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Marketing 
Strategies 
By 
Packaged 
Food 
Companies 
In 
India 
Nikunj 
Agrawal 
M.Sc. 
Marketing 
Management 
Aston 
Business 
School 
Academic 
Yr. 
2010 
-­‐ 
2011
2
3 
Acknowledgement 
Writing a dissertation is always the most challenging part of a student’s life. It was definitely 
the most important academic contribution by me. This however would not have been possible 
without the encouragement and support of a few people. Here I take this opportunity to 
display my gratitude towards them. 
First and foremost, I would like to thank my professor, Dr. Erik A. Mooi for being a source of 
support and encouragement, guidance and persistent help. Thank you sir for your time, 
support and patience. My Sincere thanks to both academic and non-academic staff of the 
Aston University and Aston Business School, for all their assistance. 
I would like to thank my parents for love and support bestowed on me. Thank you for your 
blessings. Also I would like to thank my friends for staying by me during the difficult parts in 
the strange and unknown country. I would then like to thank all the data sources which helped 
me complete the dissertation. 
Last but not the least, I would like to thank God for all. 
Nikunj Agrawal
4 
Abstract 
This research attempts to study the packaged foods market in the lucrative Indian market. The 
study gives an overview of the Indian packaged food market. Market leaders in the Indian 
packaged food market in the six different categories of packaged foods are studied. Factors 
such as the market leaders, market share, factors influencing buying, key drivers in the 
packaged food market and future of the packaged foods in India are some of the important 
aspects of the research. 
To understand the successful marketing strategies and the role of marketing strategies in 
company’s success, a company analysis of ITC Foods from the point of view of marketing is 
done. Major information sources for the research is the internal and external data available 
online. Importance of Innovation and competitive strategy in the formation of marketing mix 
of ITC Foods is firstly studied. The effectiveness of proper execution of the marketing mix is 
then studied with the help of various marketing theories and models propounded by marketing 
scholars. The finding, recommendation of marketing strategies and the future on packaged 
foods in India is then stated.
5 
Table of Contents 
1. Introduction ..................................................................................................................... 7 
1.1 Research Introduction ....................................................................................................... 7 
1.2 Packaged Foods ................................................................................................................ 7 
1.3 Industry Background. ....................................................................................................... 8 
1.4 Indian Food Processing industry ...................................................................................... 8 
1.5 Research objectives and road map. ................................................................................. 10 
1.6 Research Structure .......................................................................................................... 11 
1.7 Methodology ................................................................................................................... 11 
2. Literature Review ......................................................................................................... 13 
2.1 Definition of Marketing ................................................................................................. 13 
2.2 Marketing Strategy ......................................................................................................... 13 
2.2.1 Marketing mix ......................................................................................................... 16 
2.2.2 Competitive Strategy ............................................................................................... 17 
2.2.3 Porters Five Forces .................................................................................................. 18 
2.3 Brand image .................................................................................................................... 19 
2.4 Awareness of consumers and reasons for popularity ..................................................... 20 
2.5 Factors influencing consumption and Brand Composition ............................................ 21 
2.6 Marketing strategies by companies ................................................................................. 24 
2.7 Importance of promotion ................................................................................................ 25 
2.8 Innovation in food marketing ......................................................................................... 26 
3. Methodology .................................................................................................................. 30 
3.1 Research design .............................................................................................................. 30 
3.2 Secondary research ......................................................................................................... 31 
3.2.1 Sources of secondary research ................................................................................. 31 
3.3 Constructs ....................................................................................................................... 33 
3.4 Propositions .................................................................................................................... 33 
3.5 Case study (Company Analysis) ..................................................................................... 34 
3.6 Analysis type .................................................................................................................. 35 
3.7 Models and theories ........................................................................................................ 35 
4. Market overview ........................................................................................................... 36
6 
4.1 Area of Research: Indian Market .................................................................................... 36 
4.2 Processed Foods India : .................................................................................................. 37 
4.3 Indian Packaged foods market : ...................................................................................... 38 
4.4 Consumer Trends Fuelling the Indian Packaged Food Market ...................................... 48 
