Marketing Strategy

of

ITC
Biscuits

Sunfeast

Group 3:-

Section A

Akhilesh Aggarwal (03)

Divya Sajja (16)

Nitin Kumar (27)

Ridhi Katira (40)

Tulika Prasad (52)

1
 Table Of Contents

Executive Summary 3

Introduction 3

Industry Analysis 6

Competitor Analysis 10

Consumer Analysis 14

Market Segmentation 16

Marketing Mix 20

Positioning of ITC 24

Website Analysis 29
Future Marketing Strategy 32

Annexure 40

2
Executive Summary

We have begun this paper by analyzing the market as well as the industry structure in
biscuits in India. The biscuit industry in India is dominated by Britannia and Parle and
off late ITC Sunfeast has joined the league, since it’s inception in 2003. The industry
is still in the growth phase with a huge and untapped potential. Most brands are
present in all price segments.

After doing an analysis of the marketing strategy followed by ITC vis- a- vis its
competitors, we discovered that there is a potential for improvement for ITC Sunfeast.
This paper presents an analysis of the market for biscuits and accordingly it suggests a
marketing strategy for the firm. The changes in the tastes and preferences has
provided a unique opportunity for ITC to enter the market and develop a relationship
with the customer. It has become number three in the biscuit market since its entry in
2003. The focus of the marketing strategy should now be on how to expand its market
share and maintain the interest of its consumers while finding a more loyal base as
well.

There are various other aspects of marketing strategy that have been studied for ITC
Sunfeast. We have begun with an analysis of their branding exercise and compared it
with its competitors. This paper also looks into the current marketing strategy
concerning promotion and advertisement, pricing, positioning, communication and
distribution channels, and others. On the basis of this study, we have suggested
measures that ITC Sunfeast can take for the coming year ( 2010-11).

Introduction

Incorporated on August 24, 1910, ITC is one of India's foremost private sector
companies with a market capitalization of nearly US $ 19 billion and a turnover of
over US $ 5 billion as on 31 march,2009. . It employs more than 26,000 people at
more than 60 locations spread across India, as on 31st march 2009.

The organization is divided into various divisions/strategic business units, namely:

FMCG, Hotels, Paperboards, Specialty Papers & Packaging, Agri Business and
Information Technology

3
 ITC

FMCG:
 Cigarette Hotel Paper Agri Information
s s boards & Business Technology
Packaging
 foods  Agri-
 Paperboa commodities
 lifestyle rds & : e-choupal
retailing, specialty
Papers  Tobacco
 Personal
care  Packagin
g
 Educatio
n&
stationary

 Safety
matches

 Agarbatti
s

4
 PRODUCT LINE

1. Cigarettes Insignia, India Kings, Classic, Gold Flake, Silk Cut,

Navy Cut, Scissors, Capstan, Berkeley, Bristol,
Flake, Benson & Hedges and State Express 555
2. FMCG- Others

a. Staples Aashirvaad Atta, Salt, Spices

b. Biscuits Sunfeast
c. Salty Snacks Bingo
d. Confectionery Candyman, Mint O
e. Ready To Eat Kitchens of India, Aashirvaad Ready meals,
Aashirvaad Instant Mix, Sunfeast Pasta
f. Lifestyle Wills Lifestyle, John Players, Miss Players, Wills
Retailing Signature
g. Personal Care Essenza Di Wills, Fiama Di Wills
h. Greeting, Expressions, Paperkraft, Classmate, Saathi
Gifting &
Stationery
i. Matches & Aim, I-Kno, VaxLit, Delite, Ship, Homelites,
Incense Sticks
Mangaldeep
3. Hotels ITC , Welcom, Fortune
4. Agri Business e- Choupal
5. Paper boards
&
Packaging

Vision: Sustain ITC's position as one of India's most valuable corporations through
world class performance, creating growing value for the Indian economy and the
Company’s stakeholders

5
Mission: To enhance the wealth generating capability of the enterprise in a
globalizing environment, delivering superior and sustainable stakeholder value

Core Competencies:

1. The depth of distribution

2. Its brand building capabilities.

3. The ability of Quality outsourcing.

In 2003, ITC forayed into biscuit industry. At that time, Britannia and Parle held,
between them over 82 per cent of the market in value terms. ITC decided to enter the
foods segment because it is an Rs 550,000 crore market in India. Only 6 per cent of
this is branded and packaged. Biscuit is a comparatively low margin food product in
the PMCG (Packaged Mass Consumption Goods) sector.

ITC was already value adding to wheat with its branded atta presence. By entering the
biscuits segment, it could also improve its bottom line further.

Industry Analysis:

Biscuit is one of the major bakery products. Biscuits are estimated to enjoy around
37% share by volume and 75% by value of the bakery industry. The biscuit market in
India has acquired a value worth 71 Billion Rupees in 2008 growing at a rate 15% in
current value terms. The Organized as well as unorganized sector has about 50% each
share of the market. There are about 15 Players in the organized sector. An estimated
50,000 small and medium-size producers constitute unorganized sector in this
industry. Britannia, Parle, ITC Sunfeast, and Priyagold are the big players in this
industry. Biscuit is a comparatively low margin food product in the PMCG (Packaged
Mass Consumption Goods) sector. The share of key players in glucose and non-
glucose biscuit segments is as follows:

6
The following gives the market share of the various players present in the biscuit
industry

PARLE
BRITANNIA
PRIYA GOLD
ITC
REST

The organised sector consists of the branded and packaged biscuits. The biscuits in
the unorganised sectors are mostly sold loose. The following pie chart gives a break

7
up of the market shared by these two sectors. Unorganised sector caters to the rural
market and tier 3 cities.

