|[pic] | |Parle-G | |[A circumstance study] | | | | | |Date: 10/25/2011 | Group people: 1 . Divya Gupta 2 . Rishabh Deo 3.
Shikha Rastogi some. Sonam Agrawal 5. Swati Anoop 6th.
Vrittika Srivastava: 7. Yogesh Joshi |[The case discusses regarding the Parle-G challenges about the manufacturing price and income margin. Mister. Kulkarni’s issue to increase | |the income shares. ] | | | |SNO |TOPIC |PAGE NO | |1. |Present circumstance Situation 3 | |2. |Is Mister Kulkarni’s decision complex or a simple decision? |4 | |3. |Advantages and disadvantages of VFM item. |5 | |4. |Marketing plan to conquer problem. |6 | | | ARTICLES THE PRESENT CIRCUMSTANCE SITUATION: Parle Products has been India’s largest manufacturer of biscuits and confectionery for almost 80 years. Makers of the world’s largest advertising biscuit, Parle-G, and a number of other extremely popular brands, the Parle identity symbolizes quality, nutrition and great preference.
With a reach spanning possibly to the remotest villages of India, the business has absolutely come a very long way. A lot of the Parle items , cookies or sweets, are industry leaders inside their category.. Having a 40% discuss of the total biscuit marketplace and a 15% discuss of the total confectionary market in India, Parle is continuing to grow to become a multi-million dollar firm. While to the consumers it’s a beacon of faith and trust, competitors seem upon Parle as an example of marketing brilliance.
The truth is all about the flagship merchandise of the Parle group Parle- G, Parle G is a glucose biscuit and includes a market share of 76% in the category, this contributes 10 to 15 % of the total revenue of Parle. The problem which in turn Mr Kulkarni, general director Parle Products Pvt limited, is concerned regarding, is the intricate situation appeared out of the developing input prices. The growing input rates have led the Parle to think around the pricing strategy of Parle G. The brand name “Parle G is actually a Value For Money product. In January in the 1st attempt to counter rising prices parley hiked the price of of sixteen biscuit box from INR 4. 0 to INR 4. 55. the idea failed and the product sales came straight down by 40% within 6 months and hence the cost rise was rolled back again. Four years later managing took helpful step to deal once again with growing prices which time focus was in reducing weight in the packet and number of biscuits was as well decreased by 16 to fifteen. Although buyers noticed it but went along with it as much as the company would not tingles with prices. Therefore ultimately firm adopted different thinking of slicing prices included and these measures had been buying of manufacturing units near the wholesalers through franchising the availability.
Forward legal agreements were introduced to reduce source chain costs and conjunction with all this feel coated daily news had been replaced by BOPP paper to minimize cost. With entry of competitors just like Britania, HUL and ITC Ltd the specific situation is getting more complicated day by day for the Parle G. Virtually any wrong decision from Parle can have daring consequences for their range topping product Parle G. The dilemma of December 2009: A price hike seemed like necessary to restore the margins, a hike inside the price acquired the potential to improve the margin by 50% and to bring back the previous standard of 15%.
However the previous connection with price hike had already given a bad experience to Parle. The condition with Parle is their VFM graphic, companies build brand fairness in order to deflect the focus of customers from the value. They no longer mind loosening their purses for a manufacturer which gives a value over a dimension identified by these people. Parley must come out of their perilous VFM image and secondly the dependence on a single brand and a single SKU. Parley G contributes 68% of the annual revenue revenue of Parley plus the INR some. 00 SKU was leading to 50 % of Parley G’s annual sales earnings.
The situation in which troubles Mr Kulkarni is: 1 ) Should he launch fresh SKU’s and new selling price points. Or 2 . Ought to he continue to tinker with all the Grammage. IS DEFINITELY Mr. Kulkarni’s decision complicated or straightforward? What are the many issues , considerations? Mr. P. Kulkarni, general supervisor, Parle Products Pvt. Ltd. (Parle) is definitely faced with the dilemma of accelerating the price of the biscuit or decreasing the grammage of its SKU. The Indian consumer keeps strong company equity with Parle G biscuit on account of its inexpensive and good value (VFM) idea. The company started as a good value brand in 1939.
It was a marketing understanding which has remained intact intended for last sixty year. But also in last sixty years Of india market provides opened up and MNC businesses are new rival. Now the same value for money technique is gnawing at the profit margin of Parle G. Essentially brand is something that create a specific niche market segment for itself and consumers will not mind loosening up their particular pockets a little more every the coming year to affiliate with that brand and buy that. But here in India, the consumer are very price sensitive and increasing the retail price leads to the chance of losing the existing and possible customer. Therefore the question that Mr.
Kulkarni is facing is a very critical dilemma and involves complicated thinking and decision making strategy. For example in 2004, Parle has increased the purchase price by 55 paisa via 4Rs. to 4. your five Rs. and sales dropped by forty five per cent within six months. Hence the company has to roll backside the price increment. The brand has a strong dependence on the single manufacturer Parle G and on its single SKU of 90 gram, which usually contributes to 55 per cent in sales revenue. The company’s discuss of household biscuit companies are at forty per cent and Parle G’s share from the domestic glucose category is in 74 percent.
