Description
comparative analysis of itc's fmcg products with immediate rival firms' products
SUMMER TRAINING PROJECT REPORT ON Competition Benchmarking at ITC LTD. Submitted in the partial fulfillment of the degree of Masters of Business Administration (MBA) (2012-2014) SUBMITTED BY: Varun Bhatnagar 08316603912
Faculty Guide Sanjeev Mittal (Professor)
Mentor at the organization Mr.Karan Sehgal (Asst. Branch Manager)
SUBMITTED TO:
University School of Management Studies, GGS Indraprastha University, Sector – 16-C, Dwarka, New Delhi 110078
STUDENT DECLARATION
This to certify that I have completed the project titled “Competition Benchmarking“ under the guidance of “Sanjeev Mittal“ in the partial fulfillment of the requirement for the award of the degree of “Master in Business Administration” from “University School of Management Studies, New Delhi.” This is an original work and I have not submitted it earlier elsewhere.
CERTIFICATE This is to certify that the project titled “Competition Benchmarking” is an academic work done by “VARUN BHATNAGAR” submitted in the partial fulfillment of the requirement for the award of the degree of “Masters in Business Administration” from “University School of Management Studies, New Delhi.” under my guidance and direction. To the best of my knowledge and belief the data and information presented by him in the project has not been submitted earlier elsewhere.
Sanjeev Mittal (Project Guide) USMS
ACKNOWLEDGEMENT I offer my sincere thanks and humble regards to University School of Management Studies, GGSIPU University, New Delhi for imparting us very valuable professional training in MBA.
I pay my gratitude and sincere regards to Mr. Romit Rallhan, Branch manager (Sales department) and Karan Sehgal Asst Branch Manager(Sales Department) my external guides and Professor Sanjeev Mittal, my internal guide, who has been constant source of inspiration and encouragement to me., my project Guide for giving me the cream of his knowledge. I am thankful to him as he has been a constant source of advice, motivation and inspiration. I am also thankful to him for giving his suggestions and encouragement throughout the project work.
I take the opportunity to express my gratitude and thanks to our computer Lab staff and library staff for providing me opportunity to utilize their resources for the completion of the project.
I am also thankful to my family and friends for constantly motivating me to complete the project and providing me an environment which enhanced my knowledge
TABLE OF CONTENTS Student Declaration………………………………… Certificate from Guide……………………………… Acknowledgement…………………………………..
i ii iii Page no.
CHAPTER-1: INTRODUCTION Executive Summary………………………..……. 1.1 About the Industry………………………………… 1.2 About the company………………………………… 1.2.1 History and Evolution………………………………………… 1.2.2 Vision…………………………………………..
1 2 3 4 5
CHAPTER-2: Questionnaires and Overview
2.1 About the Topic ………………………………… 2.2 Questionnaires …………………………………... 3.1 3.2 3.3
CHAPTER-3: RESEARCH METHODOLOGY Purpose of the Study……………………………… Research Objectives of the Study……………….. Research Methodology of the study……..……… 3.3.1 Research Design………………………….. 3.3.2 Data Collection Technique……………….. 3.3.3 Sample Design…………………………… 3.3.4 Method of Data Collection……………….. 3.3.4.1 Instrument for Data Collection……… 3.3.4.2 Drafting of a questionnaire………….. 3.3.5 Limitations…………………………………
6 9
13 13 13 17 18 14 14 14 14 14
CHAPTER-4: ANALYSIS AND INTERPRETATION 4.1 Product Categories 4.2 Route Planning 4.3 Analysis & Interpretation…………………… CHAPTER-5: FINDINGS AND SUGGESTIONS 5.1 Findings…………………………………….. 5.2 Suggestions………………………………….. CHAPTER-6: CONCLUSION 6.1 Conclusion…………………………………… BIBLIOGRAPHY……………………………….. ANNEXURE…………………………………….. 35 37 16 23 25
39 40 41
CHAPTER-1: INTRODUCTION
Executive summary
To make a comparative analysis of ITC LTD?s Fast Moving Consumer Goods products with that of its close competitors BRITANNIA?s, NESTLE?s and FRITO-LAY?s respective products to create a benchmark against them and analyze their product categories, salesmen roles, sales volumes and methods of marketing and distribution by the means of checking the visibility, availability and quality distribution across the identified target outlets and the response of salesmen of the companies, and of retailers and distributors about the products of these different companies.
The project focuses on the strategies used by ITC ltd in selling its FMCG products other than tobacco especially noodles, biscuits and chips and draws comparison with its rival companies who are already established in the Indian FMCG sector and giving ITC a run for its money. Nestle and Frito-Lay?s being foreign companies have a strong financial as well as distribution base, while Britannia uses its wide popularity and customer loyalty, thus every company has its USP(Unique selling point) which it uses up to its best potential and enables ITC to make different strategies to keep a tab on its competitors accordingly.
After drawing comparisons in my survey this project report provides some illicit information from the sales personnel and distributors of these respective companies, findings and some suggestions that follow, which might prove to be useful for the company in developing its further strategies.
Indian FMCG Sector
Fast Moving Consumer Goods (FMCG) goods are popularly named as consumer packaged goods. Items in this category include all consumables (other than groceries/pulses) people buy at regular intervals. The most common in the list are toilet soaps, detergents, shampoos, toothpaste, shaving products, shoe polish, packaged foodstuff, and household accessories and extends to certain electronic goods. These items are meant for daily of frequent consumption and have a high return. The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13.1 billion. It has a strong MNC presence and is characterized by a well established distribution network, intense competition between the organized and unorganized segments and low operational cost. Availability of key raw materials, cheaper labor costs and presence across the entire value chain gives India a competitive advantage. The FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. Penetration level as well as per capita consumption in most product categories like jams, toothpaste, skin care, hair wash etc in India is low indicating the untapped market potential. Burgeoning Indian population, particularly the middle class and the rural segments, presents an opportunity to makers of branded products to convert consumers to branded products. Growth is also likely to come from consumer 'upgrading' in the matured product categories. With 200 million people expected to shift to processed and packaged food by 2010, India needs around US$ 28 billion of investment in the food-processing industry.
About the Company
ITC is one of India's foremost private sector companies with a market capitalisation of US $ 45 billion and a turnover of US $ 7 billion. ITC is rated among the World's Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes magazine and among India's Most Valuable Companies by Business Today. ITC ranks among India's '10 Most Valuable (Company) Brands', in a study conducted by Brand Finance and published by the Economic Times. ITC also ranks among Asia's 50 best performing companies compiled by Business Week. Multiple Drivers of Growth ITC’s aspiration to create enduring value for the nation and its stakeholders is manifest in its robust portfolio of traditional and greenfield businesses encompassing Fast Moving Consumer Goods (FMCG), Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, and Information Technology. This diversified presence in the businesses of tomorrow is powered by a strategy to pursue multiple drivers of growth based on its proven competencies, enterprise strengths and strong synergies between its businesses. The competitiveness of ITC’s diverse businesses rest on the strong foundations of institutional strengths derived from its deep consumer insights, cutting-edge Research & Development, differentiated product development capacity, brand-building capability, world-class manufacturing infrastructure, extensive rural linkages, efficient trade marketing and distribution network and dedicated human resources. ITC’s ability to leverage internal synergies residing across its diverse businesses lends a unique source of competitive advantage to its products and services. Within a relatively short span of time, ITC has established vital brands like Aashirvaad, Sunfeast, Dark Fantasy, Delishus, Bingo!, Yippee!, Candyman, mint-o, Kitchens of India in the Branded Foods space; Essenza Di Wills, Fiama Di Wills, Vivel, Vivel Cell Renew, Engage and Superia in the Personal Care products segment; Classmate and Paperkraft in Education & Stationery products; Wills Lifestyle and John Players in the Lifestyle Apparel business; Mangaldeep in Agarbattis and Aim in the Safety Matches segment. This growth has been rated by a Nielsen Report to be the fastest among the consumer goods companies operating in India. Creating Enduring Value Today ITC is the country's leading FMCG marketer, the clear market leader in the Indian Paperboard and Packaging industry, a globally acknowledged pioneer in farmer empowerment through its wide-reaching Agri Business, the second largest Hotel Chain in India and a trailblazer in 'green hoteliering'. ITC Infotech, a wholly-owned subsidiary, is one of India's fast-growing IT companies in the mid-tier segment. This portfolio of rapidly growing businesses considerably enhances ITC's capacity to generate growing value for the Indian economy. ITC's Agri-Business is one of India's largest exporters of agricultural products. The ITC group's contribution to foreign exchange earnings over the last ten years amounted to nearly US$ 5.4 billion, of which agri exports constituted 56%. The Company's 'e-Choupal' initiative has enabled Indian agriculture significantly enhance its competitiveness by empowering Indian farmers through the power of the Internet. This transformational strategy has already become the subject matter of a case study at Harvard Business School apart from receiving widespread global acclaim. As one of India's most valuable and respected corporations, ITC is widely perceived to be dedicatedly
nation-oriented. Chairman Y C Deveshwar calls this source of inspiration "a commitment beyond the market". In his own words: "ITC believes that its aspiration to create enduring value for the nation provides the motive force to sustain growing shareholder value. ITC practices this philosophy by not only driving each of its businesses towards international competitiveness but by also consciously contributing to enhancing the competitiveness of the larger value chain of which it is a part." ITC group directly employs more than 31,000 people and the Company's Businesses and their value-chains generate over 5 million sustainable livelihoods many of whom live at the margin in rural India. Global Exemplar in Sustainability Acknowledged as a global exemplar in sustainability, ITC is the only enterprise in the world, of comparable dimensions to be carbon-positive, water-positive, and solid waste recycling positive. A testimony to its commitment to a low carbon growth path - over 41 % of the total energy requirements of ITC is met from renewable sources. All ITC's premium luxury hotels are LEED (Leadership in Energy and Environmental Design) Platinum certified making it the "greenest luxury hotel chain" in the world. ITC's Paperboards and Paper business is an icon of environmental stewardship. ITC's production facilities and hotels have won numerous national and international awards for quality, productivity, safety and environment management systems. ITC was the first company in India to voluntarily seek a corporate governance rating.The Company continuously endeavours to enhance its wealth generating capabilities in a globalising environment to consistently reward more than 4,51,000 shareholders, fulfill the aspirations of its stakeholders and meet societal expectations.
ITC-History and Evolution
ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of India Limited. As the Company's ownership progressively Indianised, the name of 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 Company's multi-business portfolio encompassing a wide range of businesses - Fast Moving Consumer Goods comprising Foods, Personal Care, Cigarettes and Cigars, Branded Apparel, Education and Stationery Products, Incense Sticks and Safety Matches, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business and Information Technology - the full stops in the Company's name were removed effective September 18, 2001. The Company now stands rechristened 'ITC Limited'. The Company's beginnings were humble. A leased office on Radha Bazar Lane, Kolkata, was the centre of the Company's existence. The Company celebrated its 16th birthday on August 24, 1926, by purchasing the plot of land situated at 37, Chowringhee, (now renamed J.L. Nehru Road) Kolkata, for the sum of Rs 310,000. This decision of the Company was historic in more ways than one. It was to mark the beginning of a long and eventful journey into India's future. The Company's headquarter building, 'Virginia House', which came up on that plot of land two years later, would go on to become one of Kolkata's most venerated landmarks. Though the first six decades of the Company's existence were primarily devoted to the growth and consolidation of the Cigarettes and Leaf Tobacco businesses, the Seventies witnessed the beginnings of a corporate transformation that would usher in momentous changes in the life of the Company. ITC's Packaging & Printing Business was set up in 1925 as a strategic backward integration for ITC's Cigarettes business. It is today India's most sophisticated packaging house. 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). The objective of ITC's entry into the hotels business was rooted in the concept of creating value for the nation. ITC chose the Hotels business for its potential to earn high levels of foreign exchange, create tourism infrastructure and generate large scale direct and indirect employment. Since then ITC's Hotels business has grown to occupy a position of leadership, with over 100 owned and managed properties spread across India under four brands namely, ITC Hotels - Luxury Collection, WelcomHotels, Fortune Hotels and WelcomHeritage. In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam Paperboards Limited. Bhadrachalam Paperboards amalgamated with the Company effective March 13, 2002 and became a Division of the Company, Bhadrachalam Paperboards Division. In November 2002, this division merged with the Company's Tribeni Tissues Division to form the Paperboards & Specialty Papers Division. ITC's paperboards' technology, productivity, quality and manufacturing processes are comparable to the best in the world. It has also made an immense contribution to the development of Sarapaka, an economically backward area in the state of Andhra Pradesh. It is directly involved in education, environmental protection and community development. In 2004, ITC acquired the paperboard manufacturing facility of BILT Industrial Packaging Co. Ltd (BIPCO), near Coimbatore, Tamil Nadu. The Kovai Unit allows ITC to improve customer service with reduced lead time and a wider product range. In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint venture. In August 2002, Surya Tobacco became a subsidiary of ITC Limited and its name was changed to Surya Nepal Private Limited (Surya Nepal). In 2004, the company diversified into manufacturing and exports of garments. In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing company and a major supplier of tissue paper to the cigarette industry. The merged entity was named the Tribeni Tissues Division (TTD). To harness strategic and operational synergies, TTD was merged with the Bhadrachalam Paperboards Division to form the Paperboards & Specialty Papers Division in November 2002. Also in 1990, leveraging its agri-sourcing competency, ITC set up the Agri Business Division for export of agricommodities. The Division is today one of India's largest exporters. ITC's unique and now widely acknowledged eChoupal initiative began in 2000 with soya farmers in Madhya Pradesh. Now it extends to 10 states covering over 4 million farmers. Also, through the 'Choupal Pradarshan Khet' initiative, the agri services vertical has been focusing on improving productivity of crops while deepening relationship with the farming community. ITC launched line of premium range of notebooks under brand Paperkraft in 2002. To augment its offering and to reach a wider student population, the Classmate range of notebooks was launched in 2003. Classmate over the years has grown to become India's largest notebook brand and has also increased its portfolio to occupy a greater share of the school bag. Years 2007- 2009 saw the launch of Practical Books, Drawing Books, Geometry Boxes, Pens and Pencils under the 'Classmate' brand. In 2008, ITC positioned the business as the Education and Stationery Products Business and launched India's first environment friendly premium business paper under the 'Paperkraft' Brand. 'Paperkraft' offers a diverse portfolio in the premium executive stationery and office consumables segment. In 2010, Colour Crew was launched as a new brand of art stationery. ITC also entered the Lifestyle Retailing business with the Wills Sport range of international quality relaxed wear for men and women in 2000. The Wills Lifestyle chain of exclusive stores later expanded its range to include Wills Classic formal wear (2002) and Wills Clublife evening wear (2003). ITC also initiated a foray into the popular segment with its men's wear brand, John Players, in 2002. In 2006, Wills Lifestyle became title partner of the country's most premier fashion event - Wills Lifestyle India Fashion Week - that has gained recognition from buyers and retailers as the single largest B-2-B platform for the Fashion Design industry. To mark the occasion, ITC launched a special 'Wills Signature', taking the event forward to consumers. In 2000, ITC spun off its information technology business into a wholly owned subsidiary, ITC Infotech India Limited, to more aggressively pursue emerging opportunities in this area. Today ITC Infotech is one of India's fastest growing global IT and IT-enabled services companies and has established itself as a key player in offshore outsourcing, providing outsourced IT solutions and services to leading global customers across key focus verticals Banking Financial Services & Insurance (BFSI), Consumer Packaged Goods (CPG), Retail, Manufacturing,
Engineering Services, Media & Entertainment, Travel, Hospitality, Life Sciences and Transportation & Logistics.
