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Case Study: Parle G

Name Roll NumberMustafa Rokreya140301011 Narendra Kumar Singh140301012Nitesh Kumar Pandey140301013Prateek Jha140301015

IntroductionParle had started operations in 1929 as a confectionary manufacturer, and a decade later diversified into biscuit-making.It has 40% of the market share of the total biscuit industry with a turnover of Rs. 35 billion, as of 2009.Its offering in the glucose segment is Parle-G which accounts for 68% of its total revenues. Also, the Rs. 4 SKU accounts for 50% of the total of Parle-G sales.

Brand PositionParle-G is known for its Value for Money (VFM) Proposition.This perception is strengthened by the fact that Parle-G prices had remained constant since 1990.

PricingIn 2009, due to increase in raw material prices, the margins for Parle-G have dipped to below 10%. In Jan 2004 the company tried to raise the price of its 100 gms packet from Rs 4 to Rs 4.5, which resulted in a massive decline of 40% sales within a period of 6 months only.To maintain their margins while maintaining price levels the company has taken the following cost control measures;1) By bringing manufacturing units closer to whole- seller by franchising production.2) By consolidated buying and entering into forward contracts with vendors of raw materials Parle-G is sold in 46 SKUs at 12 price points.

Porters 5 Forces

RecommendationWe recommend that the price of Rs 4 for the 82.5 gram SKU be replaced by Rs. 4 for the 72.5 gram SKU. This would give the company an advantage as the number of biscuits shall be reduced to 13.We recommend that all other SKUs reduce their gram-mage by 12.7% in order to provide for better margins.Also, certain SKUs will need to be discontinued: Rs. 3, Rs. 5 and Rs 12 pack as the differences in weight from the next SKU are negligible.

Marketing StrategyThe company needs to leverage its long term affiliation with customers and goodwill in the market to be able to increase the prices of its products in the near future.The marketing campaign will have to be designed in a way as to help the company improve its margins by raising prices while retaining its dominant market share. We recommend that the company spend a considerable amount of its Rs. 700 million on positioning the Parle-G brand as one associated with a long standing tradition quality and fit for consumption by adults as well as kids.This is supported by the fact that the projected demographic of the country in 2011 forecasts almost a 25% growth in the age group of 15-34.

Target SegmentAs of 2009, the brand penetration for Parle-G is strongest in the rural segments R2, R3 and R4, accounting for almost 67.4% of the glucose biscuits sold in this market.Also, the consumer profile is predicted to change by 2015.

CategoryAnnual IncomeNo. Of House Holds%age Change20052015Seekers201-50010.955.1505.50%Aspirers91-20091.3106.1116.21%Deprived