Parle Products Limited

Sameer Alve – Section A

 PART A
EXTERNAL INDUSTRY ANALYSIS
Industry Trend
The biscuit industry is been experiencing steady growth of 14-15% annually.
In 2008, the growth exceeded 16% mark on account of exemption from
Central Excise Duty on biscuits.

Annual Growth Rate of Biscuit Indusrty in India

18%
16%
14%
12%
10%
8% Annual Growth Rate
6%
4%
2%
0%
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Two Sectors of Biscuit Industry

Unorganized
Sector 40%

60% Organized
Sector
 Annual Production:
The organized biscuit manufacturing industry‘s annual production
figures show YOY growth indicating rising consumption pattern in
India.

Annual Production Figures in Million Metric Tonnes

2.00
1.80
1.60
1.40
1.20
1.00
Annual Prod. Fig
0.80
0.60
0.40
0.20
0.00
2003-04 2004-05 2005-06 2006-07 2007-08
 Industry Players

Other Players
• HLL,
• Bisk Farm,
• Anmol,
• Elite,
• Cremica,
• Dukes,
• Anupam,
• Craze,
• Nezone
Major Market Share Holders –
Organized Sector
Others
10%
Priyagold Parle
15% 35%

Sunfeast
9%

Britannia
31%
PEST
Political Economical
• Taxes • ↑ in per capita income
• Production and Distribution licenses • India’s GDP growing at an average 8%

Social Technological
• ↑ in per capita consumption • Innovation
• India is 3rd largest producer of biscuit • R&D
• Age
• Lifestyle
• Perception
Five Forces Threat
of a new
-Capital intensive
manufacturing, entrant
advertising and Low
distribution system.

The ingredients are

basic commodities such - High competition among
as wheat, sugar etc. existing players to capture Power
Internal maximum market share. of
Rivalry Buyers
Power Low
of High High
Suppliers

-Availability of many
biscuits from low to
moderate prices
- Availability of
-Traditional Indian biscuits from non-
home made snacks organized sector
- Bread
Threat
-Growing packaged
of
snacks industry High substitute
Opportunities & Threats
Opportunities Threats
- Indian Biscuit Manufacturers’ - Fluctuations in the prices of
Association (IBMA) estimates annual transportation costs & distribution
growth of around 20% in next couple of cost due to high wedges and oil prices
years. - Entry of ITC (having very good
- The $220 Billion food industry is distribution channels) in to biscuit
expected to grow to $300 Billion by industry
2015.
- Per capita consumption of Biscuits in
the country is only 1.8 kg as compared
to 2.5 kg to 5.5 kg in South East Asian
countries and European countries, and
7.5 kg in USA.
- Growing demand of Sugar free cream
crackers & diet biscuits
- Opportunity to further grown in Urban
& Rural market; Current penetration
levels are
Urban Market : 75% to 85%
Rural Market : 50% to 65%
- Grow in southern and east India
Strategic Maps
High

Marico
Price Horlics
Sunfeast Priya
Gold

Britannia
Parle

Low
Poor Distribution Good
Strategic Maps
High
Parle
Britannia

Priya
Sunfeast
Gold

Nutrition
Content Horlics
Marico

Low
Unknown Brand Known
Strategic Maps
High

Parle
Britannia

Innova Priya
Gold
tion
Sunfeast
Horlics

Marico
Low
Poor Technology Advanced
Strategic Maps

Sunfeast
Priya Parle
Britannia
Gold Horlics
Marico

Poor Packaging Advanced

KSFs & Threshold Factors
KSFs Threshold
• Price • Technology
• Distribution Network • Packaging
• Nutrition content
• Brand
• Innovation
Matrix – Put market share as last row
KSFs Weight Parle Britannia Priya Sunfeast Marico Horlics
Gold
Price 35% 9 8 5 4 2 2
Distribution 25% 9 8 6 4 3 2
Network
Nutrition 20% 8 8 5 4 4 4
Content
Brand 13% 9 9 6 5 3 3
Innovation 7% 9 9 7 5 4 2
Total Score 44 42 29 22 16 13
Weighted 8.8 8.2 5.52 4.2 2.92 2.53
Score
Market Share 35% 31% 15% 9% 6% 4%
 PART B
INTERNAL ANALYSIS
Parle - Company Background
• India's largest manufacturer of biscuits for
almost 80 years.
• With a reach spanning even the remotest
villages of India.
• 35% share of the total biscuit market in India.
Parle Values
“The great tradition of taste and nutrition is
consistent in every pack on the store shelves,
even today. The value-for-money positioning
allows people from all classes and age groups
to enjoy Parle products to the fullest”