40%

ORGANISED SECTOR
UN ORGANISED SECTOR

60%

Next we show the segmentation of the four zonal markets

24% 25%

NORTH ZONE
WEST ZONE
EAST ZONE
SOUTH ZONE

28%
23%

8
Growth drivers and Challenges for the biscuit market:

The growth drivers for biscuit industry are:

• Focused advertising: For more growth people need to be educated about the
various new launches in the market and this promotion is done with the help of
large-scale advertising by various companies.

• New launches: In the scenario of intense rivalry among competitors, they have
to come up with new and innovative varieties of biscuits, which would help
them create a unique identity for themselves.

• Urban Market: The market penetration in urban areas is 75-85% and this area
is the major growth driver of the biscuit market as the people over here have
high disposable income.

• The ever-growing population and the growing middle class.

At the same time, the biscuit industry is facing a number of challenges such as:

• Low margins of profit due to hike in the prices of major raw materials like
sugar, vegetable oil, milk, and wheat flour which have been accounted for the
industry’s low margins of profit.

• Constant innovation to be at par with the competitors and the various

customized bakers of the neighborhood.

• Added to this is the heavy burden of taxation, which is making it difficult for
the organised biscuits industry to operate at an optimum level. Biscuits attract
VAT at 12.5 per cent - like chocolates, confectionery and ice cream that cater
to a much smaller and relatively more affluent consumer base.

• The biscuit industries have the challenge is to improve and enhance their
productivity to absorb inflation in their input cost to the highest possible extent
and make their brands available for consumers at affordable prices.

9
Competitor Analysis:

Major players:-

• Britannia

• Parle

• PriyaGold

• Sunfeast

Other players:-

• Cremica, Horlicks, Bonn, Anmol, Biskfarm, Dukes, Veeramani, Bhagwati,

Raja, Champion, Sobisco, Madhabi, Nezone, Windsor, Ankit, Shangrila,
Nalanda

Looking at the different brands of products of these players in different

categories:-
Cream Salt Glucose Health Milk Others
biscuits biscuits biscuits biscuits biscuits
Britannia Bourbon,Treat 50-50, Tiger, Marie Milk Little
Time Pass Gold, Bikis, Hearts,
Good Day,
Nice Time

Parle Kreams, Krackjack, Parle-G Parle Milk Hide and

Kreams Gold Monaco, Marie, Shakti Seek
Monaco Digestive
Jeera, Marie,
Nimkin Magix

Priyagold Classic Cheese Don Marie Lite Magic Butterbite,

Cream, Kids Cracker, Gold, Big Coconut
Cream, Snacks Boss, crunch,
Bourbon Zig zag,
Cheese Bit
Classic
Salt, CNC
Sunfeast Dark Fantasy, Snacky, Glucose Marie Milky Nice
Dream cream Sweet & Light Magic
Salt

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Britannia

• Established in 1892 in Kolkata, West Bengal, India.

• In 1997, they unveiled its new corporate identity - "Eat Healthy, Think Better"

• Occupies a 38% of the biscuit market share in India

• Brands- Tiger, Good Day, Bourbon, Marie Gold, Nutrichoice, 50-50, Treat,
Milk Bikis, Nice Time, Little Hearts, Nice Time, Time Pass

• The company has been growing at 27% p.a., compared to the industry growth
rate of 20% p.a.

• Rs. 2,200 crore

Strengths Weaknesses

• Not coming up with new products

• Has been in this business since • Geographic Concentration
1892 • Decreasing Cash from Operating
• Brand value Activities
• Has an established and popular • High overhead costs
basket of products
• Focus on Research and
Development
• Robust Manufacturing
capabilities and world class
factories
• Strong segment performance
• Superior technology
Opportunities Threats

• Growing market showing growth
rates of over 15%
• Increasing Demand for Healthier
Lifestyle Products
• Opening up of new markets
• Entry and rise of new players such
as Priyagold and ITC. If even one
or two more such players enter
and meet with success, Britannia
will suffer heavily.
• Rising raw material prices
• Government regulations
• Unorganized bakeries

11
Parle

• Established in 1929
• 1st brands – Parle Glucose and Parle Monaco
• Occupies a 40% share of the total biscuit market in India
• Has 14 manufacturing units for biscuits & 5 manufacturing units for
• confectioneries
• It has the largest such manufacturing units in India
• Annual turnover 2000 crores
• It has provided products to the masses within affordable range

• Brands- Parle G, Hide and Seek, Krackjack, Magix, Digestive Marie, Monaco,
Parle Marie, Kreams, Goldenarcs, Nimkin, Kreams Gold, Chox, Monaco Jeera

Strengths Weaknesses

• Market leader • Dependence on retailers and

• Strong product basket grocery stores for displaying Parle
• Parle-G is the world’s largest- products
selling biscuit • Over-dependence on Parle-G
• Strong reach in rural and remote
areas
• Brand value
• Frequently coming up with new
products
• Extensive distribution network
• Good understanding of consumer
psyche

Opportunities Threats

• Growing market showing growth
rates of over 15%
• Increasing Demand for Healthier
Lifestyle Products
• Opening up of new markets
• Entry and rise of new players such
as ITC.
• Entry of foreign biscuit brands
with the coming up of organized
retail.
• Unorganized bakeries
• Decline Share of glucose biscuits
is a major threat as Parle G is a
flagship product

12
Priyagold

• Company called Surya Food & Agro Ltd. was incorporated in November 1992
and commenced commercial operations of manufacturing & selling of biscuits
under brand “Priyagold” in October 1993.

