Category Management

Presented by:
Disha Arora Nikhil Lamba Shrinidhi Rao Sneh Karamchandani Ratnakar Pandey Aditya Rathi

Category Management Process

Products at a Glance

Segmentation
FMCG

FOOD AND BEVERAGES

OTHER FMCG PRODUCTS

Market Segmentation
Focuses on Indian families, especially housewives

Aashirvaad

Mint-O

Mainly the youth since it exudes a bindaas youthful image

Highly focused on children

Kitchens Of India

Focuses on people who enjoy having royal cuisine with Indian-ness and a touch of sophistication

Candyman

Sunfeast

Children (who uses the product) Parents ( who are the buyers)

Bingo!

Mainly youth and middle-aged people

Category Role
Foods Role Aashir- Kitchens Sunfeast Mint-O Candy Of India vaad Bingo -man

Destination Routine

Occasional
Convenience

Category Assessment
Market Target market Share Benchmarks & Competition

Distributor: Contribution Efficiency Productivity

Target Consumers Purchase behavior/frequency Buying pattern

Supplier Relationship building Share

Growth Rate
McKinsey & Co, a report by the US Department of Agriculture stated : "The market size for the food consumption category in India is expected to grow from US$ 155 billion in 2005 to US$ 344 billion in 2025 at a compound annual growth rate of 4.1 per cent.

Market Share
The company expects the foods business, with brands covering 200 product lines reported revenues of over Rs 2,200 crore & 25 per cent in the year 2011.
Sunfeast (Biscuit) 8%
Aashirwad (Branded Atta) 50%

Bingo (Potato based snack) 9%

Source: Business Standard

Market Share
Ready to Eat

35% Others Kohinoor MTR ITC

8% 9% 48%

Source: Business Standard

Market & Competition

ITC Foods has managed biscuits {Rs 4,500 crore (Rs 45 billion), confectionery {Rs 2,000 crore (Rs 20 billion), atta and salt {over Rs 1,000 crore (Rs 10 billion) among others.

Who is the target customer?

Targeted at premium segment (tourists, NRIs) KoI cooking pastes for high end market

A whole wheat based product targeted at children

Each and every segment

Benefit to the farmers & other consumers at the low end

Suppliers Distributors-Retailers-Customers
1. E-Choupal also allows ITC to develop long-term supplier relationships 2. Acceptance of any kind of gifts or payments from suppliers or customers is viewed as a serious breach of company 3. ITC supported with investments in technology and equipments from world class suppliers in flexible packaging

Strict compliance standards, low profit margins, intense competition, high customer-service expectations.
Fast and effective sales ordering processes. Flexibility

LOGISTICS
Control the quality through countrywide network in the agri-business Raw materials have been sourced from farmers practising organic farming One million paan, bidi shophops Added another half-a-million outlets to sell other products 40 food factories across the country Army of traditional wholesalers to reach remote markets Manufacturing of RTE products outsourced to contract manufacturers Source:

Category Scorecard
ITC Sunfeast Surya
Net Sales Profit Before Taxation Provision For Taxation Profit After Tax Market Share 2,42,42,46,21 1,80,16,52,695 56,76,86,33 1,23,39,66,36 10%

Market Share Wafers

Source: Nielsen Company Q1FY11
Parle, 5% ITC, 9% Frito-Lay, 58% Balaji Wafers , 14% Haldirams, 5%

Market Share

Which of the following statements best describes how your company practises category management? (UK vs. Rest of World)
Source: IGD Research 2007

2005 2007 UK only UK only Strategic (full 8-step process, cross-functional collaboration, customised research & initiatives, strategic alignment Innovative (shorter streamlined process, little customised research, selective investment, test new initiatives) Tactical (informal process, tactical quick wins, ranging and merchandising, promotions) Transactional (sales focused approach only, minimise costs) Do not practice Cat Man Don't Know

2007 Rest of World

20% 30% 40% 5% 2% 1%

30% 40% 31% 5% 0% 1%

40% 20% 31% 0% 6% 0%

Various Marketing Strategies

The Company is planning to double its distribution and its advertisement budget to counter the PepsiCo's Frito lay.

SHARUKH KHAN DHONI & SURYA as brand ambassador of SUNFEAST

Sunfeast World 10K Bangalore-Brand philosophy -Spread the smile E-COMMERCE activities for READY-TO-EAT Snack brand KOI Tie-up with leading portals to promote snack range Online advertising & can order snack on toll-free number 1600

ITC Foods has contract manufacturing facility.

Panel tastes & approves it before processing takes place.