This has manufactured the company more dependent on that one brand that is not healthy. Primary is so much to maintain the low price approach that different issues such as quality and taste are ignored. Natural material prices of glucose and wheat or grain, which make up 55 percent of include increased within the last 18 months. Consequently the margin of Parle G got decreased coming from 15 % to 12 per cent. The price consciousness of customer depends upon what household salary. The lower and middle class people are the majority of sensitive to price change. In past whenever the purchase price was elevated the company shed its sales revenue. Therefore Mr.
Kulkarni decision is known as a complex 1 as what seems a straightforward solution to increase the price would not go well with the Indian midsection class customers. 3. What are the advantages and drawbacks of a Value for Money Position: GOOD VALUE POSITION (VPM) is the most common positioning category. Most companies position their products to offer superb value for customers. Companies can choose possibly “Same (as premium product) for fewer prices” or perhaps “More (of the product) for the same price” pricing approach. More for the same price is frequently used at high end products which may have superior merchandise attributes although is listed on equiparable with competition.
ADVANTAGES of VFM: 1 . The company initial product is Parle-G which offers major earnings to the organization. Value for Money positioning helps make large product sales volume intended for products. 2 . Value for money was your consumer understanding that got led Parle-G to become most significant selling biscuit brand simply by volume in the world in 2002 as validated by a study by global market research firm A C Nielsen. Market share is top for Parle-G because of value to cash it centers to the consumers. 3. Parle-G has implemented the market transmission strategy that is low price along with recording of a large marketplace.
The value for cash positioning allows generate large sales volumes of prints for the items. 4. VFM is the only value dimensions consumers seem to be plugged into with Parle-G. it is additionally value sizes they are connected to with sugar category which will ParleG- prospects. 5. As a result of VMP which has advantage for Parle-G create trouble for new traders like Tiger Glucose label of biscuits of Britannia, Sunlight feast Glucose of ITC Ltd. These types of new traders were under compulsion to hold prices low. DISADVANTAGES- 1 ) It is a very price sensitive market due to VFM. These kinds of being the weakness hold competition as its main some weakness.. It could further more lead to revenue erosion and entry of un-brand players into the industry notwithstanding these kinds of threats, the corporation beholds various opportunities every single as exports and importance. 3. Client perception was rooted so strongly in Parle- G’S low price it turned out undermining additional product features such as top quality and taste. 4. The value for money method highly flexible in characteristics and hence the purchase price cannot be elevated even to a single device as it is going to affect the require drastically. 5. Parle-G acquired generally refrained from increasing the price of Parle- G, even though it had simply no competition.
In holding towards the price series, Parle acquired brought disciplining factors for the Indian industry. 6. A hike in cost had the potential to increase the margin of Parle-G simply by 50 percent and to maybe restore this to the before level of 12-15 per cent. But , if the connection with 2004 was any indicator, consumer would be extremely hypersensitive to a value hike. Advertising plan to conquer this problem: “Reducing the gram mage is the only way out: Due to its VFM image and the valuable company which Parle G has grown into to get the middle category and lower middle school society, having fun with prices is a lot like playing with fireplace for Parle G.
Midsection class and lower lower middle category constitute difficulties purchasers inside the Indian cookies industry. Not only Parle G even brands like Nestle’s Maggi and Hajmola also have adopted similar policy of weight reduction. Developing input prices is further than our control and hence we have to go ahead with weight reduction of current SKU’s. Cost control measures need to follow strictly and obediently to keep margins at doble. Parle G for “specials category: Parle G can be market leader in its category (glucose) with market share of 74% and penetration rate of 84%. The sugar category of cookies forms an industry of 42% of Indian biscuit market.
With raising income levels in region the choice is definitely showing a shift in premium category. Premium category is the upcoming market to repeat history which Parle G has created in blood sugar category Parle G must be established also as a high grade brand. Fresh varieties could be launched concentrating niche clients eg: 1 . Parle G chocolate: children from 6-14 2 . Parle G diet: teenagers 3. Parle G protein: intended for lactating mother and pregnant women 4. Parle G sugar free: pertaining to health conscious people. These kinds will get totally new sections for Parle G (augmentation) without cannibalising the existing Parle G VFM image.
Related trends are followed by Nestle’s Maggi by simply introducing Maggi Soupy Noodles and Maggi Pasta. Parle G intended for institutional “in bigger SKU’s: This project aims at institutional sales by introducing bigger SKU’s, these kinds of SKU’s may also be used to target the area posh and successful tea stalls. This task will help to table the unorganised sector which in turn prevails in local areas. Bigger SKU’s will be used as refilling units. Big plastic-type containers can provided thus it won’t be asked to repurchase SKU’s instead of just refilling this. These SKU’ will reduce packaging price and the materials containers will demand only refilling.