• Occupies a 15% share of the Indian biscuit market

• Have established strong manufacturing capabilities and have invested strongly

in developing consumer preference for brands..

• Trademarks / brands “Haq Se Maango” & “Priyagold” are some of the most
powerful brands in the FMCG sector.

• Three plants located in Greater Noida, Lucknow & Surat. They are also
outsourcing manufacturing to a plant located in Hyderabad.

• Production capacity is of 1, 50,000 MT p.a.

• Brands- Butterbite, Classic Cream, Kids Cream, Bourbon, Big Boss, Marie
Lite, Magic Gold, CNC, Cheese Cracker, Snacks Zig Zag, Don, Coconut
crunch, Cheese Bit Classic Salt

Strengths Weaknesses

• Good products at affordable • Have yet to establish strong

prices brands
• Push strategy. Consumers buy • Have to create demand for
because available cheaply their products
Opportunities Threats

• Growing market showing • Maintaining lower prices is

growth rates of over 15% increasingly becoming
• The market is expanding and difficult because of increasing
biscuit consumption is raw material costs and
increasing increasing transportation and
• Rural areas demand cheaper distribution costs.
branded biscuits • Unorganized bakeries

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Consumer Analysis:

7o’s of Biscuits

Occupants People of all age groups specially Children, school canteens,

office canteen, college canteens, kirana stores, retail outlets
Objects Crispy snack, orange cream biscuit, vanilla cream biscuit,
chocolate cream biscuit, elaichi flavoured biscuit, marie
biscuit, choco-chip biscuit, glucose biscuit, cookies, health
conscious brands, assortment cookies, butter-based cookies,
chocolate cookies, cream-filled cookies, plain cookies, wafer
cookies, artisanal cookies, in-store bakery cookies and egg-
based cookies.
Objectives Tea time snack, on the move food, nutritious, healthy and
filling, glucose alternative
Organizations Individuals - students, working crowd, parents, home makers
(mostly house wives)
Operations Market place - cash, shorter credit (‘khata system’)
Occasions Daily routine, regular snack, tea time snack, get togethers,
birthdays, parties
Outlets Kirana stores, retail outlets, paan shops, local bakery shops

Factors Influencing Consumer behavior:

The factors influencing the consumer behavior are divided into various categories as
shown below:

1) Cultural factors do not have much influence on a low involvement product like
biscuit.

2) Social factors

• The people around them easily influence reference groups- The major target segment
of biscuits, i.e. children. Friends, relatives and especially family members are a huge
influence. They want to eat biscuits if they see others around them having one. In a

14
 group of friends, say five of them if three prefer ITC Sunfeast then the other two
would also eat the same to get acceptance as the part of the group.

• Status - there are biscuits available in various price ranges. Consumers in the high-
income bracket would prefer to buy premium biscuits like dark fantasy as opposed to
glucose biscuit.

3) Personal factors-

• Age - all age groups consume biscuits for different reasons. Kids from 5-10
years are the major consumers of biscuits because it is novel and tasty for
them. Youngsters in the age group 11-18 years purchase it for taste and
convenience. They are also influenced by the endorsement by a celebrity like
Shah Rukh

Khan. Working people also consume it for convenience. Senior citizens prefer
biscuits for its easy in eating and digestion.

• Occupation - a poor laborer may buy inexpensive biscuits for satisfying his
hunger. For him it is not a matter of choice but one of necessecity.

Students and executives may buy a more expensive biscuit.

• Income - the income decides the expenditure segment of people. A person who is
earning more also buys biscuits but goes for the premium brands. Whereas a poor
laborer will not spend more than the minimal amount required for the cheapest
biscuit.

4) Psychological factors -

• Motivation- hunger is one motivating factor, which compels people to buy

biscuits specially those of lesser price. Since biscuits are one of the favorite
teatime snacks one is motivated to buy it for that purpose too.

• Perception - consumers perceive ITC Sunfeast to be a good quality product,

which gives value for money. It is also perceived to be crispy, fun, innovative
and healthy.

Market Segmentation:

15
Segmentation refers to identifying the needs & preferences of different groups of
consumers.

The detailed segmentation of the biscuit market is as follows:

Geographic Segmentation:

The biscuit market can be segmented based on the geographic boundaries.

This can be classified as:

a) North (25%) b) South (24%) c) East (28%) & d) West (23%)

A look into the data for the biscuit market tells us there is no geographic bias in the
purchase of cream biscuits.

Urban/ Rural:

Another basis for segmenting the market is through the Urban/ Rural divide.

A look into the penetration of the biscuits in rural & urban areas gives us a fair view
of this segment. The biscuit penetration in Urban is around 75 to 85% whereas in rural
areas it is only 50 to 65%. This can also be attributed to the fact that due to the low-
income levels, the rural households prefer to eat homemade food rather than buying
biscuits. In addition, biscuits in India are primarily served along with tea/coffee
during the evening snacks. The lower penetration in rural areas can also be associated
with the fact that with their income levels, the rural households can afford only three
square meals a day & could seldom afford an evening snack.

