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"Abhi to main jawan hoon"

"Aaj se Jeene Ka Andaaz Sudhariye"
Healthy oil for Healthy people
Guidance Team
Prof P. Venugopal Gourav Agarwal 018
Himadri Sankar Singha 019
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Manoj Jindal 028
Mrigank Shekhar Adhikari 030 In todays fast life people hardly have time to sit down at ease and
have a hearty breakfast, lunch or dinner. Thus depriving them of proper nutrition and leading to
various diseases. Heart disease is one of the most dreaded diseases due to improper diet habit.
Fortunately people in India especially the urban class consumers have started realizing this fact
and have become very careful in what they intake including the cooking oil. This project is about
one such brand called Saffola which is claimed to be Heart Friendly oil and prevent heart disease.
Saffola...the Healthy Oil.

Saffola satisfying Health Needs:
All Saffola oils come with 'LoSorb Technology'. Food fried in Saffola oils
absorbs less oil and thus reduces the consumption of oil in your diet.
Saffolla, The Heart of a Healthy family

Saffola oils fats' are 'Free of trans
Saffola encourages you to take care of your heart by following a low saturated fat diet with regular
exercise. By most of the households, Saffola is being considered as Dil Ko Rakhiye Jawan edible
oil.
Its main ingredients are Rice Bran Oil and Safflower Oil.
Rice Bran Oil (RBO):
Heart healthy nutrients in RBO such as tocopherols, tocotrienols and oryzanol are known for their
cholesterol lowering ability.
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Safflower (Kardi) Oil:
This has the highest levels of Linoleic acid, an omega-6-polyunsaturated fatty acid, which is well
known for reducing cholesterol levels.
Safflower oil is a colourless and flavourless edible vegetable oil extracted from the seeds of the
safflower. It has a light texture, non-greasy feel, easily absorbed, and is nutritionally similar to
sunflower oil. It has a long shelf life when stored in a cool dark place away from light and heat due to
the presence of very high amount of vitamin E naturally, about 34%.
Health Benefits
Safflower oil is low in saturated fats and very high in unsaturated fats.
Essential fatty acids are the precursors of prostaglandins, which are hormone like substances
that have a variety of functions like contraction and relaxation of smooth muscles, control of
blood pressure, inflammatory response, etc. in humans and animals.
Good source of cis-linoleic acid, the omega-6 fatty acid in safflower oil is responsible for
prostaglandin production.
Cis-linoleic acid is also responsible for burning the brown fat in the body for heat rather than
storing as white fat. Thus, safflower also aids in weight loss and its maintenance.
5. Has a very high content of vitamin E, about 34%, which is an antioxidant that fights against
free radicals and preserves the integrity of cell membranes and reduces the risk of heart
diseases, cancers and other degenerative diseases.
Nutritional Information per Serving:
Serving Size 100 g of Safflower oil, oleic acid 70%
% Daily Requirements
Total Calories 884 44%
Calories from fat 884
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Total fat 100 g
Saturated fat 6.2 g
Palmitic acid 4288 mg
Stearic acid 1915 mg
Monounsaturated fat 74.6 g
Oleic acid 74639 mg
Polyunsaturated fat 14.3 g
Linoleic acid (-6) 14350 mg
Trans fat 0 g

154%
31%






Cholesterol 0 g
0%
Total Omega-3 fatty acids 0 mg

Total Omega-6 fatty acids
Vitamins
14350 mg

Vitamin E 34.1 mg 171%
Vitamin K 7.1 mcg 9%
Phytosterols 444 mg





If we go by basic marketing product concept, a company can define tangible and intangible benefits
to provide value to the customer. To start with, Marico also defined Saffola, the marketing product at
three levels:
Technical Product: Saffola cooking oil has the internationally proven formula of 80% of Rice
Bran Oil (RBO) and 20% of Safflower oil (Kardi Oil). Saffola Gold oil is made through exclusive
protection technology called LoSorb that makes the oil more stable during deep-frying. It is fortified
with natural Vitamin-E. Vitamin-E helps to preserve the stability of the oil, and thereby increases the
shelf-life.
Functional Product: Widely used by house-holds, restaurants for daily cooking, salad dressing
etc. As Saffola is extremely stable, it reduces consumption of cooking oil.
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Emotional Product: Here Saffola essentially satisfies the Health Need of consumers. The
product emphasizes on Heart Protection. It focussed on urging people to adopt a healthy lifestyle.
One of the major concerns today is the occurrence of heart disease and every fourth Indian being
under threat. And adopting Saffola as your familys cooking medium is one big step that you can take
towards safeguarding of your family.

Edible/Cooking oils could broadly be categorized into vegetable refined oil, hydrogenated oil
(vanaspati) and bakery fats. The major edible oils produced and consumed in India were groundnut,
sunflower, safflower, soya, castor seed, cottonseed, mustard and sesame seed. While pure
groundnut oil could be directly consumed or refined to have higher purity, others had to be refined
to make them edible grade. Groundnut oil was the most widely consumed oil in India. But groundnut
was a monsoon crop (Kharif), vulnerable to the vagaries of monsoon.
Background:
Climatic conditions in India favour growing a variety of oilseeds. On the demand side, a growing
population and vastly varied dietary habits have ensured a thriving market for edible oil in the
country. In fact, there is a substantial demand overhang, which is expected to continue for some
years. At present, this is offset by imports that cater to almost half of the total domestic
consumption. With cheap imports threatening to cripple the domestic industry, the government is
walking a tightrope between filling the demand supply gap and the political need to keep the
domestic industry in good health. Unorganized, medium and small players dominate the industry.
Hence, quality remains a concern. There is need for better regulatory control to protect consumers.
An average Indian's yearly edible oil requirement has gone up from 7.0 kg in 1996-97 to 11.8 kg in
2000-01. Despite the variety of oilseeds grown in India, the country imports a substantial quantity of
edible oil, which also works out cheaper. Allied factors contributing to imports are the higher cost of
cultivation in India and uneconomic oil extraction systems. India is one of the largest oilseed
producers in the world (9.3%). Oilseeds in India account for around 5.0 percent of the Gross National
Product (GNP) and 14.0 percent of the country's area under cultivation of crops. Castor, Groundnut,
Linseed, Niger, Rapeseed, Mustard, Safflower, Sesame and Sunflower are some of the major oilseeds
grown. India produces 10 percent of the world's oilseeds, but has a low productivity of around
850900 kg per hectare (compared to a world average of around 1,100-1,350 kg per hectare).

