Marketing Research Project

On

Shakti Biscuits

Submitted to:

Prof. Bhavesh Vanparia,

Faculty,

TIMS.

Submitted by: Name: Jaykishan Joshi,

Roll no.: 08024,

Batch: 08-10.

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AcknowledgementAcknowledgementAcknowledgementAcknowledgement This project would not have been successful in absence of our Marketing mentor Prof. Bahvesh Vanparia who first gave an opportunity to implement the marketing concepts into real life situations so that the students understand the practical implications of theoretical learning. Also during the sessions we were briefed about the various successful companies and their competing strengths. I would also thank my classmates with whom I discussed various queries and the effects of different strategies on the product. And above all I thank God for blessing me with TIMS Family where learning takes place in form of studies as well as live projects to enhance the skills of students.

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Table of contents

SR NO. TOPIC PAGE NO.

1 Introduction 4

2 PEST Analysis 5

3 Marketing Research Process 6

4 Questionnaire 8

5 Demand Estimation 10

6 Consumer Behavior 11

7 Identifying Marketing Segment 11

8 Recognizing Brand Elements 11

9 Product Life Cycle 12

10 Product Differentiation 13

11 Classification of product 13

12 Pricing Strategies 13

13 Marketing Channel 14

14 Distribution Strategy 14

15 Advertisement for product 15

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Introduction India Biscuits Industry is the largest among all the food industries and has a turn over of around Rs.3000 crores. India is known to be the second largest manufacturer of biscuits, the first being USA. It is classified under two sectors: Organized and Unorganized. Bread and biscuits are the major part of the bakery industry and covers around 80 percent of the total bakery products in India. Biscuits stands at a higher value and production level than bread. This belongs to the unorganized sector of the bakery Industry and covers over 70% of the total production. India Biscuits Industry came into limelight and started gaining a sound status in the bakery industry in the later part of 20th century when the urbanized society called for ready made food products at a tenable cost. Biscuits were assumed as sick-man's diet in earlier days. Now, it has become one of the most loved fast food product for every age group. Biscuits are easy to carry, tasty to eat, cholesterol free and reasonable at cost. The total production of bakery products have risen from 5.19 lakh tonnes in 1975 to 18.95 lakh tonnes in 1990. Biscuits contributes to over 33 percent of the total production of bakery and above 79 percent of the biscuits are manufactured by the small scale sector of bakery industry comprising both factory and non-factory units. Glucose biscuits have always been well accepted by the Indian consumers. The pioneer company leading this race is Parle. There is demand for this product from various market segments. The economically priced glucose biscuits are sold by Parle but today various international brand biscuits have entered the niche market of the high end customers who pay premium price for the product. Overall the major consumption basket lies in the rural market which is widely spread across the length and breadth of the company. Federation of Biscuits Manufacturers of India (FBMI) is the regulatory body for biscuits manufacturers in India. Basically glucose biscuits have their utility as both complimentary product with tea or a source of energy and nutritional product for the low end customers who are economic in their spending. The major share in biscuits market is owned by Glucose biscuits at nearly 44% (as per FBMI for 2000-01) of the total market share. This market segment has both organized producers as well as the unorganized. The organized market still continues to be dominated by Parle but the competition has intensified with many other organized producers like ITC, Britannia, Priyagold, etc. entering the market. This project is an extensive research based on the technical as well as psychological aspects of consumers in accepting a new product. The product selected is Glucose biscuits and it will be branded as Shakti Biscuits.

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Environmental factors affecting Shakti Biscuits: PEST ANALYSIS of Biscuits Industry in India Political factors

� Exemption limit of excise duty for SSI raised to 1.5 crores � Excise duty on biscuits removed on biscuits priced below Rs 100 per kg. � Custom duty on food processing machinery reduced from 7.5% to 5%. � Custom duty on sunflower oil (crude) reduced from 65% to 50% and for refined sunflower oil it is levied at 60% compared to 75% earlier. � SAD of 4% waived for refined edible oil. � CST is levied at 3%. These changes were brought in 2007 – 08 budget by the government. The government has shown favorable policies for the development of biscuits industry which is a boost for the current producers and an incentive for the new entrants. Economic factors

� Per capita income in India is $950 in year 2008 � GDP $2.96 trillion(2007) www.worldstatesmen.org/India.htm � Population of 1,027,015,247 www.surfindia.com/india-facts/population-of-india.html

The population of India has made the country a consumption market for almost every product traded in the world. This gives good indication for the launch of a new product in India as compared to other countries. Also there are better chances of success in Indian market where people are ready to spend more on consumable goods.