4.5 Key Growth Enablers ...................................................................................................... 49 
5. ITC Case ........................................................................................................................ 52 
5.1 ITC Company background ............................................................................................. 52 
5.2 ITC Packaged Foods ....................................................................................................... 53 
5.3 Company Culture ............................................................................................................ 55 
6. Analysis and Discussion ............................................................................................... 57 
6.1 ITC Marketing strategy Analysis .................................................................................... 57 
6.2 ITC Corporate Strategies : .............................................................................................. 58 
6.3 Porters Five Forces - FMCG Sector Of ITC ................................................................... 59 
6.4 ITC’s Strategies with respect to packaged foods are ...................................................... 64 
6.4.1 Entry into packaged foods ....................................................................................... 64 
6.4.2 Product ..................................................................................................................... 65 
6.4.3 Price ......................................................................................................................... 66 
6.4.4 Place ......................................................................................................................... 67 
6.4.5 Promotion ................................................................................................................ 68 
6.5 Analysis of ITC Food’s organizational effectiveness ..................................................... 69 
6.6 Innovation And Competitive Strategy For Designing The Marketing mix - Marketing 
Mix Development For Sunfeast Biscuits .............................................................................. 70 
6.7 ITC Bingos’s Marketing Mix ......................................................................................... 72 
6.8 Financial Data ................................................................................................................. 73 
6.9 Sales Of Food Sector And Its Projection : ...................................................................... 74 
6.10 ITC Strategy analysis .................................................................................................... 75 
6.11 ITC’S New Challenges: ................................................................................................ 75 
6.12 ITC Case Conclusion : .................................................................................................. 76 
7. Emerging New Categories and the future of Packed and processed foods in India77 
8. Findings and Recommendations and Research Gap ................................................. 79 
8.1 Findings of the research. ................................................................................................. 79 
8.2 Recommendations ........................................................................................................... 80 
8.3 Research Limitations and further research scope ........................................................... 81 
9. References ...................................................................................................................... 82
7 
1. Introduction 
1.1 Research Introduction 
This study tries to give a picture of the current market scenario of the Indian packaged and 
Instant food industry and the marketing strategies used by the companies. The Indian 
Packaged food industry is observed in a complex and dynamic environment. 
The research begins by understanding the Indian Packaged food market. An overview of the 
consumers, their needs, the products in the Indian Market will be carefully analysed. The later 
part of the research explains the positioning of the market leaders in the market and the 
marketing strategies adopted by them to capture the lucrative Packaged food market. Apart 
from the Mighty 4 P’s there are many other factors which play a very important role for 
designing a strategy in such a way that it is flexible to the environments affecting the business 
and industry. To name a few Situation analysis, marketing tactics, marketing budget, resource 
allocation, operational timeline and etc. Innovation strategies used in the food industry will be 
studied, revealing an inappropriate focus on internal knowledge. 
1.2 Packaged Foods 
The phrase 'food' means the chemical substances consumed by the human body in order to 
keep the body in an active and healthy condition. The body needs food for its growth, repair, 
replacement and treatment of the worn-out tissues. Therefore, food has to deliver the required 
energy, raw material, and other regulating constituents, like minerals and vitamins, for the 
efficient and smooth functioning of the body, apart from fulfilling the calorific needs like 
protein, fats, carbohydrates, etc., Oxford Advanced Learners Dictionary defined instant food 
products as “Instant food products which are prepared and packaged often in powered form 
are required only the addition of a liquid as water or milk for final preparation”. 
The Instant food products, which originated in Japan with Instant noodles had its beginning in 
India in 80’s, are found today in the kitchen shelves of every Indian household. The 
advancement of science and technology offered the people new foods processing vessels,
8 
tools and equipment, despite this fact, people are still searching for new methods to prompt 
up the cooking activities with a view of coping up with their mechanical life, as they lack of 
adequate time to cook in the conventional Indian methods. In this ever changing social and 
domestic scenario, both women and men have to unavoidably go for work and are employed 
to supplement their income, as a result of this, cooking food in the conventional methods is a 
suffering for women. Capitalizing this situation, business houses ranging from small time 
manufactures to multinational corporations have started innovating and commercializing 
“easy to cook food items” like noodles, vermicelli, gulab jamun, instant idli, vada, dosa mix, 
etc., that are otherwise called instant. The instant food products are not only easy to cook but 
also have a significant role and place in the celebration of the family functions and religious 
functions of the people. 