ITC's foray into the Foods business is an outstanding example of successfully blending multiple internal competencies to create a new driver of business growth. It began in August 2001 with the introduction of 'Kitchens of India' readyto-eat Indian gourmet dishes. In 2002, ITC entered the confectionery and staples segments with the launch of the brands mint-o and Candyman confectionery and Aashirvaad atta (wheat flour). 2003 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. In just over a decade, the Foods business has grown to a significant size under seven distinctive brands, with an enviable distribution reach, a rapidly growing market share and a solid market standing. In 2002, ITC's philosophy of contributing to enhancing the competitiveness of the entire value chain found yet another expression in the Safety Matches initiative. ITC now markets popular safety matches brands like iKno, Mangaldeep and Aim. ITC's foray into the marketing of Agarbattis (incense sticks) in 2003 marked the manifestation of its partnership with the cottage sector. Mangaldeep is a highly established national brand and is available across a range of fragrances like Rose, Jasmine, Bouquet, Sandalwood, Madhur, Sambrani and Nagchampa. ITC entered the Personal Care Business in 2005. In eight years, the Personal Care portfolio has grown under'Essenza Di Wills', 'Fiama Di Wills', 'Vivel' and 'Superia' brands which have received encouraging consumer response and are also being progressively extended nationally. In May 2013, the business expanded its product portfolio with the launch of Engage – one of India?s first range of „couple deodorants? In 2010, ITC launched its handrolled cigar, Armenteros, in the Indian market. Armenteros cigars are available exclusively at tobacco selling outlets in select hotels, fine dining restaurants and exclusive clubs.
Vision Sustain ITC's position as one of India's 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 globalizing environment, delivering superior and sustainable stakeholder value
Chapter-2 : Overview of topic and Questionnaires 2.1 Competition Benchmarking This report offers a comprehensive overview on the key strategies adopted by these market leaders to gain a stronger market position in this competitive environment. It can be best used to derive a framework for strategic planning with key success factors (KSFs) of the industry or marketplace on specific metrics. From a strategic decision making perspective, it can be further used to develop future quality and market initiatives for the company to enhance its overall competitive position. This is a sort of market analysis done in order to get a comprehensive perspective on product offerings, financial performance, market/industry position, and business strategies etc of the company in relation to its competitors & industry segment. Benchmarking enables us a reference point which acts as a guiding, driving and motivating force to take decisions regarding the search for industries? best practices that will lead to a superior performance , for easy identification of outlets for products offered by the company and their respective placement into prospective markets. Placement of products is the utmost important criteria to enhance or acquire the visibility of the product in the eyes of the customer and for the same every company aims to take an edge over its competitors by infusing creativity in their branding and promotional activities.
Fast Moving Consumer Goods (FMCG)? Products which have a quick turnover, and relatively low cost are known as Fast Moving Consumer Goods (FMCG). FMCG products are those that get replaced within a year. Examples of FMCG generally include a wide range of frequently purchased consumer products such as toiletries, soap, cosmetics, tooth cleaning products, shaving products and detergents, as well as other non-durables such as glassware, bulbs, batteries, paper products, and plastic goods. FMCG may also include pharmaceuticals, consumer electronics, packaged food products, soft drinks, tissue paper, and chocolate bars. A subset of FMCGs is Fast Moving Consumer Electronics, which include innovative electronic products such as mobile phones, MP3 players, digital cameras, GPS Systems and Laptops. These are replaced more frequently than other electronic products. White goods in FMCG refer to household electronic items such as Refrigerators, T.Vs, Music Systems, etc.
ITC estimates the Indian FMCG industry at Rs.2.5 lakh crores with a compounded annual growth rate (CAGR) of 17 per cent over the last five years . Indian FMCG Sector The Indian FMCG sector is the fourth largest in the economy and has a market size of US$13.1 billion. Wellestablished distribution networks, as well as intense competition between the organized and unorganized segments are the characteristics of this sector. FMCG in India has a strong and competitive MNC presence across the entire value chain. It has been predicted that the FMCG market will reach to US$ 33.4 billion in 2015 from US $ billion 11.6 in 2003. The middle class and the rural segments of the Indian population are the most promising market for FMCG, and give brand makers the opportunity to convert them to branded products. Most of the product categories like jams, toothpaste, skin care, shampoos, etc, in India, have low per capita consumption as well as low penetration level, but
the potential for growth is huge. The Indian Economy is surging ahead by leaps and bounds, keeping pace with rapid urbanization, increased literacy levels, and rising per capita income. The big firms are growing bigger and small-time companies are catching up as well. According to the study conducted by AC Nielsen, 62 of the top 100 brands are owned by MNCs, and the balance by Indian companies. Fifteen companies own these 62 brands, and 27 of these are owned by Hindustan Lever. Pepsi is at number three followed by Thums Up. Britannia takes the fifth place, followed by Colgate (6), Nirma (7), Coca-Cola (8) and Parle (9). These are figures the soft drink and cigarette companies have always shied away from revealing. Personal care, cigarettes, and soft drinks are the three biggest categories in FMCG. Between them, they account for 35 of the top 100 brands.
THE TOP 10 COMPANIES IN FMCG SECTOR S. NO. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Companies Hindustan Unilever Ltd. ITC (Indian Tobacco Company) Nestlé India GCMMF (AMUL) Dabur India Asian Paints (India) Cadbury India Britannia Industries Procter & Gamble Marico Industries
The companies mentioned in the table are the leaders in their respective sectors. The personal care category has the largest number of brands, i.e. 21, inclusive of Lux, Lifebuoy, Fair and Lovely, Vicks, and Ponds. There are 11 HLL brands in the 21, aggregating Rs. 3,799 crore or 54% of the personal care category. Cigarettes account for 17% of the top 100 FMCG sales, and just below the personal care category. ITC alone accounts for 60% volume market share and 70% by value of all filter cigarettes in India. The foods category in FMCG is gaining popularity with a swing of launches by HLL, ITC, Godrej, and others. This category has 18 major brands, aggregating Rs. 4,637 crores. Nestle and Amul slug it out in the powders segment. The food category has also seen innovations like softies in ice creams, chapattis by HLL, ready to eat rice by HLL and pizzas by both GCMMF and Godrej Pillsbury. This category seems to have faster development than the stagnating personal care category. Amul , India's largest foods company has a good presence in the food category with its icecreams, curd, milk, butter, cheese, and so on. Britannia also ranks in the top 100 FMCG brands, dominates the biscuits category and has launched a series of products at various prices. In the household care category (like mosquito repellents), Godrej and Reckitt are two players. Goodknight from Godrej is worth above Rs 217 crores, followed by Reckitt's Mortein at Rs 149 crore. An overview at ITC?s major competitors in the FMCG sector Maggi noodles is a brand of instant noodles manufactured by Nestlé, Nestlé India Ltd (NIL) offered a variety of culinary products such as instant noodles, soups, sauces and ketchups, cooking aids (seasonings), etc., under the Maggi brand. Of these, instant noodles had been NIL's main product category in the culinary segment since the launch of Maggi 2 Minute Noodles (Maggi noodles) in 1982. In fact, the word "Maggi" has become a synonymous term for any brand of instant noodles in India and Malaysia. Maggi Noodles are available in a large assortment of different flavours
and vary from country to country. Maggi noodles also produces instant noodles known as "Hot Bowl" noodles named "Cuppa Mania" in India. In Some countries,new flavors were made on the 25th Anniversary ,Maggi is the toughest competitor that ITC faces in its noodles product „YIPPEE? ,though Maggi has a very good reputation and a well established market in our country ITC?S Yippee is able to give a healthy competition due to its innovative shape and marketing tactics plus it also has a unique flavor.
Frito-Lay is the world's largest manufacturer and distributor of snack foods and is a wholly owned subsidiary of PepsiCo. Since its entry in India in 1989, PepsiCo?s snack foods division Frito Lay India (FLI) has become the clear leader in branded salty snack segme nt with popular brands like lay?s, Kurkure, Uncle Chipps Cheetos and Lehar Namkeens. Frito Lay India produces its snacks at its state-of-the-art plants in Channo (Punjab), Pune (Maharashtra) and Sankrail (West Bengal). The company operates over 40 distribution centers that serve more than 2,500 active stockists, reaching approximately 1 million retail outlets that in turn make the product available at an arms length. Frito-Lay India Ltd. produces India's largest snack food manufacturer?s brands, including Ruffles, Hostess, Cheetos and Uncle Chips. Frito Lay's story is an example of how American recipes were adjusted to satisfy local tastes. Though ITC?s BINGO was launched quite later as compared to Lay?s which already had a stronghold of the market, BINGO has given a stiff competition to Lay?s in recent years, though Lay?s remains to be on top and most preferred chips brand in the country but BINGO has still been able to garner a lot of interest and attention from the customers due to its unique Indian taste plus an interesting set of TV commercials. Britannia Industries Limited is an Indian food-products corporation based in Kolkata,[2] India. It sells its Britannia and Tiger brands of biscuit throughout India. Britannia has an estimated 38% market share. [3] The Company's principal activity is the manufacture and sale of biscuits, bread, rusk, cakes and dairy products. The company's factories have an annual capacity of 433,000 tonnes. [3] The brand names of biscuits include VitaMarieGold, Tiger, Nutrichoice Junior,Good day, 50 50, Treat, Pure Magic, Milk Bikis, Good Morning, Bourbon, Thin Arrowroot, Nice, Little Hearts and many more.Tiger, the mass market brand, realised $150.75 million in sales including exports to countries including the U.S. and Australia, or 20% of Britannia revenues in 2006. Britannia has been adored by the Indian customers for a long time, ITC?s Sunfeast has been able to give Britannia Biscuits a run for their money and pushed them to bring out new and creative biscuits by snatching a significant market share from them in the Indian Biscuit Industry
2.2 Questionnaires Used Questionnaire for Direct Sales Executives Q1. What margin do you offer to retailers (%)____________ Q2. How is market segment classified _____________________________________________________________________________________________ _____________________________________________________________________________________________ ______________________________ Q3. How many routes are covered in distribution __________________________________________________________________ Q4. How many product categories are there in fmcg category _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________________ Q5. How the zoning is done (how areas are divided among DSE) _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________________ Q6. What is your role as a salesman _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________ Q7. What is your salary and what incentives are given to you _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________ Q8. What are the measures adopted at the distribution point _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________ Q9. How is the training given to you _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________________________________________ ___ Q10. Role of your Supervisor(if any) _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________________ Q11. What strategies are adopted by you to enhance sales (Best practices ) _____________________________________________________________________________________________ _____________________________________________________________________________________________
_____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________ Q12. What are the hand held devices used in day to day sales tasks _____________________________________________________________________________________________ _____________________________________________________________________________________________ _______________________________ Q13. What is the coverage norm _____________________________________________________________________________________________ _____________________________________ Q14. How do you feel your company values you? _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________________________________________ ____
QUESTIONNAIRE (RETAIL OUTLET) 1) How is the demand of Bingo? a) Very good ___ b) good ___ c) average ___ d) bad ____
2) Stock availability of various brands a) Lays _______ b)parle ________ c) Bingo _________
3) What criteria you apply when you sell your product? a) Focus on Quality_____ b) Focus on Price____ c) Focus on Size______ d) Focus on Margin____ 4) How far do you think ITC Bingo has captured market over Lays? a) On a Small Scale________ b) On a Large Scale________ 5) What problem you face to sale ITC Bingo!? a) Price____ b) Size____ c)Brand Loyalty towards other Brand_____ d) Lack of Awareness_____ e) Any Other______________________ 6) Does your sale increased due to Bingo! promotional activities? a) Highly Increased____ b) Increased____ c) Somewhat Increased____ d) Not at all Increased_____ 7) Whether you have to convince customer to purchase Bingo? a) Yes ___ b) No ___
8) Please assign a value from 1-5 : To LAYS 5 For Excellent 4 For Very Good 3 For Good 2 For Average 1 For Bad
To BINGO 5 For Excl lent 4 For Very Good 3 For Goo d 2 For Average 1 For Ba d
QUESTIONNAIRE (RETAIL OUTLET)
1) How is the demand of Sunfeast’s range of biscuits?
a) Very good ___ b) good ___ c) average ___ d) bad ____
2) Stock availability of various brands a) Sunfeast _______ b)Britannia ______ c) Priyagold ______d) Parle______ e)Duke______
3) What criteria you apply when you sell your product? b) Focus on Quality__________ b) Focus on Price_____ c) Focus on Size______ d) Focus on Margin______ 4) How far do you think Sunfeast has captured the Indian market over Britannia? a) On a Small Scale________ b) On a Large Scale________ 5) What problem you face to sale Sunfeast Biscuits? a) Price____ b) Size____ c)Brand Loyalty towards other Brand_____ 1) Lack of Awareness_____ e) Any Other 6) Does your sale increased due to ITC Sunfeast?s Promotional activities? b) Highly Increased____ b) Increased____ c) Somewhat Increased____ d) Not at all Increased_____ 7) Whether you have to convince customer to purchase Sunfeast biscuits? a) Yes ___ b) No ___
8) Please assign a value from 1-5: To BRITANNIA biscuits 5 For Excellent 4 For Very Good 3 For Good 2 For Average 1 For Bad To ITC Sunfeast Biscuits 5 For excellent 4 For Very Good 3 For Good 2 For Average 1 For Bad
QUESTIONNAIRE (RETAIL OUTLET)
1) How is the demand of Yippee Noodles?
a) Very good ___ b) good ___ c) average ___ d) bad ____
2) Stock availability of various brands a) Yippee ______ b)Maggi ______ c) Top Ramen _______d) Foodles_______
3) What criteria you apply when you sell your product? c) Focus on Quality_____ b) Focus on Price____ c) Focus on Size______ dFocus on Margin____ 4) How far do you think Yippee Noodles has captured market over Maggi? a) On a Small Scale________ b) On a Large Scale________ 5) What problem you face to sale Sunfeast Yippee Noodles? a) Price____ b) Size____ c)Brand Loyalty towards other Brand_____ 2) Lack of Awareness_____ e) Any Other________________________ 6) Does your sale increased due to Yippee noodles? Promotional activities? c) Highly Increased____ b) Increased____ c) Somewhat Increased____ d) Not at all Increased_____ 7) Whether you have to convince customer to purchase Yippee Noodles? a) Yes ___ b) No ___
8) Please assign a value from 1-5 : To MAGGI 5 For Excellent 4 For Very Good 3 For Good 2 For Average 1 For Bad
To Yippee 5 For Excl lent 4 For Very Good 3 For Goo d 2 For Average 1 For Ba d
Chapter-3 Research Methodology 3.1 PURPOSE FOR THE STUDY ? To do comparative study of ITC’s BINGO,SUNFEAST,YIPPEE’s performance in the market with respect to its direct competitors and analyze their prices, sales and method of marketing and distribution ? To check and achieve visibility, availability and quality distribution across the identified target outlet and the response of retailer about the product. .
3.2 OBJECTIVES OF THE STUDY 1. To analyze various types of measures and strategies adopted by ITC?s major competitors i.e. Nestle , Frito lay?s, Britannia and compare them with that of ITC. 2. To study the performance of the company. 3. To study and analyze how the customers perceive the products of ITC.
3.3 RESEARCH METHODOLOGY OF THE STUDY
The research design is Descriptive as well as Exploratory in nature. The Indian FMCG sector is the fourth largest in the economy and has a market size of US$13.1 billion. Well-established distribution networks, as well as intense competition between the organized and unorganized segments are the characteristics of this sector. FMCG in India has a strong and competitive MNC presence across the entire value chain. It has been predicted that the FMCG market will reach to US$ 33.4 billion in 2015 from US $ billion 11.6 in 2003. The middle class and the rural segments of the Indian population are the most promising market for FMCG, and give brand makers the opportunity to convert them to branded products. Most of the product categories like jams, toothpaste, skin care, shampoos, etc, in India, have low per capita consumption as well as low penetration level, but the potential for growth is huge. In midst of these situation it becomes necessary to analyze and find where the company is going with the huge success of its FMCG products and find its future prospects and study new products? viability it tends to launch in the environment of uncertainty and risks involved with the FMCG sector. DATA COLLECTION METHODS: 1) Interview with retailers, customers, distributors, and company officials of ITC. 2) Interview with distributors, salesmen and company officials of Frito-Lays,Britannia and Nestle. 3) Questionnaire i. For Direct Sales Executives ii. For retailers 4) Observations made and inferences drawn during the training period. 5) Secondary data from www.ITCportal.com newspaper, Internet. 3.3.3 SAMPLE DESIGN SAMPLE SIZE: The sample size is 141 persons. Sampling Method:Convenience Sampling Technique Convenience Sampling is the technique in which the researcher just simply picks up the respondents on the basis of their availability.
3.3.4 Methods of Data Collection:3.3.4.1 Instrument for data collection: The balance sheet provided by the company to study and analyze financial position of the company and cash flows statements and cost sheets to study and analyze financial viability of the project Jhansi. The method of data collection used is “SURVEY METHOD” with the help of Questionnaire.