The amount of oil extracted from the seed varies with the type and quality of seed. In many cases,
the oil recovery rate is upwards of 30 % with Sesame accounting for a high 45 %. Domestic
consumption of edible oils has been growing at 4 - 5 % a year. The consumption in 2001-02 was
around 25.75 million tons. Non-packaged oils account for nearly 50 % of consumption in both urban
and rural markets. In the remaining 50 % contributed by packaged oils, branded oils constitute a
small portion of approximately 10 -15 %.
Major Source of Oilseeds:


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Major Players:

Edible Oils Vanaspathi
National Dairy Development Board (Anand)
ITC Agro-Tech (Secunderabad)
Marico Industries (Mumbai)
Ahmed Mills (Mumbai)
Hindustan Lever (Mumbai)
Wipro (Bangalore)
Rasoi (Calcutta)
Avi Industries (Mumbai)

Market:
Industry Structure:
Highly fragmented industry
Over 600 oil extraction units, 166 vanaspati manufacturing units out of which only 10 edible
oil units and 8 vanaspati units have national reach
Over 50% of the units - sick or underutilised due to surplus capacity
Idle capacities among these units due to shortage in feedstock supply
Major oil brands - - Sundrop, Dhara, Saffola, Sweekar, Postman
Vanaspati brands - Dalda, Rath
Trends in Output:

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Market Size:
Edible oils and vanaspathi markets - 9.6 million MT
Oils market growing at 8.7 % CAGR
Vanaspathi market stagnating at around 1 million MT

Capacities:
Installed Capacity and Prodcution

Vanaspathi Edible Oils
Capacity 2,720,000 30,368,000
Production 990,534 6, 250,000
Utilisation 36% 21%

Installed capacities and Production - in MT per year
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Import:







Key Inputs
Inputs
Vanaspathi - Minor (solvent extracted) edible oils - Sunflower oil, Soybean oil, Ricebran oil Edible
Oils - Oilseeds such as Groundnut, Sesame, Mustard, Sunflower, Safflower and oil cakes and bran.
Raw material
Comprises 70% of the production cost
Oilseeds - the largest cash crop
Poor productivity - 873 Kg/ hectare (global average of 2000 kg/ hectare)
Though oilseeds have 14.5% share in gross cropped area, only 25% of it is under assured
irrigation.
Technology : Refining technology freely available indigenously
Characteristics:
Oils : primarily a commodity market - Price sensitive
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Effective distribution chain - through a complex network of C&F agents, wholesalers/stockists &
retailers (kirana shops, supermarkets).
Oil sold in bulk (tin, HDPE containers) to institutions; In retail packs (PET bottles, cans, jars,
pouches) to small customers.
Seasonal demand for oils & vanaspathi - September to November (peak season).
Regulation : Under the Edible Oils Packaging (Regulation) Order, 1998, edible oils cannot be sold
loose but can be sold only in `packed form .
Oil consumption - North is largest market, followed by South, West & East zones.
Key Success Factors:
Raw material sourcing : focus on improving yields, getting better quality oilseeds , ensuring
regular supplies - through symbiotic relationship with farmer
Branding essential for success (Vanaspathi - Dalda, Oils Saffola, Sundrop)
Better distribution network to improve reach
Efficiency in operation - to become price competent and withstand overseas competition.
Business Concerns:
Free imports, low import duties and slump in global prices - lead to `dumping.
Domestic industries of edible oils and vanaspathi affected - low realisation and idle capacities in
oil and vanaspathi industries.
Production slippages have also forced imports.
Excessive (cheap) imports of oilseeds - led to unremunerative prices, locally Hence,
farmers have shifted to other cash crops.
Increasing health awareness - impact of oils and vanaspati usage on individuals cholesterol levels.
Growth:
The industry is a high volume, medium growth sector characterized by excess/idle capacities owing to
in efficient operations. Imports have been influencing prospects, leading to domestic industry crisis.
The proliferation of regional brands has been one of the key threats to the national players in the
branded edible oil market over the past couple of years. With the domestic supply of oilseeds
dwindling, operating integrated oilseed processing facilities no longer makes economic sense. Even
Agro-Tech Foods, which has made substantial investments in its integrated oil processing complex at
Mantralayam (in Karnataka) over the years, has now cut back on production at the unit and is
reportedly scouting for refining capacities near port towns where it can cost-effectively import and
package oil.
This has significantly lowered the entry barriers in the edible oils business, leading to a mushrooming
of local and regional brands. On the one hand, players such as Kaleesuwari Refineries (of the Gold
Winner brand), Adani Exports (Fortune) and Ahmednagar Mills (Postman, Til Raj) have been in a
Threats of New Entry

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position to firmly establish their brands and actually glean away market share from the larger
players.

These brands use a combination of active regional advertising and aggressive pricing (Gold Winner,
for instance, adjusts its selling prices at intervals of a week or less) to woo consumers. On the other
hand, international trading houses such as Cargill Foods (Nature Fresh) have also made a foray into
the market and have been actively looking to set up refining capacities within the country. These
brands appear to have whittled the market share of the national brands. For instance, in 2001-02,
Gold Winner, a regional brand, clocked a growth of well over 40 per cent, even as leading brands
Sundrop, Saffola and Sweekar reported de-growth in volumes.

Bargaining power of Buyers
The bargaining power of customers determines how much customers can impose pressure on
margins and volumes. In edible oil market, bargaining power of the buyers is likely to be high
because of the following reasons.
Customers buy a large volume, so there is a concentration of buyers.
Customers are price sensitive and can switch to other substitutes.
Substitutes are available in numbers.

