Popularity without promotion

Dr Amit Rangnekar www.dramitrangnekar.com

Case learnings
Marketing strategies of a local brand going national NPD of Natural Scaling up strategies Insights into the dynamics, competition and consumer behaviour in the ice cream market

Defining moments
Raghunandan Srinivas Kamath 1960s- Failed Class VII, in Mangalore, packed off to Mumbai 1984- Fell out with brothers, opted out of ice-cream business Gokul's 1994- Lost everything in tax arrears to IT Dept, lesson learnt led to expansion

Indian Ice cream market

Indian ice cream market Rs 2,000 crore @ 20% India PC ice-cream consumption 106 ml pa, US 22 liters, scope Organised players 45% share (Rs 900 crore) Gujarat 18% share- Rs 162 crore, Ahmedabad Rs70 crore Vanilla+strawberry+chocolate=70%; Butterscotch+dryfruits= 20% Catchment- After dinner, movies, malls; home delivery growing Unorganised sector- Kulfi, candy, ice fruit reign

Players
West 39%, North 28%, South 18% and East 15% Highly seasonal- Apr-Jun 47%, winter sharp fall Maximum promotional campaigns Takeaway and impulse (spot buying) segment Mothers Dairy 10 crore ad spend, 2000 TV spots National majors- Amul (39%), Walls (11%), Mother Dairy (10%), Vadilal (9%), Baskin Robbins (3%) Regional majors- Pastonji & Dinshaw- Maharshtra, HavmorGujarat, Arun- South, Nirulas- North Metro majors- Natural, Gelato Price insensitive

Amul
1996 Gujarat, 97 Mumbai, 98 Chennai, 02 National 2001- No 1 in India, now 39% NMS, 4X Walls 220 products (flavours, packs, SKU) Positioning- Real Milk. Real Ice Cream SKU- sticks, cones, cups, family packs, catering/institutional pack Competitive advantage- cost leader in milk, national cold chain Penetrative price + relentless promotion+ Amul brand equity 2007- Sugar free & ProLife Probiotic Wellness Ice Cream Indias largest food brand

Walls
Kwality- National leader, acquired by Walls (HUL)1995 Kwality- in-depth knowledge of Indian market Unilever- largest global ice cream maker- $5bn Promoted as frozen desserts to be competitively priced, no milk Batterred by Amul on price & milk front The Global Scoop Unilever is the world's biggest ice cream manufacturer, with an annual turnover of 5 billion

Vadilal
Focus on ice creams Gujarat based, local to national player Reasonable prices, exclusive ingredients, easily available Daily production capacity 1-lakh liters 200 products (flavours, candies, cones, cups, party and family packs and bulk packs SKUs). Launch 1 new flavour every month NPL- low fat desserts Flavors- regular strawberry, vanilla, butterscotch and chocolate, + exotic Fresh Fruit Fantasies, Nutty Delights and Romantic Ripples

Mother Dairy
Mother Dairy growing @30% NDDB subsidiary, milk & curd major Focus on premium range of ice-cream Rs 170-210 for 1-litre tubs North, AP, Mumbai and Kolkata Own retails outlets, booths, carts and kiosks. Traditional flavours- Firdausi Kaju Kishmish, Zafrani Kesar Pista and Shahi Meva Malai (mix of kheer and basundi flavours) NPL- vitamin C-enriched Lic Lolleez Penetrating distribution and cold chain

Ice creams- perceptual map

Traditional Industrial Haagen Dazs

Expensive

Gelato Baskin Robbins Nirulas Vadilal Arun Havmor Pastonji Dinshaw

Walls

Affordable

Mother Dairy

Natural
Amul

Natural- Origins
1984- Fell out with brothers, opted out of Gokuls On his own, focus on traditionally made ice creams Completely natural, no artificial flavours or preservatives Industrial ice creams- 2 key players- Kwality & Vadilal Investment- Rs 3L (Settlement+ Own+ friends), Juhu outlet "Mumbai gives everyone a chance, so I was not scared to experiment here. I hired 3 people and insisted my just married wife also join me in the business. I did not spend too much doing up the interiors; I kept my outlet simple. I had faith that my products would speak for me.

Ice cream insights

Whenever Indians wanted to embellish a seasonal fruit, they often poured milk on it. Why not do the opposite, embellish my traditional milky ice cream with fruit? I knew about fruit, and it was easy for me to choose the best ones as my father dealt in fresh seasonal fruits and had taught me about the fruit trade- how to check fruit ripeness, where to get quality fruits. So I decided to add slivers of whichever fruit the customer asked for, to my traditional, natural ice cream, in effect, kulfi + fruit. Thus the brand Natural was born.