Social factors

� There has been a cultural transmission in India. � Gone are those days where Indians were considered orthodox. � The new India is very well placed in matter of cultural diversity as well as cultural

adoption. � The people are not hesitant to try out new things. � Even the quality of life has improved which has led people to spend more. � Indians are well known for saving their income for future unpredictable situations and

invest more in gold but the encouraging sign is that Indians never hesitate to spend on food.

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Technological factors:

� Automation in India is widespread in most industries. � Even for manufacture of biscuits the imported machinery is available which will help in

mass production and reap benefits of economies of scale. � So the technological know how and equipments are available for development of the

biscuits industry.

Marketing Research Process: Step 1: Defining the problem, the decision alternatives and the research objectives.

The decision making situation on hand is considering the production of a new band of glucose biscuits to be retailed in the market. The decision alternatives include the price of product and the consumption pattern. The research objectives are to define a market for the product and understand the consumer behavior of a target market segment which will be attended.

Step 2: Developing the research plan

Data sources: In this research both primary data sources as well as secondary data will be used for a comprehensive study of the Indian biscuit industry. Research approaches:

Survey research – A survey research will enable the company to know about consumer behavior, beliefs, preferences and satisfaction. Research instruments:

Questionnaire - It is the most used primary research instrument because of its flexibility. It seems very easy to construct a questionnaire but all the common mistake researchers do is while framing the questions itself which may defeat the very purpose of research. So it is very necessary that the questions are relevant as well as unambiguous. Also the no. of questions must be limited.

Sampling plan:

Sampling unit - Since biscuits are consumed by the masses the population consisting of children to adults are the sampling units. For better understanding the behavior of consumers age group between 10 – 45 is taken as sampling unit. Sample size - A size of 700 respondents which represent the males and females as well as the child and adult will be the sample size.

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Sampling Procedure -

Snowball sampling will be used to get the primary data. This will be better than the other methods as the survey will be limited to 700 respondents of which initial respondents will be selected randomly and rest will be as per the information provided by the respondent. The advantage here will be that when any respondent is contacted and told that his reference is provided by the other person most of the times the respondent will be willing to answer the questions with enthusiasm. This will help the researcher to gather better quality of primary data if things go as per expectations. Contact methods: In this research only contact in person will be used since it will be conducted all over Kachchh where most people will not be willing to be contacted by telephone and also there is limited scope for collection information through mails or online information. Step 3: Data collection

It is the heart of the research. If this step fails to work as expected then the survey will not bear fruitful results. One most important thing is that the data needs to be consistent. Honesty and integrity on part of respondent as well as fieldworker are equally of prime importance. Step 4: Analyzing the information

This step will help to extract meaningful information from the data gathered. Here various softwares and other statistical tools are available to the researcher which will facilitate the research work. Step 5: Present the findings

This step is the face of the research. The researcher has to present his findings and show his ability to interpret the data. The researcher must have good communication skills so that he is able to project his findings aptly in front of the management. Step 6: Make the decision

The management will consider the quantitative and the qualitative aspects of the data in deciding about the product promotion. Survey will be for potential in Kutch region regarding the launch of new product i.e. Shakti Biscuits: Research problem: Launching a new product Management problem: Market penetration

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Questionnaire

1)Name: 2)Age: 3)Gender: 4)Locality: (village) 5)Do you consume biscuits? YES NO If yes then which type of biscuits do you prefer: Glucose Marie Cream Others If no then , Which food item you prefer over biscuits? . 6) Which factors do you keep in mind while purchasing biscuits? Quality Flavor Variety Cost Others Please specify others . 7) Do you try new flavors or biscuits launched in market? Yes No

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8) What do you prefer to accompany you while eating biscuits? Tea or Coffee Milk Others Nothing with biscuits 9) On an average what quantity of biscuits do you consume? Packets {approx.} 10) Comment on your preferences for buying biscuits .