Segmentation rural urban comments

basis
Income levels Low(85%- Rs.500< High(>20000) Higher income
>Rs.4000) signifies higher
disposable income
Family size Large(65.3%)(5-6) Small(60%)(1-4) Presence of
nuclear families in
the urban-higher
sales of smaller
packets

16
Gender Male dominated Female dominated Advertisements
need to be different
for both the
segments
Occupation Mostly farmers and Working class Eating habits
unskilled labor. influenced by
corporate culture
Awareness Low High Consequences:
Fake products high
in rural,
advertisement
penetration low
Occasion Festive occasions Regular Urban-on the move
consumption food option and
teatime snack,
indulgence.
Benefits Luxury good Hunger and taste Infrequent
satisfaction purchase of the
commodity.
Brand loyalty Less Moderate-high Rural- quality
reduction of a
brand by
counterfeit
products leading to
dissatisfaction
Attitude towards Indifferent Depends on the Awareness is less
other products age segmentation in rural
Price Very important Lesser level Quality is less
important than
price in rural.
Packet size Big Small/compact Owing to the family
size.
Lifestyle Simpler and “on the toes” The urban sector
mundane. has more potential

17
 as consumption of
“easy to eat” items
prevail.

Demographic Segmentation:

Age:

Another basis of segmentation is the age of the consumer. The consumers in this
category can be classified as:

Category Age
Children 4 to 14
Adults 15 to 45
Elders above 45

It can be seen that the children are a lucrative market for cream biscuits as they have a
natural liking for cream. On the other hand, the adults and elders have a natural
tendency towards glucose and Marie biscuits, as these are teatime snacks and are not
harmful to their health.

Porter’s 5 Forces:

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 Threat of new entrants-
LOW

Capital-intensive
manufacturing, advertising
and distribution system.

Power of Suppliers- Power of Buyer- LOW

LOW Internal Rivalry- HIGH to MEDIUM

The ingredients are basic High competition among Buyers have no market
commodities such as existing players to capture power. Many substitutes
wheat, sugar etc. maximum market share. and Low switching cost

Threat of substitute-
HIGH

Traditional Indian
homemade snacks, bread
and bakery products

Marketing Mix:

Threat of substitute-
HIGH
19
Traditional Indian
homemade snacks, bread
and bakery products
Product Level:

Product Classification:

1) Based on Tangibility: Sunfeast biscuits are tangible, i.e., one can touch and see
them.

2) Based on functional life: Sunfeast biscuits are consumable since biscuits form
a part of food and have a short life.

3) Based on price and quality: Many of Sunfeast’s products such as Sunfeast

Nice, Marie Lite and Milky Magic are mass products but a few Sunfeast
products such as Sunfeast Golden Bakery and Dark Fantasy are premium or
prestige products.

20
 4) Based on Utility: Sunfeast biscuits are convenience goods. They are staples
since consumers buy them regularly. In addition, they are partly impulse
products.

Product Life Cycle:

The product life cycles of products in the biscuit, industry is different. Various
varieties like glucose biscuits and cream biscuits are in their maturity stage wherein
the market demand has become stable and now the company’s are only fighting for
maximizing their market share.

On the other hand, products like wafer products are in their decline stage and
gradually are getting out of the market.

Biscuit companies are constantly trying to innovate and come up with unique flavors
and concepts in the market. These variants have a short product life cycle during
which these are promoted heavily and decline faster than the normal glucose and
cream biscuits. These variants generally within the Introduction and the Growth phase
of the product life cycle. The various examples of such variants can be Sunfeast
Golden Bakery, Sunfeast Dark Fantasy, Britannia Treat, Parle Hide and Seek Milano
etc.

Product Mix:

Width: Sunfeast produces Biscuits, Cookies and Pastas. Therefore, the Product width
is three.

Length: The length of Sunfeast products is as follows:

21
BISCUITS COOKIES PASTAS

Milky Magic Sunfeast Special Pasta Treat

Marie Light

Golden Bakery

Dark Fantasy

Glucose

Dream Cream

Snacky

Sweet and Salt

Benne Vita Flaxseed Biscuits

Depth:

Sunfeast Marie Light- has two variants: Marie Light Original and Marie Light
Orange. They both come in only one size. Therefore, depth is two.

Sunfeast Golden Bakery- has three variants: Butternut, butterscotch and Choco-nuts.
They all come in one size. Therefore, depth is three.

Sunfeast Dream Cream- has four variants: Strawberry Cream, Bourbon,

Butterscotch Cream, and Orange Cream. So depth is four.

Consistency:

The product consistency generally depends on three factors:

1) Production

2) Distribution

3) Consumer End-Use

22
The production process of every Sunfeast biscuit follows some basic ingredients like
wheat flour, inverted syrups, vegetable oil, skimmed milk powder etc. then depending
upon the product extra ingredients are added. E.g. in Dark Fantasy extra amount of
chocolate is added to give it more taste etc.

ITC uses the same distribution channels for selling all its products under the biscuits
category, i.e. 1st, 2nd and 3rd level of distribution channels.

The basic end use of all Sunfeast products remains the same- eating it simply to
satisfy hunger. Products like Sunfeast Milky Magic may also be consumed for intake
of high glucose levels for immediate strength and energy.

Brand Name Strategy:

ITC follows Individual names strategy for its biscuits category by naming them
Sunfeast. Sunfeast is the umbrella brand under which all the biscuits are named using
Sunfeast as prefix such as Sunfeast Marie light, Sunfeast Golden Bakery and Sunfeast
Dark Magic.

Brand Name Decision:

ITC follows both line extension and brand extension for its products.

For a product like Sunfeast Special it followed line extension with the introduction of
Sunfeast Special Cookies (has two variants-Cashew and Butter) and Sunfeast Special
Creams (has three variants- Orange, Chocolate and Elaichi). Similarly, when it
introduces any new product in the biscuit category it follows line extension.