Bargaining power of Suppliers
The term 'suppliers' comprises all sources for inputs that are needed in order to provide goods or
services. In edible oil market, bargaining power of suppliers is likely to be moderate to low due to
following reasons.
Domestic oil seed market is dominated by many (fragmented) suppliers rather than few
large suppliers.
Customers suppliers are not too many, so buyers bargaining power is moderate.
Switching cost from one supplier to another is easy.

Threat of Substitute
A threat from substitutes exists if there are alternative products with lower prices of better
performance parameters for the same purpose. They could potentially attract a significant
proportion of market volume and hence reduce the potential sales volume for existing players.
Threat of Substitute in Edible oil market is significantly high.
Huge portion of customer is not still Brand Loyal
Switching cost is high.
Customers are highly price sensitive.

Competitive Rivalry
This force describes the intensity of competition between existing players (companies) in an industry.
High competitive pressure results in pressure on prices, margins, and hence, on profitability for every
single company in the industry. In this industry, competition between existing player is likely to be
high because of the following reasons.
Except few, all players have the similar strategy.
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Customers are not still Brand Loyal.
Products are not much differentiated.
Switching cost is not high.
Parameter Environment Stimulus Opportunity
Threat
Response of Marico
Industries
Political Overall, India had a stable government
with Trade policies favourable to
growth of Industries.
Opportunity Aggressive marketing
strategies complemented with
expanded product range to
target various segments.
Political 60% of the safflower seeds were
imported, The input costs depends
heavily on Governments import
policies and duties. (In March 2001 the
import duty on crude vegetable oil was
increased from 35% to 75% as a result
the input cost soared)
Threat

Launched blended low priced
variants. Even during period
of shortages of safflower
seeds Marico made sure the
consumer can buy other
variants.
Economic A large part of the population lived in
rural areas and belonged to the low
income group.
Threat Targeted the urban
population.
Economic Even the urban population had lots of
other options and Saffola was
expensive for them as well.
Threat Launched blended low priced
variants

Economic With effect from 1st April, 2008, the
customs duty on crude and refined
forms Soyabean Oil, Mustard Oil,
Sunflower Oil, Safflower Oil,
Groundnut Oil, Coconut Oil etc.
reduced to zero percent and 7.5%
respectively
Opportunity Launched various low price
products and increased the
market penetration activities
Socio
Cultural
People in general are not health
conscious.
Threat
Opportunity
Launched various initiatives to
educate the people about
heart diseases.
Socio
Cultural
Taste is given more priority than
Health
Threat Saffola tasty blend was
introduced.
Socio National Vegetable Oil Development Opportunity Participated in Program and
Cultural Board of India has a demand
Developmental Programmes,
Promotion of Oil seed Cultivation,
Seed Production and Strengthening of
Seed Farm, Mechanization &
Processing.
more focused the advertising
on educating the public.
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Techno
logical
Other producers had superior
technology to offer better quality,
colourless, odourless refined oil.
Threat Acquired vegetable oil
refinery, equipped with latest
technology.
Legal Poor Public Transport System.
Focussed Govt initiatives to extend
infrastructure in Rural and Semi-urban
areas.
Opportunity Scaled up production (set-up
2
nd
Plant at Gurgaon) to meet
demand from newer markets.
This helped establishing
leadership position.

Marico Industries, a well-known Indian Fast Moving Consumer Goods (FMCG) company, offers
unique and ethnic Indian products. Marico was famous for its Parachute and Saffola brands. In a
survey carried out by Brand Equity of The Economic Times in early 2003, for Indias 100 most
trusted brands, Saffola ranked 75th and Parachute ranked 29th. Maricos brands had shown
resilience against competition and maintained their market shares over the years.


MARICO: Market Share (1998-2003)




Product Feature Mix
Recent medical studies recommend diets high in monounsaturated and low in saturated to help
reduce heart disease. Monounsaturates are also preferred for superior cooking performance. Saffola
is the only leading cooking oil grown without pesticides. The following analysis shows the levels of
saturation and cholesterol in various oils used for cooking.

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Cholesterol
Saturated Monounsaturated Polyunsaturated Other
(mg/tbsp)
Canola Oil 0 6

62 31
Safflower Oil 0 9

12 78
Sunflower Oil 0 11

20 69
Corn Oil 0 13

25 62
Peanut Oil 0 13

4 9 33 5
Olive Oil 0 14

77 9
Soybean Oil 0 15

24 61
Margarine 0 18

48 29 5
Vegetable
Shortening
0
26

43 25 6

Cottonseed Oil 0 27

19 54
Chicken Fat 11 30

47 22
Lard 12 41

47 12
Animal Fat
Shortening
9
44

47 5


Beef Fat 14 51

44 4


14

Palm Oil 0 51

39 10
Butter 33 54

30 4 12
Coconut Oil 0 77

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Brand Objectives
Achieve volume objectives
Set up a distribution network
Build a dealer franchise
Build equity with customer

Strategic Objectives
To achieve leadership in the refined oils market
Set up state-of-the-art manufacturing facilities in the heart of the oil belt
Enter through a range of multibrand oils offerings
Ensure the best in quality, packaging, pricing and focused distribution
Growth Strategy o Expansion through concentration o Expansion through integration o
Expansion through diversification
o Expansion through cooperation

Marketing Mix
Product
Cholesterol is a soft, waxy substance which is an important nutrient for the brain,nerves, muscles
and heart. However if too much cholesterol circulated in the blood, it can build up inside the artery
walls. It can slow the flow of blood and eventually damage the heart. The body typically supplies or
produces all the cholesterol it needs; therefore none is needed in the diet. Saffola oil is a superior
oil.it is excellent for frying. Due to its mild flavor, it is an all purpose oil. It has no off-flavors when
cooking and frying.