1.3 Industry Background. 
India being the world’s succeeding major producer of foods after China, is expected of being 
biggest food industry with agricultural and food sector contributing 26 per cent to Indian 
GDP. It has the capacity of producing over 700 million tons of food products every year; is 
expected to be doubled of what it is in the coming ten years. Foods has the largest share in 
consumer expenditures in India. Foods and food products count for more than 53 per cent of 
net private consumption. The stake in expenses is considerably more than in developed 
countries, where consumer spending for food and their food products sum up to about 20 per 
cent. (www.tata.com, 2010). 
1.4 Indian Food Processing industry 
India saw quick economic growth powered by economic transformations during the phase of 
2004 to 2007. FDI inflow increased and GDP growth was at 8-10 per cent during the period. 
The global economic downturn seen in 2008 had a deep impact on the economy with 
industrial output slowing down and inflation increasing by two percentage points over the 
previous year to 8.3 per cent. However, real GDP growth still remained as strong as 7.3 per 
cent. 
With India’s huge population base, steady macro-economic environment and a rise in middle 
class population, processed foods has been one of the fastest growing segments in the Indian 
market. Rapid lifestyle change, especially in the urban areas, has caused a histrionic rise in the 
demand for packaged, processed, ready-to-eat foods and food products.
9 
With he entry of food multinational companies and the propagation of Quick Service and fast 
food Restaurants (QSR) outlets have indeed further added to the boost of the packaged food 
industry. The proliferation of modern-day retail business types and the rapid increase of 
hypermarkets/ supermarkets, fast food outlets and shopping malls combined with the 
promising industry trends is adding to the fundamental shifts in the Indian grocery and food 
industry. 
The food processing and production industry in India is considered to be one of the largest in 
terms of growth, production, export and consumption prospects. Significant sub sectors in the 
food processing industry are, fish-processing, processing of fruit and vegetable, milk 
processing, packaged/convenience foods, meat and poultry processing, grain processing, soft 
drinks, and alcoholic beverages. . (Sajani Mrinalini Dutta, Rohit Chadha, Rohit Bhatiani 
(2008). 
In the past few decades, Indian companies have taken big and vital steps in producing milk, 
food grains, vegetables and fruits. The production of raw food materials is worth over Rs 
60,000 crore in India. After the calculation of primary, secondary and tertiary processes, total 
sum of the food industry is estimated as Rs.1,10,000 crores. This huge cost overrun replicates 
the alluring opportunities in the food-processing industry, offered to the Indian economy to 
the whole and to the entrepreneurs in individual. The attractive marketing opportunities lie in 
advancing the grains and commodities to branded and packaged products and into convenient 
foods, which yield value for money paid. Products aimed towards young adults and children 
and products providing to those who live a rapid modern-day life are the need of the hour. 
Appreciating the potentials in the food market and with a view of providing further boost, the 
government has provided exemption from excise duty for ice cream, condensed milk, 
preparations of meat, pectin’s, fish and poultry, yeast and pasta. Adding to the relief, excise 
duty on a few ready-to-eat and packaged foods is curtailed from 16% to 8%. (Budget, 2007) 
The volume of packaged foods market in India is valued to be US $ 10 million & with the rise 
in the segment, it is expected to cross US $ 20 million by the end of the year 2014. Packaged 
food contribution is now 4 % of the total Food and Grocery (F&G) market, is anticipated to 
reach 5 per cent of total food & grocery market by 2014. . (Sajani Mrinalini Dutta, Rohit 
Chadha, Rohit Bhatiani (2008). 
The Food processing industry plays an important role in associating the farmers to the end 
consumers in the Indian domestic together with the international markets. Food processing
10 
along with efficient marketing efforts has the capacity of resolving the basic agricultural 
problems like wastages, surpluses, reasonable remuneration to the harvesters and growers and 
rural jobs. Keeping a view of 10 years ahead, production of foods is anticipated to double. 