3.3.4.2 Drafting of a Questionnaire : To frame questionnaire or schedule, we have at first to decide regarding various questions to be incorporated. This decision of the selection of questions depends upon the purpose of enquiry. In this regard, precaution should be adopted to avoid irrelevant or unnecessary questions.The questionnaire was formulated by keep in mind the following points: ? ? ? ? Giving respondents clear understanding of the questions. Inducing the respondents to be honest and help to fill in the entire questionnaire. Giving instructions as to what is wanted. Identifying needs to be known.
3.3.5 Limitations at last a. b. c. d. e. f. g. h. i. For performing these king of research large data base is required. The data collected for this study is not sufficient to analyze the investment pattern of retail investors in India. There may be many variables which influences the result but this analysis reveals only few variables. There can be some deviations in the data as the human psychology changes from time to time. The feedback we got may not be correct as the respondent might have filled in the information with no interest or in hurry. Scientific research on the part of research is also required. Accuracy level may be effected when data is subjected to weighing. Time was the biggest constraint as these studies cannot be completed with accuracy in two month. Understanding the psychology of human is not the cup of every one tea so, might be some interpretations go wrong. Some respondents might have taken the question in different sense which can change the data collected.
CHAPTER-4: ANALYSIS AND INTERPRETATION
Product Categories Britannia Following are its various brands in the biscuits segment:
? ? ? ? ? ? ? ? ? ? ? ? ? ?
Pure Magic Treat Britannia Cookies Milk Bikis Tiger Nutri Choice Good Day Time Pass Bourbon Little Hearts 50-50 Nice Time Marie Gold Rusks BRITANNIA holds the majority of the biscuit industry of the Indian FMCG sector Sunfeast by ITC Sunfeast is the biscuit brand of ITC and was initiated during July 2003. To start with, the brand dealt with glucose, Marie, and cream biscuits and Following are the major brands of Sunfeast
?
Sunfeast Milky Magic
? ? ?
Sunfeast Dream Cream
Sunfeast Marie Light
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Sunfeast Dark Fantasy
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Sunfeast sweet 'n salt
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Sunfeast Dark Fantasy Choco Fills
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Sunfeast Nice
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Sunfeast Glucose
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Sunfeast Special-cream and cookies
Britannia and Parle have been one of the major competitors of ITC in the Indian biscuit market in which Britannia especially enjoys a favorable market share due to the fact that the company was established way back in 1892 and till today has managed to maintain a distinctive position in the Indian biscuit industry specially with its most popular brand called Tiger and Good day, Britannia holds a 38% market share in the biscuit industry in India. Britannia Industries Ltd. its variety of offerings which never fail to create a value for the customer plus Britannia cakes enjoy a huge monopoly as none of its major competitors have fruit cakes or flavored cakes at their disposal but Sunfeast currently holds a market share of 10% and is surely becoming a top biscuit brand in India. Nestle Nestle is a Swiss company founded in 1986 by Henri Nestle,Basically the company started to meet the need of the milk in world war I , The Maggi Company merged with Nestle in 1947. Today, Maggi is a leading culinary brand and part of the NESTLE family of fine foods and beverages. The brand Maggi became so popular in some East Asian countries and oceania that it is used interchangeably with the product?s type itself i.e „Noodles? , ITC, for its part, is pleased as a pie of share it has garnered so far, and attributes its No 2 position to factors like quality , taste preferences and distribution strength and scale. ITC has done a wonderful job to get a double digit market share which not even Top Ramen was able to achieve despite its presence in the Indian market since 1988. I think it is because of its good taste, right targeting and appropriate communication. As of now in the noodles market Nestle?s major competitor is ITC and it is not the other way round , as Nestle enjoys a first mover advantage in this market and has a mass appeal in the minds of its customers.
VS
Frito lay Fritolay is a North American company which has been running successfully throughout the world under its parent company PepsiCo. with numerous brands under its belt in context of this project I would like to focus only on Fritolay brand of PepsiCo. As ITC has been directly competing with the fritolays range of chips in the Indian market , fritolay’s the world’s largest and favourite snack food brand, has steadily established itself as an indispensable part of India?s snacking culture since its launch in 1995., and has been ruling the Indian market with its indisputable range of potato chips and rice chips i.e Kurkure. Fritolays? direct competition in the Indian market is with ITC?s Bingo! which offers a unique Indian taste to cater to the buds of Indian customers and since its launch in 2007 which marked ITC's foray into the fast growing branded snack foods segment. Bingo?s portfolio includes an array of products in both Potato Chips & Finger Snacks segment. Bingo is positioned as a youthful and innovative snack, offering the consumers with choice in terms of both formats and flavors.
VS
Flavors in the market Bingo! CHIPS PREMIUM SALTED
JUICY TOMATO KETCHUP
RED CHILLI BIJLI
SPICY MASALA REMIX
INTERNATIONAL CREAM & ONION
BRIDGES MAD ANGLES CHILLI DHAMAKA
TOMATO MISCHIEF
HATKE-JHATKE FUNKY MASALA
TOMATO TWIST
TEDHE-MEDHE
Lays There have been multiple upcoming flavors in market by Fritolay but none has been able to create much hype around the market as compared to its initial evergreen flavors ,the major range of chips that are giving a tough run to Bingo! are :
1.American style cream & onion
2. India?s magic masala
3. Spanish tomato tango
4. Classic salted
5. Chile lemon
6. French salt & cracking pepper 7. Lays Baked
COMPETITION AMONG VARIANTS OF
Chips 1. Spicy Masala remix 2. International cream onion 3. Juicy tomato ketchup 4. Red chili bingo 5. Premium salted Bridges 6. Mad angle tomato 7. Mad angle chili 8. Mad angle achari 9. Hatke-Jhatke Funky 10. Hatke-Jhatke Tomato 11. Tedhe-Medhe Kurkure Dewana tomato Kurkure chili chatka Kurkure Rajhasthani Kurkure Funjabi Kurkure Naughty Tomato Kurkure Masala Munch Chilly Mexicana American cream and onion Spanish tangy tomato Magic Masala Classic salted
Comparative Analysis Best Practices Every company strives to gain a competitive advantage over its rival companies in the market and for that it opts for some sort of practices that are unique to it which it uses to have some specific set of activities and tasks, which helps it to achieve a better position in the market and in the eyes of its customers. All the major companies that are within the ambit of my project tend to follow some set of practices which areITC?s salesmen best practices lie in the skills of the salesmen itself ,for say it depends upon what set of salesmanship or skills he possesses to lure the retailers to buy or order more of the comp any?s products. In BRITANNIA a salesman whom I was able to interact with was trying to instigate the retailer to convince him to order a bigger volume of BRITANNIA biscuits which was looking kind of a desperate attempt just to meet his sales target. Albeit BRITANNIA has been the biggest market player in the Indian market when it comes to the biscuit industry still its salesmen have to infuse a specific set of skill and logic to lure the retailer. It is always the skill of the salesman that is at the floor level coming into effect i.e. whatever practice a company intends to imply at the end it is going to be implied by the salesman only. The NESTLE salesman worked on the pre laid set of practices of the company that were to offer higher margin to retailers ,offering discounts on 6*100 and 8*100 pack Maggi Noodles . A notable thing about NESTLE?S Maggi was that NESTLE has been able to keep a real tab on the market in India and abroad as well ,it knows what kind of variants customers are actually liking and which kinds are not being received well ,the credit for this may go to its well placed resources ,market analysis or an efficient customer feedback system in which they are able to receive customers reviews and are equally able to deal with the particular variant?s like or dislike and just straightaway makes the required changes as per the wish of the customers. They?ve made Maggi actually available everywhere in India whether it be rural area, semi urban and even in hilly areas, if one goes to a hill station one might not be able to get yippee noodles there but one can get Maggi ,this is the demand or say charm of maggi that NESTLE has been able to create by excellent distribution system. On the other hand a FRITO-LAYS salesman works on the principle of giving offers and discounts to the retailers to lure them. It is also pre laid by the company to ensure that the retailers don?t remain unhappy or dissatisfied with their business interaction with the company. FRITO-LAYS?s strategy is like trial and error method which is very much like ITC in context of launching new variants in the finger and snacks industry, every 6 months FRITO-LAYS' comes up with some new variant of either Lays?, Kurkure, Uncle Chips or Cheetos and then tests the market response by conduc ting sales surveys and through general market response and are thus able to keep a tap and track of the demand, taste & preferences of the customers. Frito-Lays uses pre sale or order booking process for taking order in urban areas and uses ready stock process for rural or deep up country
FRITO-LAYSs has been able to enjoy a first mover advantage in India and hence is reaping its full advantage over ITC ,but ITC has still been to give a tough competition to FRITO-LAYS through its BIGNO! Range of chips and ITC?s best practices are also similar to that of former but ITC?s main strategy in BINGO! Is excessive and creative advertising along with that a unique (both name and taste wise) range of chips it is offering since its inception. Every company tries to lure its retailer and distributor by offering some sort of margin or discounts or give offers. Hand Held Devices The hand held devices possessed by the salesman of all 3 rival companies are as follows along with ITC?s Company Device ITC Samsung Galaxy Ace BRITANNIA Pidion bip-6000 series NESTLE Samsung Galaxy Pop FRITO-LAYS Samsung Star This hand held device is an actual mobile phone given by the company to its salesmen in which all information related to products is stored in. Order which is taken by the machine sinks to the data to branch office. WD system operator makes the invoice and sends goods to market next day, till my initial days of internship an ITC salesman was using a register to store order
given by the retailer as the previously held hand held device was becoming outdated and used to store the orders manually but after a while they were provided with Samsung galaxy ace which is a high end phone in which a software i.e. an application NPR7 is stored which does all the storing and sending of order details to the WD system. The same functioning is done by the devices mentioned against other 3 companies. Hand held devices are available to all these companies? salesmen is due to the reason that it saves a lot of time an d effort of the salesman and thus benefits the company. ITC uses software that is called SIFY at the WD, all the bills and detailed information product wise, variant wise, summarized sales reports are made with the help of this application software. Margin Structure Margin structure refers to margin offered to the retailer and distributors by the Company in order to attract further product orders independent of the demand of the product in a particular market. Every company offer some margin to its distributors so as to provide them a profitable income as against the distribution activities performed by them ,a distributors margin is of utmost importance to the distributor as it is indicative of the main profit a distributor will earn from selling the compa ny?s products which is the least profit he can earn. On the other hand a retailer?s margin is given to a retailer by the company in case he orders more of a company?s products for say ,if one orders 2 cartons of Sunfeast Yippee noodles having 12 packets ea ch he?ll be eligible to get a certain amount of margin just like a discount as he?s purchasing in bulk ,larger the order higher will be the margin and vice versa ,but there?s always a minimum %age of margin given to the retailers by the company irrespect ive of the order made by him. As we all know that the order made by the retailer depends largely upon the demand of any product in the market, whether already prevalent or anticipated in future. This table gives a look about the margin structure of all 4 companies in terms of percentage Company Margin to Distributors Margin to Retailers in % in % ITC 5.8 Glucose Marie Cookies Noodles Bingo Premium and mid Cream price Cream 10 10 12 9 12 10 BRITANNIA 5.9 10 NESTLE Around 5.8 9-10 FRITO-LAYS 5.5 10(approx) As we can see from the table there?s a very close gap or even none between the margin structure of these 4 majors, ITC is providing 5.8% margin profit to its distributors and it is the same for NESTLE while BRITANNIA is providing a little bit higher %age margin i.e. 5.9 to its distributors whereas FRITO-LAYS is providing a bit lower margin as compared to its competitor ITC. When we see at the retailer margin we can see that all these companies are closely matching with each other , ITC and BRITANNIA are following the same margin structure in their bi(Biscuit) products while NESTLE is providing less than 10% margin to the retailers while ITC is providing 10 % and FRITO-LAYS is providing same margin as of ITC. This shows that a standard margin structure is being provided by these competitors of ITC in all their respective products. Training of Salesmen Training forms the core of sales personal?s knowledge of his field; it gives an actual understanding of the work he has to do when working as salesmen of any given company. The mode of training given to the salesmen is almost the same in all the 4 companies; they might vary with each other, which are mentioned here underIn ITC a salesmen is given on the field training which is like training the sales personal while working on the actual job front in real job like situations. In such training the sales personal is accompanied by a senior salesman and thus he follows the senior?s beats and learns the way how the work is done. Along with this he is involved in sales meetings which are conducted by sales officers to analyze the market conditions based on their and salesmen?s observations and the new salesmen thus learns what the market conditions
are ,how they are observed ,how he shall try to incr ease sales and he?s also welcomed to give any suggestions to his counterparts. Classroom training is also given to the new salesmen as well as the old so as they can theoretically relate to the ifs and buts of the sales function and have a firm grip of the laid down functions he is expected to perform as a salesman of ITC. In BRITANNIA is very much similar to ITC but it differs a bit as their training also include the training of how to use the hand held devices by a specialist Mr.Chandra with whom I had a handshake and a slight conversation with, that are given to them, they are given product booklet for product information so as they know about the products that they are selling, along with this they are also given on the job training. In NESTLE the salesmen are given three types training which includes1. On the job training(OJT) 2. Classroom Training and 3. Sessions training. The first being implicit OJT is found to be prevalent in most of the organizations involving sales force ,while the second type of training is implicit from ITC?s model as it includes training of sales force by specialists ,senior salesmen and sales officers. In FRITO-LAYS a very similar kind of training is being provided to its sales force as I didn?t find any difference in their training program from that of ITC ,they also conduct sales meets to discuss the present market situations ,problems that are persisting ,how to increase sales and deal with retailer problems. Role of Salesmen Process 1. Route and Beat plan To receive sales order on previous day and then to make the supply of products on the next day by transportation, for this the DSE collects the order from the retailer
2. Sales person visit a particular area on weekly basis. 3. Basically, main outlets are visited twice a week. 4. Nearly 30 stores are visited daily from Monday to Saturday by the company?s DSE on their personal vehicles. 5. Salesmen assembles at a distribution point, collect a printed invoice of the bill which the SIFY system has generated as per the purchases made by the retailers, the DSE collects such invoices from the distribution point head to the planned area of the market they are zoned into and perform two functionsi. Bill clearance-the DSE makes clearance of the retailers bill by showing them their respective invoices which contains an itemized record of their last one week’s purchases and asks them to make payment against the same. ii. After the bill is cleared he asks the retailer for further orders, which the retailer duly makes as per his/her outlets requirement and the current demand of the product. i. ii. iii. 6. In case any retailer complaints or creates a problem likeDefaults in making the payment against his/her bill. Complaints about the shortage in supply or irregular supply of products. Communicates about any customers grievance related to ITC’s product. The DSE has to handle such problems to their best and communicate such problems to their supervisors and area executives. 7. To offer special schemes and offers to the retailers like informing them about special displays of products like personal care and biscuits and paying them for keeping such displays. 8. Keeping them contended by providing margins. A FRITOLAY DSE performs a bit different role along with performing the aforementioned roles, the DSE arranges the packets of Lays chips that are kept on the rack at retailer?s outlet, he wipes off any dust that is laying on the packet of lays chips and arranges the packets after discussing its demand with the retailer.
