CRA - Marketing Plan for Glucose Biscuits (Group C1)

January 27, 2009

CRA The Marketing Plan

CRA - Marketing Plan for Glucose Biscuits (Group C1)

January 27, 2009

TABLE OF CONTENTS
1. Executive Summary

2. Marketing Objectives for the Project 3. Market Research: Methodology, observations and results 4. Market Analysis 5. Target Market Segment 6. Marketing Strategies 7. Sales projections & Financial analysis 8. Learning from CRA 9. Exhibits and References

CRA - Marketing Plan for Glucose Biscuits (Group C1)

January 27, 2009

Executive Summary

Our new marketing focus, made explicit in this plan, details the strategic focus on marketing, distribution and sustenance of our product, glucose biscuits as a successful business proposition in our local market. GlucoYouth will change its focus to differentiate itself from other major competitors in the market, namely, Parle, Britannia, ITC and other producers from unorganized sectors. Our marketing challenge is to position GlucoYouth as a high-quality, low-price, healthy, any-time snack for the younger generation. Our objective also includes optimizing the distribution strategy and maximizing profits.

Marketing Objectives for the Project

Objective of this marketing plan is to successfully market, launch and sustain new brand of glucose biscuits in the market.

Primary Objectives

1. Establish market share of 4% of the overall market share for Glucose biscuits in the first 2 years 2. Target and acquire the market segment of college going students from age group 19-25 years 3. Increase sales for GlucoYouth through sales promotion

CRA - Marketing Plan for Glucose Biscuits (Group C1)

January 27, 2009

Market Research
For knowing consumer behavior about glucose biscuit we prepared a Questionnaire of 7 questions (Exhibit 1). These questions were relatively simple and less time consuming. We divided our group of 5 students into 2 sub-groups and targeted some of the important and crowded destinations in Manipal and Udupi. These destinations were also different with respect to demographic of consumers.

Day 1 For the first day we targeted important destinations in Manipal.

Tiger circle in Manipal: The first sub-group targeted the Tiger circle in Manipal. We targeted middle class families with children; however our focus was also on students. We targeted the locations with maximum crowd: the most frequented departmental stores in Manipal (Manipal Store) and the main bus stand.

The other sub-group was targeting college students in MIT campus. Since students comprise majority of consumers in Manipal and also since our target segment included college students, MIT Campus (campus stores and various canteen/mess were approached for our survey) and Food Court in manipal.edu were selected as one of the locations. The students were friendly and we were able to collect substantial data in relatively less time.

Day 2: For the second day we targeted important destinations in Udupi.

The target segment at Udupi was families with children. Hence, Udupi Bust Stand and Big Bazaar in Udupi, which are one of the most crowded destinations, were selected as locations for survey. Interview also included questions regarding consumer preferences and factors that influence their buying decisions.

CRA - Marketing Plan for Glucose Biscuits (Group C1) Observations & Results from the Study:

January 27, 2009

Data analysis revealed that consumers preference for the product brand across different segments gave different results. The conclusions from our study are discussed below:

Families: This segment of the consumer was more brand loyal and showed reluctance in switching to another brand than the one they were using right now. They were very satisfied with the existing brand of glucose biscuits. Even after offering the products at lower cost they were reluctant to change their preference. Another important thing that was observed for the families with young children was that children played an important role in purchase decision making. Purchase cycle for families was more on monthly basis and the SKUs purchased included larger packets.

Students: This segment of the consumer was much more inclined to switching brands. They were more willing to try new product and were comparatively less brand loyal than the families. They were much more concerned about the ingredients of the product and also were prone to price fluctuations though sensitivity was not much in case of glucose biscuits. Buying frequency was higher amongst students and smaller SKUs (i.e. 50g, 100g) being the most purchased type of SKU.

In case of both of the segments, point of sale was usually from nearby retail stores. Stores closest to the place of residence were the preferred locations for purchase of glucose biscuits.

CRA - Marketing Plan for Glucose Biscuits (Group C1)

January 27, 2009

GlucoYouth- Market Analysis

GlucoYouth is a new brand of glucose biscuits which will be introduced by us in the market. It will be made available in SKU containing 12 pieces, 100 grams priced at Rs. 5/-.