Spreading sweetness
1994, decade of success, expansion Childhood friend, Girish Mallya (SBI) joined "The customer is a good teacher. Some of my customers would give suggestions about flavours, even tell me how people are getting innovative with fruits and ice creams in places like Africa and Singapore. I took all the suggestions seriously.

Manufacturing sweetness
Traditional ice cream making- manual, slow & laborious 3 steps- Boil milk in a kadai, make rabri and cool it TQT method- taste, quality and traditional method No stabilisers or artificial colours Challenge- consistency, taste Resistors- automation and scaling up

Manufacturing facility
Sole factory- Charkop, Kandivili- 4500 sqf No equipment to make traditional ice cream or peel fruit Developed equipment to enhance the process Sitafal was the biggest challenge as it has to be manually deseeded. One person can deseed only 2 kgs in a day manually. Eventually, we developed a machine to do it, and now we deseed over 500 kg sitafal everyday. As we use lots of fresh fruits in our ice cream but do not use any preservatives, distribution is a key challenge as fresh stocks only have to available at our outlets. Batch production to ensure freshness

Sourcing
Dedicated suppliers for milk and sugar Exotic fruits from fruit growers Sitafal-Saswad, MangoRatnagiri Regular fruits and dry fruits from major markets Local sourcing

Flavours

15 fruit flavours in 3 months Combining traditional ice cream with fruit- super hit Instant hit- Sitafal, first sunday after launch- 300 scoops Extension- tender coconut, chikoo, jamun, musk-melon, papaya, apricot, water melon, melon, pineapple, jack fruit "We became popular purely by word of mouth 2009- 100 natural flavours, now combinations NPL- raw mango flavour 'Pickle- lapped up Consistency in flavours- biggest challenge

Pricing strategy
1984- Value for money pricing Rs 8 for 2 scoops, high value 2009- Rs 25/cup, Rs 28 a scoop, VFM kg Tubs @Rs 135 Waffle cone- Rs 4, Amul Rs 4, Baskin Robbins Rs 11 Round the year flavours- chocolate & dry fruit range, badam, kesar pista and anjeer, apricot, tender coconut Seasonal flavours- chickoo, sitaphal, pineapple, Lichee, jack fruit, mango & water melon All flavours priced the same, except for fresh fruit toppings

SKUs (Check Menu)

Special packs Tubs litre packs Cups, cones , waffles Seasonal sundaes No Family Packs, Candies Scope for value addition

Service
Tasters Friendly service Happening ambience Home delivery- Numbers to avoid delays Special storage boxes for trips & picnics Crowds- cues

Franchising
For faster expansion, better penetration Less investment ensures more management focus on key areas Exclusive outlets Rs 12-15L deposit + commission Mumbai/ Maha outlets catered from Mumbai facility Ahmedabad outlet- special packaging (Railways) Delhi, Bangalore (airlifting explored)

Key drivers
Unique traditionally hand-made taste Creamier and richer but distinctly Indian taste 100% vegetarian ice creams- pan community acceptance Eatable any day of the year Fruity flavours instant acceptance Natural (sans preservatives) appeals better Constant innovation with fruits & combinations

Competition
Differentiated brand VFM pricing No advertising, pure WoM When Natural came on the scene, Yankee Doodle and Vadilal were already established players. We created a stable niche. Mumbai is receptive to changes, they like to try out new things, but they are also very loyal customers. Even though the market is flooded with new products, there will always be customers, including new ones everyday. Many try to imitate us but we stay ahead by continuously launching new flavours, innovative and convenient packaging, and efficient service.

Financials
1984- Rs 3L investment Lean set up helped manage initial hiccups 1st Sunday- Rs1400 from 1st 300 scoops (12kg) Sitafal icecream sold

2009- Sales Rs 25 cr Rs 10L from 3.5T ice cream daily Net profit Rs 1.5 cr, to double to Rs 3 cr in 2010

Geo-Spread
Franchisee model 52 branches- Mumbai, Pune, Thane and Ahmedabad 2010- Delhi and Bangalore Juhu Scheme branch still big money-spinner, Rs 3.5 crore pa Tap home delivery- 33% sales Start all-India phone/net service

Limca Book of Records

Ice cream slab (strawberry) 12 feet L*12 feetW*5 feet height*2.5 feet thickness, weighing 3,000 kg To celebrate silver jubilee anniversary of Naturals NPL jack fruit to celebrate Mangalores contribution to Naturals

Idol
Dr TMA Pai of Manipal Dr Pai collected small savings from every household, even 50 paise, and promised a Medical College and a bank (Syndicate Bank) in return. His vision was so clear from the point he decided to undertake the journey.