These harvests, if processed and marketed briskly, can led to become India the leading 
suppliers of food, globally. 
Among the processed food segment, Packaged food products occupied a considerable shelf 
space in stores and super markets in India. Food companies through instant food products had 
provided high quality food choices, which would have been inconceivable to ancestors. 
Instant food mixes formed a range of convenience food for households, being easy to use 
without terminal processing and women found it very convenient to use. It helped them to 
save time and effort and relieved them of the tedious jobs of collecting various ingredients, 
cleaning and sorting them and preparing food. 
1.5 Research objectives and road map. 
1. Reasons of popularity and rising demand for packaged and instant foods in the indian 
market 
2. The market leaders and the Brand Composition of the various packaged food products in 
the Indian Market. 
Factors that will help us analyse this are : 
• What made them the leaders 
• Reasons for the preference and Brand Loyalty. 
3. Marketing strategies adopted by ITC Foods, in the Indian packaged food market. 
• The Strategy by ITC Foods with respect to demographics, product life cycle stage, 
competition, area of operations and etc will be studied and taken under consideration. 
• The efficiency and effectiveness of ITC Foods’s functional and departmental activities 
will be analysed.
11 
1.6 Research Structure 
The research is structured in two fundamental parts. While the first part of the paper attempts 
to present a clear understanding of the current food industry situation, providing reasoning 
behind the increased amount of products and services continuously appearing on the market. 
The analysis will comply the market leaders, the brand composition in the market, the brand 
preferences, reasons for preference and etc. The second part aims at explaining the Marketing 
strategy adopted by the market leader by illustrations and Indian Market facts. It will cover 
the marketing strategies adopted by ITC Foods in the Indian packaged food market. A Case 
study based on the company’s current position will be formed and the marketing strategies 
adopted by the company will be then analysed. 
Once these two parts have been explained and fully understood, they will materialize 
1.7 Methodology 
The research tends to understand the packaged foods market in India. For understanding the 
marketing strategy, The primary data sources are available public data, industry studies and 
selected private data files to measure trends in packed food sector. Research will take a close 
look into the articles, readings, and publications about successful marketers and various 
packaged food companies strategy implications. 
Additionally the structure of the research presented, so as to give a clear explanation of each 
construct and the propositions taken, is designed in such a way to answer the research 
questions with all the components of the paper. Research will be aided by graphical 
representations and marketing models to add theory aspect and make the research intact with 
the theories. 
The research is then followed by concrete recommendations to answer the final research 
question, that is understanding the Marketing strategies in the Indian Packaged food Industry. 
1.8 Contribution by the Research 
The research tends to contribute towards the strategy planning and execution element of 
marketing, successfully executed or in progress in the Indian market. 
It will prove as a navigator for the managers of the SME’s which tend to enter the 
complicated but lucrative Indian packed food Industry.
12 
The findings in the research of the successful marketers will act as a bench mark for the 
new entrants or failures in the packed food industry.
13 
2. Literature Review 
In this chapter, research works done in the past regarding awareness, factors influencing the 
consumption, brand loyalty, brand composition and demand estimation of food products by 
researchers and scholars has been reviewed and presented. The literatures and the studies 
done will help in understanding the marketing mix of the companies. 
2.1 Definition of Marketing 
“Marketing is a social process by which individuals and groups obtain what they need and 
want through creating and exchanging products and values with others.” - (Philip Kotler). 
Marketing is a process of analysis, planning, implementation, and control with a view of 
achieving organizational objectives by delivering value to the targeted market.. “It relies 
heavily on designing the organization’s offering in terms of the target markets’ needs and 
desires, and on using effective pricing, communication, and distribution to inform, motivate, 
and service the markets”. - (Philip Kotler, 2008). While Some of the definitions of marketing 
include The elements of profit. The Chartered Institute of Marketing defines the term as " the 
management process responsible for identifying, anticipating and satisfying customer 
requirement profitably ". (www.marketingteacher.com) According to others, like (Chandler in 
http://idl-bnc.idrc.ca/) have stressed into the promotional characteristic of marketing where 
marketing consists the vital components of – information about your customers/potential 
customers who are gearing your products and services and making sure they know about you. 