Source – http://www.parleproducts.com/about/about_core_values.asp
Parle Products – Biscuits

• Parle – G
• Krackjack
• Monaco
• Kreams
• Hide & Seek
• Marie
• Milk Shakti
Parle Production Factories
Opportunity
To
Grow
Competency Ladder Sustainable Comp Adv:
- Strong sales / distribution
N/W
- Value for money products
-Understanding of consumer
Competency: psyche
- Strong sales /
distribution N/W
- Healthy Products
Distinctive Competency:
- Value for money - Strong sales / distribution
products
Strategic Competency: N/W
- Understanding of - Strong sales / distribution - Value for money products
consumer psyche N/W -Healthy Products
- Geographically - Value for money products - Understanding of consumer
located factories - Healthy Products psyche
Resources: - Effective brand - Understanding of
marketing consumer psyche
- People
- Newer & Innovative
- Brand - Newer & Innovative Competitive
products products
- Market Advantage:
Knowledge - Attractive packaging
- Healthy Products
- Distribution
Channels
- Machinery Peripheral Threshold Competency:
- Factories Competency: - Newer & Innovative
- Technology -Geographically located products
factories
- Effective brand marketing
Incompetency: - Attractive packaging
Strategic Competencies
- An in-depth understanding of the Indian consumer psyche
- Nutritious Products
- Newer & Innovative products
- Strong sales / distribution N/W
- Value for money products
Value Proposition
KSFs Competencies
• Price • An in-depth understanding of
• Distribution Network the Indian consumer psyche
• Nutrition content • Healthy Products
• Brand • Newer & Innovative products
• Innovation • Strong sales / distribution N/W
• Value for money products

We at Parle continuously strive for high quality & nutritious

biscuits meeting your changing health needs at every corner of
India by producing new value-for-money products.

SWOT
Opportunity
1. Estimated annual growth of 20%
2. The 220 B$ food industry is
expected to grow to 300 B$ by 2015.
3. Low Per capital consumption of
Biscuits (1.8 KG) as against 5.5 KG in
South East Asian countries.
4. Increasing demand for Sugar free
cream crackers & diet biscuits
5. Current penetration levels
Urban Market : 75% to 85%
Rural Market : 50% to 65%
6. Growth in southern and east India
Threats
1. Hike in cost of production due to hike
in prices of raw materials and
increase in transportation plus
distribution cost due to high wedges
and oil prices
2. Entry of ITC (having very good
distribution channels) into biscuit
industry
Strengths
1. Parle Brand
2. Diversified Product Range
3. Extensive Distribution Network
(Availability in most remote villages)
4. Low & mid range price segment
catering to mass
5. Better understanding of consumer
psyche
S–O
1. Increase penetration in southern
India and eastern India (S1, S5, O6)
2. Expand in rural market (S1, S2, S3,
S4, S5, O5)
3. Cater to new diet conscious segment
(S1, S3, S4, S5, O4)
4. Advertising of Parle products using
celebrities such as sport person
(Cricketer – very popular game in
India) (S1, S5, O2, O3, O5, O6)
S–T
1. Shift towards products (SKUs) that
are highly appreciated in urban
market (heath conscious mothers)
and price sensitive rural market
rather than just increasing no of SKUs
(S1, S3, S4, S5, T1, T2)
Weakness
1. Dependence on retailers & grocery
stores for displaying diversified
Parle products on shelf to induce
impulsive buying
2. Dependence on Parle-G (glucose
biscuit) under Parle umbrella
W–O
1. Heavy promotional campaigns in
rural areas , southern & eastern
India to increase brand awareness
to boost ‘top of the mind recall’
sales. (W1, O3, O5, O6)
2. Advertise and promote Parle’s
nutritious brands other than Parle-
G in educated urban market
looking for healthy products (W2,
S3, S4, S5, S6)
W–T
1. Capture more market share of other
biscuit segments using distribution
channels by associating individual
products with a promotion.
Example – the stylish cream biscuit
is promoted by bollywood star,
Marie products are branded as
family snacks product etc. (W1, W2,
T1, T2)
Recommendations