Competitor Analysis

Glucose Biscuit industry can be categorized into Organized and Unorganized sector. Majority of the consumption of glucose biscuit is from the organized sector with more than 70% share. The major players in the market are Parle, Britannia, ITC and Priyagold.

Parle-G: It is oldest and the largest selling glucose biscuit in World. It is instantly recognized by its iconic white and yellow wax paper wrapper with the depiction of a young girl covering the front. Many counterfeit companies have attempted to recreate and sell lower quality products of similar names and virtually identical package design.

Britannia Tiger: Tiger launched in 1997, became the largest brand in Britannia's portfolio in the very first year of its launch and continues to be so till today. Also being a part of the famous Britannia makes it a second largest selling glucose biscuit in India after Parle-G.

Sunfeast Glucose Biscuit: One of the new entrants in the market by ITC, Sunfeast glucose biscuit is catching up with the other glucose biscuit brands available in the market. Also it is endorsed by one the most famous personalities in India, Shahrukh Khan.

Priyagold Don: Don is the glucose and milk biscuit by Priyagold. It is one of the new glucose biscuit brands available in the market and has relatively less presence in the market.

These brands constitute 95% of the total market share of glucose biscuits. Remaining market consists of unorganized sectors, manufacturers that produce and sell glucose biscuits locally (Exhibit2).
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CRA - Marketing Plan for Glucose Biscuits (Group C1)

January 27, 2009

Target Market Segments

Currently, glucose biscuits in India are targeted at mostly children in the age group of 2-12 years of age. It is being promoted as biscuit for smart and strong school going kids. Consumers especially parents associate it as a healthy, low-cost snack worth its money. However, consumers of glucose biscuits include adults in the families (25+ years), college going students (19 25 years), convalescing patients and older section of the society (60+ years). Being a low-price product, most of the consumers of glucose biscuits are families/individuals belonging to the low to middle class income groups. Being one of the oldest and most commonly consumed snack, there is no specific geographic segmentation for glucose biscuits.

Planned target segment

For GlucoYouth we have segmented the market into 2 major segments: Families with children and college going students. Target segment for GlucoYouth are college going students; with emphasis on sub-segment of students pursuing higher education in professional courses especially those staying away from families in hostels and belonging to families with low to middle class income groups. The reason for targeting this sub-segment is their lifestyle which includes longer hours of study (late-nights), irregular eating schedules. They rely on their college canteens or campus/outside college stores/stalls for their regular snacks. Other factors that make this target segment attractive for us are: they use the product more as mid-night, tea-time snacks and Tiffin. Thus the frequency of consumption is relatively higher compared to family segment on a daily basis. Consumption rate is higher during examinations when glucose biscuits with tea/coffee serve as mid-night snacks. Some even consume glucose biscuits as snacks in between games/sports breaks. Smaller packages are preferred due convenience of carrying and lower price. Also it includes number of units just enough to last for one time, than buying bigger packages resulting in softening of the biscuits. Also, they are the most commonly available snacks in college canteens and stores.
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CRA - Marketing Plan for Glucose Biscuits (Group C1)

January 27, 2009

Marketing Strategies
Strategy Development for Target Group Since the existing players in the market target children in age group 6 12 years and college going students market is still untapped from the promotion point of view, it is an opportunity for GlucoYouth to capitalize on this untapped market. Our strategy would include investing more in trade marketing by increasing shelf-space at retail stores and canteens for GlucoYouth.

Positioning and Advertising

GlucoYouth will be positioned as a low-priced, any-time rejuvenating snack for youth. Advertisements will show college students enjoying GlucoYouth at college canteens, games and late-night study groups.

Promotional activities

Sales promotion: For the initial 2 months our marketing strategy would include short term incentives designed to stimulate quicker purchase. This will include free samples, discount offers. Advertising: Second phase of promotion would include advertising expenses in the print media (local newspapers) and local television channels. Television and print ads will be targeted at students. Also we can target billboards at some strategic positions on the city to attract maximum visibility. Sponsorships: Third phase of promotion would include sponsoring local college and school level events which will eventually give a lot of visibility for GlucoYouth. We could also organize contests for college students through radio media.

