Minor Project Report

On

Marketing Mix of ITC

Submitted in partial fulfilment of the requirements
for the award of the degree of

Bachelor of Business Administration (BBA)

To

Guru Gobind Singh Indraprastha University, Delhi

Guide: Ms. Nisha Submitted by: Aaryan vats

Enrolment No: 09014201721

(Name of the Institute)

Batch (2021--2024)
 Certificate

This is to Certify that the Project Report (BBA-114) titled “ Marketing Mix of ITC ”

done by Aaryan Vats , Enrollment No. 09014201721 ,

is completed under my guidance.

Signature of the Guide :

Date: 15/06/2022

Name of the Guide: Ms. Nisha

 ACKNOWLEDGMENT

I have taken efforts in this project. However, it would not have been possible without the kind
support and help of many individuals and organizations. I would like to extend my sincere
thanks to all of them.
I am heartily thankful to my institute Jagannath International Management School (JIMS) for
allowing me to undertake this project.
I would like to express my thanks of gratitude to Dr. Ravi K Dhar, Director, JIMS for their
support and guidance.
I would also like to express my special thanks of gratitude to my guide Ms Nisha, JIMS for
her valuable help and guidance, and for the encouragement, she had given me in completing
this project.
I would also like to thank my parents and friends who helped me a lot in finishing this project
within the limited time. I am making this project not only for marks but to also to increase my
knowledge.
Thanks again to all who helped me.

AARYAN VATS
09014201721
 CONTENTS

Topic Page No
S No
1 Certificate 2
2 Acknowledgements 3
3 Introduction 5 - 13
4 Conceptual Discussion 14 - 17
5 Research Methodology 18 - 19
6 Analysis
7 Finding and Conclusions
8 Bibliography
9 Appendices
10
 Tables and Graph
 Analytical Master
 Financial Statements
 CHAPTER 1
INTRODUCTION

1.1 OVERVIEW
The Fast Moving Consumer Goods (FMCG) sector is the key contributor of the Indian
economy. This fourth largest sector of Indian economy provides employment to around 3
million people which accounts for approximately 5% of the total factory employment in the
country. These products are daily consumed by each and every strata of the society
irrespective of social class, income group, age group etc. FMCG sector is more lucrative
because of low penetration levels, well es-tablished distribution network, low operating cost,
lower per capita consumption, large consumer base and simple manu-facturing processes for
most of products resulting in fairly low capital investments.The industry is highly
competitive due to presence of multi-national companies, domestic companies and
unorganized sector. A major portion of the market is captured by unor-ganized players
selling unbranded and unpackaged products. More than 50 per cent of the total revenues of
FMCG compa-nies come from products worth Rs 10 or less1 .This has made the proliferation
of localized brands which are offered in loose form in small towns and rural part where brand
awareness is low. In last 10 years domestic players are giving tough com-petition to
multinationals; infact they have outstripped many MNCs in growth and market cap. Between
2005- 2014 the profit of domestic companies increased by 24% against 14% increase of
multinational companies. Urban India accounts for 66% of total FMCG consumption, while
rural India accounts for the remaining 34%. However, rural India accounts for more than 40%
of the consumption in major FMCG categories such as personal care, fabric care and hot
beverages. As per the analysis by ASSOCHAM, com-panies like Hindustan Unilever Ltd and
Dabur India generate half of their sales from rural India while Colgate Palmolive In-dia and
Marico constitute nearly 37% respectively.
Such impeccable signs of growth and statistical records certainly make the Indian FMCG
sector and the food & beverage market a booming and lucrative ground for foreign
investments. However, with opportunities, there is also a rise in competition and important
recent trends, which calls for strategic planning to secure long-term success.
For this, foreign investors must essentially collaborate with an FMCG consultant India or
consumer good and retail consultant for formulating an India-specific market entry strategy
and thereby secure profitable outcomes.
The Indian FMCG industry grew by 16% in CY21 a 9-year high, despite nationwide
lockdowns, supported by consumption-led growth and value expansion from higher product
prices, particularly for staples. Final consumption expenditure increased at a CAGR of 5.2%
during 2015-20. Price increases across product categories will offset the impact of rising raw
material prices, along with volume growth and resurgence in demand for discretionary items,
are driving growth. The domestic FMCG market has grown at 12.6% YoY in Q3 2021.