To get benefits of growing biscuit

industry, I have following 3
recommendations to Parle.
Recommendation-1
Promotion of Parle brand
a. Promote Parle brand through schemes such as “Parle Gramin Swastha
Yojana” (a network of ambulance van visiting rural areas giving basic
medical treatments educating people on nutrition deficiency problems
and promoting Parle nutritious products)
b. Promote Parle brand through T. V. shows such as “Parle Sakhi” (“Parle -
Friend of Women”). The weekly T. V. show will cater to health issues of
women and children and will explain long term benefits of healthy diet)

Results Expected – Improved sales through “Top of mind recall”.

Reduced competition for ‘visible shelf space’ in small grocery
and retail stores.
Brand Loyalty.
Communicating Parle value of ‘Nutrition Product’.
Recommendation-2
Study revenue and cost of each of the SKUs (products) of Parle
ITC’s entry into the biscuit industry will pose challenges to the number one position
Parle has held over decades. Before further diversifying into producing more
products to cater to market niche, I recommend Parle to carry out detail study of
each SKU.

This is to avoid adding more complexity to existing production & distribution

process with addition of SKU eventually leading to lowered net income.

Results Expected – The study should help Parle forecast and plan future launches,
stop producing unprofitable products and focus on emerging /
highly demanded products.
The study will also help Parle utilize its deep distribution
channels effectively and efficiently as per consumer demand.
Recommendation-3
Advertise products segment wise as follows
a. Nutritious/Glucose biscuits
Advertisement by doctors/dieticians to explain the benefits to heath
conscious consumers
Advertisement by cricketers (Cricket is a very popular game in India) to
attract youth
b. Cream biscuits
To be endorsed by bollywood (film) starts
c. Marie
To be advertised as a family tea time snack

Results expected – Increased penetration in rural,

southern and eastern market.
Attracting health & diet conscious people.
INDUSTRY Framework
How the industry success factors
will change over next 8-10 years?
Biscuit industry going forward
With GDP growing at average of 8% and
government’s spending on infrastructure
projects, many local distributors will evolve
and existing players will have penetrated deep
inside urban and rural markets.
Thus, Distribution will no longer be a KSF

Sunfeast Priya
Horlics
Gold
Britannia
Marico
Parle

Poor Distribution Good

 Promotion & Alliances will emerge as
new KSFs
Promotion – Industry’s ability to connect to large
population through various promotional events (such as
school’s industry visits to plant, talk & TV shows, rural
programs) to target different age segment will decide the
market share.
Alliances – The biscuit manufactures able to maintain
good relations with distributors, whole sale suppliers and
regional institutions (through CSR and other community
oriented activities) will have greater market share due to
BUZZ (mouth publicity) and media attention.
Will Price be still a success factor?
Yes, very much.
The industry players will try to lower the
procurement, production and distribution costs
through programs such as JIT, JITD, TQM, Per SKU
cost/Revenue analysis and will pass on these benefits
to end consumers in terms of lowered prices.
What will the new value proposition be
for Parle?
KSFs Competencies
• Price • An in-depth understanding of
• Nutrition content the Indian consumer psyche
• Brand • Healthy Products
• Innovation • Newer & Innovative products
• Promotion • Value for money products
• Alliances

Parle provides nutritious and innovative products through better

understanding of consumer needs. Parle promotes relations with
customers and its rapport with business partners help it achieve
operational efficiency and manufacture ‘value for money’
products.
• Thank You.
- Sameer Alve. (Section A, MBA2009_B3)
Asian Institute of Management.
Makati, Philippines.

Write to – alvesameer@yahoo.com