The same system is followed by other 3 companies? respective DSE?s, its not like cutting short the task of providing a distinguished detail of the role of a DSE in BRITANNIA, NESTLE and FRITO-LAY, the role performed by each companies? DSE was exactly the same to that of ITC?s. Salary and incentives Salary acts as the most significant source of motivation as it forms the most basic reason for which any DSE joins a company. While incentives play a very significant role in providing additional motivation to the executives whether working at a senior level or working at the ground level i.e. a DSE . An optimum salary amount and Incentives encourages a sales personal in achieving their sales objectives, in addition it prevents any loss of morale due to dissatisfaction among the staff if the level of salary or the share of incentives is low. After my interaction with the DSE of all these 4 companies, this is the prevailing salary structure of the direct sales executivesCOMPANY ITC BRITANNIA NESTLE FRITO-LAY SALARY 8000-8500* 6500-8000* 7500-8000* 9000 INCENTIVES 2000-4000 or more 1500-6000 4000 3000-4000 *-for senior salesmen Salaries in all the companies is found to be very similar to each other, while it was found to be a bit lower in BRITANNIA and NESTLE. ITC?s DSE are being paid a good amount as compared to the former two whereas a FRITOLAY salesmen is getting around 9000 the highest among the lot, a senior salesmen is getting a bit higher salary then the junior salesmen. The incentives are paid entirely on the basis of the sales targets achieved by the DSE. The DSE?s are given a fixed target which is corresponding to the actual sales made by them to the retailers, if they are able to attract more sales due to their sheer skills, relations with retailers and effective communication and negotiative abilities. Segmentation Classification Segment classification refers to the classification of the various segments of the market, in which segment refers to the class of the population that comprises of the very customers. Companies target the segments on the basis of their : 1. Taste and preferences of the customers 2. Income of the people 3. Demand of the products 4. Cost of manufacturing of products 5. Cost incurred in the distribution of products Market segments are considered as the basis for segment classification Biscuits ITC Focus is on the premium segment of the market, but steadily targeting the middle or lower income group BRITANNIA Focus is more on the middle and lower income group, and is certainly in a good hold of the biscuit market in the country
Noodles ITC Focus is on kids, the junior segment of the society NESTLE Focus is decentralized as everyone relates to Maggi very comfortably Chips ITC There’s a decentralized segmentation of the market, but as the name suggests kids relate to BINGO! Very easily FRITO-LAY Focus is on the high-middle income group, Lays and kurkure tend to focus on all age groups while cheetos is directed more towards children of 7-14 age groups
Zoning Zoning refers to the distribution of the areas in the market which are assigned respectively to the DSEs of different companies. The distribution of the area for each salesman is done on the basis of : ITC BRITANNIA NESTLE FRITO-LAY His seniority and existing His knowledge about any His place of residence, His communication skills knowledge of the actual particular area, as if a depending upon his and his existing relations field work, it helps in person is well aware and geographical proximity to with the retailers. zoning because a salesman informed about a the market in which he has who is senior(has been particular area and is to work in. working in the same field willing to use his own for more then 5 years) is knowledge base to cover considered to be an more outlets. essential component of the sales force and thus is assigned an area in which he will best fit into
Measures at distribution point ITC has various distributors as per area/regions who follow the chain of transferring the products to their clients. These distributors are independent proprietors/ partners who are the mediators between the company and the customer. Apart from the basic relation of a mediator, the distributor plays a very important role as it passes consistent raw information as to which product is performing in the market. Following are the important functions followed by distributors:
Order taking process The order taking process starts from the customer point from where a Purchase Order (P.O.) is sent directly to the distributor of ITC via salesman. Further, the P.O. is manually transferred into an Order Booking Report by the accounts head, further it's classified as per the availability of the products and then Load Slip is prepared. The Load slip is send to the stores head that dispatches the products as per specification and order.
Delivery process The Delivery process starts after the goods are been loaded in trucks and are ready to move towards clients' stores. One copy of received P.O. is taken along with original and duplicate copies for reference. At the clients store the foods need to be arranged as per the P.O., which is inspected by an official with the help of the Good Inspection Note (G.I.N.). Further after the inspection the official sings on the duplicate copy and provides a Goods Receipt Note (G.R.N), which is filed for reference and proof. Comparison The measures adopted are one and the same in all the companies, these measures are found to be common among most companies because these are the tried and tested measures which are the minimum requirement for prudent distribution of FMCG products in which respective companies deal with for referenceIn Britannia the distributor I conversed with said its all common among all the companies i.e. to ensure that all the goods that are required to be delivered are made available to the retailers as soon as possible ,while a FRITO-LAYS distributor asked me to go and survey not only the FMCG sector but any other sector and you?ll find that the measures adopted are one and the same in every distribution point and same goes for Nestle whose distributor asked that we try to cope with the demand and supply equilibrium as best we can and tend to provide the demanded products to our retailers.
Role of supervisor (if any) A supervisor is any monitor or guide that is an employee of the company and supervises the activities and performances of its junior employees in order to guide them and direct their efforts towards a common goal of the organization. In ITC Ltd. There?s a supervisor who looks over all the activities related to sales and sales force which are1. To handle the grievances of the retailers. 2. To handle the grievances of ITC’s salesmen. 3. To help train the direct sales executives i.e. salesmen so as they can learn about their work. 4. To keep a regular tab on the actual market scene by making weekly visits to the market along with the direct sales executives to see whether they are doing the job well or not and also giving certain inputs to them about to tackle with retailer grievances. 5. To handle the default making retailers and reporting to respective area executives about such defaults so as the required action is taken.
While these are the roles a supervisor performs in ITC there are very few discrepancies between IT C’s supervisor with that of BRITANNIA’s Performance Coach, which according to my research was almost the same to that of ITC’s Supervisor but the extra role a performance coach undertakes is that he is more involved in the training of the direct sales executives as compared to a supervisor. The performance coach which is an employee of the company is required to conduct the skill training program designed by BRITANNIA’s sales department .the coach observes the performances of the direct sales executives and makes note of it and then gives various suggestions and inputs to help the executives in increasing their sales, better customer and retailer handling, dealing with retailers diligently. In NESTLE there’s a Sales Officer who acts as a supervisor of the direct sales executives. The sales officer is required to1. Conduct the sales meetings 2. Set sales targets for the direct sales executives 3. He is the carrier of all sales plans of the company and is expected to communicate them with the entire sales force.
In FRITO-LAY there?s a Team Leader who is in-charge of all the sales tasks of ground level and administrative level as well to some extent, the supervisor has to1. 2. 3. Provide the detailed information about the products to the direct sales executives. Check the current stock availability of the stock at the Stock Keeping Units (SKU’s). To determine the responses that new flavors are having in the market through DSE’s. Rest of the role a team leader or a sales officer has to perform are almost similar to that of ITC’s supervisor.
Coverage norm The Outlet coverage norm means how much portion of a market in context of outlets is to be covered by the company, which is indicative of its pre laid strategy to cover as much possible area of a market to have a bigger market share. In BRITANNIA coverage norm has been very rigorous as they tend to cover 6 routes in a week, enabling them to cover a wider market as compared to ITC .A BRITANNIA salesmen covers top 60% outlets that constitute around 90% of their sales on a priority basis and then cover the balance outlets. In NESTLE the directive of the sales force is to provide Maggi to every single outlet in their area of operation, Maggi is being distributed to a General Store in a posh area as well as to some tea stall owners who are having a higher demand of the noodles while yippee noodles has not yet been able to reach such a high. In FRITO-LAY too norm is to cover every single possible outlet wherever there?s a possibility of a sale, thus, one can find lays chips in every nook and corner even at some pan shops. ITC on the other hand has a differentiated strategy for different products for say in case of sunfeast Choco fills and newbie Delishus range of biscuits which are directed towards premium market segment, are definitely being made available at retail stores located in posh areas or wherever there?s a specific demand for them while in case of other range of Sunfeast biscuits are being made available at every possible retail store whether in premium class or rest normal class. ITC salesmen might visit its premium channels i.e. outlets even twice a week, the premium channel may constitute to top 85% outlets which have shown some definite sales and cover the balance channel by visiting once in a week, in case of BRITANNIA too the premium channels might be visited twice only if there?s a huge demand for its biscuits and the outlets need another visit.
CHAPTER-5: FINDINGS AND SUGGESTIONS Findings BINGO! 1. ITC?s BINGO! Which was introduced much later in market than its rival FRITO -LAYS? Lays and Kurkure has garnered a tremendous response in the market and is able to give a tough challenge to Lays and other chips manufacturing companies.
2. In the duration of my project I use to visit the market daily with DS (distributor salesmen) and analyze the market of ITC Bingo and Frito-Lays. ITC provide 2% extra margin to retailer as compare to its competitor Frito-Lays. While checking availability and visibility of Bingo snacks at Retail Outlets I came across following observations:
1) ITC has a good mix of traditional and modern type of distribution channel. 2) The response of customer towards Bingo is positive. 3) At some outlets the sale was very good. 4) Offer packs or consumer offer packs mostly gets sold. 5) The total coverage of ITC Bingo snacks is falling short in comparison to Frito-Lays in some areas but overall BINGO! is covering a large share of market. 6) Sometimes there was a demand but no supply of requisite chips or bridges by ITC which was a rare sight for me. After my observations I„ve made this estimate to represent the market share of ITC’s BINGO! And FRITO-LAYS’ Lays Chips Market share LAYS? BINGO(both Chips and Bridges) 71 % 29 %
YIPPEE noodles
1.
Hats off to the branding and research team of Yippee noodles for such a good positioning for its noodles brand ,these are not my words but the actual words of many retailers I came across . But still, I feel a lot has to be done for Yippee, the biggest advantage for brands like Maggie is its taste and first mover advantage in the instant noodle market. The brand Maggie is now becoming generic for the category and mere advertising is not going to do any harm to Maggi.
2.
3. 4.
Yippee noodles are being purchased by kids of age between 5-10 as they find its cover (wrapper) very attractive and scores as a selling point for the product. People tend more to purchase Yippee noodles when they feel bored of Maggi or Top Ramen and want are looking for a change. Yippee is perceived with a positive and favorable image as it is a product of a reputed company like ITC and hence sometimes enjoy some market share due to this fact. A lot of noodles products have been launched in the Indian market like Nissin?s Top Ramen, Horlicks (GSK) Foodles but they are not able to give Maggi a tough fight except than Yippee noodles, Top Ramen has been in the market from more than 2 decades but still is not able to capture a market share as much as Yippee noodles has acquired in 3 odd years.
5.
6.
But the key to success for Yippee noodles will be the taste (trials) and targeted promotional activities and good distribution (A key element since I believe some purchases for Maggie are not planned and Yippee noodles acts as a substitute for Maggi in many cases) Sunfeast Biscuits 1. ITC has a very distribution network due to its cigarette brands and it is using that network to increase the sales and distribution of its range of biscuits. 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. A tremendously successful source of the Sunfeast biscuits is its innovative advertising which includes Sunfeast school programme: cover 1000 schools across country, to familiarize childrens with sunfeast brand name and sunfeast mascot, brand ambassadors- shahrukh khan & surya (south actor), Official sponsor of WTA tennis championship-sunfeast open. There is Two method of Pricing, which is : -Low Margin -Two-Pronged Strategy ? Essentially, Parle plays a high volume, low margin game. ? But Sunfeast look at a two-pronged strategy, High margins in cream variants and volumes from the Marie and Glucose segments. For instance, cream biscuits from 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 4 and Rs 6for 100 gram packs.
2.
3.
4.
Company
Type
Pricing Strategy
Promotional
Distribution
Strategy BRITANNIA Digestive for lifestyle Regular Glucose High margin in cream, volume High value, low margin High margin in cream, volume from marie & glucose Best of brand ambassadors, mass campaigns Health conscious promotion Largest spender on ads & promotional i.e. 35-40% of its turnover on marketing
Strategy Excellent distribution Extremely widespread distribution Existing distribution model and network of tobacco products
Parle
Sunfeast-ITC
Premium Variety
5.
Sunfeast biscuits are in a league of their own, they have created a certain market share territory which is not interfered or disturbed by any competitor, leading to development of niche market for its premium classs biscuits like dark fantasy and dark fantasy choco fills.
Here’s a look at the Market share of the Biscuit industry ’s distribution in the Indian market
SUNFEST PRIYA GOLD PARLE-G 10% 36%
BRITANIA OTHERS
31% 9%
14%
All these findings are derived fromWork at retail outlets: 1) To check the availability of products. 2) To check visibility of products. 3) SWOT analysis of products. 4) To check how old the product is in the market. 5) To trace the complaints regarding the product. 6) Identifying what could be the factor that can increase sales. A FRITO-LAY salesmen with whom I interacted with said that” I was previo usly employed by ITC and was not feeling contended with its work environment and that?s why I switched over to FRITO -LAY, where I feel I?m being appraised quite well”, well it was a rare case for me because except him everyone I came across while my survey no one was found critical of the company ITC but instead were found appreciating and contend with the work environment and performance appraisals.
SUGGESTIONS Bingo! 1) There is vast distribution gap between ITC Bingo snacks and Frito-Lays which has to be filled up in order to increase the sales for that ITC should consider: (a) Width of Distribution: total number of outlets covered should be increase in order to bridge the distribution gap. For that ITC should (b) Increase the number of DS. (c) Ready Stock: there are many areas around the city where supply through loading auto is not possible for that ready-stock should be made available.
2) We can introduce new schemes for WholesalersA Wholesaler is totally interested in margin or demand which has high demand in the market. At present ITC Bingo is in its growing stage if we provide comparatively high margin to wholesaler then it will influence the sale. 3) 4) We can introduce new consumer offer packs. To some of the posh areas which hesitate to switch to other brands like BINGO! we can provide free sample of BINGO! so that the people get aware of the product taste and quality so as they don?t feel they are being disloyal to their brand as they?ll start getting familiar with BI NGO!
5) ITC shall never hesitate to reduce the scale of advertising as FRITO-LAY is never planning to reduce its scale of advertisements in near future ,as advertising forms a very significant contributor in the increasing sales and market share of BINGO!
1.
Yippee noodles Though yippee noodles have managed to generate a lot of hype in the market but it still needs to work more on the distribution network as it is not available on a very large scale in the market especially rural market. Maggi has been doing the basic thing from the beginning which no other noodles making company has been doing, Maggi never compromises on the taste, its main focus is on the actual taste of the product rather than its packaging, Yipee has to learn this from Maggi that taste is the winner at the very end. ITC shall not confuse the customers by increasing the inventory of variants in yipee as customers are not evenly familiar with yipee noodles’ basic taste and at the same time they are getting confused by the newly launched flavors of yipee and as it helps none. ITC shall focus on improving the taste of the tastemaker that is placed in the packing of noodles and is an essential ingredient of the product. 1. Sunfeast Biscuits The bi product of sunfeast-ITC is gaining market share and showing great sales in recent times but still people tend to prefer Parle or Britannia over sunfeast’s basic biscuits like marie, glucose as marie(BRITANNIA) and glucose(Parle-G) have been in the picture from a very long time, thus focus on improving these two biscuit variants’ taste and advertising shall be upped seriously. ITC shall focus on its premium class biscuits like choco fills and dark fantasy as they have secured a special place in the eyes of the customer due to its good taste and a royal feel attached to it thanks to its advertisements and packaging. Sunfeasts special cookie biscuit is not able to give a tough fight to BRITANNIA’s Good day biscuit which not only dominates the market but has a market of around rs1200 crores alone in the market courtesy – BRITANNIA’s area executive, thus ITC shall try to help its product by focusing on its taste, packing and pricing it a bit low than good day biscuit to make it a perfect substitute of good day. Apart from my designated products I would like to mention a fact which I have observed from various retailers that ITC’s personal care product Fiama di wills soap has not been generating much demand and revenue for the retailers due to a common complaint they’ve been receiving from the customers i.e. it is not able to create much ‘lather’ and people are finding this very awful and hence causing a damage to company’s reputation, this problem shall be rectified as soon as possible.
2.
3.
4.
2.
3.
Chapter-6 : Conclusion
CONCLUSION: After survey at retail outlet and doing a comparative analysis I found a contradiction that 1) Lays has been around for a longer time and has its loyalists. Lays scores on flavor while Bingo is crunchier. Right now Lays has the upper hand but Bingo has a good thing going with new and innovative products like 'Mad Angles'.
2) There is a need to put the image of our product Bingo in the mind of customers before they come to purchase at shop. 3) ITC?s Sunfeast has a bright future, it is well placed in the market and is going strong in developing a niche market for itself 4) Sunfeast is coming with unique flavors of biscuits and that is providing it a competitive edge. 5) ITC?s Yippee also has a bright future and is able to attract the younger customers plus offers a unique shape and taste So from above points and according to my other observation SWOT analysis of products is: Strength: - A good sales force is the strong point of ITC. Weakness – Some products are new and not able to match the already established alternative products
Opportunity - The unique flavors and advertisements provides ITC a great opportunity to the company Threats – Britannia, Nestle, Frito lay?s are already very well established and are constantly posing threat to ITC?s products
Bibliography 1. 2. 3. 4. 5. 6. 7. 8. 9. www.Itcportal.com www.google.com www.itcinfotech.com www.itcindia.com www.slideshare.com Research Methodology – Mr. Romit Ralan(ITC) Retail Management – Mr. Arvind Kumar Sharma(ITC) Supply chain management –Mr. Arvind Kumar Sharma(ITC) www.wikipedia.org
doc_254335993.docx
comparative analysis of itc's fmcg products with immediate rival firms' products
SUMMER TRAINING PROJECT REPORT ON Competition Benchmarking at ITC LTD. Submitted in the partial fulfillment of the degree of Masters of Business Administration (MBA) (2012-2014) SUBMITTED BY: Varun Bhatnagar 08316603912
Faculty Guide Sanjeev Mittal (Professor)
Mentor at the organization Mr.Karan Sehgal (Asst. Branch Manager)
SUBMITTED TO:
University School of Management Studies, GGS Indraprastha University, Sector – 16-C, Dwarka, New Delhi 110078
STUDENT DECLARATION
This to certify that I have completed the project titled “Competition Benchmarking“ under the guidance of “Sanjeev Mittal“ in the partial fulfillment of the requirement for the award of the degree of “Master in Business Administration” from “University School of Management Studies, New Delhi.” This is an original work and I have not submitted it earlier elsewhere.