Sunfeast followed brand extension by introducing Pasta Treat in the snacks category.
In this way, by concentrating on consumer’s tastes and preferences and emphasizing
on R&D, the Sunfeast brand grows from strength to strength.

23
POSITIONING of ITC (Sunfeast):

Positioning statement

“To energetic, active and sweet toothed ids, Sunfeast biscuit is a biscuit that takes the
customers into a fantasy world (‘Sunfeast ki duniya’)”

Its tag line “spread the smile” has an emotional connotation attached to it. It has also
created a Sunfeast ki duniya, which is an imaginative fantasy world where one is
transported on consuming the biscuit. These appeals to the kids who are Sunfeast’s
main target market. The mascot of Sunfeast is the Animated Sun, which is the
symbol of contentment, satisfaction and Pleasure.

Price:

The biscuit market in India is also extremely fragmented with a substantial proportion
of sales accounted for by the unorganized sector. In such a competitive scenario,
biscuits become highly price sensitive. There is a fairly high possibility of the demand
for a particular brand dipping, if it attempts to move up the price ladder in its biscuits
portfolio. This is also because brand loyalty in biscuits sector happens to be frail.

A typical biscuit portfolio of a company straddles across the economy and the high-
end consumer segment.

In Glucose business segments, ITC keeps a low MRP like its competitors, as this
segment is basically a value for money segment. However, the high-end consumer
segment does not have a price-limitation. ITC Foods with its economy brand ‘Special’
and premium brand, ‘Dark Fantasy’ echoes a strategy of having different brands at
different price points to cover both segments in biscuits. Therefore, it has its flagship
brands to take on competition from economy segment biscuit brands like Parle-g,
Britannia Tiger etc, & from premium segment biscuits like Britannia Good Day, Parle
hide & Seek etc.

Sunfeast Size MRP Per 100

24
 (Gms.) gms.

Dream Cream Strawberry 82 10 12.20

Dream Cream Bourbon 82 10 12.20
Dream Cream Orange 82 10 12.20
Dream Cream Butterscotch 82 10 12.20
Dark Fantasy-Vanilla Cream 150 30 20.00
Sunfeast Glucose 78 4 5.13
Orange Marie 147 12 8.16
Sunfeast Snacky - Classic Salted 70.6 7 9.92
Sunfeast Snacky -Chilli Flakes 70.6 8 11.33
Marie Light 147 12 8.16
Sunfeast Special 150 20 13.33

Golden Bakery 75 15 20.00

Segments ITC Sunfeast Britannia (Rs/100 Parle (Rs/100gm)

(Rs/100gm) gm)
Glucose (5.13) 50-50 (10.77) Parle-G Glucose
Biscuits (4.85)
Marie Light (8.16) Marie Gold (10.14) Milk Shakti (Milk
and Honey ) (6.67)
Sunfeast snacky Milk Bikis (8.33) Butter Cookies 20-
(9.92) 20 (8.55)
Special (13.33) Good day pista Kreams Mango
Economy Segment
(13.53) (6.25)
a Dream cream Time pass (8.77) Kreams
(12.20) Chocolate(7.69)
Classic Light Hide & Sike
Cracker(8) Bourbon (12.84)
Tiger-Glucose Monaco (Classic &
biscuits (4.88) Regular ) (9.33)
Treat Cream (12) Krackjack (8.33)

25
 Cream carbon
(Cream chocolate)
(14)
Marie (6.67)
Golden Bakery Good day choco Hide & Seek (16)
(20) chip (20)
Dark Fantasy (20) Pure Magic Nutrichoice (15)
Creamy (17.69)
Benne Vita Little Heart (16.67) Milano (23.80)
Flaxseed
Bourbon (16.55)
Premium segment
Milk Cream
(16.85)
Nutri Choice (15)

PLACE (distribution Channels):

For biscuits, distribution and visibility are extremely important, as it is partly an

impulse purchase product. ITC is leveraging its well-established distribution channel
of tobacco business for Sunfeast biscuits. Sunfeast is available. In nearly 1.8 million
outlets. But Britannia seems to have a superior distribution clout with its presence in
nearly 3.3 million outlets.

Company

C&F / Super
Distributor
Stockist

Retailer
Wholesalers

26

Consumer Retailer
PROMOTION:

Non-personal communication:

Advertising:

Outdoor advertising: For two years after the launch of Sunfeast, it was promoted by
sticking posters on walls and behind the buses

Print Media: Corner space in leading newspapers is booked for advertisement.

Television and Radio:

In April 2005, it signed on Hindi film actor, Shah Rukh Khan as its brand
ambassador. In the same year, as the official sponsor of the WTA tennis
championship — titled the Sunfeast Open — the company had teenage sensations
Sania Mirza and Mahesh Bhupathi campaigning for it. For promotions in southern
states, Sunfeast signed Tamil super star Surya as a brand ambassador.

The company books nearly 10-15 spots per channel per day on youth channels such as
MTV and Star World, mass Hindi channels like Star TV, Zee and news channels. ITC
has around 20 spots on a variety of radio channels.

Events & Experiences:

In 2004, in a bid to reinforce its brand on kids, ITC Foods Ltd covered more than
1,000 schools across the country as part of its Sunfeast school programme. It sponsors
Sunfeast Open, a recent initiative aiming at the school kids by providing them an
opportunity to enhance creativity through painting competitions, " Hara Bano "
campaign that set a world record in planting maximum number of saplings etc.