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FORECASTING AND ESTIMATING DEMAND: An important and tough work for any company is to predict the demand for the product in the market. Demand estimation is just an expected rate of consumption but if it is faulty it leads the firm into troubled waters. So forecasters use statistical tools to forecast demand as well as they have to keep the psychological aspect of consumers in mind. Since biscuits fall in FMCG category it is easy to predict its demand by considering the past data, the current buying trends and also the growth rate of population. Another important aspect of the product is that its consumption is not limited to any particular age group which makes the work of marketer tough as they have to keep in mind all the age groups while devising their marketing programme. As a producer of biscuits it will be necessary to know what is the proportion of glucose biscuits in the biscuit consumption basket and what level of demand will the product be able generate. Indian biscuit Industry is the considered as the third largest producer of biscuits after USA and China. It is one of the fastest growing sectors within the food industries and has an estimated turnover of around Rs 65 billion. Biscuit manufacturing in India is huge and is constantly growing at a rate of 12-15 per cent per annum. Indian biscuit manufacturers can penetrate into international market in a bigger and bolder way by taking off the excise duties for biscuit products, focusing on quality standards and thereby maintaining them, adhering to world class packaging technique and working upon helpful policies. So the biscuit industry has the potentials of doing well in domestic market as well as the international market. Although the market for biscuits in India is growing at a very steady rate of 12-15 per cent per annum, the per capita consumption in our country is only 2.1 kg per annum, compared to more than 10 kg in the USA, UK and Western European countries. Therefore, Indian domestic market cannot be ignored, as it is large and continuously expanding. So both international and Indian markets are important for the growth of biscuit industry. Source: http://www.indiaretailing.com/india-capita-biscuit-consumption.asp

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Consumer buying behavior affecting glucose biscuits: The three factors affecting the behavior of consumers are: CULTURAL FACTORS, SOCIAL FACTORS and PERSONAL FACTORS. Cultural factors: When marketing efforts are focused towards the cultural factors relating to the country in which the product is to be sold the product gets recognition in the market. In the Indian context now the people have adopted biscuits as a part of their consumption basket. Earlier it was not the case as people used to relate biscuits with the sick people only. Social factors: The social factors include Role and status, reference groups and family. And for a consumer consumption product these factors play a vital role. Biscuits are considered as a complementary with consumption of tea which is influenced by the status of consumer as the rich will be willing to eat any foreign branded biscuits which will provide them the sophistication they need whereas the middle class person will be happy with any brand which is economically available. Family influences on the purchase include the preferences of mostly the females who go for shopping and the interest of children in the family. Personal factors: The age of the consumer also decides the kind of product he will consume. For instance kids will prefer cream biscuits whereas the adults may prefer marie or glucose biscuits. The economic status will determine the purchasing power of the customer.

Market segment for glucose biscuits:

Glucose biscuits are consumed by all market segments. On the basis of age the product is mostly consumed by kids and adults. On the basis of income the product is consumed by people from the lower middle class to the upper middle class. On basis of gender there is no differentiation of market since it is consumed by both males as well as females. Brand elements for SHAKTI Biscuits:

Memorable: The name is easy to remember. It is short and not very complicated so people will not have difficulty in remembering the name. Meaningful: The name SHAKTI means power and in the context of the product it aims to tell the customer that the product will deliver performance and energy which is the main reason for buying glucose biscuits. Likeable: The kids will like the name as for them such names bring in adventure and for the other market segments the name shows reliability related to the product so they will not be averse to it.

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Protectable: There are less chances of patenting the name of brand since the word is used more often by the marketers for their product and in many categories the name could be found. Adaptable: Customers will be readily accepting the name of the product as it is an encouraging name which inspires the people. Transferable: Since the brand name will be in initial stage in the market an estimate about its transferability may not be possible at this stage.

Product Life Cycle for Shakti Biscuits:

Every product has to pass through different stages during its life. The four stages related with the life cycle of a product are: 1) Introduction Stage 2) Growth Stage 3) Maturity Stage 4) Decline Sage In case of Shakti Biscuits the product is in its very initial stage where it will be introduced in the market. This is the first step of the product in the market. This stage decides the future of the product. If it is accepted in the market the product can successfully move onto the next stage else it will be thrown out of the market in the introduction stage itself. The company will have to spend heavily to introduce the product in the market. The marketing efforts will be guided towards product awareness. The prime job will be to project the right image of the product. The customers should be inclined to try the product at least once. Since in this stage the expenses tend to be in greater proportion than the revenues the company will be in need of funds. So the company will estimate its expenses budget and arrange for the funds accordingly. After about one year the product will be reaching the second stage. Now the emphasis will be on brand identification instead of brand awareness which was the case in the first stage. Now the product will be related to the customers showing how the product’s regular consumption increases the health of customer. The people value products which enhance their health so this aspect of the customer should be given importance to help in successful marketing. The product will take about 3 years to cross the second stage to reach maturity stage. By this time the brand name will be established in the markets and now is the time the company intends to foray into the international market. Also the company will have experience and knowledge about the market which will help it compete in the international market on cost as well as quality basis.