Number of households shopping on modern-trade channel grew 29.15% YoY in the

September quarter and shopping volume on the channel went up by 19.2% YoY.

The FMCG market in India is expected to increase at a CAGR of 14.9% to reach US$ 220
billion by 2025, from US$ 110 billion in 2020. The Indian processed food market is projected
to expand to US$ 470 billion by 2025, up from US$ 263 billion in 2019-20.

FMCG companies are looking to invest in energy efficient plants to benefit the society and
lower cost in the long term. Dabur India has grown its rural network to over 52,000 villages
in March 2020, from 44,000 villages in March 2019. For 2020-21, the company aims to have
up to 60,000 villages. The sector recorded an FDI of US$ 18.59 billion between April 2000
and June 2021.Beco, a startup in India, is revolutionising the FMCG market with low-cost,
environmentally-friendly consumer goods.

Advertising volumes on television recorded healthy growth in the July-September quarter,

registering 461 million seconds of advertising, which is the highest in 2021. FMCG
continued to maintain its leadership position with 29% growth in ad volumes against the
same period in 2019. Even the e-commerce sector showed a healthy 26% jump over 2020.

Growing awareness, easier access, and changing lifestyle are the key growth drivers for the
consumer market. The focus on agriculture, MSMEs, education, healthcare, infrastructure
and tax rebate under Union Budget 201920 was expected to directly impact the FMCG
sector. Initiatives undertaken to increase the disposable income in the hands of common man,
especially from rural areas, will be beneficial for the sector.
1.2 PROFILE
ITC is one of India's foremost private sector companies and a diversified conglomerate with
businesses spanning Fast Moving Consumer Goods, Hotels, Paperboards and Packaging,
Agri Business and Information Technology. The Company is acknowledged as one of India's
most valuable business corporations with a Gross sales value of ₹ 90,104 crores and Net
Profit of ₹ 15,058 crores (as on 31.03.2022). ITC was ranked as India's most admired
company, according to a survey conducted by Fortune India, in association with Hay Group .

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, a pre-eminent hotel chain in India
that is a trailblazer in 'Responsible Luxury'. ITC's wholly-owned subsidiary,

Over the last decade, ITC's new Consumer Goods Businesses have established a vibrant
portfolio of 25 world- class Indian brands that create and retain value in India. ITC's world
class FMCG brands including Aashirvaad, Sunfeast, Yippee!, Bingo!, B Natural, ITC Master
Chef, Fabelle, Sunbean, Fiama, Engage, Vivel, Savlon, Classmate, Paperkraft, Mangaldeep,
Aim and others have garnered encouraging consumer franchise within a short span of time.

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.
1.4 PROBLEMS OF THE ORAGNISATION
The organisation is currently comprised of four separate functions: administration,
production, retail, and customer service. These functions are spread over a number of sites
with administration and production sharing a single site, retail function operating from
several locations, and customer service spread across three call centres. The problems which
are facing the organisation vary depending on the function and location.

The administration function of head office and the production function of the factory are both
based on the same geographical site. These differences are creating tensions across the
departments and leading to a “them and us” culture. Some of the differences identified
include; bonus scheme in the factory but not the head office, poorer working conditions in the
factory compared to head office, lack of subsidised canteen for factory staff which is
available to administrative staff. Some problems are common to both functions such as lack
of promotion opportunities for internal candidates and poor general perception of staff
abilities by managers

The retail outlets have a separate set of problems. There is potentially a discrimination
problem in the recruitment and selection processes employed for managerial staff. There are
currently no female managers of retail outlets and there has been at least one complaint of
discrimination referred to a trade union by an unsuccessful female candidate for promotion.
This complaint has received the backing of a number of the individual’s colleagues.

The call centres are very highly pressured, time-oriented environments in which to work.
There are significant pressures to deal with customer enquiries quickly and to sell as many
new packages as possible. Pressure is exerted by supervisors whose salaries are dependent on
the abilities of the centre staff to generate income through sales.