Sales promotion: (Pull strategy) ITC also provides its retailers with racks, hangers
to display their products.

27
(Push strategy)Sometime back ITC Limited started a prize scheme to promote its
Sunfeast brand biscuits. The company undertook an elaborate advertisement
campaign in print as well as electronic media to advertise the scheme. The
advertisement said ' buy a pack of delicious Sunfeast Golden Bakes Biscuits and you
could find a real gold coin inside absolutely free'.

Annual advertising budget for ITC biscuit segment is 115-120 crores.

As per a survey conducted by Future TV in April 2008 to study the impact of

advertising on awareness and brand recall of Sunfeast, questionnaires were distributed
to a sample of 300 people visiting food bazaar and big bazaar in Mumbai, their
findings were: (Annexure 1)

• Spontaneous awareness has gone up significantly across stores

for Sunfeast and TOM (Top of Mind) increases in Big Bazaar.

• Higher purchase intention for Sunfeast more so in Big Bazaar where a high majority
would definitely buy.

• Majority at Big Bazaar recall seeing the ads.

• Brand recall for Sunfeast has gone up significantly in Big Bazaar. At Food
Bazaar, recall of Sunfeast has gone up but to a lesser extent.

• 3 out of 4 of the respondents who recalled Sunfeast recall seeing

• ShahRukh Khan. Aided brand r: Pre

Website Analysis

ITC has a website in place for all its products including Sunfeast biscuits
(www.itcportal.com). It is quite an extensive website and has all the company
information. All the businesses of ITC are listed in one section including FMCG,
Hotels, Agri-Businesses and Information Technology. Sunfeast biscuits are listed
under the foods category.

Comments on the website content and appearance:

• The website has light tone and colours such as a white background.

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 • It is representative of all the new products and services offered by ITC.

• There is also a link provided to all the media releases related to ITC products.

• Links have been provided for all the products of ITC clicking on which one
can get all the information about the products.

• At the same time, finding information within links is a cumbersome process. It

does take a while to find specific information within the website, although the
search bar has been provided for the purpose.

Comments from Sunfeast’s perspective:

• Itcportal.com has a page dedicated to all the information relating to the

Sunfeast biscuits.

• The page tells about all the biscuits being manufactured under the “Sunfeast”
brand and their description along with the wrapper photographs.

• The variants in which a particular biscuit is available is also mentioned.

But comparing with the websites of the competitors there are still a lot of things
missing in the website when seen from Sunfeast’s perpective.

• The contents of biscuits are not mentioned in www.itcportal.com. However for

biscuits manufactured by Britannia and Parle, the list of all the contents is
given in the respective websites.

• The number of sizes in which a particular biscuit comes is also not mentioned.

• The websites of the competitors are more appealing and they have even posted
the latest clipping of their advertising campaigns on their websites. This
feature is also missing in ITC’s website.

• There are blogs on the websites of Britannia and Parle wherein the consumers
can interact with each other. This also helps the company in a way that they
get to know about any problems which the consumers may be facing.

One major reason for ITC’s biscuit website not being so comprehensive is that ITC
deals in a wide range of products and has brief information about all its product
categories. No elaborate description of any of the products. But the competitors many

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of whom deal only in confectionary products provide much more information about
the products. Also the websites are more interactive and colourful.

Online Selling Strategy

In today’s technology driven environment with an expected growth of the number of

internet users somewhere around 30%, ITC should also make use of this ubiquitous
Internet marketing to promote its products. This can be done in the following ways:

• An online portal should be created for its distribution network from where the
dealers and distributors can directly place their orders. However for a product
like biscuits the order should be in bulk and a minimum order needs to be
specified. In order to prevent channel conflicts, ITC must make use of its
current delivery network to send the goods directly to the customers.

• Also, ITC should register itself as with various online trading portals such as
tradeindia.com, alibaba.com etc. Whenever a prospective customer (either in
India or abroad) searches online for biscuit manufacturers then the name of
ITC should appear. This would help boost sales both in the national as well as
international market. In tradeindia.com, for Rs.13500/- one can a get a basket
of benefits such as online company listing, trade leads, webmail account,
website and much more.

• Feedback and review: In order to ensure the reliability and relevance of data,
the company must institute measures to receive feedback from its customers.
This can be done via a questionnaire that can be voluntarily filled by the
customers.The information received will be used by the company to improve
its online and general operations.

• Blog marketing – This will help to promote the product to more of a active
population on internet and it will cover ¼ th of the internet user population.
Here the individual customers can come and discuss their views and problems.
This will be made effective through various techniques like banners,
sponsored links, etc.

• Banners and pop-up’s can be placed on the site most visited and these sites can
be identified through the table below.

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Rank Online Activities Sites
1 E-mailing Gmail, yahoo, rediff, etc
2 Job search MonsterIndia, Naukri.com, etc
3 Instant messaging Yahoo, gmail, msn
4 Check news Timesofindia.com,hinduonline.com,etc.
5 Online music
6 Chatting
7 E-greeting Indiatimes.com, etc
8 Check sports Cricinfo.com, etc
9 Online games
10 Dating/Friendship Orkut, hi5, etc

Other uses of the site –

Interaction between customers can be encouraged.

Reviews of the customer about the product can be obtained.

Customer grievances can be considered online.