"Grown without pesticides" means that no pesticides are used on the farm to grow the crop. In
addition, pesticides are not used throughout harvesting, processing, and storage of the seed or oil.

Saffola's farming methods do not pollute the crop, soil, underground water or the air. In addition,
farm workers are not exposed to any pesticides while working with Saffola "grown without
pesticides" crops.

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Price

This increase in market share is despite the fact that Saffola is available at a higher price point to
Sundrop. Saffola is priced at Rs 80-Rs 140 for various stock keeping units. Sundrop, on the other
hand, comes at Rs 65, going up to Rs 120.
With upbeat demand on fresh buying owing to marriage and festive season in India, edible oil prices
are expected to stay firm with imports playing a key role in keeping a check on the prices. The crop
estimation from rabi oil seed cultivation suggest a marginal drop against the previous year.
At the moment, there is a fierce battle for market share in the super-premium-refined-edible-oil
category. A C Nielsen data for the month of December 09 shows that Saffola had a lead over
Sundrop in terms of volume share. It stood at 54 per cent for Saffola and 46 per cent for Sundrop
respectively.
Place
Marico already had a very large existing distribution network. They used that network only for the
distribution and tried to place Saffola initially in High value outlets and gradually after moving to
different price categories they increased the reach of the product to general stores. But most of the
rural area is still untapped.
Supply Chain
Promotion
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The Saffola cooking oil, for instance, plugged the need for a product that was simply, healthy for the
heart. Advertising over the years (since the early 1990s, to be precise) dwelt on what regular edible
oils did to the vital organ - build cholesterol that is - eventually damaging the heart. Used the
health platform by showing testimonials from doctors in advertisements
Advertisements focused on creating a strong franchise among consumers having heart, blood
pressure and health problems.
Focused on reduction of cholesterol
To win the faith of high income groups they showed Saffola as a Branded oil
This clever appropriation of the space with communication that played on the agony of almost losing
a loved one to a heart attack did the trick. Saffola today is synonymous with preventive heart care in
the country. As Harish Bijoor, chief executive officer, Harish Bijoor Consults, says, Saffola means
heart. That is the positioning in the minds of people. Ironically, allied marketers could have played up
this virtue. They did not. Saffola did.

Profits
Maricos second flagship brand, Saffola, is positioned strongly on the good for the heart platform
and rides the trend in increasing concern around health and heart health in India. With this increasing




Raw

Material

Vendors

Direct

Distributors

Plants

RDC

Depots

Super

Distributors

Retailer

Stockists

30 depots

6 ) RDCs (regional distribution centres

Total > 1100



Secondary Sales

Primary Sales

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awareness several households have begun using Saffola, as part of their adoption of a healthier
lifestyle. The super-premium niche of the branded refined edible oils market thus continues to
expand. During Q1 FY11, Saffola refined oils recorded a strong volume growth of 17.5% over Q1 FY10
and continued to maintains its leadership position. The higher volumes are expected to increase the
customer base for Saffola as the brand has a high retention rate.
Saugata Gupta, CEO-Consumer Products, commented, We are encouraged by the expansion in
franchise across all major segments especially premium refined edible oil. This sets us up to deliver
strong volume growth during the year as planned.
Saffola: An increase in the market share with a reasonable pricing premium over the other edible oils
and the promotion of the brand on the health and wellness platform would ensure Saffola achieves
above 13% volume growth in the coming years. However, due to the recent price reductions and
promotional add-ons on the key variants, the overall value growth of Saffola would remain subdued
in Q1FY2011 and Q2FY2011.
Value Chain

Concept: The value chain categorizes the generic value adding activities of an organization. The
"primary activities" include: inbound logistics, operations (production), marketing and sales
(demand), and services (maintenance). The "support activities" include: administrative infrastructure
management, human resource management, technology (R&D), and procurement. The costs and
value drivers are identified for each value activity.

Primary activities:
Inbound logistics:
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These are the activities concerned with receiving the materials from suppliers, storing these
externally sourced materials, and handling them within the firm.
Here goods are received from a company's suppliers.
They are stored until they are needed on the production/assembly line. Goods are moved around
the organization.
They purchase their raw material from all around the world.
In order to maximize their availability of raw material they maintain good relationship with their
suppliers.
They use JIT (Just in Time) approach for handling of raw material.
Operations:
These are the activities related to the production of products and services. They are known for their
reliability which comes from efficient operations.


Outbound logistics:








Profit Profit margin
Margin








Administrative Infrastructure Man agement
Human Resource Management
Technology (R&D)
t Procuremen

Inbound Operation Outbound marketing services
logistics logistics & sales
Primary
activities

Support
activities

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These are all the activities concerned with distributing the final product and/or service to the
customers. They manage their Distributor and Super Distributor in different rural and urban area.
They make their product easily assessable.

Marketing and sales:
This functional area essentially analyses the needs and wants of customers and is responsible for
creating awareness among the target audience of the company about the firms products and
services. Companies make use of marketing communications tools like advertising, sales promotions
etc. to attract customers to their products. MARICO focuses more on TV ads and magazine for
marketing. This area focuses strongly upon marketing communications and the promotions mix.
Service:
There is often a need to provide services like pre-installation or after sales service before or after the
sale of the product or service. This includes all areas of service such as final checking, after-sales
service Like quality, quantity, packaging, weight etc.. MARICO values their customers.
Support activities:
Procurement:
This function is responsible for purchasing the materials that are necessary for the companys
operations. An efficient procurement department should be able to obtain the highest quality goods
at the lowest prices. They aim to secure the lowest possible price for purchases of the highest
possible quality. MARICO will be responsible for outsourcing and e-Purchasing (using IT and
webbased technologies to achieve procurement aims).
Human Resource Management:
This is a function concerned with recruiting, training, motivating and rewarding the workforce of the
company. Human resources are increasingly becoming an important way of attaining sustainable
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competitive advantage. Employees are an expensive and vital resource. MARICO manage
recruitment and selection, training and development, and rewards and remuneration. MARICO
consider their employees as HUMAN CAPITAL. Equal support comes from our HRD team, which
expends its energies, formulating and building strategies to build a stable and high - talent
organisation. The innovations and the quest for excellence at Marico continue unabated. Even as the
success stories continue, the focus from the consumer never shifts.
Technology Development:
This is an area that is concerned with technological innovation, training and knowledge that is crucial
for most companies today in order to survive. They believe that technology is an important source of
competitive advantage and try to innovate to reduce costs and to protect and sustain competitive
advantage. MARICO implemented production technology, Internet marketing activities, lean
manufacturing, Customer Relationship Management (CRM), and many other technological
developments.
Firm Infrastructure:
This includes planning and control systems, such as finance, accounting, and corporate strategy etc.
This activity includes and is driven by corporate or strategic planning. MARICO implemented
Management Information System (MIS) and other mechanisms for planning and control in different
departments.
Environment Conscious: Saffola has taken further steps with their packaging to provide an
environmentally responsible product. Saffola purchases plastic packaging from plastics suppliers that
are taking part in voluntary recycling programs. All of Saffola's plastic packaging carries the triangular
arrow recycling symbol on the bottom of each bottle. The new retail-size bottles are made of PET
plastic and take up less shelf space, and require less packaging in their shipping cartons.
Differential Advantage for Marico over competitors in terms of