CERTIFICATE This is to certify that the project titled “Competition Benchmarking” is an academic work done by “VARUN BHATNAGAR” submitted in the partial fulfillment of the requirement for the award of the degree of “Masters in Business Administration” from “University School of Management Studies, New Delhi.” under my guidance and direction. To the best of my knowledge and belief the data and information presented by him in the project has not been submitted earlier elsewhere.
Sanjeev Mittal (Project Guide) USMS
ACKNOWLEDGEMENT I offer my sincere thanks and humble regards to University School of Management Studies, GGSIPU University, New Delhi for imparting us very valuable professional training in MBA.
I pay my gratitude and sincere regards to Mr. Romit Rallhan, Branch manager (Sales department) and Karan Sehgal Asst Branch Manager(Sales Department) my external guides and Professor Sanjeev Mittal, my internal guide, who has been constant source of inspiration and encouragement to me., my project Guide for giving me the cream of his knowledge. I am thankful to him as he has been a constant source of advice, motivation and inspiration. I am also thankful to him for giving his suggestions and encouragement throughout the project work.
I take the opportunity to express my gratitude and thanks to our computer Lab staff and library staff for providing me opportunity to utilize their resources for the completion of the project.
I am also thankful to my family and friends for constantly motivating me to complete the project and providing me an environment which enhanced my knowledge
TABLE OF CONTENTS Student Declaration………………………………… Certificate from Guide……………………………… Acknowledgement…………………………………..
i ii iii Page no.
CHAPTER-1: INTRODUCTION Executive Summary………………………..……. 1.1 About the Industry………………………………… 1.2 About the company………………………………… 1.2.1 History and Evolution………………………………………… 1.2.2 Vision…………………………………………..
1 2 3 4 5
CHAPTER-2: Questionnaires and Overview
2.1 About the Topic ………………………………… 2.2 Questionnaires …………………………………... 3.1 3.2 3.3
CHAPTER-3: RESEARCH METHODOLOGY Purpose of the Study……………………………… Research Objectives of the Study……………….. Research Methodology of the study……..……… 3.3.1 Research Design………………………….. 3.3.2 Data Collection Technique……………….. 3.3.3 Sample Design…………………………… 3.3.4 Method of Data Collection……………….. 3.3.4.1 Instrument for Data Collection……… 3.3.4.2 Drafting of a questionnaire………….. 3.3.5 Limitations…………………………………
6 9
13 13 13 17 18 14 14 14 14 14
CHAPTER-4: ANALYSIS AND INTERPRETATION 4.1 Product Categories 4.2 Route Planning 4.3 Analysis & Interpretation…………………… CHAPTER-5: FINDINGS AND SUGGESTIONS 5.1 Findings…………………………………….. 5.2 Suggestions………………………………….. CHAPTER-6: CONCLUSION 6.1 Conclusion…………………………………… BIBLIOGRAPHY……………………………….. ANNEXURE…………………………………….. 35 37 16 23 25
39 40 41
CHAPTER-1: INTRODUCTION
Executive summary
To make a comparative analysis of ITC LTD?s Fast Moving Consumer Goods products with that of its close competitors BRITANNIA?s, NESTLE?s and FRITO-LAY?s respective products to create a benchmark against them and analyze their product categories, salesmen roles, sales volumes and methods of marketing and distribution by the means of checking the visibility, availability and quality distribution across the identified target outlets and the response of salesmen of the companies, and of retailers and distributors about the products of these different companies.
The project focuses on the strategies used by ITC ltd in selling its FMCG products other than tobacco especially noodles, biscuits and chips and draws comparison with its rival companies who are already established in the Indian FMCG sector and giving ITC a run for its money. Nestle and Frito-Lay?s being foreign companies have a strong financial as well as distribution base, while Britannia uses its wide popularity and customer loyalty, thus every company has its USP(Unique selling point) which it uses up to its best potential and enables ITC to make different strategies to keep a tab on its competitors accordingly.
After drawing comparisons in my survey this project report provides some illicit information from the sales personnel and distributors of these respective companies, findings and some suggestions that follow, which might prove to be useful for the company in developing its further strategies.
Indian FMCG Sector
Fast Moving Consumer Goods (FMCG) goods are popularly named as consumer packaged goods. Items in this category include all consumables (other than groceries/pulses) people buy at regular intervals. The most common in the list are toilet soaps, detergents, shampoos, toothpaste, shaving products, shoe polish, packaged foodstuff, and household accessories and extends to certain electronic goods. These items are meant for daily of frequent consumption and have a high return. The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 13.1 billion. It has a strong MNC presence and is characterized by a well established distribution network, intense competition between the organized and unorganized segments and low operational cost. Availability of key raw materials, cheaper labor costs and presence across the entire value chain gives India a competitive advantage. The FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion in 2015. Penetration level as well as per capita consumption in most product categories like jams, toothpaste, skin care, hair wash etc in India is low indicating the untapped market potential. Burgeoning Indian population, particularly the middle class and the rural segments, presents an opportunity to makers of branded products to convert consumers to branded products. Growth is also likely to come from consumer 'upgrading' in the matured product categories. With 200 million people expected to shift to processed and packaged food by 2010, India needs around US$ 28 billion of investment in the food-processing industry.
About the Company
ITC is one of India's foremost private sector companies with a market capitalisation of US $ 45 billion and a turnover of US $ 7 billion. ITC is rated among the World's Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes magazine and among India's Most Valuable Companies by Business Today. ITC ranks among India's '10 Most Valuable (Company) Brands', in a study conducted by Brand Finance and published by the Economic Times. ITC also ranks among Asia's 50 best performing companies compiled by Business Week. Multiple Drivers of Growth ITC’s aspiration to create enduring value for the nation and its stakeholders is manifest in its robust portfolio of traditional and greenfield businesses encompassing Fast Moving Consumer Goods (FMCG), Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, and Information Technology. This diversified presence in the businesses of tomorrow is powered by a strategy to pursue multiple drivers of growth based on its proven competencies, enterprise strengths and strong synergies between its businesses. The competitiveness of ITC’s diverse businesses rest on the strong foundations of institutional strengths derived from its deep consumer insights, cutting-edge Research & Development, differentiated product development capacity, brand-building capability, world-class manufacturing infrastructure, extensive rural linkages, efficient trade marketing and distribution network and dedicated human resources. ITC’s ability to leverage internal synergies residing across its diverse businesses lends a unique source of competitive advantage to its products and services. Within a relatively short span of time, ITC has established vital brands like Aashirvaad, Sunfeast, Dark Fantasy, Delishus, Bingo!, Yippee!, Candyman, mint-o, Kitchens of India in the Branded Foods space; Essenza Di Wills, Fiama Di Wills, Vivel, Vivel Cell Renew, Engage and Superia in the Personal Care products segment; Classmate and Paperkraft in Education & Stationery products; Wills Lifestyle and John Players in the Lifestyle Apparel business; Mangaldeep in Agarbattis and Aim in the Safety Matches segment. This growth has been rated by a Nielsen Report to be the fastest among the consumer goods companies operating in India. Creating Enduring Value Today ITC is the country's leading FMCG marketer, the clear market leader in the Indian Paperboard and Packaging industry, a globally acknowledged pioneer in farmer empowerment through its wide-reaching Agri Business, the second largest Hotel Chain in India and a trailblazer in 'green hoteliering'. ITC Infotech, a wholly-owned subsidiary, is one of India's fast-growing IT companies in the mid-tier segment. This portfolio of rapidly growing businesses considerably enhances ITC's capacity to generate growing value for the Indian economy. ITC's Agri-Business is one of India's largest exporters of agricultural products. The ITC group's contribution to foreign exchange earnings over the last ten years amounted to nearly US$ 5.4 billion, of which agri exports constituted 56%. The Company's 'e-Choupal' initiative has enabled Indian agriculture significantly enhance its competitiveness by empowering Indian farmers through the power of the Internet. This transformational strategy has already become the subject matter of a case study at Harvard Business School apart from receiving widespread global acclaim. As one of India's most valuable and respected corporations, ITC is widely perceived to be dedicatedly
nation-oriented. Chairman Y C Deveshwar calls this source of inspiration "a commitment beyond the market". In his own words: "ITC believes that its aspiration to create enduring value for the nation provides the motive force to sustain growing shareholder value. ITC practices this philosophy by not only driving each of its businesses towards international competitiveness but by also consciously contributing to enhancing the competitiveness of the larger value chain of which it is a part." ITC group directly employs more than 31,000 people and the Company's Businesses and their value-chains generate over 5 million sustainable livelihoods many of whom live at the margin in rural India. Global Exemplar in Sustainability Acknowledged as a global exemplar in sustainability, ITC is the only enterprise in the world, of comparable dimensions to be carbon-positive, water-positive, and solid waste recycling positive. A testimony to its commitment to a low carbon growth path - over 41 % of the total energy requirements of ITC is met from renewable sources. All ITC's premium luxury hotels are LEED (Leadership in Energy and Environmental Design) Platinum certified making it the "greenest luxury hotel chain" in the world. ITC's Paperboards and Paper business is an icon of environmental stewardship. ITC's production facilities and hotels have won numerous national and international awards for quality, productivity, safety and environment management systems. ITC was the first company in India to voluntarily seek a corporate governance rating.The Company continuously endeavours to enhance its wealth generating capabilities in a globalising environment to consistently reward more than 4,51,000 shareholders, fulfill the aspirations of its stakeholders and meet societal expectations.
ITC-History and Evolution
ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of India Limited. As the Company's ownership progressively Indianised, the name of 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 Company's multi-business portfolio encompassing a wide range of businesses - Fast Moving Consumer Goods comprising Foods, Personal Care, Cigarettes and Cigars, Branded Apparel, Education and Stationery Products, Incense Sticks and Safety Matches, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business and Information Technology - the full stops in the Company's name were removed effective September 18, 2001. The Company now stands rechristened 'ITC Limited'. The Company's beginnings were humble. A leased office on Radha Bazar Lane, Kolkata, was the centre of the Company's existence. The Company celebrated its 16th birthday on August 24, 1926, by purchasing the plot of land situated at 37, Chowringhee, (now renamed J.L. Nehru Road) Kolkata, for the sum of Rs 310,000. This decision of the Company was historic in more ways than one. It was to mark the beginning of a long and eventful journey into India's future. The Company's headquarter building, 'Virginia House', which came up on that plot of land two years later, would go on to become one of Kolkata's most venerated landmarks. Though the first six decades of the Company's existence were primarily devoted to the growth and consolidation of the Cigarettes and Leaf Tobacco businesses, the Seventies witnessed the beginnings of a corporate transformation that would usher in momentous changes in the life of the Company. ITC's Packaging & Printing Business was set up in 1925 as a strategic backward integration for ITC's Cigarettes business. It is today India's most sophisticated packaging house. 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). The objective of ITC's entry into the hotels business was rooted in the concept of creating value for the nation. ITC chose the Hotels business for its potential to earn high levels of foreign exchange, create tourism infrastructure and generate large scale direct and indirect employment. Since then ITC's Hotels business has grown to occupy a position of leadership, with over 100 owned and managed properties spread across India under four brands namely, ITC Hotels - Luxury Collection, WelcomHotels, Fortune Hotels and WelcomHeritage. In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam Paperboards Limited. Bhadrachalam Paperboards amalgamated with the Company effective March 13, 2002 and became a Division of the Company, Bhadrachalam Paperboards Division. In November 2002, this division merged with the Company's Tribeni Tissues Division to form the Paperboards & Specialty Papers Division. ITC's paperboards' technology, productivity, quality and manufacturing processes are comparable to the best in the world. It has also made an immense contribution to the development of Sarapaka, an economically backward area in the state of Andhra Pradesh. It is directly involved in education, environmental protection and community development. In 2004, ITC acquired the paperboard manufacturing facility of BILT Industrial Packaging Co. Ltd (BIPCO), near Coimbatore, Tamil Nadu. The Kovai Unit allows ITC to improve customer service with reduced lead time and a wider product range. In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint venture. In August 2002, Surya Tobacco became a subsidiary of ITC Limited and its name was changed to Surya Nepal Private Limited (Surya Nepal). In 2004, the company diversified into manufacturing and exports of garments. In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing company and a major supplier of tissue paper to the cigarette industry. The merged entity was named the Tribeni Tissues Division (TTD). To harness strategic and operational synergies, TTD was merged with the Bhadrachalam Paperboards Division to form the Paperboards & Specialty Papers Division in November 2002. Also in 1990, leveraging its agri-sourcing competency, ITC set up the Agri Business Division for export of agricommodities. The Division is today one of India's largest exporters. ITC's unique and now widely acknowledged eChoupal initiative began in 2000 with soya farmers in Madhya Pradesh. Now it extends to 10 states covering over 4 million farmers. Also, through the 'Choupal Pradarshan Khet' initiative, the agri services vertical has been focusing on improving productivity of crops while deepening relationship with the farming community. ITC launched line of premium range of notebooks under brand Paperkraft in 2002. To augment its offering and to reach a wider student population, the Classmate range of notebooks was launched in 2003. Classmate over the years has grown to become India's largest notebook brand and has also increased its portfolio to occupy a greater share of the school bag. Years 2007- 2009 saw the launch of Practical Books, Drawing Books, Geometry Boxes, Pens and Pencils under the 'Classmate' brand. In 2008, ITC positioned the business as the Education and Stationery Products Business and launched India's first environment friendly premium business paper under the 'Paperkraft' Brand. 'Paperkraft' offers a diverse portfolio in the premium executive stationery and office consumables segment. In 2010, Colour Crew was launched as a new brand of art stationery. ITC also entered the Lifestyle Retailing business with the Wills Sport range of international quality relaxed wear for men and women in 2000. The Wills Lifestyle chain of exclusive stores later expanded its range to include Wills Classic formal wear (2002) and Wills Clublife evening wear (2003). ITC also initiated a foray into the popular segment with its men's wear brand, John Players, in 2002. In 2006, Wills Lifestyle became title partner of the country's most premier fashion event - Wills Lifestyle India Fashion Week - that has gained recognition from buyers and retailers as the single largest B-2-B platform for the Fashion Design industry. To mark the occasion, ITC launched a special 'Wills Signature', taking the event forward to consumers. In 2000, ITC spun off its information technology business into a wholly owned subsidiary, ITC Infotech India Limited, to more aggressively pursue emerging opportunities in this area. Today ITC Infotech is one of India's fastest growing global IT and IT-enabled services companies and has established itself as a key player in offshore outsourcing, providing outsourced IT solutions and services to leading global customers across key focus verticals Banking Financial Services & Insurance (BFSI), Consumer Packaged Goods (CPG), Retail, Manufacturing,
Engineering Services, Media & Entertainment, Travel, Hospitality, Life Sciences and Transportation & Logistics.