Cronin's definition covers everything outlined so far. To (Cronin in http://idl-bnc.idrc.ca/), 
marketing Is “a consumer-oriented philosophy”. According to Cronin, marketing can be very 
well defined in just a word, ‘proactivei1'. Hence according to service philosophy, marketing is 
an exchange relationship, being user-oriented rather than being product-oriented and 
ultimately aims towards satisfying customers needs. 
2.2 Marketing Strategy 
Marketing strategy is where you specifically define, how the business is going to achieve its 
objectives, by setting goals and high-level strategies. A study into marketing strategy will take 
us through the different aspects of strategy formulation, implementation and its effects.
14 
Kotler (2003) defined marketing strategy as “a set of business principles that an enterprise 
uses to serve its customers and achieve profitability.” Armstrong and Kotler (2003) realized 
that marketing strategy is designed to direct an organization to use its resources optimally to 
meet the customer requirements and realize its marketing goals in a more efficient way than 
its competitors. While some of the others regarded marketing strategy to be four dimensional, 
channel strategy, including low-cost strategy, branding strategy, and innovation strategy. 
Hence it can be derived that marketing strategy and product innovation are inter-related and 
closely linked. Therefore Innovation is given importance in our study and different aspects of 
Innovation related to the industry will be studied. 
Although marketing strategy has been proposed in many different ways, most researchers, 
scholars and theorists have explained marketing strategy via the incorporated aspect of 4P’s - 
Product, Price, Place, and Promotion. (Kotler, 2003). 
Implying the theories, it can be said that Marketing strategy is the marketing sense through 
which an organization tries to achieve its marketing objectives by optimum utilization of 
resources and opportunities in the market. It reflects the strategies for target markets and 
positioning accordingly to build the firm's differential advantage. It should include the market 
segments where the company will target. These segments differ in needs and wants, responses 
to marketing, and profitability. The company should then work into those market segments 
where it can best perform from a competitive point of view. It should develop a marketing 
strategy on the basis of feasibility and potential success for each targeted segment 
accordingly. Matching of the activities of an organization to the environment in which it 
operates is referred as strategy. Marketing strategy formulation involves setting the objectives 
of an organization by performing the internal and external analysis. 
Though formulating a strategy which is consistent and constant in nature is a difficult task for 
any marketing team, performing the strategy work that is, implementing it as it was planned 
throughout the organization structure – is even more difficult (Hrebiniak, 2008). There are 
countless factors that can potentially affect the process of successfully implementing the 
strategic plans in the organizational action. Strategy implementation, unlike strategy 
formulation is many times considered as a craft, instead of a science, and the previous 
researches have described it as as uneven and eclectic (Noble, 2008). It can be implied that, 
even after a comprehensive strategy, strategic framework or single strategic decision has been 
planned and formulated, significant difficulties and practical problems are usually 
experienced during the successive implementation process.
15 
Here are some of the illustrations in the packaged food market over the previous few years, 
where many companies have successfully implemented their strategies and without increasing 
their sales volume significantly, they have increased the net earnings. It was done by 
implementing the strategies successfully. Either by improving productivity, raising prices, 
simplifying promotions, or by cutting product costs. Companies focused on Product 
development through line extensions than developing new products. 
In the coming years, beverages and packaged food sales are just expected to increase by mere 
2 percent—and much of it is prospected through non-traditional and unorganized food service 
channels. As a result of the fact that beverage and food expenditure is virtually flat, 
competition among companies and producers is sure to intensify. In the cut throat Indian 
Packaged food market, it can be said that commercialization and product development is the 
need of the hour for succeeding. 
In our study of processed and packaged foods which are novel to Indian market and 
consumers, majority of Indian consumers and potential customers have had less of experience 
and hence have not exactly developed predisposed and willful attitudes towards processed and 
ready to eat products. Moreover, food and taste is closely affiliated with the rick Indian 
culture. 
Our research unearths that in order to achieve their business goals how important is the role of 
product development and commercialization. After a company defines its objectives clearly, 
level of performance would be realized. The dimension in which the company appears to be 
the most distinguish and capable from the rest, should incorporate the business practices foe 
its product development.