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Any company does not intend to reach the decline stage but as is the rule of the game it has to follow. In this stage the company intends to introduce the product to the underdeveloped markets so that it will reap benefits prevailing in such markets.

Product differentiation:

The major organized competitors include Parle, Priyagold, Britannia, ITC, etc. It will be a difficult job to differentiate the product since the organized companies have developed Brand Equity and it will not be an easy task for any new entrant to compete them. But no company was built in one day and it is perseverance and dedication which determines ultimate success. So the company will focus on its core strengths of providing quality product at competitive prices. It will be difficult for the company in the initial stage but it has to compete on terms of prices since it will not be possible to attract more customers if the product is priced above the competitors.

Product classification:

The product is non-durable and tangible. It is mostly consumed in few usages. Since it is consumable product people do not like to stock it. They purchase the product as and when needed as it is easily available. The product can be included in staple as well as impulse consumer goods. Since many people regularly consume it we can term it as staple product on the other hand people sometimes buy it on impulse also.

Setting the prices:

The product will be introduced at competitive prices. The price range will not be over the competitors. One interesting fact about the product is that 40% of the cost is related to packing. The company will try to use innovation in package design and reduce its cost in packaging. This will enable to get more contribution from the sale of product since the company will save on packaging. But for a new company the biggest hurdle is to meet its financial needs and sustain in the market. Hence the new packaging design will also cost in R & D but in the longer term will benefit the company. So by adopting the going market pricing strategy the company will accomplish the objective of pricing the product as per the market acceptance. If it is lower than it the company will lose on profit margin and if higher than market it will be difficult to induce buyers to purchase the product. After the introductory stage the prices of product will not be changed so as to keep the buyers intact. If there are price fluctuations the customers may shift to competitors. If prices are lowered the customers may perceive a drop in quality and they will not be willing to pay additional prices also.

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Setting prices for an existing product: The biggest competitor in Glucose biscuit market for the company is Parle G. This product is in its maturity stage. The product was launched keeping the needs on Indian customers in mind. Its prices were lower compared to other biscuits and there were no major organized player in that segment. The company priced its product economically to keep its market segment growing since India is a developing country and the people prefer the economically priced products. The main reason for Parle to sustain in the market is its ability to sense the motions of the market and understand the consumer psychology. So few years back the company changed its packaging and brought the value priced packs. It was probable the first company to introduce Re 1 packs of biscuits. Today the company sells Re1 packs as well as 1 kg packs to meet the demands of the customers. So the value pricing strategy has been adopted by the company. The competitors charge the same price but the company has been able to conquer the market due to its ability to meet customer demands and its Brand Equity combined with market reach to even the rural market where the competitors have not been able to reach. The company adopts value pricing so the company may not change the prices which will retain the customers and attract new customers. A stable price indicates the quality assurance and confidence in the customers.

Marketing channel:

The product is a standardized product so the company will use the make to stock strategy which shows the company will use push strategy of production. The company will produce the goods as per the market demand and then will use the marketing channels to induce demand for the product. The increases in no. of channels increase the price of product but also help in increasing the reach of product. Many companies have zero level channel where there are no intermediaries and company interacts directly with customers. But it is important for a producer of mass consumption product to spread its reach so that the company reaches the urban as well as the rural market. For this the company will have to use different channels including retailers, wholesalers and regional distributors as well.

Distribution strategy:

The product is new in the market so it will be imperative for the company to induce demand of product in market. In the initial stage the consumers will not be aware of the more product and they may not be induced to purchase. So the retailer is instrumental in increasing the sale of product since they are in direct contact with the customers. So if the retailers are given a better margin in comparison to other players then the producer will be in a better position to penetrate in the market. Also the product is standardized so the levels of distribution channel will be the third level to increase the reach of product.

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Advertisement: The customers tend to purchase the product which they can associate easily with their lifestyle also the children need to be impressed to increase the sale of product. The advertisement will be shown where a mother is giving Shakti Biscuits to her girl child with milk and telling her it is very important to take nutritious food which gives energy and helps to maintain sound health. The bringing of girl child will also highlight a social cause and the background will be of a middle class family. Tagline for product: “Shakti rakhe aapko saabse aage ”