Sweet ambitions
Now called Our Times Ice Cream Pvt Ltd Stay focussed on ice creams 25 years to open 50 outlets, now opening 50 in 2010 Penetrate most Indian cities Scale up factory from 4,500 to 20,000 sqf From 10,000 to 15,000L daily in 2010 Being a technical person, it is not very difficult for me to supervise such an expansion, we are ready to take the next step forward. NPL- Sugar-free kulfi ice creams Son Shrinivas joined the family business

Diversification
"For the past 5 years, I have been successful. I have learnt several lessons, and now know whom to trust. I have developed a resort at Mangalore, where I have recreated the life of south India and the rich traditions of Mangalore. Spread on a 5 acre plot, the resort is set in a natural habitat. Fruit trees and vegetables grown everywhere. It will be open soon. Nature lover, Lands Flavour Resort, Mangalore-Bantwal national highway in Adyar village

4Ps
Product- Fresh and pure, traditionally made ice cream Price- VFM Promotion- Word of Mouth

Place- Franchised outlets

Natural- STPD

Segment

Urban middle+ fly who celebrates

Target

Traditional & fruity ice cream lovers

Positioning

Fresh, natural & fruity ice creams

Differentiation

Unique taste, exotic fruity flavours

Brand Natural- value proposition

Emotional- pure & natural

EconomicVFM

Functionalfresh, taste, quality

Brand personalitysimple, fun, innovative, specialist

Brand Identity & Image

Brand
Identity Position
Natural, fruity, ice creamunique taste Natural Fruity Fresh

Image (Perception)
Traditional Fruity 100% Veg

Customers Mind

POP & POD

POP Ice cream Milk rich Dry fruit flavours Regular flavours Multi packs Waffle cone Own outlets

POD Traditionally made No preservatives Fresh Fruit combinations

Aakers Model- Naturals

Extended Core
Value

Brand Essence:

Taste

Traditional, pure ice cream

Quality

Fruits

Natural- Kapferers Brand Identity Prism

Physique (Purpose)Taste, Quality Personality (Soul)Pure, Traditional, Fresh

Externalisation

Internalisation

Relationship (Brand to customer)Social, family, ethical

Culture (Brand in customers conscience) Sharing, Indian, unique

Reflection (Customer identifies wrt brand)Value oriented, focused

Self-Image (Customer identifies brand wrt self)Cool, Fun

Kellers CBBE / Brand Equity Pyramid

Building blocks

Active loyalty, connect, engagement, attachment

Quality, credibility, innovation Fruity, tasty, value, exotic flavours, good service, satisfaction
Identity

Cool, fun, excitement Pure, natural, fresh, traditional

Awareness

High recall, awareness, range, reach

Testimonials
Natural Icecreams is an all time favourite Sanjeev Kapoor I recommend anjeer, dry fruits and sitaphal flavoured icecreams from Naturals Anup Jalota Naturals tender coconut icecream with hot rasgullas - thats my recommendation to the truly reckless Bipasha Basu My fridge is incomplete without icecreams from Naturals Shilpa Shetty Natural icecreams; every flavour you can think of, plus several you never dreamt even existed Busybee I like Chickoo & Custard Apple icecream at Naturals, Juhu Viv Richards

Case questions
Word of mouth publicity (buzz) made them popular, would advertising help penetrate deeper and wider Traditional ice cream making method made them acceptable, would expanding scale and scope affect quality and consistency Would exclusive outlet franchising be a hurdle to deeper penetration, are they missing out on MBOs Should they leverage popularity at high footfall places- malls, multiplexes, railway stations and airports- through bare formats Tapping the Indian diaspora in UAE, UK & US?

References
Nuzhat Aziz, Hindustan Times, Mumbai, July 15, 2008 http://www.hindustantimes.com/StoryPage/Print.aspx?Id=db0863ac-c29e4587-8e1a-379dc0af5f6fSmallideasbigchanges_Special Cold is gold November 27, 2008 India Today UNUSUAL ENTREPRENEURSTRAIL BLAZERS- Jhilmil Motihar http://indiatoday.intoday.in/index.php?issueid=112&id=21118&option=co m_content&task=view&sectionid=34 MEDIA articles link http://www.naturalicecreams.in/company/media.asp Recession will not melt ice cream sales Ankur Parikh / DNA Monday, April 6, 2009 11:01 IST Mother Dairy aims for Kolkata ice cream market, western India 2007-0509 http://www.mangalorean.com/news.php?newsid=104990&newstype=local NMIMS website- VC Cases Natural ice cream http://www.nmims.edu/whats_new/VC_CS_Natural_Ice_cream.pdf