Future Marketing Strategy -

Since the entry into biscuit market in 2003, ITC has been able to capture about 14%
market share within short span of time. Continuing with this momentum, it would like
to expand its market coverage to 15-16% by 2010-2011. One way of achieving this
target is to go for “market penetration” strategy. ITC can penetrate the market further
by leveraging its extensive distribution network, which consisted of 1.8 million
retailers. According to NCAER study, 50% of biscuit is consumed in rural areas. ITC
can take advantage of its wide rural distribution network as well as its choupal sagar
initiative to penetrate rural market further. In India, per capita consumption of biscuit
is 1.9 kg compared to 2.5-5.5 kg in southeastern countries and in Europe and us
respectively. This reflects the huge growth potential for the industry.

ITC does not believe in capturing its competitors turf in order to compete with them.
They do not indulge in undercutting their competitors leading to price wars. ITC and

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consequently Sunfeast plays on its strengths. Thus to expand its market share they
want to capture new markets instead of snatching away its competitor’s share.

ITC Sunfeast is known as a very innovative brand. It wants to maintain its innovative
image by bringing out new products.

Price

• On the pricing front, developing an extensive product line with attractive price
point variation will enable them to fight with local players like, Priya gold,
Raja Biscuit, Biskit. The unorganized sector accounts for over 40% of the
market. The market has been growing at the rate of CAGR of 6-7% per
annum. Price is the important factor by which ITC can eat away the market
share of unorganized sector. Therefore, by keeping easy price points ITC can
compete with local players.

• Impact of rise in Raw Material Cost:

There has been a substantial rise in the price of the raw materials for biscuits recently.
The overall prices have gone up by13 % the main contributors being the price of
sugar, one of the major components, whose price has increased by 75%. Indian
Biscuits Manufacturers Association has announced a 10%

Increase in biscuits prices because of higher input costs.

Input % Price per Price per kg Raw Raw

Kg (rs) (rs) material per material per
kg (rs) kg (rs)
2009 2010 2009 2010
Wheat flour 60 14 15 8.4 9
Sugar 25 17 24 4.3 6
Vegetable 10 49.5 49.5 5.4 5.4
oil
Others 5
Total 18.1 20.4
Increase % 13
Sugar led 9.6

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increase

Others ingredients include starch, baking soda, salt etc.

• There is a lot of waste generated in the biscuit industry. Either the waste can
be disposed off or in many cases, it can be recycled. The cost of recycling is
lower than the cost of procurement. The recyclable wastes generated include
dough, flour dust, sugar dust in the process and wrappers, tins, cardboard
boxes, bags, cores, polythene, sacks etc in packaging. If these wastes are
recycled, there can be substantial saving in the procurement costs. This cost
benefit can be transferred to the customers in the form of lower prices or
maintaining the current prices. In the present scenario, when the cost of raw
materials is rising, this can prove to be the competitive advantage for Sunfeast,
which will help it to capture larger market shares.

• ITC Sunfeast is able to reduce its cost because of electronic procurement of

raw material through its e-choupal network. It also uses its paper and
packaging for fast, efficient and inexpensive packaging of biscuits.

Promotion

Objectives-

ITC currently markets its biscuits under the umbrella brand of Sunfeast. They should
promote the brands of their individual biscuits since it has a higher recall rate and
scores higher on AIDA. Sunfeast is not able to convert many to its potential
customers since the awareness levels are low. If a customer wants a chocolate cream
biscuit, he will ask the retailer for Bourbon rather than Sunfeast’s dark fantasy which
is lesser known and has a low recall level. Thus, it is necessary to promote the
individual brand of the biscuits.

• Being innovative and nimble is not sufficient for propelling growth in tough
market like biscuit; visibility is the important turf where firms fight battles.

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 ITC has impressive celebrity endorsement with stars like Sachin Tendulkar,
Sania Mirza, and Mahesh Bhupati and Shahrukh Khan promoting its Sunfeast
brand. To take its growth to next level ITC should focus on rural areas of
different zones, where these celebrities are not as popular as the local stars.
Therefore, to increase the popularity of its product in the rural areas local
celebrity or local sports personality is better option. Keeping these options in
mind ITC has increased its ad budget on food portfolio by 25% to gain high
visibility.

• According to Govindkrishna Seshan ITC spends 35-40% of its turnover from

biscuits on advertising and promotion. This figure turns out to be around Rs
4.2 crore annually.

• Sunfeast may offer more affordable price points such as Rs 2, Rs 4 etc. This
objective is attained by selling biscuits in smaller pack size. Such step caters to
the trend of ‘out-of-home’ consumption.

Push strategy - ITC Sunfeast give incentives to the retailers so that they sell Sunfeast
to their customers. This means adopting a push strategy by Sunfeast to push their
biscuits towards the consumers through the retailers.

Print media - English daily newspapers, regional language newspapers, magazines

and pamphlets providing information about the various products

Broadcast media - Sunfeast can increase its advertisements on various kid’s channels
like cartoon network, Pogo, Disney, Hungama

Electronic media - they already have group websites for their different divisions. For
example in food segment, they have separate website for Aashirwad, Bingo, Kitchen
of India and Candyman Club but not for Sunfeast.

Product

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 • “Product development” strategy can be another tool for increasing market
share. By launching new varieties of cookies, sweet and salt crackers, sugar
free biscuits it can open new source of growth for itself. They used this
strategy in past to capture the market. ITC launched differentiated product in
every segment, for example, it introduced an orange Marie, a butterscotch
cream biscuits, chilly flakes in biscuits and honey flavor under the Sunfeast
brand. They used this strategy to make inroad into the market and by being
innovative, they captured a significant portion of the market in short span of
time. Continuing with this strategy will help them in achieving a greater pie of
the market. Since consumer is acquiring cosmopolitan taste hence by being
innovative and having a better product depth will give them a position from
which they can serve market effectively.