16 
For designing the marketing mix for the strategy planned, a strategic fit of companies 
resources and the market opportunities should be considered. 
2.2.1 Marketing mix 
Marketing mix is defined as A planned mix of the controllable elements of a product's 
marketing plan commonly termed as 4Ps: product, price, place, and promotion. 
These four elements are adjusted until the right combination is found that serves the needs of 
the product's customers, while generating optimum income. 
http://www.businessdictionary.com/definition/marketing-mix.html) 
A marketing mix must be designed with carefully keeping in mind the following aspects 
* the right product 
* sold at the right price 
* in the right place 
* using the most suitable promotion. 
Each element of the marketing mix should be designed keeping the following aspects in 
consideration: 
* The product should have the required right features – ex. It should be attractive and 
efficient. 
* The pricing must be reasonable and right. Consumer should buy in bulk to generate more 
profits 
* The goods should be placed in the right location at the right time. Having the goods 
available to the consumers every time. 
* The products need to be made aware to the public informing their existence and availability. 
(www.thetimes100.co.uk [online)
17 
2.2.2 Competitive Strategy 
“A firm's relative position within its industry determines whether a firm's profitability is 
above or below the industry average. The fundamental basis of above average profitability in 
the long run is sustainable competitive advantage. There are two basic types of competitive 
advantage a firm can possess: low cost or differentiation. The two basic types of competitive 
advantage combined with the scope of activities for which a firm seeks to achieve them, lead 
to three generic strategies for achieving above average performance in an industry: cost 
leadership, differentiation, and focus. The focus strategy has two variants, cost focus and 
differentiation focus.” 
(Porter, Michael E., "Competitive Advantage". 1985)
18 
2.2.3 Porters Five Forces 
“Porter's 5 Forces analyses the external factor to an industry that affect the nature 
of competition within it, the forces inside the industry (microenvironment) that influence the 
way in which firms compete, and so the industry’s likely profitability is conducted in Porter’s 
five forces model. A business has to understand the dynamics of its industries and markets in 
order to compete effectively in the marketplace. Porter (1980a) defined the forces that drive 
competition, contending that the competitive environment is created by the interaction of five 
different forces acting on a business. In addition to rivalry among existing firms and the threat 
of new entrants into the market, there are also the forces of supplier power, the power of the 
buyers, and the threat of substitute products or services. Porter suggested that the intensity of 
competition is determined by the relative strengths of these forces.” 
(http://www.coursework4you.co.uk)
19 
2.3 Brand image 
The processed food consumer market is highly dependent on the factors like Brand Image and 
satisfaction. A study of Brand image will guide us understand the different aspects of Brand 
image and consumer perception on Branding and Product selection. 
Rajarashmi and Sudarsana (2004) revealed that, almost all the sample respondents preferred 
branded products and if their favourite brand is not available in the retail shop, they will go 
for another store and their favourite brand. If it is not available in the market, the respondents 
are ready to postpone their decision. It is clear with the research that consumers just don’t 
want to buy the product but give preference to the brand they like. In the Indian packaged 
food market where the buyers have lots of options, they still prefer the brands they want to 
buy. 
Kim-Hyunah et al. (2005) analysed the relationship among brand equity factors (brand 
awareness, brand image, brand preference and brand loyalty) and suggested a strategy for 
brand management in contract food service management companies. He concluded that brand 
awareness has positive effect on brand image and brand preference and recommended that the 
contract food service companies should focus on improving brand awareness as a brand 
strategy. In the intense race of packaged foods companies, it is thus very important for 
companies to design their promotion strategies in such a way that people are aware of the 
product. In addition, brand preference and brand image have significant positive effects on 
brand loyalty. Thus, the companies should strive to strengthen brand loyalty through building 
brand preference and brand image. Brand loyalty promotes more customer visits, which is 
directly related to profitability of contract food service management companies, the authors 
concluded. 