ITC's foray into the Foods business is an outstanding example of successfully blending multiple internal competencies to create a new driver of business growth. It began in August 2001 with the introduction of 'Kitchens of India' readyto-eat Indian gourmet dishes. In 2002, ITC entered the confectionery and staples segments with the launch of the brands mint-o and Candyman confectionery and Aashirvaad atta (wheat flour). 2003 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. In just over a decade, the Foods business has grown to a significant size under seven distinctive brands, with an enviable distribution reach, a rapidly growing market share and a solid market standing. In 2002, ITC's philosophy of contributing to enhancing the competitiveness of the entire value chain found yet another expression in the Safety Matches initiative. ITC now markets popular safety matches brands like iKno, Mangaldeep and Aim. ITC's foray into the marketing of Agarbattis (incense sticks) in 2003 marked the manifestation of its partnership with the cottage sector. Mangaldeep is a highly established national brand and is available across a range of fragrances like Rose, Jasmine, Bouquet, Sandalwood, Madhur, Sambrani and Nagchampa. ITC entered the Personal Care Business in 2005. In eight years, the Personal Care portfolio has grown under'Essenza Di Wills', 'Fiama Di Wills', 'Vivel' and 'Superia' brands which have received encouraging consumer response and are also being progressively extended nationally. In May 2013, the business expanded its product portfolio with the launch of Engage – one of India?s first range of „couple deodorants? In 2010, ITC launched its handrolled cigar, Armenteros, in the Indian market. Armenteros cigars are available exclusively at tobacco selling outlets in select hotels, fine dining restaurants and exclusive clubs.
Vision Sustain ITC's position as one of India's 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 globalizing environment, delivering superior and sustainable stakeholder value
Chapter-2 : Overview of topic and Questionnaires 2.1 Competition Benchmarking This report offers a comprehensive overview on the key strategies adopted by these market leaders to gain a stronger market position in this competitive environment. It can be best used to derive a framework for strategic planning with key success factors (KSFs) of the industry or marketplace on specific metrics. From a strategic decision making perspective, it can be further used to develop future quality and market initiatives for the company to enhance its overall competitive position. This is a sort of market analysis done in order to get a comprehensive perspective on product offerings, financial performance, market/industry position, and business strategies etc of the company in relation to its competitors & industry segment. Benchmarking enables us a reference point which acts as a guiding, driving and motivating force to take decisions regarding the search for industries? best practices that will lead to a superior performance , for easy identification of outlets for products offered by the company and their respective placement into prospective markets. Placement of products is the utmost important criteria to enhance or acquire the visibility of the product in the eyes of the customer and for the same every company aims to take an edge over its competitors by infusing creativity in their branding and promotional activities.
Fast Moving Consumer Goods (FMCG)? Products which have a quick turnover, and relatively low cost are known as Fast Moving Consumer Goods (FMCG). FMCG products are those that get replaced within a year. Examples of FMCG generally include a wide range of frequently purchased consumer products such as toiletries, soap, cosmetics, tooth cleaning products, shaving products and detergents, as well as other non-durables such as glassware, bulbs, batteries, paper products, and plastic goods. FMCG may also include pharmaceuticals, consumer electronics, packaged food products, soft drinks, tissue paper, and chocolate bars. A subset of FMCGs is Fast Moving Consumer Electronics, which include innovative electronic products such as mobile phones, MP3 players, digital cameras, GPS Systems and Laptops. These are replaced more frequently than other electronic products. White goods in FMCG refer to household electronic items such as Refrigerators, T.Vs, Music Systems, etc.
ITC estimates the Indian FMCG industry at Rs.2.5 lakh crores with a compounded annual growth rate (CAGR) of 17 per cent over the last five years . Indian FMCG Sector The Indian FMCG sector is the fourth largest in the economy and has a market size of US$13.1 billion. Wellestablished distribution networks, as well as intense competition between the organized and unorganized segments are the characteristics of this sector. FMCG in India has a strong and competitive MNC presence across the entire value chain. It has been predicted that the FMCG market will reach to US$ 33.4 billion in 2015 from US $ billion 11.6 in 2003. The middle class and the rural segments of the Indian population are the most promising market for FMCG, and give brand makers the opportunity to convert them to branded products. Most of the product categories like jams, toothpaste, skin care, shampoos, etc, in India, have low per capita consumption as well as low penetration level, but
the potential for growth is huge. The Indian Economy is surging ahead by leaps and bounds, keeping pace with rapid urbanization, increased literacy levels, and rising per capita income. The big firms are growing bigger and small-time companies are catching up as well. According to the study conducted by AC Nielsen, 62 of the top 100 brands are owned by MNCs, and the balance by Indian companies. Fifteen companies own these 62 brands, and 27 of these are owned by Hindustan Lever. Pepsi is at number three followed by Thums Up. Britannia takes the fifth place, followed by Colgate (6), Nirma (7), Coca-Cola (8) and Parle (9). These are figures the soft drink and cigarette companies have always shied away from revealing. Personal care, cigarettes, and soft drinks are the three biggest categories in FMCG. Between them, they account for 35 of the top 100 brands.
THE TOP 10 COMPANIES IN FMCG SECTOR S. NO. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Companies Hindustan Unilever Ltd. ITC (Indian Tobacco Company) Nestlé India GCMMF (AMUL) Dabur India Asian Paints (India) Cadbury India Britannia Industries Procter & Gamble Marico Industries
The companies mentioned in the table are the leaders in their respective sectors. The personal care category has the largest number of brands, i.e. 21, inclusive of Lux, Lifebuoy, Fair and Lovely, Vicks, and Ponds. There are 11 HLL brands in the 21, aggregating Rs. 3,799 crore or 54% of the personal care category. Cigarettes account for 17% of the top 100 FMCG sales, and just below the personal care category. ITC alone accounts for 60% volume market share and 70% by value of all filter cigarettes in India. The foods category in FMCG is gaining popularity with a swing of launches by HLL, ITC, Godrej, and others. This category has 18 major brands, aggregating Rs. 4,637 crores. Nestle and Amul slug it out in the powders segment. The food category has also seen innovations like softies in ice creams, chapattis by HLL, ready to eat rice by HLL and pizzas by both GCMMF and Godrej Pillsbury. This category seems to have faster development than the stagnating personal care category. Amul , India's largest foods company has a good presence in the food category with its icecreams, curd, milk, butter, cheese, and so on. Britannia also ranks in the top 100 FMCG brands, dominates the biscuits category and has launched a series of products at various prices. In the household care category (like mosquito repellents), Godrej and Reckitt are two players. Goodknight from Godrej is worth above Rs 217 crores, followed by Reckitt's Mortein at Rs 149 crore. An overview at ITC?s major competitors in the FMCG sector Maggi noodles is a brand of instant noodles manufactured by Nestlé, Nestlé India Ltd (NIL) offered a variety of culinary products such as instant noodles, soups, sauces and ketchups, cooking aids (seasonings), etc., under the Maggi brand. Of these, instant noodles had been NIL's main product category in the culinary segment since the launch of Maggi 2 Minute Noodles (Maggi noodles) in 1982. In fact, the word "Maggi" has become a synonymous term for any brand of instant noodles in India and Malaysia. Maggi Noodles are available in a large assortment of different flavours
and vary from country to country. Maggi noodles also produces instant noodles known as "Hot Bowl" noodles named "Cuppa Mania" in India. In Some countries,new flavors were made on the 25th Anniversary ,Maggi is the toughest competitor that ITC faces in its noodles product „YIPPEE? ,though Maggi has a very good reputation and a well established market in our country ITC?S Yippee is able to give a healthy competition due to its innovative shape and marketing tactics plus it also has a unique flavor.
Frito-Lay is the world's largest manufacturer and distributor of snack foods and is a wholly owned subsidiary of PepsiCo. Since its entry in India in 1989, PepsiCo?s snack foods division Frito Lay India (FLI) has become the clear leader in branded salty snack segme nt with popular brands like lay?s, Kurkure, Uncle Chipps Cheetos and Lehar Namkeens. Frito Lay India produces its snacks at its state-of-the-art plants in Channo (Punjab), Pune (Maharashtra) and Sankrail (West Bengal). The company operates over 40 distribution centers that serve more than 2,500 active stockists, reaching approximately 1 million retail outlets that in turn make the product available at an arms length. Frito-Lay India Ltd. produces India's largest snack food manufacturer?s brands, including Ruffles, Hostess, Cheetos and Uncle Chips. Frito Lay's story is an example of how American recipes were adjusted to satisfy local tastes. Though ITC?s BINGO was launched quite later as compared to Lay?s which already had a stronghold of the market, BINGO has given a stiff competition to Lay?s in recent years, though Lay?s remains to be on top and most preferred chips brand in the country but BINGO has still been able to garner a lot of interest and attention from the customers due to its unique Indian taste plus an interesting set of TV commercials. Britannia Industries Limited is an Indian food-products corporation based in Kolkata,[2] India. It sells its Britannia and Tiger brands of biscuit throughout India. Britannia has an estimated 38% market share. [3] The Company's principal activity is the manufacture and sale of biscuits, bread, rusk, cakes and dairy products. The company's factories have an annual capacity of 433,000 tonnes. [3] The brand names of biscuits include VitaMarieGold, Tiger, Nutrichoice Junior,Good day, 50 50, Treat, Pure Magic, Milk Bikis, Good Morning, Bourbon, Thin Arrowroot, Nice, Little Hearts and many more.Tiger, the mass market brand, realised $150.75 million in sales including exports to countries including the U.S. and Australia, or 20% of Britannia revenues in 2006. Britannia has been adored by the Indian customers for a long time, ITC?s Sunfeast has been able to give Britannia Biscuits a run for their money and pushed them to bring out new and creative biscuits by snatching a significant market share from them in the Indian Biscuit Industry
2.2 Questionnaires Used Questionnaire for Direct Sales Executives Q1. What margin do you offer to retailers (%)____________ Q2. How is market segment classified _____________________________________________________________________________________________ _____________________________________________________________________________________________ ______________________________ Q3. How many routes are covered in distribution __________________________________________________________________ Q4. How many product categories are there in fmcg category _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________________ Q5. How the zoning is done (how areas are divided among DSE) _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________________ Q6. What is your role as a salesman _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________ Q7. What is your salary and what incentives are given to you _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________ Q8. What are the measures adopted at the distribution point _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________ Q9. How is the training given to you _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________________________________________ ___ Q10. Role of your Supervisor(if any) _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________________ Q11. What strategies are adopted by you to enhance sales (Best practices ) _____________________________________________________________________________________________ _____________________________________________________________________________________________
_____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________ Q12. What are the hand held devices used in day to day sales tasks _____________________________________________________________________________________________ _____________________________________________________________________________________________ _______________________________ Q13. What is the coverage norm _____________________________________________________________________________________________ _____________________________________ Q14. How do you feel your company values you? _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________________________________________ ____
QUESTIONNAIRE (RETAIL OUTLET) 1) How is the demand of Bingo? a) Very good ___ b) good ___ c) average ___ d) bad ____
2) Stock availability of various brands a) Lays _______ b)parle ________ c) Bingo _________
3) What criteria you apply when you sell your product? a) Focus on Quality_____ b) Focus on Price____ c) Focus on Size______ d) Focus on Margin____ 4) How far do you think ITC Bingo has captured market over Lays? a) On a Small Scale________ b) On a Large Scale________ 5) What problem you face to sale ITC Bingo!? a) Price____ b) Size____ c)Brand Loyalty towards other Brand_____ d) Lack of Awareness_____ e) Any Other______________________ 6) Does your sale increased due to Bingo! promotional activities? a) Highly Increased____ b) Increased____ c) Somewhat Increased____ d) Not at all Increased_____ 7) Whether you have to convince customer to purchase Bingo? a) Yes ___ b) No ___
8) Please assign a value from 1-5 : To LAYS 5 For Excellent 4 For Very Good 3 For Good 2 For Average 1 For Bad
To BINGO 5 For Excl lent 4 For Very Good 3 For Goo d 2 For Average 1 For Ba d
QUESTIONNAIRE (RETAIL OUTLET)
1) How is the demand of Sunfeast’s range of biscuits?
a) Very good ___ b) good ___ c) average ___ d) bad ____
2) Stock availability of various brands a) Sunfeast _______ b)Britannia ______ c) Priyagold ______d) Parle______ e)Duke______
3) What criteria you apply when you sell your product? b) Focus on Quality__________ b) Focus on Price_____ c) Focus on Size______ d) Focus on Margin______ 4) How far do you think Sunfeast has captured the Indian market over Britannia? a) On a Small Scale________ b) On a Large Scale________ 5) What problem you face to sale Sunfeast Biscuits? a) Price____ b) Size____ c)Brand Loyalty towards other Brand_____ 1) Lack of Awareness_____ e) Any Other 6) Does your sale increased due to ITC Sunfeast?s Promotional activities? b) Highly Increased____ b) Increased____ c) Somewhat Increased____ d) Not at all Increased_____ 7) Whether you have to convince customer to purchase Sunfeast biscuits? a) Yes ___ b) No ___
8) Please assign a value from 1-5: To BRITANNIA biscuits 5 For Excellent 4 For Very Good 3 For Good 2 For Average 1 For Bad To ITC Sunfeast Biscuits 5 For excellent 4 For Very Good 3 For Good 2 For Average 1 For Bad
QUESTIONNAIRE (RETAIL OUTLET)
1) How is the demand of Yippee Noodles?
a) Very good ___ b) good ___ c) average ___ d) bad ____
2) Stock availability of various brands a) Yippee ______ b)Maggi ______ c) Top Ramen _______d) Foodles_______
3) What criteria you apply when you sell your product? c) Focus on Quality_____ b) Focus on Price____ c) Focus on Size______ dFocus on Margin____ 4) How far do you think Yippee Noodles has captured market over Maggi? a) On a Small Scale________ b) On a Large Scale________ 5) What problem you face to sale Sunfeast Yippee Noodles? a) Price____ b) Size____ c)Brand Loyalty towards other Brand_____ 2) Lack of Awareness_____ e) Any Other________________________ 6) Does your sale increased due to Yippee noodles? Promotional activities? c) Highly Increased____ b) Increased____ c) Somewhat Increased____ d) Not at all Increased_____ 7) Whether you have to convince customer to purchase Yippee Noodles? a) Yes ___ b) No ___
8) Please assign a value from 1-5 : To MAGGI 5 For Excellent 4 For Very Good 3 For Good 2 For Average 1 For Bad
To Yippee 5 For Excl lent 4 For Very Good 3 For Goo d 2 For Average 1 For Ba d
Chapter-3 Research Methodology 3.1 PURPOSE FOR THE STUDY ? To do comparative study of ITC’s BINGO,SUNFEAST,YIPPEE’s performance in the market with respect to its direct competitors and analyze their prices, sales and method of marketing and distribution ? To check and achieve visibility, availability and quality distribution across the identified target outlet and the response of retailer about the product. .
3.2 OBJECTIVES OF THE STUDY 1. To analyze various types of measures and strategies adopted by ITC?s major competitors i.e. Nestle , Frito lay?s, Britannia and compare them with that of ITC. 2. To study the performance of the company. 3. To study and analyze how the customers perceive the products of ITC.
3.3 RESEARCH METHODOLOGY OF THE STUDY
The research design is Descriptive as well as Exploratory in nature. The Indian FMCG sector is the fourth largest in the economy and has a market size of US$13.1 billion. Well-established distribution networks, as well as intense competition between the organized and unorganized segments are the characteristics of this sector. FMCG in India has a strong and competitive MNC presence across the entire value chain. It has been predicted that the FMCG market will reach to US$ 33.4 billion in 2015 from US $ billion 11.6 in 2003. The middle class and the rural segments of the Indian population are the most promising market for FMCG, and give brand makers the opportunity to convert them to branded products. Most of the product categories like jams, toothpaste, skin care, shampoos, etc, in India, have low per capita consumption as well as low penetration level, but the potential for growth is huge. In midst of these situation it becomes necessary to analyze and find where the company is going with the huge success of its FMCG products and find its future prospects and study new products? viability it tends to launch in the environment of uncertainty and risks involved with the FMCG sector. DATA COLLECTION METHODS: 1) Interview with retailers, customers, distributors, and company officials of ITC. 2) Interview with distributors, salesmen and company officials of Frito-Lays,Britannia and Nestle. 3) Questionnaire i. For Direct Sales Executives ii. For retailers 4) Observations made and inferences drawn during the training period. 5) Secondary data from www.ITCportal.com newspaper, Internet. 3.3.3 SAMPLE DESIGN SAMPLE SIZE: The sample size is 141 persons. Sampling Method:Convenience Sampling Technique Convenience Sampling is the technique in which the researcher just simply picks up the respondents on the basis of their availability.
3.3.4 Methods of Data Collection:3.3.4.1 Instrument for data collection: The balance sheet provided by the company to study and analyze financial position of the company and cash flows statements and cost sheets to study and analyze financial viability of the project Jhansi. The method of data collection used is “SURVEY METHOD” with the help of Questionnaire.