Category Challenges
Competition from Unorganized sector Low Margin Consumption was lower compared to developed countries Competition from Parle-G & Britannia in Biscuits business Increase in the Production Cost Taxes & VAT (Value Added Tax)

Category Strategies
Entering into less competitive or unexplored markets (Ready to eat, Staples, Wafers Distribution Network Market differentiation (Ready to eat, Biscuits) Cost control strategy (all products) Diversification of products (Biscuits, Wafers, and Ready to Eat) Extensive advertising (Biscuit, confectionary, wafers)

Category Tactics
Assortment Pricing Promotion Shelf Presentation

T A R G E T S

Assortment
Famous restaurants like the Bukhara and the Dum Pukht - deep understanding of the Indian palate, localized launches The branded & packaged food business is represented in 4 categories in the market:

Ready To Eat Foods Staples Confectionery Snack Foods

High SKUs, 200 differentiated products under 6 distinctive brands

Snack Foods Aashirvaad

Aashirvaad: Staples: Aashirvaad Atta (Market Share: 50%), Aashirvaad Salt Spices: Aashirvaad Pickle Mirch Powder Instant Mixes: Rava idli Mix, Gulab Jamun Ready Meals: Aaloo Mutter, Palak Paneer

CONFECTIONERY

40 % share in the mint category Source: hindubusiness line

PRICING
Price & Margins

Low Margins in confectionary business Low price points(Rs.5/- per 75 gram pack , Rs.10/- per 100 gm pack) , KoI high end Various SKUs at differentiated price points Direct frontal attack by introducing similar priced SKUs Facilitate timely supply of raw materials
e-Choupal initiative Printing & packaging business also lead to highquality, cost-effective & innovative packaging

Strategy

Cost Advantages

Shelving

POS - Distributed more than 4 lakh large racks for Bingo launch POS Introduced mega-size wafer trolleys outside most mom-and-pop outlets Trolley

PROMOTION - Bingo
Humour and irreverent advertising Crowd sourcing strategy in TVC Online presence - educates users about the current offers, online games, downloads, mobile games Clutter-breaking communication to create excitement around the brand
360-degree communication(outdoors, print, radio, modern trade outlets, stores, on-ground promotions and mall activation) Social media Sponsor events for Channel V

Celebrity Endorsements

PROMOTION - Bingo
Action

Desire Interest

Attention Mad Angles

PROMOTION
Aashirvaad : Tailored differently for the two consumers groups Communication message for the South Indian audience focuses on wheat as a source of "active energy Bingo sponsored many Bingo Remix nights in various clubs Market Challenger strategy - flank and frontal attack against the market leader Frito Lays Mass media advertising like magazines, newspapers BTL spends are 60 % of the total spends (Pitch,2009)

Case Study Bingo

Available across 2, 50, 000 retailers across the country Strategic alliance with Future group Food Bazaar, Big Bazaar, and Fair Price etc stored only ITC Bingo

Alliance with HORECA (hotels, restaurants and cafes), entire cigarette distribution network including pan shops
JItna Dikhega Utna Bikega Bingo : A Challenger Brand Bingo National Gaming Championship across 4 cities with more than 25,000 participants

Category Management in an IT environment

Retailer - process owner Pocess flow controlled using workflow Documents are stored centrally Manufacturer has access to all the retailer's transactions, documents and data required to run the process All the data and information that is required for the process and which can be supplied is made available by the manufacturer The retailer uses an assortment implementation tool when stocking the shelves for the first time. Space management software is then used to optimize the shelf-space

Plan Implementation
Distribution network- Hub and Spoke Model

Plan Implementation
Distribution System
ITC uses FIFO method to reduce the wastage of goods due to expiry. They also keep the good on constant move from low sales area to high sales area. The company collects all the expired goods four times a year, and destroys them.

Retailers must return expired or damaged products within six months after the date of expire.

Plan Implementation
Diversification Strategy Food Business easy to enter- ITC entered into several categories-:
ITC entered into the branded and packaged foods business in 2001 with the launch of Kitchens of India brand. ITC entered the biscuits market with Sunfeast in 2003, with three varieties of biscuits - glucose, marie, and cream, they did what any new player in the market does, imitating and emulating the leader that was Britannia. ITC entered the branded spices market in 2005 and the Instant Mix segment in 2006, both under the Aashirvaad Brand. Launch of Bingo in 2007, ITC finally became a profitable business for the first time since its launch in 2001.

Plan Implementation
Cost Control
Challenge to offer products at a price which is either equal or less than what the competitors are offering. Planned to capitalize by leveraging the strength of the groups other businesses. Eg. ITCs printing and packaging business provided high-quality, cost-effective, and innovative packaging.

Plan Implementation
Extensive Advertisement
Award winning marketing campaign for Bingo and Minto Fresh. The tagline "Jab Laila ko karna tha impress to majnu ne khayi minto fresh" has stood the test of times and is still widely known and remembered. Hiring the best people from the film industry and sports (Sharukh Khan and Sachin Tendulkar for Biscuits, Rakhi Sawant for Minto Fresh)

References
Business Standard http://www.managementparadise.com/forums/marketingresearch-mr/217417-marketing-research-itc.html http://www.financialexpress.com/news/itc-foods-planschocolate-foray-draws-up-strategy/185759/3 http://fmcg-marketing.blogspot.com/2008/02/itcs-bingosuccessful-launch.html http://help.sap.com/saphelp_470/helpdata/en/6d/c3023af9b3e 627e10000000a114084/content.htm http://www.itcportal.com/about-itc/newsroom/pressreports/PressReport.aspx?id=521&type=C&news=ITC-Foodsplans-facility-make-biscuits