Case Parle-GPressure from increasing raw material costs and falling margins presents Parle with a difficult pricing decision. As Pravin Kulkarnii, general manager at Parle Products Pvt. Ltd., you must decide whether to increase the price of your flagship product, Parle-G biscuits. Be prepared to outline (1) your rationale for the pricing decision and (2) as accompanying marketing plan for the future of Parle-G biscuits. You should consider both short-and long-term impacts of your decisions.

INTRODUCTION

Parle is a leading biscuit manufacturing company in India established in 1939. The ParleG biscuit has always been associate offering value for money (VFM), a perception created in the market unfaltering for more than 60 years

The success of the brand, lies in its low pricing AND its good taste.

COST CONTROL MEASURES:

Bring manufacturing centers near to wholesalers by franchising production so as to reduce the distribution costs.

The company had also consolidated buying and entered into forward contracts with vendors of raw materials to reduce supply chain costs etc., where similar ways

COMPETITION

The biscuit market in India is extremely price sensitive. With Parle providing the cheapest biscuits, other players in the market do not have the margins or the brand equity to compete with Parle G on the aspect. BIL and ITC Ltd. are the two main competitors for Parle-G in the glucose category in domestic market in India.

ADVERTISING SPEND:

Every year since 2004, Parle had spent between Rs 600 million and Rs 700 millions on advertising and sales promotion, which constitutes 2% of annual revenues. The company had recently begun to rely on celebrity endorsements, with Aamir Khan, supporting the tagline “G for genius.”, lending more de

POSITIONING

Parle G with its value for money proposition, is viewed as an affordable and wholesome meal. It is positioned as a product which could be used as a 'charger' on lower energy. The target audience for Parle G has also been shifting from the adults to teens.

DISTRIBUTION

India had 15 million retail outlets spread across the country Parle-G was sold in2.5 million outlets. It was available in every village with a population of 500people on a par with pre-paid mobile cards. The company had 8000 wholesalers who had their own sales force. The company's sales organization structure was based on the geographies and included zonal sales managers, divisional sales managers, area managers, sales executives and sales officers.

RECOMMENDATION:

It should endeavor to not just build upon it image as the cheapest option available, but also as a healthy and nutritious alternative available to people, particularly the masses. The Indian consumer views Parle G as an low-cost option to meet hunger pangs. This value-for-money positioning helps generate large sales volumes for the products.

Parle G should therefore focus on volumes and follow a Market Penetration strategy. There are still huge uncapped areas in the country where Parle G can make inroads, primarily on its low cost plank. Parle G by having a competitive edge in terms of large market share which is around 40%: both

rural and urban presently, can afford to aggressively market itself in such areas.

For Urban areas, Parle G should recoup some of it margins by bundling Parle G biscuits with other "value for money "offerings from the company. The biscuits could also be bundled with superior biscuits. In doing so, Parle G becomes not just the refuge of the price-conscious, but also builds an image of its tastes. Company can even come with higher price, which they are agreeing to despite knowing the consequences. Consumers are willing to also spend on new categories such as digestive biscuits.