3.3.4.2 Drafting of a Questionnaire : To frame questionnaire or schedule, we have at first to decide regarding various questions to be incorporated. This decision of the selection of questions depends upon the purpose of enquiry. In this regard, precaution should be adopted to avoid irrelevant or unnecessary questions.The questionnaire was formulated by keep in mind the following points: ? ? ? ? Giving respondents clear understanding of the questions. Inducing the respondents to be honest and help to fill in the entire questionnaire. Giving instructions as to what is wanted. Identifying needs to be known.
3.3.5 Limitations at last a. b. c. d. e. f. g. h. i. For performing these king of research large data base is required. The data collected for this study is not sufficient to analyze the investment pattern of retail investors in India. There may be many variables which influences the result but this analysis reveals only few variables. There can be some deviations in the data as the human psychology changes from time to time. The feedback we got may not be correct as the respondent might have filled in the information with no interest or in hurry. Scientific research on the part of research is also required. Accuracy level may be effected when data is subjected to weighing. Time was the biggest constraint as these studies cannot be completed with accuracy in two month. Understanding the psychology of human is not the cup of every one tea so, might be some interpretations go wrong. Some respondents might have taken the question in different sense which can change the data collected.
CHAPTER-4: ANALYSIS AND INTERPRETATION
Product Categories Britannia Following are its various brands in the biscuits segment:
? ? ? ? ? ? ? ? ? ? ? ? ? ?
Pure Magic Treat Britannia Cookies Milk Bikis Tiger Nutri Choice Good Day Time Pass Bourbon Little Hearts 50-50 Nice Time Marie Gold Rusks BRITANNIA holds the majority of the biscuit industry of the Indian FMCG sector Sunfeast by ITC Sunfeast is the biscuit brand of ITC and was initiated during July 2003. To start with, the brand dealt with glucose, Marie, and cream biscuits and Following are the major brands of Sunfeast
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Sunfeast Milky Magic
? ? ?
Sunfeast Dream Cream
Sunfeast Marie Light
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Sunfeast Dark Fantasy
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Sunfeast sweet 'n salt
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Sunfeast Dark Fantasy Choco Fills
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Sunfeast Nice
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Sunfeast Glucose
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Sunfeast Special-cream and cookies
Britannia and Parle have been one of the major competitors of ITC in the Indian biscuit market in which Britannia especially enjoys a favorable market share due to the fact that the company was established way back in 1892 and till today has managed to maintain a distinctive position in the Indian biscuit industry specially with its most popular brand called Tiger and Good day, Britannia holds a 38% market share in the biscuit industry in India. Britannia Industries Ltd. its variety of offerings which never fail to create a value for the customer plus Britannia cakes enjoy a huge monopoly as none of its major competitors have fruit cakes or flavored cakes at their disposal but Sunfeast currently holds a market share of 10% and is surely becoming a top biscuit brand in India. Nestle Nestle is a Swiss company founded in 1986 by Henri Nestle,Basically the company started to meet the need of the milk in world war I , The Maggi Company merged with Nestle in 1947. Today, Maggi is a leading culinary brand and part of the NESTLE family of fine foods and beverages. The brand Maggi became so popular in some East Asian countries and oceania that it is used interchangeably with the product?s type itself i.e „Noodles? , ITC, for its part, is pleased as a pie of share it has garnered so far, and attributes its No 2 position to factors like quality , taste preferences and distribution strength and scale. ITC has done a wonderful job to get a double digit market share which not even Top Ramen was able to achieve despite its presence in the Indian market since 1988. I think it is because of its good taste, right targeting and appropriate communication. As of now in the noodles market Nestle?s major competitor is ITC and it is not the other way round , as Nestle enjoys a first mover advantage in this market and has a mass appeal in the minds of its customers.
VS
Frito lay Fritolay is a North American company which has been running successfully throughout the world under its parent company PepsiCo. with numerous brands under its belt in context of this project I would like to focus only on Fritolay brand of PepsiCo. As ITC has been directly competing with the fritolays range of chips in the Indian market , fritolay’s the world’s largest and favourite snack food brand, has steadily established itself as an indispensable part of India?s snacking culture since its launch in 1995., and has been ruling the Indian market with its indisputable range of potato chips and rice chips i.e Kurkure. Fritolays? direct competition in the Indian market is with ITC?s Bingo! which offers a unique Indian taste to cater to the buds of Indian customers and since its launch in 2007 which marked ITC's foray into the fast growing branded snack foods segment. Bingo?s portfolio includes an array of products in both Potato Chips & Finger Snacks segment. Bingo is positioned as a youthful and innovative snack, offering the consumers with choice in terms of both formats and flavors.
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Flavors in the market Bingo! CHIPS PREMIUM SALTED
JUICY TOMATO KETCHUP
RED CHILLI BIJLI
SPICY MASALA REMIX
INTERNATIONAL CREAM & ONION
BRIDGES MAD ANGLES CHILLI DHAMAKA
TOMATO MISCHIEF
HATKE-JHATKE FUNKY MASALA
TOMATO TWIST
TEDHE-MEDHE
Lays There have been multiple upcoming flavors in market by Fritolay but none has been able to create much hype around the market as compared to its initial evergreen flavors ,the major range of chips that are giving a tough run to Bingo! are :
1.American style cream & onion
2. India?s magic masala
3. Spanish tomato tango
4. Classic salted
5. Chile lemon
6. French salt & cracking pepper 7. Lays Baked
COMPETITION AMONG VARIANTS OF
Chips 1. Spicy Masala remix 2. International cream onion 3. Juicy tomato ketchup 4. Red chili bingo 5. Premium salted Bridges 6. Mad angle tomato 7. Mad angle chili 8. Mad angle achari 9. Hatke-Jhatke Funky 10. Hatke-Jhatke Tomato 11. Tedhe-Medhe Kurkure Dewana tomato Kurkure chili chatka Kurkure Rajhasthani Kurkure Funjabi Kurkure Naughty Tomato Kurkure Masala Munch Chilly Mexicana American cream and onion Spanish tangy tomato Magic Masala Classic salted
Comparative Analysis Best Practices Every company strives to gain a competitive advantage over its rival companies in the market and for that it opts for some sort of practices that are unique to it which it uses to have some specific set of activities and tasks, which helps it to achieve a better position in the market and in the eyes of its customers. All the major companies that are within the ambit of my project tend to follow some set of practices which areITC?s salesmen best practices lie in the skills of the salesmen itself ,for say it depends upon what set of salesmanship or skills he possesses to lure the retailers to buy or order more of the comp any?s products. In BRITANNIA a salesman whom I was able to interact with was trying to instigate the retailer to convince him to order a bigger volume of BRITANNIA biscuits which was looking kind of a desperate attempt just to meet his sales target. Albeit BRITANNIA has been the biggest market player in the Indian market when it comes to the biscuit industry still its salesmen have to infuse a specific set of skill and logic to lure the retailer. It is always the skill of the salesman that is at the floor level coming into effect i.e. whatever practice a company intends to imply at the end it is going to be implied by the salesman only. The NESTLE salesman worked on the pre laid set of practices of the company that were to offer higher margin to retailers ,offering discounts on 6*100 and 8*100 pack Maggi Noodles . A notable thing about NESTLE?S Maggi was that NESTLE has been able to keep a real tab on the market in India and abroad as well ,it knows what kind of variants customers are actually liking and which kinds are not being received well ,the credit for this may go to its well placed resources ,market analysis or an efficient customer feedback system in which they are able to receive customers reviews and are equally able to deal with the particular variant?s like or dislike and just straightaway makes the required changes as per the wish of the customers. They?ve made Maggi actually available everywhere in India whether it be rural area, semi urban and even in hilly areas, if one goes to a hill station one might not be able to get yippee noodles there but one can get Maggi ,this is the demand or say charm of maggi that NESTLE has been able to create by excellent distribution system. On the other hand a FRITO-LAYS salesman works on the principle of giving offers and discounts to the retailers to lure them. It is also pre laid by the company to ensure that the retailers don?t remain unhappy or dissatisfied with their business interaction with the company. FRITO-LAYS?s strategy is like trial and error method which is very much like ITC in context of launching new variants in the finger and snacks industry, every 6 months FRITO-LAYS' comes up with some new variant of either Lays?, Kurkure, Uncle Chips or Cheetos and then tests the market response by conduc ting sales surveys and through general market response and are thus able to keep a tap and track of the demand, taste & preferences of the customers. Frito-Lays uses pre sale or order booking process for taking order in urban areas and uses ready stock process for rural or deep up country
FRITO-LAYSs has been able to enjoy a first mover advantage in India and hence is reaping its full advantage over ITC ,but ITC has still been to give a tough competition to FRITO-LAYS through its BIGNO! Range of chips and ITC?s best practices are also similar to that of former but ITC?s main strategy in BINGO! Is excessive and creative advertising along with that a unique (both name and taste wise) range of chips it is offering since its inception. Every company tries to lure its retailer and distributor by offering some sort of margin or discounts or give offers. Hand Held Devices The hand held devices possessed by the salesman of all 3 rival companies are as follows along with ITC?s Company Device ITC Samsung Galaxy Ace BRITANNIA Pidion bip-6000 series NESTLE Samsung Galaxy Pop FRITO-LAYS Samsung Star This hand held device is an actual mobile phone given by the company to its salesmen in which all information related to products is stored in. Order which is taken by the machine sinks to the data to branch office. WD system operator makes the invoice and sends goods to market next day, till my initial days of internship an ITC salesman was using a register to store order
given by the retailer as the previously held hand held device was becoming outdated and used to store the orders manually but after a while they were provided with Samsung galaxy ace which is a high end phone in which a software i.e. an application NPR7 is stored which does all the storing and sending of order details to the WD system. The same functioning is done by the devices mentioned against other 3 companies. Hand held devices are available to all these companies? salesmen is due to the reason that it saves a lot of time an d effort of the salesman and thus benefits the company. ITC uses software that is called SIFY at the WD, all the bills and detailed information product wise, variant wise, summarized sales reports are made with the help of this application software. Margin Structure Margin structure refers to margin offered to the retailer and distributors by the Company in order to attract further product orders independent of the demand of the product in a particular market. Every company offer some margin to its distributors so as to provide them a profitable income as against the distribution activities performed by them ,a distributors margin is of utmost importance to the distributor as it is indicative of the main profit a distributor will earn from selling the compa ny?s products which is the least profit he can earn. On the other hand a retailer?s margin is given to a retailer by the company in case he orders more of a company?s products for say ,if one orders 2 cartons of Sunfeast Yippee noodles having 12 packets ea ch he?ll be eligible to get a certain amount of margin just like a discount as he?s purchasing in bulk ,larger the order higher will be the margin and vice versa ,but there?s always a minimum %age of margin given to the retailers by the company irrespect ive of the order made by him. As we all know that the order made by the retailer depends largely upon the demand of any product in the market, whether already prevalent or anticipated in future. This table gives a look about the margin structure of all 4 companies in terms of percentage Company Margin to Distributors Margin to Retailers in % in % ITC 5.8 Glucose Marie Cookies Noodles Bingo Premium and mid Cream price Cream 10 10 12 9 12 10 BRITANNIA 5.9 10 NESTLE Around 5.8 9-10 FRITO-LAYS 5.5 10(approx) As we can see from the table there?s a very close gap or even none between the margin structure of these 4 majors, ITC is providing 5.8% margin profit to its distributors and it is the same for NESTLE while BRITANNIA is providing a little bit higher %age margin i.e. 5.9 to its distributors whereas FRITO-LAYS is providing a bit lower margin as compared to its competitor ITC. When we see at the retailer margin we can see that all these companies are closely matching with each other , ITC and BRITANNIA are following the same margin structure in their bi(Biscuit) products while NESTLE is providing less than 10% margin to the retailers while ITC is providing 10 % and FRITO-LAYS is providing same margin as of ITC. This shows that a standard margin structure is being provided by these competitors of ITC in all their respective products. Training of Salesmen Training forms the core of sales personal?s knowledge of his field; it gives an actual understanding of the work he has to do when working as salesmen of any given company. The mode of training given to the salesmen is almost the same in all the 4 companies; they might vary with each other, which are mentioned here underIn ITC a salesmen is given on the field training which is like training the sales personal while working on the actual job front in real job like situations. In such training the sales personal is accompanied by a senior salesman and thus he follows the senior?s beats and learns the way how the work is done. Along with this he is involved in sales meetings which are conducted by sales officers to analyze the market conditions based on their and salesmen?s observations and the new salesmen thus learns what the market conditions
are ,how they are observed ,how he shall try to incr ease sales and he?s also welcomed to give any suggestions to his counterparts. Classroom training is also given to the new salesmen as well as the old so as they can theoretically relate to the ifs and buts of the sales function and have a firm grip of the laid down functions he is expected to perform as a salesman of ITC. In BRITANNIA is very much similar to ITC but it differs a bit as their training also include the training of how to use the hand held devices by a specialist Mr.Chandra with whom I had a handshake and a slight conversation with, that are given to them, they are given product booklet for product information so as they know about the products that they are selling, along with this they are also given on the job training. In NESTLE the salesmen are given three types training which includes1. On the job training(OJT) 2. Classroom Training and 3. Sessions training. The first being implicit OJT is found to be prevalent in most of the organizations involving sales force ,while the second type of training is implicit from ITC?s model as it includes training of sales force by specialists ,senior salesmen and sales officers. In FRITO-LAYS a very similar kind of training is being provided to its sales force as I didn?t find any difference in their training program from that of ITC ,they also conduct sales meets to discuss the present market situations ,problems that are persisting ,how to increase sales and deal with retailer problems. Role of Salesmen Process 1. Route and Beat plan To receive sales order on previous day and then to make the supply of products on the next day by transportation, for this the DSE collects the order from the retailer
2. Sales person visit a particular area on weekly basis. 3. Basically, main outlets are visited twice a week. 4. Nearly 30 stores are visited daily from Monday to Saturday by the company?s DSE on their personal vehicles. 5. Salesmen assembles at a distribution point, collect a printed invoice of the bill which the SIFY system has generated as per the purchases made by the retailers, the DSE collects such invoices from the distribution point head to the planned area of the market they are zoned into and perform two functionsi. Bill clearance-the DSE makes clearance of the retailers bill by showing them their respective invoices which contains an itemized record of their last one week’s purchases and asks them to make payment against the same. ii. After the bill is cleared he asks the retailer for further orders, which the retailer duly makes as per his/her outlets requirement and the current demand of the product. i. ii. iii. 6. In case any retailer complaints or creates a problem likeDefaults in making the payment against his/her bill. Complaints about the shortage in supply or irregular supply of products. Communicates about any customers grievance related to ITC’s product. The DSE has to handle such problems to their best and communicate such problems to their supervisors and area executives. 7. To offer special schemes and offers to the retailers like informing them about special displays of products like personal care and biscuits and paying them for keeping such displays. 8. Keeping them contended by providing margins. A FRITOLAY DSE performs a bit different role along with performing the aforementioned roles, the DSE arranges the packets of Lays chips that are kept on the rack at retailer?s outlet, he wipes off any dust that is laying on the packet of lays chips and arranges the packets after discussing its demand with the retailer.