Across the organisation there is a general feeling that staff are underpaid in relation to
competitors and not valued as an asset of the organisation. There is an increasing trend
towards trade union membership which is probably a sign of growing disaffection within the
workforce as a whole. There are also a growing number of customer complaints, mainly
directed at retail and customer service staff as they are the customer-facing part of the
organisation. These complaints are generally centred on lack of knowledge of products on the
part of retail staff and poor customer service from the call centre staff.
As detailed there are a multitude of different problems facing ITC with the lack of
consistency of treatment of staff across the organisation and poor communication of
organisational values being major contributing factors. The managerial and supervisory staff
also appear to be unable and/or unwilling to tackle the problems which leaves the staff with
no alternative but to seek advice and assistance from the trade unions.

The consultants reported that there is no inherent problem with the quality of the core
workforce but that the managerial staff are not sufficiently competent to be able to recognise
and build on the attributes of the workforce. This combination of factors and problems could
potentially all be explained within the concept of employee engagement.

The main thrust of this report will, therefore, concentrate on the implementation of an
employee engagement programme as an initial means of addressing the issues currently
facing ITC. Other means of tackling the identified problems over the longer term will also be
discussed and recommendations made.

Being an “Employer of Choice” is not simply about offering the best salary. The whole
package must be seen as appealing in order to attract and retain the correct calibre of staff
who share the vision of the organisation and who want to actively contribute to its success. It
has been stated (CIPD, 2009) that:

“Engaged employees are more likely to act as organisational advocates than disengaged
employees and can play a powerful role in promoting their organisation as an employer of
choice.” For this to work, staff must feel that their views are welcomed and they are valued as
individuals. This should result in higher levels of motivation and increased morale which, in
turn, should reduce staff turnover. Our aim is to spread the word about how good ITC is to
work for and hence attract the maximum number of high calibre candidates for posts who
then want to stay with the organisation to reach their full potential.

We also have to accept that by attracting the highest calibre of candidate we will inevitably
lose a number of high-performing staff over time as they wish to progress beyond what the
organisation can offer. We must be prepared not only to embrace this, but actively encourage
it, and accept that for the organisation to grow there will be a certain degree of turnover of
ambitious staff. The upside of this is that there will be regular opportunities for existing staff
to progress through the organisation increasing levels of loyalty and improving morale.
1.5 SWOC ANALYSIS OF ITC
The SWOC Analysis of ITC includes its strengths, weaknesses, opportunities, and
Challenges. And in this reading of the SWOC Analysis of ITC Ltd., we will examine this
beauty and wellness company in terms of its internal and external factors.

S Stands For Strengths ( Internal Factor )

1. Portfolio of Business Units: ITC has 6 strong and diverse business units under its
name that drive its overall revenues and enable ITC to innovate and explore more
business opportunities.
2. Effective Social Business Initiatives: ITC has developed a triple bottom line strategy
that focuses on developing the economic, social and environmental capital of the
nation. ITC has launched initiatives like E-Choupal, Choupal Pradarshan Khet (CPK)
that benefit the people at the grassroots level i.e. farmers. These initiatives have also
helped ITC improve its corporate image from a traditional tobacco manufacturer.
3. Employees: ITC limited employees Just Over 25,000 people.
4. Strong Brand Image: Over 6500 E-Choupal CSR activities and sustainability
initiatives enhance ITC’s brand image reaching over 4 million farmers
5. Strong Brands Across Products: ITC is a strong branded company whose products
are leaders in most of the segments in which they operate. ITC owns some of the most
popular cigarette brands such as Gold Flake and Classic. ITC also owns Sunfeast,
which is one of the best selling biscuits in India. Similarly, Aashirvaad, Yippee!,
Engage, John Players and Bingo are among the market leaders in their respective
categories.

W Stands For Weaknesses ( Internal Factor )

1. Mostly Dependent On Tobacco: ITC has made continuous efforts to
decouple its FMCG business from over-dependence on tobacco products and
has been successful to some extent. However, tobacco products continue to be
the major source of revenue, accounting for more than 60% of the total
revenue from FMCG business.
2. Brand Image: ITC has made great efforts to improve its corporate image, but
the fact that ITC has many tobacco products in its portfolio affects its
corporate image.
 3. Tax Increase: Increase in tax on tobacco products affects prices and hence
revenue.
4. Low Market Share in Hotel Industry: The hotel industry has not been able
to build an enormous market share.