Ability to design new products:
In house production no outsourcing high reliability suppliers superior quality assurance.
India and foreign production location spread benefit.
Plant location as per raw materials availability
Ability to deliver the service:
big distribution channel

Ability to Market:
Various Products, Domestic and Foreign market gainer
Wide variety of product
Low company image
Low promotion
Fixed price


Ability to finance:
High cost capital, reserves & surplus Cash management
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Centralized payment Decentralized collection
Ability to manage:
Human resources high calibre.
Quality management & personnel par with competition
Good personnel system
Good industrial relation with other company
Expected future strategies
Brand Extension: During Q4 FY10, Saffola Arise was launched across key Saffola markets, at
invitational pricing and has been supported by insightful advertising. The initial performance has
been encouraging with indications that repeat purchases are taking place. With its health
positioning, the company hopes to create a sizable franchise for itself, in the rapidly growing Rs.
400 Cr packaged rice market, over the next two to three years. In line with its strategy to launch
foods under Saffola, the company introduced Saffola Oats in the month of June 2010. The
product is being prototyped primarily in the Modern Trade format, in select cities across India
International Business: The Company launched the Saffola brand of edible oil in international
market recently and hopes to post strong revenue growth and improved profitability. Marico is
confident of achieving around 20-25% growth in its international business.
Insight: Health more universal than initially defined by Saffola. Now they have started focusing on
overall
a. Maintenance of health
b. Family health

Problem Recognition
In early nineties, there was low brand specification at the time of purchase, meaning many
consumers simply asked for a Cooking Oil and did not specify a particular brand. There was no
awareness among people regarding the effect of cooking oil on their health. By the name cooking oil
customer only means that he needs oil in which he can cook. The Saffola cooking oil, for instance,
plugged the need for a product that was simply, healthy for the heart. Advertising over the years
(since the early 1990s, to be precise) dwelt on what regular edible oils did to the vital organ - build
cholesterol that is - eventually damaging the heart.
Alternate Generation

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Consideration
Set
Moving from
appropriateness
to uniqueness
During this era the consideration set primarily comprised of its
key competitors such as SUNDROP, DHARA, FORTUNE etc.
Later on Saffola came out with different products to cater to
different segments.
Saffola GOLD - Saffola Gold has the unique composition of 80%
Rice bran Oil and 20% Safflower Oil.
Saffola Tasty - Saffola Tasty was the first Saffola blend. This oil
blend provides the benefits of two oils, thereby giving added
value to the consumer. It provides the high PUFA from Safflower
(Kardi) oil and the taste of Corn oil.
Saffola Active - Saffola Active provides Omega 3 and Oryzanol,
two important compounds known for promoting heart health.
This comes to you without odour. To get these benefits Saffola
Active is made with Rice Bran Oil and Soya bean oil. Saffola
Active also contains Vitamin E.
New Saffola - New Saffola comes with new ingredients. New
Saffola, a blend consisting of Safflower (Kardi) Oil (60%) & Rice
Bran Oil (40%), contains Vitamin E. Vitamin E is a well-known and
potent antioxidant.

Information search
Technical
and
Functional
Info
From 2005-06, SAFFOLA has become renowned for its expertise in Heart Care,
thanks to the consistent introduction of innovative product like heart healthy
cooking oil and foods. Saffola's products are the first in line of defense against heart
diseases.
During this era its image changed from a mere Cooking Oil to a responsible brand
whose philosophy is to help people get the most out of life, Saffola always
promotes the adoption of a healthier lifestyle for heart.

Evaluation
Attributes There are many players in the market and consumers had little experience and
expectations. People are basically evaluating these products based on price.

Purchase Decision
Place utility High Main source of the purchase of Cooking Oil for people is Kirana stores in
earlier days and now a days lot of urban consumers buy it from retail stores like
Reliance Fresh, Big Bazaar, More stores etc.
23

Time utility Moderate Earlier the time utility was low but in later on the time utility picked up
due to increasing rush in busy urban life.
Form utility Medium There were 2 variant available in the Cooking Oil. Can of 5/10/15 Litres
and 1 Litre plastic pouch. This was standard for most of the competitors.
Quality Over the years, the brand Saffola has become renowned for its expertise in Heart
Care, thanks to the consistent introduction of innovative product like heart healthy
cooking oil and foods. Saffola's products are the first in line of defences against
heart diseases, making transition to a healthier lifestyle a lot easier. This is a clear
advantage against its competitors.
Buying Behaviour
During this era of health conscious people, there is a natural inclination towards taking less
cholesterol and so taking good quality of oil, but this is a case of urban India, for rural India this is
still a challenge to educate the people about the health effects due to consumption of Oil. Saffola
has taken lot of initiatives to do it. Lot of advertisements and campaigning to educate people about
the effects of cooking oil on heart. Their all the advertisement are focused towards the health
aspect. For example their tagline is Jeene ka andaaz sudhariye. (Improve your style of living).
Segmentation
Type of Segment State of being Suitable Product
Geographical:
Urban India (Metro
cities)
Rural India (Small towns
& villages)