CRA - Marketing Plan for Glucose Biscuits (Group C1)

January 27, 2009

Distribution Strategy
Distribution Channel

The current distribution channel for glucose biscuits in the area of our survey is as described below. We assume that similar distribution strategy is adopted across the country. Distribution for GlucoYouth would follow a similar distribution path except for a few changes.

The manufacturer transfers the completed product from the factory to one of the warehouses (company owned or taken on lease) near Udupi/Manipal. The warehouses are located such that it is a common point of distribution to over 7 to 10 distributors. From the warehouse the product goes to the wholesale distributors (WDs) who will cover the entire district with areas like Udupi, Manipal, Karkala and Kunthapur. Usually these WDs supply to the entire district. These WDs are usually private agencies who will handle the supply-chain of all the brands of a particular company. (For e.g. Mars distributors in Udupi handle all ITC products ranging from cigarettes to biscuits for the entire district and its surrounding areas). In the case of our competitors like Parle-G, Britannia Tiger after the WDs the channel gets divided into two links. (Exhibit 3). One link goes to all the retail outlets which are at a reachable distance i.e. the ones inside the urban radius or ones within the township. The other link is managed by sub-wholesale distributors (SWDs) who distribute the biscuits to the retail outlets at interior locations (villages) where the WD cannot reach. For our product, initially we are not using the second link i.e. we are not going to penetrate to the interior locations as the price of our biscuit is one rupee higher than our competitors and penetrating those regions will be difficult. Unlike the workers employed by the WDs who get a regular pay or salary for reaching the retail outlets, these SWDs usually get a 0.8% of commission from WDs for every product that they sell. So in our case we recommend the WDs to neglect SWDs.

The following are the physical distribution channels which we will be supplying to (Exhibit 4): Convenience stores: These are small stores which sell a variety of daily needed products to the households in the vicinity. This will form 20% of our overall supply. College Canteens/Stores: These are stores which sell a wide range of food products to college going consumers. This will form 40% of our supply.
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CRA - Marketing Plan for Glucose Biscuits (Group C1) -

January 27, 2009

Departmental Stores: These are stores which sell a wide range of products like food products, toiletries, cosmetics and many other items. This will form 30% of our supply. Assorted convenience stores: The remaining small assorted convenience stores will get 10% of supply.

Supply schedule

The stock supply from the warehouse to the wholesale distributor end will be done twice a week. I.e. every fourth day stock will be sent to the WD. Our competitors wholesale distributors stock the retail outlets once every week thus filling the stock for 10 days i.e., 3 extra days are covered for contingencies. But since we are going to supply a lesser quantity and the shelf life of the product is considerably long we will follow a 10 day interval, thus filling the stock for a 2 week period. This will reduce the transportation costs due to frequent trips.

We will follow the accurate order capture process wherein when the stock at one retail outlet remains unsold and the stock at the other outlet is fully sold then the stock from the unsold outlet will be shifted to the outlet where there is huge demand. This will ensure that the stock in most of the retail outlets is maintained almost at the same level.

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CRA - Marketing Plan for Glucose Biscuits (Group C1)

January 27, 2009

Sales Projections & Financial Analysis

It must be noted that most established brands average about 4 tonnes per month (i.e. 12 tonnes every quarter). Hence, our estimate averages at about 3 tonnes every quarter. This figure has been arrived at, considering our product is a new entrant in the market.

The price of the product has remained stable over the 5-year period. Our initial outlay is Rs.1 lakh taken as a loan for 5 years. There is an interest rate of 15% on this amount. We have assumed repayment of principal to start from the end of the 1st quarter. Each quarter, Rs.5000 is repaid from the principal amount for 5 years. The interest per quarter has been calculated on the reducing balance method. It is also assumed that inflows occur at the end of every month and profits are reinvested in the business. The projected profits per quarter do not include the effect of principal repayment every quarter. The following costs have been assumed Variable costs per unit Price to supplier Rs. 2.5 Distribution costs Rs. 0.25 Transportation & Inventory costs Rs.0.3 Packing expenses Rs.0.05 Fixed expenses Salaries per quarter Rs.7500 The Marketing expenses have been assumed to increase at the same rate as the sales. We have assumed Tax at 30%.
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CRA - Marketing Plan for Glucose Biscuits (Group C1)

January 27, 2009

Inferences The project shows positive cash flows and NPV. The IRR is almost double the current cost of capital. This shows that the project is viable subject to the rates of increase used in the sales units. Sales hold the potential of increase as promotion strategies can be used to boost it.