O Stands For Opportunities ( External Factor )

1. Strategic Acquisitions: ITC should continue with strategic acquisitions as they have
done in the past with the acquisition of Savlon from Johnson & Johnson and B
Natural from Balan natural Foods. As the product fits into the existing distribution
network, ITC can look to expand its product portfolio and grow its non-tobacco
FMCG business, thereby strengthening its revenue base.
2. Growth in Purchasing Power: ITC should take advantage of the growing purchasing
power and improvement in lifestyle of customers in India. This could help increase
revenues across all business segments.
3. Food and Personal Care Products: ITC should leverage its distribution channels in
the personal care and food processing industries to benefit from the growth in these
categories to increase revenue.
4. Rural Market: The growing rural market in India and other emerging markets offers
tremendous opportunities to improve the company’s bottom line.
5. Influencer Marketing: More publicity of hotel chains to increase market share.

C Stands For Challenges ( External Factor )

1. Intensified Competition in FMCG Sector: ITC faces intense competition in its
FMCG business from large multinationals like HUL and P&G and Indian FMCGs
like Patanjali and Dabur. This restricts ITC’s market share.
2. Stringent regulations & Rise in Taxes in Cigarette Business: the tobacco and
cigarette industry in India continues to be threatened by stringent government
regulations and tax regimes. This poses a threat to ITC’s highly profitable cigarette
business.
3. Growing Health Awareness: Health awareness has increased, leading to a decline in
demand for tobacco products in India. Anti-smoking campaigns across the country
are also impacting the sale of cigarettes.
 1.5 COMPETITIVE ANALYSIS

ITC was incorporated in 1910 as the Imperial Tobacco Company and was later renamed as
ITC Limited in 2001 where it no longer stands as an acronym. ITC is one of the largest private
sector companies in India and also a diversified conglomerate with businesses ranging from
Fast Moving Consumer Goods, Hotels, Paperboards and Packaging, Agri-Business and
Information Technology.

 The Company is acknowledged as one of India’s most valuable business corporations

with a gross sales value of approximately $ 11+ billion last year.

 It operates across many industries, but all of them requires scale and branding for
achieving market dominance. ITC strives towards diversified portfolio offerings away
from its traditional cigarette business.

 The company has more than a century of presence in the Indian market and is now a
dominant player in Paper and Paperboards, Agri-Business, FMCG and Hotels. Some of
the largest non-tobacco brands include Ashirvad with revenue of INR 4500+ Crores,
Sunfeast with a revenue of INR 3800+ Crore, Bingo with a revenue of INR 2500+ crore
and Classmate with a revenue of INR 1400+ crore.

 Each set of business has its competitors and different market conditions, but overall ITC
has been successful in establishing its dominance in the Indian market because of its
scale, brands and distribution network.

Some insights for the coming years from the analysis, management discussions and con calls
are as follows.

 The effect of COVID-19 outbreak and the lockdown can be in double digits on revenue
and profits for the company due to the ban on selling cigarettes during the period. There
is also a behavioural repercussion to this. A ban on tobacco products for more than a
month has the potential to prompt fringe or non-serious smokers to give up the habit due
to its harmful effects. This may shrink the market further.
 The prices of cigarettes will also increase by 10–20% as the company passes on the new
tax burden to the consumers. The price increase is likely to have an impact on the
volumes sold and the profitability of the company.

 The company has a presence in non-tobacco business for over 20 years but none of the
businesses has achieved the scale matching the tobacco business. The company still is
heavily dependent on one business which drives its profitability.

Overall ITC shows many indicators of declining valuation in the future. Fundamentally the
company still remains strong and can see good growth in the coming years after the COVID-
19 situation clears. However, for shareholders, their returns might not be in proportion to the
increased earnings due to declining valuation and price multiples.