Need satisfaction
Health Consciousness

Need Satisfaction
Saffola Gold, New Saffola,
Saffola Active, Saffola Tasty
Saffola Tasty
Demographic Healthy oil was preferred by educated
Housewives and not by uneducated
rural women
Saffola Gold, New Saffola,
Saffola Active, Saffola Tasty
Behavioural
Segmentation
Price
To compete with different brands
available in market, Saffola launched 4
different variants with different
prices.
Saffola Gold, New Saffola,
Saffola Active, Saffola Tasty

Targeting
Targeted
Segment
Evaluation Parameters
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Urban India:
Indian Upper
Middle Class
Twenty percent of the countrys population lived in urban areas or large cities
and consume11.2 Kgs of edible oil per year while the vast remainder lived in
rural areas, villages, and small towns.
Saffola focused mainly on Urban population because of its high quality product
and benefits are very difficult to explain to the rural India.
Healthy oil category was undifferentiated in the minds of rural India

Rural market was very unattractive because of following reasons:
Per capita consumption is quite low
Poor rural infrastructure & consumption habits were very different from the
urban people and were two major obstacles to enter rural markets.
Affordability is a great factor for the reluctant of rural people buying Saffola
which is a high premium brand.
Age group- All Indias most of the people are influenced by the western culture so they had a
good potential for healthy eating habits.
Keeping in mind about the health conscious people which are present in all age
group, Saffola has kept its uniqueness of providing a healthy oil which is less on
cholesterol and hence good for heart.
Lower Income
group
Lower income group was more or less not entertained by Saffola due to quality
product and cost cutting is not easy for them.
Educated
Youth
Saffola created awareness in youth towards the health implications of cooking oil
and launched ads to educate youth which they named as Saffola Cholesterol
Management.

Positioning
Product Type of
positioning
Strategy
Saffola Gold Perceived
Quality
Position it as a premium brand for health conscious people. A right
combination of Safflower Oil and Rice Bran Oil is more effective in
reducing cholesterol than each of the oils singly.
Saffola Gold has the unique composition of 80% Rice bran Oil and 20%
Safflower Oil.
Saffola Tasty Perceived
Taste and
Quality
Saffola Tasty was the first Saffola blend. This oil blend provides the
benefits of two oils, thereby giving added value to the consumer. It
provides the high PUFA from Safflower (Kardi) oil and the taste of Corn
oil.
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Saffola New Perceived
Quality

New Saffola comes with new ingredients. New Saffola , a blend
consisting of Safflower (Kardi) Oil (60%) & Rice Bran Oil (40%), contains
Vitamin E. Vitamin E is a well-known and potent antioxidant
Saffola Active Health based Saffola Active provides Omega 3 and Oryzanol, two important
compounds known for promoting heart health. This comes to you
without odour. To get these benefits Saffola Active is made with Rice
Bran Oil and Soyabean oil. Saffola Active also contains Vitamin E.
Demand Drivers
Macroeconomic factors : Population growth, per capita income, purchasing power, oilseeds
crop
Other factors : Prices - domestic/ international, Availability - oil, oilseeds Influence of branded
products - `health message Growing preference for convenience foods.
With steady growth in population and personal income, Indian per capita consumption of edible
oil has been growing steadily.
Key Success Factors
Raw material sourcing : focus on improving yields, getting better quality oilseeds , ensuring
regular supplies - through symbiotic relationship with farmer
Branding essential for success (Vanaspati - Dalda, Oils - Sundrop)
Better distribution network to improve reach
Efficiency in operation - to become price competent and withstand overseas competition
Proposed Future trading in edible oils will help curtail price volatility and lend knowledge - based
assistance to farmers of eliminate unofficial markets.
Future
In the next 5 years, the market for o Edible oils will grow by 8% to 12.65 million MT o Vanaspati
will grow to 1.5 million MT
Free imports, low import duties and slump in global prices - lead to `dumping
Domestic industries of edible oils and vanaspati affected - low realisation and idle capacities in
oil and vanaspati industries
Currently, India accounts for 7.0% of world oilseeds output; 7.0% of world oil meal production;
6.0% of world oil meal export; 6.0% of world veg. oil production; 14% of world veg. oil import;
and 10 % of the world edible oil consumption
The demand for edible oils is expected to increase from Oil Year 2004-05 levels of 10.9 MT to
12.3 MT by 2006-07 (two years). This assumes a per capita consumption increase of 4% and a
population growth of 1.9% which translates to an overall growth in demand @ 6% p.a. Based on
the above assumptions, edible oil demand in the year 2015 is expected to be 21.3 million tonnes.
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Business Concerns
Production slippages have also forced imports
Excessive (cheap) imports of oilseeds - led to unremunerated prices, locally
Hence, farmers have shifted to other cash crops
Increasing health awareness - impact of oils and vanaspati usage on individuals cholesterol
levels.

Be More Everyday.
The Purpose of Marico is its reason to exist beyond making profit.

To transform, in a sustainable manner, the lives of all those we touch, by nurturing and
empowering them to maximize their true potential.

Marico sustained its profitable growth, by attempting to maximize the potential of the multiple
stakeholders in each sphere of their business, in India and overseas - be it farmers whose
communities they sustain - or consumers whose lives they have endeavored to transform through
wellness and beauty solutions.

Turning fallow land into a profitable business. We pressed the right buttons.

Marico continuously benefit safflower farmers by implementing various initiatives for them. They
made contracts with the farmers to grow safflower a hardy non-seasonal crop that grows in harsh
conditions. Marico helped them maximize the potential of their unused land, turning their losses into
thriving profitable business.