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CRA - Marketing Plan for Glucose Biscuits (Group C1)

January 27, 2009

Learning from CRA

This project helped us identify the target segments for Glucose biscuits in the

Udupi/Manipal region. It is important to note that this geographic segment showed a huge potential market in the youth population as opposed to school-going children (as observed in other parts of the country). This would be the main benefit of conducting a survey and analyzing the results. We also learned the importance attached to product positioning. It was imperative to

position this product as a snack that was meant for the youth segment as opposed to the strategy used by most Glucose biscuits which concentrates on the health aspect. Also, the strategy can be strengthened by emphasizing lower prices. The distribution channels used for this product do not include any high-end stores or

malls etc. This is firstly because the Manipal/Udupi region lacks such stores. Secondly, in order to maximize sales by reaching our target segment, we must put our product into the closest proximity possible to our consumers. As most students prefer to do their purchasing from the stores mentioned in our distribution network, this will help us increase sales. We realized that although the biscuit market holds a lot of potential, it would be hard to

establish ourselves as part of it owing to the existent players who have all been around for a considerable period of time. Parle G was the leader in Glucose biscuits before Brittania or Sunfeast decided to explore the market. Although both of them are known brands, Parle G continues to dominate the market. Hence, marketing would be an integral part in the process of establishing ourselves. It is a challenge to decide on the initial number of units to be sold as our estimations are

based on the number of units being sold by established brands. Also, the acceptance of GlucoYouth is based on the willingness of existent consumers to try out new products in the same category. in. It is important to forecast the cash flows of a project as it provides us a direction to work

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CRA - Marketing Plan for Glucose Biscuits (Group C1)

January 27, 2009

Exhibits & References

Exhibit 1

Questionnaire for market survey

Consumer No Do you buy Glucose Biscuits? Who consumes? Age 0 - 9 Age 10 - 16 Age 17 - 25 Age 26 - 45 Age 45+ Which Brand do you buy? Parle Brittania Tiger Priya Gold Sunfeast Local brands Other Frequency One/week Twice/week Once/month Twice/month Where do you buy from? Malls Retail stores Wholesale Local bakery Others Does it make a difference what brand it is? No/yes Reason 1 Reason 2 Reason 3 Reason 4 Reason 5 Anything that you wold like to change? Taste - Reason Packaging - reason Nutrient value - reason

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CRA - Marketing Plan for Glucose Biscuits (Group C1) Exhibit 2 Major brands for Glucose biscuits and their attributes:

January 27, 2009

Company Parle

Brand Parle-G

Quantity (in gms) 19, 40, 66, 82, 232, 347, 400, 576, 935

Price (in Rs.) 2(40g),4(82g),10

Packaging White and Yellow wax paper wrapper

Britannia Priyagold

Tiger Don

4082 16, 39, 61,, 83, 200

2(40g),4(82g) 2(40g),4(82g)

Red wrapper Red and White wrapper

ITC

Sunfeast Glucose

40,82

2(40),4(82)

Red, yellow and white wrapper

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CRA - Marketing Plan for Glucose Biscuits (Group C1) Exhibit 3 Distribution channel for Sunfeast Glucose biscuits

January 27, 2009

Exhibit 4

Distribution channel mix for GlucoYouth

10%

Convenience stores College canteens/ Stores

20%

40%

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CRA - Marketing Plan for Glucose Biscuits (Group C1) Exhibit 5 Financial projections for GlucoYouth

January 27, 2009

GlucoYouth Cash flows.xlsx

References
Marketing plan formats: http://www.planonline.org/planning/marketing/mkplanformat.htm Competitors information: www.parleproducts.com/brands/biscuits_parleg.asp www.britannia.co.in/brandstories_tiger.htm www.itcportal.com/foods/foods_sunfeast.html www.priyagold.com

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