The same system is followed by other 3 companies? respective DSE?s, its not like cutting short the task of providing a distinguished detail of the role of a DSE in BRITANNIA, NESTLE and FRITO-LAY, the role performed by each companies? DSE was exactly the same to that of ITC?s. Salary and incentives Salary acts as the most significant source of motivation as it forms the most basic reason for which any DSE joins a company. While incentives play a very significant role in providing additional motivation to the executives whether working at a senior level or working at the ground level i.e. a DSE . An optimum salary amount and Incentives encourages a sales personal in achieving their sales objectives, in addition it prevents any loss of morale due to dissatisfaction among the staff if the level of salary or the share of incentives is low. After my interaction with the DSE of all these 4 companies, this is the prevailing salary structure of the direct sales executivesCOMPANY ITC BRITANNIA NESTLE FRITO-LAY SALARY 8000-8500* 6500-8000* 7500-8000* 9000 INCENTIVES 2000-4000 or more 1500-6000 4000 3000-4000 *-for senior salesmen Salaries in all the companies is found to be very similar to each other, while it was found to be a bit lower in BRITANNIA and NESTLE. ITC?s DSE are being paid a good amount as compared to the former two whereas a FRITOLAY salesmen is getting around 9000 the highest among the lot, a senior salesmen is getting a bit higher salary then the junior salesmen. The incentives are paid entirely on the basis of the sales targets achieved by the DSE. The DSE?s are given a fixed target which is corresponding to the actual sales made by them to the retailers, if they are able to attract more sales due to their sheer skills, relations with retailers and effective communication and negotiative abilities. Segmentation Classification Segment classification refers to the classification of the various segments of the market, in which segment refers to the class of the population that comprises of the very customers. Companies target the segments on the basis of their : 1. Taste and preferences of the customers 2. Income of the people 3. Demand of the products 4. Cost of manufacturing of products 5. Cost incurred in the distribution of products Market segments are considered as the basis for segment classification Biscuits ITC Focus is on the premium segment of the market, but steadily targeting the middle or lower income group BRITANNIA Focus is more on the middle and lower income group, and is certainly in a good hold of the biscuit market in the country
Noodles ITC Focus is on kids, the junior segment of the society NESTLE Focus is decentralized as everyone relates to Maggi very comfortably Chips ITC There’s a decentralized segmentation of the market, but as the name suggests kids relate to BINGO! Very easily FRITO-LAY Focus is on the high-middle income group, Lays and kurkure tend to focus on all age groups while cheetos is directed more towards children of 7-14 age groups
Zoning Zoning refers to the distribution of the areas in the market which are assigned respectively to the DSEs of different companies. The distribution of the area for each salesman is done on the basis of : ITC BRITANNIA NESTLE FRITO-LAY His seniority and existing His knowledge about any His place of residence, His communication skills knowledge of the actual particular area, as if a depending upon his and his existing relations field work, it helps in person is well aware and geographical proximity to with the retailers. zoning because a salesman informed about a the market in which he has who is senior(has been particular area and is to work in. working in the same field willing to use his own for more then 5 years) is knowledge base to cover considered to be an more outlets. essential component of the sales force and thus is assigned an area in which he will best fit into
Measures at distribution point ITC has various distributors as per area/regions who follow the chain of transferring the products to their clients. These distributors are independent proprietors/ partners who are the mediators between the company and the customer. Apart from the basic relation of a mediator, the distributor plays a very important role as it passes consistent raw information as to which product is performing in the market. Following are the important functions followed by distributors:
Order taking process The order taking process starts from the customer point from where a Purchase Order (P.O.) is sent directly to the distributor of ITC via salesman. Further, the P.O. is manually transferred into an Order Booking Report by the accounts head, further it's classified as per the availability of the products and then Load Slip is prepared. The Load slip is send to the stores head that dispatches the products as per specification and order.
Delivery process The Delivery process starts after the goods are been loaded in trucks and are ready to move towards clients' stores. One copy of received P.O. is taken along with original and duplicate copies for reference. At the clients store the foods need to be arranged as per the P.O., which is inspected by an official with the help of the Good Inspection Note (G.I.N.). Further after the inspection the official sings on the duplicate copy and provides a Goods Receipt Note (G.R.N), which is filed for reference and proof. Comparison The measures adopted are one and the same in all the companies, these measures are found to be common among most companies because these are the tried and tested measures which are the minimum requirement for prudent distribution of FMCG products in which respective companies deal with for referenceIn Britannia the distributor I conversed with said its all common among all the companies i.e. to ensure that all the goods that are required to be delivered are made available to the retailers as soon as possible ,while a FRITO-LAYS distributor asked me to go and survey not only the FMCG sector but any other sector and you?ll find that the measures adopted are one and the same in every distribution point and same goes for Nestle whose distributor asked that we try to cope with the demand and supply equilibrium as best we can and tend to provide the demanded products to our retailers.
Role of supervisor (if any) A supervisor is any monitor or guide that is an employee of the company and supervises the activities and performances of its junior employees in order to guide them and direct their efforts towards a common goal of the organization. In ITC Ltd. There?s a supervisor who looks over all the activities related to sales and sales force which are1. To handle the grievances of the retailers. 2. To handle the grievances of ITC’s salesmen. 3. To help train the direct sales executives i.e. salesmen so as they can learn about their work. 4. To keep a regular tab on the actual market scene by making weekly visits to the market along with the direct sales executives to see whether they are doing the job well or not and also giving certain inputs to them about to tackle with retailer grievances. 5. To handle the default making retailers and reporting to respective area executives about such defaults so as the required action is taken.
While these are the roles a supervisor performs in ITC there are very few discrepancies between IT C’s supervisor with that of BRITANNIA’s Performance Coach, which according to my research was almost the same to that of ITC’s Supervisor but the extra role a performance coach undertakes is that he is more involved in the training of the direct sales executives as compared to a supervisor. The performance coach which is an employee of the company is required to conduct the skill training program designed by BRITANNIA’s sales department .the coach observes the performances of the direct sales executives and makes note of it and then gives various suggestions and inputs to help the executives in increasing their sales, better customer and retailer handling, dealing with retailers diligently. In NESTLE there’s a Sales Officer who acts as a supervisor of the direct sales executives. The sales officer is required to1. Conduct the sales meetings 2. Set sales targets for the direct sales executives 3. He is the carrier of all sales plans of the company and is expected to communicate them with the entire sales force.
In FRITO-LAY there?s a Team Leader who is in-charge of all the sales tasks of ground level and administrative level as well to some extent, the supervisor has to1. 2. 3. Provide the detailed information about the products to the direct sales executives. Check the current stock availability of the stock at the Stock Keeping Units (SKU’s). To determine the responses that new flavors are having in the market through DSE’s. Rest of the role a team leader or a sales officer has to perform are almost similar to that of ITC’s supervisor.
Coverage norm The Outlet coverage norm means how much portion of a market in context of outlets is to be covered by the company, which is indicative of its pre laid strategy to cover as much possible area of a market to have a bigger market share. In BRITANNIA coverage norm has been very rigorous as they tend to cover 6 routes in a week, enabling them to cover a wider market as compared to ITC .A BRITANNIA salesmen covers top 60% outlets that constitute around 90% of their sales on a priority basis and then cover the balance outlets. In NESTLE the directive of the sales force is to provide Maggi to every single outlet in their area of operation, Maggi is being distributed to a General Store in a posh area as well as to some tea stall owners who are having a higher demand of the noodles while yippee noodles has not yet been able to reach such a high. In FRITO-LAY too norm is to cover every single possible outlet wherever there?s a possibility of a sale, thus, one can find lays chips in every nook and corner even at some pan shops. ITC on the other hand has a differentiated strategy for different products for say in case of sunfeast Choco fills and newbie Delishus range of biscuits which are directed towards premium market segment, are definitely being made available at retail stores located in posh areas or wherever there?s a specific demand for them while in case of other range of Sunfeast biscuits are being made available at every possible retail store whether in premium class or rest normal class. ITC salesmen might visit its premium channels i.e. outlets even twice a week, the premium channel may constitute to top 85% outlets which have shown some definite sales and cover the balance channel by visiting once in a week, in case of BRITANNIA too the premium channels might be visited twice only if there?s a huge demand for its biscuits and the outlets need another visit.
CHAPTER-5: FINDINGS AND SUGGESTIONS Findings BINGO! 1. ITC?s BINGO! Which was introduced much later in market than its rival FRITO -LAYS? Lays and Kurkure has garnered a tremendous response in the market and is able to give a tough challenge to Lays and other chips manufacturing companies.
2. In the duration of my project I use to visit the market daily with DS (distributor salesmen) and analyze the market of ITC Bingo and Frito-Lays. ITC provide 2% extra margin to retailer as compare to its competitor Frito-Lays. While checking availability and visibility of Bingo snacks at Retail Outlets I came across following observations:
1) ITC has a good mix of traditional and modern type of distribution channel. 2) The response of customer towards Bingo is positive. 3) At some outlets the sale was very good. 4) Offer packs or consumer offer packs mostly gets sold. 5) The total coverage of ITC Bingo snacks is falling short in comparison to Frito-Lays in some areas but overall BINGO! is covering a large share of market. 6) Sometimes there was a demand but no supply of requisite chips or bridges by ITC which was a rare sight for me. After my observations I„ve made this estimate to represent the market share of ITC’s BINGO! And FRITO-LAYS’ Lays Chips Market share LAYS? BINGO(both Chips and Bridges) 71 % 29 %
YIPPEE noodles
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Hats off to the branding and research team of Yippee noodles for such a good positioning for its noodles brand ,these are not my words but the actual words of many retailers I came across . But still, I feel a lot has to be done for Yippee, the biggest advantage for brands like Maggie is its taste and first mover advantage in the instant noodle market. The brand Maggie is now becoming generic for the category and mere advertising is not going to do any harm to Maggi.
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Yippee noodles are being purchased by kids of age between 5-10 as they find its cover (wrapper) very attractive and scores as a selling point for the product. People tend more to purchase Yippee noodles when they feel bored of Maggi or Top Ramen and want are looking for a change. Yippee is perceived with a positive and favorable image as it is a product of a reputed company like ITC and hence sometimes enjoy some market share due to this fact. A lot of noodles products have been launched in the Indian market like Nissin?s Top Ramen, Horlicks (GSK) Foodles but they are not able to give Maggi a tough fight except than Yippee noodles, Top Ramen has been in the market from more than 2 decades but still is not able to capture a market share as much as Yippee noodles has acquired in 3 odd years.
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But the key to success for Yippee noodles will be the taste (trials) and targeted promotional activities and good distribution (A key element since I believe some purchases for Maggie are not planned and Yippee noodles acts as a substitute for Maggi in many cases) Sunfeast Biscuits 1. ITC has a very distribution network due to its cigarette brands and it is using that network to increase the sales and distribution of its range of biscuits. 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. A tremendously successful source of the Sunfeast biscuits is its innovative advertising which includes Sunfeast school programme: cover 1000 schools across country, to familiarize childrens with sunfeast brand name and sunfeast mascot, brand ambassadors- shahrukh khan & surya (south actor), Official sponsor of WTA tennis championship-sunfeast open. There is Two method of Pricing, which is : -Low Margin -Two-Pronged Strategy ? Essentially, Parle plays a high volume, low margin game. ? But Sunfeast look at a two-pronged strategy, High margins in cream variants and volumes from the Marie and Glucose segments. For instance, cream biscuits from 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 4 and Rs 6for 100 gram packs.
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Company
Type
Pricing Strategy
Promotional
Distribution
Strategy BRITANNIA Digestive for lifestyle Regular Glucose High margin in cream, volume High value, low margin High margin in cream, volume from marie & glucose Best of brand ambassadors, mass campaigns Health conscious promotion Largest spender on ads & promotional i.e. 35-40% of its turnover on marketing
Strategy Excellent distribution Extremely widespread distribution Existing distribution model and network of tobacco products
Parle
Sunfeast-ITC
Premium Variety
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Sunfeast biscuits are in a league of their own, they have created a certain market share territory which is not interfered or disturbed by any competitor, leading to development of niche market for its premium classs biscuits like dark fantasy and dark fantasy choco fills.
Here’s a look at the Market share of the Biscuit industry ’s distribution in the Indian market
SUNFEST PRIYA GOLD PARLE-G 10% 36%
BRITANIA OTHERS
31% 9%
14%
All these findings are derived fromWork at retail outlets: 1) To check the availability of products. 2) To check visibility of products. 3) SWOT analysis of products. 4) To check how old the product is in the market. 5) To trace the complaints regarding the product. 6) Identifying what could be the factor that can increase sales. A FRITO-LAY salesmen with whom I interacted with said that” I was previo usly employed by ITC and was not feeling contended with its work environment and that?s why I switched over to FRITO -LAY, where I feel I?m being appraised quite well”, well it was a rare case for me because except him everyone I came across while my survey no one was found critical of the company ITC but instead were found appreciating and contend with the work environment and performance appraisals.
SUGGESTIONS Bingo! 1) There is vast distribution gap between ITC Bingo snacks and Frito-Lays which has to be filled up in order to increase the sales for that ITC should consider: (a) Width of Distribution: total number of outlets covered should be increase in order to bridge the distribution gap. For that ITC should (b) Increase the number of DS. (c) Ready Stock: there are many areas around the city where supply through loading auto is not possible for that ready-stock should be made available.
2) We can introduce new schemes for WholesalersA Wholesaler is totally interested in margin or demand which has high demand in the market. At present ITC Bingo is in its growing stage if we provide comparatively high margin to wholesaler then it will influence the sale. 3) 4) We can introduce new consumer offer packs. To some of the posh areas which hesitate to switch to other brands like BINGO! we can provide free sample of BINGO! so that the people get aware of the product taste and quality so as they don?t feel they are being disloyal to their brand as they?ll start getting familiar with BI NGO!
5) ITC shall never hesitate to reduce the scale of advertising as FRITO-LAY is never planning to reduce its scale of advertisements in near future ,as advertising forms a very significant contributor in the increasing sales and market share of BINGO!
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Yippee noodles Though yippee noodles have managed to generate a lot of hype in the market but it still needs to work more on the distribution network as it is not available on a very large scale in the market especially rural market. Maggi has been doing the basic thing from the beginning which no other noodles making company has been doing, Maggi never compromises on the taste, its main focus is on the actual taste of the product rather than its packaging, Yipee has to learn this from Maggi that taste is the winner at the very end. ITC shall not confuse the customers by increasing the inventory of variants in yipee as customers are not evenly familiar with yipee noodles’ basic taste and at the same time they are getting confused by the newly launched flavors of yipee and as it helps none. ITC shall focus on improving the taste of the tastemaker that is placed in the packing of noodles and is an essential ingredient of the product. 1. Sunfeast Biscuits The bi product of sunfeast-ITC is gaining market share and showing great sales in recent times but still people tend to prefer Parle or Britannia over sunfeast’s basic biscuits like marie, glucose as marie(BRITANNIA) and glucose(Parle-G) have been in the picture from a very long time, thus focus on improving these two biscuit variants’ taste and advertising shall be upped seriously. ITC shall focus on its premium class biscuits like choco fills and dark fantasy as they have secured a special place in the eyes of the customer due to its good taste and a royal feel attached to it thanks to its advertisements and packaging. Sunfeasts special cookie biscuit is not able to give a tough fight to BRITANNIA’s Good day biscuit which not only dominates the market but has a market of around rs1200 crores alone in the market courtesy – BRITANNIA’s area executive, thus ITC shall try to help its product by focusing on its taste, packing and pricing it a bit low than good day biscuit to make it a perfect substitute of good day. Apart from my designated products I would like to mention a fact which I have observed from various retailers that ITC’s personal care product Fiama di wills soap has not been generating much demand and revenue for the retailers due to a common complaint they’ve been receiving from the customers i.e. it is not able to create much ‘lather’ and people are finding this very awful and hence causing a damage to company’s reputation, this problem shall be rectified as soon as possible.
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Chapter-6 : Conclusion
CONCLUSION: After survey at retail outlet and doing a comparative analysis I found a contradiction that 1) Lays has been around for a longer time and has its loyalists. Lays scores on flavor while Bingo is crunchier. Right now Lays has the upper hand but Bingo has a good thing going with new and innovative products like 'Mad Angles'.
2) There is a need to put the image of our product Bingo in the mind of customers before they come to purchase at shop. 3) ITC?s Sunfeast has a bright future, it is well placed in the market and is going strong in developing a niche market for itself 4) Sunfeast is coming with unique flavors of biscuits and that is providing it a competitive edge. 5) ITC?s Yippee also has a bright future and is able to attract the younger customers plus offers a unique shape and taste So from above points and according to my other observation SWOT analysis of products is: Strength: - A good sales force is the strong point of ITC. Weakness – Some products are new and not able to match the already established alternative products
Opportunity - The unique flavors and advertisements provides ITC a great opportunity to the company Threats – Britannia, Nestle, Frito lay?s are already very well established and are constantly posing threat to ITC?s products
Bibliography 1. 2. 3. 4. 5. 6. 7. 8. 9. www.Itcportal.com www.google.com www.itcinfotech.com www.itcindia.com www.slideshare.com Research Methodology – Mr. Romit Ralan(ITC) Retail Management – Mr. Arvind Kumar Sharma(ITC) Supply chain management –Mr. Arvind Kumar Sharma(ITC) www.wikipedia.org
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