• ITC should follow a multi pronged strategy where their target market should
not be just the kids segment but other age groups as well. For this, it can
follow either of the two approaches-

Healthy biscuits - In today’s world where people are becoming more and more health
conscious, it is important for Sunfeast to keep up with this dynamic trend. It has
launched its Multi Grain Biscuits, enriched with vitamins and proteins. It is being sold
as “Sachin’s Fit Kit”. However, this is not enough. The main perception of people
regarding healthy biscuits is that it should be “fat free”. Producing sugar less and
gluten free biscuits will help cater to this perception. It will help capture new
customer segments like students and young adults.

Premium biscuits- They should add some premium biscuits in their range of
products. Sunfeast is considered as an inexpensive brand which gives value for
money. However, the consumers in the middle to higher income range want a product,
which complements their status. Sunfeast does not have many products to satisfy this
psychological need of its consumers. Sunfeast has only four products in this segment
whereas the competitors are offering a number of products in this segment and are
getting thriving results out of it.

Place

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 • Another strategy for enhancing market share is to go for “market development
“strategy .according to a recent study the average consumption scenario of
biscuit in four zones of the country are , northern states: 28%, southern states:
24%, western states: 25%, eastern states: 23%. Therefore, by reviewing its
performance in respective zones they can decide which zone is underserved
and hence give more attention to serve that region.

• ITC has a 5400 strong e-choupal network covering 34000 villages. Since the
main input in biscuits are from the agricultural sector, such network provides
ITC Sunfeast unparallel procurement muscle. They can exploit this advantage
to the fullest.

• Biscuits being a perishable product, to maintain the freshness the company

should try to minimize the transit time and closely monitor the aspects of
supply chain lie warehouses, trucks etc.

Besides these strategies, looking for unconventional channels can be driver of growth.
Government is one agency with whom ITC can have alliance. Government supplies
biscuits to the tribal belts in Uttaranchal, Madhya Pradesh and Orissa for students in
school to take care of their nutritional needs. Government, which is a mass buyer, can
also be a source of credibility for the product. Another mass buyer are organized
retailers, so by having strategic alliance with them can be good source of increasing
market share.

Assumtions And calculations

For projecting PBT for 2010 for the company ITC:

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 • ITC revenue had been growing at CAGR of 11.77 %since 2000 upto 2009. but
due to slow down in 2008 , it increased by 7.8%. So for 2010 it has been
assumed to grow by 9%.

• CAGR of excise duty is 6.5%

• Net Income was growing at a rate of 16% appx till 2008, but due to recession
it has grown by only 9.3%. so for year 2010 it has been projected to grow by
10%.

• Raw material costs have grown by 15%appx in 2008 due to rise in commodity
prices it is assumed to grow to 18%.

• Manufacturing and selling expenses have grown by 16% appx in 2008, which
have been taken to grow to 18% to speed up sales in recession.

• Depreciation has bben increased proportionately by 25% .

For projecting PBT of ITC sunfeast:

Total biscuit industry was 71billion in 2008, expected to grow at 15% p.a (CAGR).
so, biscuit industry by 2010 will be (71)*(1.15)^2= 94 billion appx.
ITC share in 2008 was 11% which is expected to grow to 13% by 2010.
So, ITC share comes out to be 13% of 94 billion= 12.22 billion (1222 crore)
Hence Sunfeast biscuit will contribute (1222/25809)*100 = 4.73% of ITC sales

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• Biscuits with MRP upto Rs 100/kg are exempt from excise duty. Rest are
charged are 8% rate. Due to non availability of such onformation. 50% of
gross sales are considered exempt from duty.

• Other income has been taken proportionately.

• Since major raw material like sugar, wheat, vegetable alsone are expected to
lead to a hike in biscuit price of 13% (table given in future pricing
strategy).total raw material increase is expected to be 20% for biscuit segment.

• ITC is expected to spend upto 30% of advertising expenses to promote its food
division.the same have been taken for sunfeast biscuits.

• Depreciation for sunfeast biscuits is calculated by taking 15% increase from

2008, because ITC does not have many plants as of now for manufacturing
biscuits, most of biscuit manufacturing is outsurced and only quality tests are
conducted by ITC for them.

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Annexure 1:

39
40
41
42
43
44
 ITC
compa
ny
For Sunfeast
Biscuits
Budge
Actual ted Budgeted
FY 09 FY 10 FY10
23678. 25809.
Gross Income 46 52

Net Income
23143. 25226.
Gross sales 53 45 1193.210976

7755.4 8259.5
Less: exice duty 2 22 0
-
15388. 25226.
Net sales 11 4 -1193.210976
42741.
Other income 534.93 79 2021.686747
15923. 17515.
Net income 04 34 828.4757712

Expenditure:
6446.7
Raw material 8 7607.2 365.9192328
Mnufacturing, selling etc 4101.1 4757.2
expenses 1 88 67.50591104
686.76
Depreciation 549.41 25 29.88515695

4825.7 4464.0
PBT 4 94 365.1654704

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References

• www.itcportal.com

• www.thehindubusinessline.com

• www.parleagro.com

• www.priyagold.com

• Business world marketing whitebook

• www.britannia.co.in

• Marketing management by Philip kotler & others, 11th and 13th edition

• Kellogs on marketing by iacobucci & others

• www.business-standard.com

• www.indiastat.com

• www.ibmabiscuits.in

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