By forging win-win partnerships across every link of the supply chain, we have increased the
growth and sustainability of our business, yielding winning results time after time, year after year.
The net sales have grown by 13% to Rs 790.15 crore. This was led by volume growth across
categories. Volume growth was at 16%. Saffola refined oils recorded a strong volume growth of
17.5%

The input prices lowered by 22% with respect to previous year. Brand passed on a part of this to
consumers using a strategic mix of promotions and price reductions across select packs during the
year to keep the premium over other branded refined edible oils at sustainable levels. This was
supported by a media campaign and other marketing efforts. Higher volumes are expected to
increase the customer base of Saffola as the brand has a high retention rate. Households buying
Saffola have steadily increased with the number of households estimated to have gone up by over
12% during FY10. The Saffola refined oil franchise continues to hold its market leadership position in
the super premium ROCP (Refined Oil in Consumer Packs) segment.

In the longer term, Saffola would like to establish itself as a leading healthy lifestyle brand. It has
commenced its journey in the functional foods space and plans to have a basket of offerings that
provides healthy food options throughout the day to individuals conscious about heart health. During
Q4 FY09, Saffolas key markets at an invitational price and has been supported by insightful


27

advertising. The initial performance has been in line with expectations. With its health positioning,
the company hopes to create a sizable niche for itself over the next two to three years.

Saffola is encouraged by the expansion in franchise across premium refined edible oil. This sets us
them to deliver strong volume growth during the year as planned. Marico's international business has
had a satisfying journey over the last few years. It feels confident that it will continue to find and
leverage the right growth drivers, in their quest to build a sustainable business that contributes
meaningfully to the Marico Group's strategic objectives.
Customer Targets

Saffola is targeting busy and health conscious cooking oil consumers.

Saffola is leveraging the current leaning towards the health trend, the wellness concept in an
innovative manner. The busy executives and professionals who come across stresses in both
professional and personal life are very much health conscious (especially heart related issues) and
they prefer to use cooking oil like Saffola.

Wives of professionals who are very much conscious of heart and cholesterol content of their
husbands shall also prefer to use Saffola.

Low absorb technology (LoSorb) used by Marico helps Saffola Cooking oil to be stable during
deepfrying. Food fried in Saffola oils absorbs less oil and thus reduces the consumption of oil in diet.
So, normal household wives who very much cost sensitive shall prefer Saffola as their cooking oil.
Saffola is still considered as a premium product. Its price is fixed at a very higher level than its
competitors. So there is already a gap for medium price ranged product from Saffola.
Also Saffola doesnt emphasize in taste attribute. Bettering taste along with its health image can
substantially increase its market share. Saffola has already launched Saffola Tasty brand but it is still
to gain popularity.

Competitor Targets

Its competitors are targeting mainly the lower income segment of consumers as the premium
charged for Saffola is high. Also competitor, like Sundrop, emphasizes on Taste of cooking oil.

Core Strategy
Value proposition

It provides certain advantages that look after ones health condition as well as the consumption
amount of cooking oil:
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It focuses on urging people to adopt a healthy lifestyle. One of the major concerns today is the
occurrence of heart disease and every fourth Indian being under threat. And adopting Saffola as
your familys cooking medium is one big step that you can take towards safeguarding of your
family.
Heart healthy nutrients in RBO such as tocopherols, tocotrienols and oryzanol are known for
their cholesterol lowering ability.
This has the highest levels of Linoleic acid, an omega-6-polyunsaturated fatty acid, which is well
known for reducing cholesterol levels.
All Saffola oils come with 'LoSorb Technology'. Food fried in Saffola oils absorbs less oil and thus
reduces the consumption of oil in your diet.


Product Positioning

Demographic Segmentation:

Basis of segmentation is income, occupation and age as follows;

Income Occupation Age
High Income Groups Housewives 21-40 years of people
Middle Income Groups Working Professionals Above 40 years of people

Targeting:

On the basis of the above matrix, Saffola will be targeted at the following segments;

Segments Key Features
Middle/High Income
Group
Saffola serves the purpose of cooking oil which takes care of Heart disease.
Saffola tasty serves Middle income group also. Less consumption goes well
with Middle income group.
Housewives Takes care of husbands health.
Working Professionals Working professionals who go through a stressful ambience in office are
conscious about health and especially heart. Saffola is a wise choice.
Age above 40 years This group of people are more vulnerable to Heart Disease. So Saffola is a
definite choice.

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Perceptual MAP for SVS


The above figure shows the perceptual map for Saffola cooking oil. SVS is to be positioned based on
two parameters Health Conscious Image and Price. It is to be rated high in health conscious image
and low in price because of the following reasons:
Competition is less in this particular
attribute. It develops a Credence attribute.

Integrated Marketing Communications Programs
In 1993, after a thorough analysis of heart disease patients, Marico decided to position Saffola as
Good for your heart and the slogan Healthy Oil for Healthy People. Marico first created fear in the
minds of people about the incidence of heart attacks and then presented Saffola as a preventive.
Saffola was also prescribed by doctors, as it was low on cholesterol. Saffola was awarded the Brand
of the year in 1993 by the Advertising Club of Bombay.
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In the same year, Marico launched the Saffola Healthy Hearts Foundation (SHHF), to educate
consumers about heart care and healthcare. The Foundation provided easy-to-read-and understand
consumer information booklets and useful reference material like emergency directories. It also
conducted free heart check-up camps that provided ECG, cholesterol, sugar, blood pressure testing
besides advice from eminent cardiologists.

The Foundation also arranged for free counselling and diet guidance from dieticians. It actively
participated on important days like World Health Day, World Heart Day and Doctor's Day to spread
awareness about preventive health care. Integrated Marketing Communication Program used all 4
Ps of marketing together;
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Pricing strategy of Saffola

Saffola has different products to suit different customers. Marico's reasoning is that since Saffola oil
commands a premium of 10 to 15 per cent over other edible oil brands, the company should be able
to cater to the demand of the all the customer from different purchasing power groups. The
company wants to leverage the Saffola brand equity through brand extension.