The company’s shares have 52 weeks high of 310 and a market capitalization of INR 2.19
Trillion, which makes it a large-cap company. ITC was incorporated in 1910 as the Imperial
Tobacco Company and was later renamed as ITC Limited in 2001 where it no longer stands
as an acronym. ITC is one of the largest private sector companies in India and also a
diversified conglomerate with businesses ranging from Fast Moving Consumer Goods,
Hotels, Paperboards and Packaging, Agri-Business and Information Technology. The
Company is acknowledged as one of India’s most valuable business corporations with a gross
sales value of approximately $ 11+ billion last year.

The company’s shares have 52 weeks high of 310 and a market capitalization of
INR 2.19 Trillion, which makes it a large-cap company. ITC was incorporated
in 1910 as the Imperial Tobacco Company and was later renamed as ITC
Limited in 2001 where it no longer stands as an acronym. ITC is one of the largest
private sector companies in India and also a diversified conglomerate with businesses
ranging from Fast Moving Consumer Goods, Hotels, Paperboards and Packaging, Agri-
Business and Information Technology. The Company is acknowledged as one of

India’s most valuable business corporations with a gross sales value of

approximately $ 11+ billion last year.
 CHAPTER 2

CONCEPTUAL DECISION

2.1 Latest Information

2.1.1 Following Consumer Trends

According to B Sumant, Executive Director, ITC, the company has accelerated its digital
transformation over the last two-to-three years. It has not only helped bring process efficiency
but has helped in cost optimisation.

While on one hand, the company is customising advertisements and communication

campaigns to target consumers through digital media platforms, on the other hand, it is using
insights from social listening to customise its offerings. The diversified conglomerate has
rolled out close to 110 products over the last one year.

Following consumer trends.“ITC has been closely following the emerging consumer trends
and has enhanced social listening that fuels our product development engine and provides
valuable inputs for product launches. We are probably one of the most prolific product
innovation companies and we launched 110 products last year during Covid. We launched a
number of products based on what consumers want,” Sumant told BusinessLine.

Some of these products will continue to have sustained demand, but some may moderate over
time. ITC dynamically realigns its supply chain based on the prevailing demand conditions
and consumer preferences, he added.

ITC created Sixth Sense, the company’s marketing command centre, which uses digital tools
for social listening to observe the key trends, issues, needs, and concerns on people’s minds
through social media forums. “The relationship of brand owners with consumers has always
been disintermediated by retail so while we make a lot of products and we put out a lot of ads
but we cannot directly talk to consumers. Digital provides that unique opportunity to cross that
barrier and engage with consumers directly. If you know who you are advertising to, you can
tailor-make the content and serve it in the right places and to the right people,” he said.
So from running big ads and campaigns, the company has been focusing on rolling out
customised ads. The Sixth Sense works with a variety of agencies and tech partners to
optimise the cost of customer acquisition and that of ad spends.Insiders say that ITC’s
Chairman Sanjiv Puri, who has led ITC Infotech in the past and is tech-savvy himself, has
been driving a digital-first culture in ITC. His vision of ITC as a future-tech enterprise has
catalysed the creation of Smart ecosystems with digitalisation being pursued at every node of
business.

Puri is said to have spearheaded the setting up of a ‘Young Digital Innovators Lab’ consisting
of digital natives drawn from across ITC’s businesses to crowdsource digital strategies. He has
also formed a dedicated digital council of senior ITC managers — the ‘DigiNext’, which
ideates and supports high-impact digital interventions.

2.1.2 Digital Initiatives

The company is also undertaking a lot of digital initiatives on the distribution front using big
data analytics and algorithms to break up its network of 2.5 million direct retailers into cohorts
based on size, range, locality, population around the retailer, etc. This would help salesmen
visiting the retailers to suggest what kind of an assortment of products to be kept at his outlet.
It also has B2B apps called Unnati and VIRU to help retailers place orders.

“We work extensively with e-comm players and our share of e-comm sales is much higher
than that of the industry. We have more than doubled the share of e-comm to our sales. We
undertake aggressive marketing on these platforms and we have dedicated teams to handle
these platforms,” he said.

ITC’s sales through the e-commerce channel grew by 50 per cent during the year, taking the
channel salience to seven per cent. ‘ITC e-store’, the company’s exclusive D2C platform, is
now operational in 15 cities and offers over 700 ITC FMCG products across over 45
categories.

The company also uses the digital platform for raw material sourcing and for better price
discovery. It has a number of projects for sourcing optimisation and has been able to get
“significant benefits” because of sharper procurement.
2.2 MARKET CAPITALISATION

ITC surpassed Bajaj Finance in terms of market capitalisation (market value) on Monday,
amid a riot on Dalal Street triggered by fears of aggressive rate hikes and the prospect of
slowing economic growth. Bajaj Finance bore the brunt of the overall mood in the
market, losing the 12th spot among India's largest listed companies to ITC.

The stock of cigarette-to-FMCG conglomerate ITC has been on a roll, rewarding

investors with a return of more than 20 percent so far in 2022. In the last one year, the
stock has returned more than 27 percent.

Most brokerages remain upbeat on ITC, boosting the uptrend in the FMCG major. ICICI
Direct, Prabhudas Lilladher and Sharekhan have kept their targets for ITC in the range of
Rs 305-320 per share.

Shares of FMCG major hit a 52-week high of Rs 282.35 apiece in May and have risen 23
per cent so far this year. The recent rally in the share prices has been accompanied by an
increase in exposure by foreign portfolio investors (FPIs) on the counter after four
quarters of selling. Market experts are now overweight on the stock and believe it is in a
bull trend and will continue to outperform.

Analysts at Ventura Securities also share a similar opinion and said that among the Nifty
50 stocks, ITC is one of the few stocks that provide a strong growth opportunity with an
attractive dividend yield of 4.19 per cent.
2.3 SHARE MARKET POSITION

FMCG major ITC Ltd posted 12% growth in net profit to ₹4,195 crore for the January-
March period, compared with ₹3,755 crore a year ago.

Anaylsts expected the net profit to grow anywhere between 11% to 12%. The Kolkata-
based company's revenue from operations rose 15% to ₹17,754 crore as against ₹15,404
crore in the last year period.

On Wednesday, ahead of the results, ITC's scrip closed 0.68% higher at ₹266.50 on NSE.
The stock is up about 21% so far in 2022 (Year-to-Date).

The company's board has also recommended a final dividend of ₹6.25 for the financial
year ended 31 March.

Segment wise, revenue from the FMCG-cigarette business rose 10% to ₹7,177 crore
during the fourth quarter, while that from the non-cigarette business or FMCG-others
segment increased 12%.

he company said it saw a robust broad-based recovery in cigarettes despite disruptions

due to the third wave and the volumes surpassed pre-pandemic levels.

Revenue from the hotels business came in at ₹407 crore for the March quarter, up 35%,
compared with the corresponding quarter of last year.
 CHAPTER 3
RESEARCH METHODOLOGY

3.1 Objective of the study

Objective one:

To analyze the marketing strategies of ITC Limited used to market their personal
care products in extremely competitive environment of industry.

Objective two:

To study and analyse the factors influencing a customer to buy personal care
products in competitive environment of industry.

Objective three:

To identify the customer perception with respect to features required in their

personal care products.

3.2 Scope of the Study

The study will be limited to ITC personal care product, marketing strategy and
also consumer survey about the personal care products. The survey was limited to
the geographical area of New Delhi. The sample size was limited to 50
respondents.

3.3 Significance of the Study

Significance of the Industry

The study can benchmark the factors behind the success of ITC Limited in the
Indian FMCG market. This will help them achieve sales volume and higher
market share in the Indian personal care products.
 Significance of the Researcher

I have gained lot of experience while doing this project. The project had helped
me to study the marketing mix of ITC Limited and to interact with the Managers
and Executive of the ITC Limited. To interact with the customers of the different
religions while filling questionnaire for my study. This will help me in my future
career.

3.4 Research Design

The research was probability based exploratory research.

Secondary Data

 Organisation website
 Internet

3.5 Limitations of the Study

 The sample size was limited to 50 customers

 The survey was limited to South Delhi.
 Biased opinions of the customers are limiting factors for the research.