32


Their Main strategy for price discrimination is to make customer aware that the different price are
associated with different products which are suitable for different needs.

Channel Strategy






Saffola is using wholesale distributors, Big Malls, Grocery stores etc. as their distribution channels to
result in meeting the customer needs effectively and efficiently.
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Saffola was using their key strength which was showing the oil as the healthy oil for people, this is
their USP for selling the oil at even premium over the competitors.
Even Saffola has gone to the extent of launching the website especially for the health care for the
consumers. www.saffolalife.com
On the brands homepage, the sites colour scheme is reminiscent of the brands bright yellow
packaging that stands out in grocery stores. Sticking to its objective, the site has all the necessary
tools to effectively characterize Saffola as a health-conscious brand. The Eating Right section
educates the reader about nutrition myths, beverages, health benefits from particular plants and
other pertinent health topics The Healthy Heart link on the homepage transports the web user to a
section that outlines the initiatives the brand has taken in the community. The company has
organized several outreach programs, and details on such events are available online. Corporate
social responsibility is an important facet of any brand today, and Saffola does an admirable job
describing these initiatives on its site.
Saffola had always focused on the heart. The brands image had suffered a setback in the early 2000s
with the ambulance commercial, which portrayed that one had to rush to the hospital if he did not
use Saffola. Later, Marico changed Saffolas positioning, focusing on the health of the entire family
with its Sehat se jeena hai campaign. Since the overall health positioning did not yield results, Saffola
was moved from the family health positioning, once again to the original heart care positioning in
2004.
In February 2004, Marico launched a fresh advertising campaign for Saffola, after a gap of two years.
The campaign by Grey Worldwide had a new tagline, Aaj se jeene ka andaaz sudhariye (Improve your
lifestyle today), urging every Indian to take up a healthy lifestyle. The TV Commercial focused on a
little girl approaching various groups of people to pass on the message of heart care. The new
campaign was based on research done by SHHF. Almost one-fourth of the country's population was
vulnerable to a heart related ailment and a majority was unaware of the risks related with heart
problems.
In September 1999, Marico launched a website to provide information on heart care through dietary
intervention. Targeted at health-conscious consumers, the website offered a personalized diet plan.
The site also offered general information on heart care and healthy food habits. In 2000, SHHF
launched a multi-level awareness campaign, where a select group of housewives distributed
literature on heart care to friends. The friends in turn spread the initiative to their friends and so on.
The motive was to convert each consumer into an agent for spreading Easy to follow tips for a
healthy heart, to strengthen the association between Saffola and heart care.

Research
Maricos Research & Development center, continuously work towards incorporating the latest
technological advances in all their products. This ensures that any product, which comes out from
Saffola, incorporates the latest learning in the field of heart care. According to Dr. Sudhakar Mhaskar
from Maricos Research & Development Center, We continuously strive to innovate products to
improve the healthy living of the people. To achieve this target we put lot of emphasis on R & D
which leads to enhance the oils ability to maintain a healthy level of total, LDL & HDL cholesterol in
the body. Every product from Saffola is made through an exclusive protection technology called
34

Losorb that makes the oil more stable during deep-frying. No other oil or blend of oil in the country
has this technology. When food is fried in Saffola gold, there is lesser of the unhealthy degraded
compounds formed. This kind of health initiatives is the core of Saffolas strategy and they spend a
handsome amount of money in R & D to keep their product superior.




Financial Budgets
Marico uses the following techniques for allocating funds for promotion.
Percentage of sales method Marico is currently using this method. In this approach the
budget is determined by taking a fixed percentage of the sales. Maricos expenditure on
advertising and sales promotion is 13.2% of sales in 2009-2010 as compared to 10.2% in the year
2008-2009. Out of the allocated budget the ratio of advertising to sales promotion expenditure is
40:60 and out of the 60% allocated to sales promotion, 40% is spent on consumer promotion,
50% on trade promotion and 10% on sales-force promotion.
Unit of Sales method - This method is used for highly priced goods or consumer durables
wherein a promotion budget is arrived by multiplying the units of goods sold with a fixed
amount.
Competitive parity method In this method the budget is decided by what others are offering in
the market. This method is to use as the only information required is about the amount of
money spent by the competitors.
All-You-Can-Afford Method In this approach to budget allocation, the amount that is left over
after all relevant allocation have been earmarked for sales promotion. This approach is generally
taken by small companies with small budget.
Sl. No Metric(Value) Construction Considerations Purpose
1 Revenue
Market
Share (24%)
Sales revenue as a
percentage of
market sales
revenue
Scope of market
definition
Measure of
competitiveness
2 Unit Market Share
(54%)
Unit sales as a
percentage of
Market Unit sales
Scope of market
definition
Measure of
competitveness
35

Objective-and-Task Method In this method the promotion manager starts by making thorough
study of the market, the product, and competition and consumer behaviour in order to set
appropriate promotion objectives. The next step is to decide how much money will be required
to achieve the objectives. If the cost happens to be more than the money available, then either
the promotion objectives are adjusted or more funds are made available from the contingency
reserve or by reducing the budget from other promotional activities.
Marketing Metrics
Set up a team that would monitor operations so that problems are revealed much earlier and we can
be proactive rather than reactive. This team would monitor market place and financial results as well
as the implications of any other changes (like govt. policies, legal obligations, consumer behaviour)
and other aspects that have been identified as threats in the SWOT analysis.
We should go for a periodic review and analysis of our corporate strategies, market strategies,
pricing philosophy, positioning philosophy etc. This would just give an insight when to launch a
contingency plan.
At present we are in a very good position in the market and enjoying a virtual market leader position
in premium health edible oil category. However if in near future some competitor arises, we will
have to revisit our strategies to either develop the market barriers or to come up with the superior
products to regain our supremacy.
3 Relative Market
Share(54/46=1.173)
Brand market
share divided by
the largest
competitors
market share
Can use either unit
or revenue shares.

Assesses
comparative
market strength.