Al-Weqaiyan (2005), using the attitude behaviour model, conducted cross-national study, of 
fast-food meals purchase intentions in Kuwait, where it was found that long term marketing 
success was highly dependent on generating and maintaining brand loyalty. It was discovered 
that, repurchase action varies a result of four independent factors (1) Approach derived by 
past experiences with the product and brand;(2) Perceived barriers of switching to another 
brand from present brand; (3) propensity to go for variety as a result of boredom resulted 
because of dealing with the consistent and same brand choices. (4) cultural differences were 
seen in some characters of national character. It can be seen, that food products globally are 
chosen with a lot of particularity and brand preference is built on the basis of constant value
20 
delivery to the customer. 
2.4 Awareness of consumers and reasons for popularity 
The purchase action is influenced by many factors. Foremost the consumer needs to be aware 
of the product, its features, benefits derived and etc. Apart from advertising there are several 
other means of consumers being educated. For ex. Word of mouth, attractive packing, 
company image and etc. A study on consumer awareness and reasons for popularity will help 
us understand the importance, means and effects of consumer awareness. Indian purchasing 
pattern is changing. Branded products purchases have increased from 25 percent to 35 percent 
over the past years. Products like KFC’s Chicken and Basmati rice have been successfully 
implying the fact that there is a rise in demand for branded products, provided hygienically at 
affordable reasonable prices. 
Brown et al. (2000) reported that it has been important to educate the young consumers about 
the nutritional benefits of foods, observing the routine and general behaviour and food habits, 
especially during adolescence and found that there is an interaction between the youths food 
preferences and nutritional awareness within the three environments namely home, social and 
school. The observations indicate that there is development of some ‘individual traits’ 
especially during the adolescent years which surpasses the perceived domination of school, 
home or social environment. The researchers suggest that the food consumption and 
preferences are frequently of 'fast food' and ‘junk food’ types which feed them poor nutrition 
and unevenly balanced meals. Although the youth consumers were aware of the facts and 
healthy eating, the food consumption and preference behaviour did not seem to portray such 
knowledge, especially within the social and school environments. The study made it clear that 
educating the consumers about the product right from nurturing stage is equally important 
even if the foods does not offer much of nutritional value. 
Aaker (2000) regarded brand awareness as a remarkably durable and sustainable asset. It 
provided a sense of familiarity (especially in low- involvement products such as soaps), a 
sense of presence or commitment and substance and it was very important to recall at the time 
of purchasing process. Apart from the conventional mass media, there were other effective 
means to create awareness viz., event promotions, publicity, sampling and other attention-getting 
approaches. Packaged foods which are generally consumed by people living in the
21 
urban areas, promotion and awareness thus becomes easier for the companies as the access 
to people in urban areas is easier and convenient. 
Beverland (2001) analysed the brand awareness for ZESPRI kiwi fruit within the markets of 
New Zealand. The efficiency of the branding strategy used for the kiwi fruits in New Zealand 
was studied. The implications from the research for ‘agribusiness’ in using the data, 
composed of surveys of the kiwi fruit consumers in three of the major super markets in 
Auckland, the findings suggested that there is a low level of Brand awareness of ZESPRI 
among the consumers (n=106). It was indicated that the brand awareness could increase by a 
customer relationship-making program, towards the targeted supply chain and target 
customers. Customer relationship, though being a modern day marketing concept has become 
a necessity for the companies to adhere, for creating a differential advantage over the 
competitors. 
Nandagopal and Chinnaiyan (2003) concluded that the level of awareness among the rural 
consumers about the brand of soft drinks was high which was indicated by the mode of 
purchase of the soft drinks by “Brand Name”. The major source of brand awareness was word 
of mouth followed by advertisements, family members, relatives and friends. From the 
research it is clear that buying behaviour in rural India is often an influence of trend 
prevailing in the society. Innovative ways of promoting the product is the necessity for 
spreading awareness and brand preference in the rural India. 
It can be concluded that brand awareness is the first stage of acquiring customers. But there 
are various ways of acquiring customers, it differs with the area of operation, price elasticity 
and ways of promotion 
2.5 Factors influencing consumption and Brand Composition 
Kumar et al. (1987) examined the factors influencing the buying decision making of 200 
respondents for various food products. Country of origin and brand of the products were 
cross-tabulated against age, gender and income. Results revealed that the considered factors 
were independent of age, education and income. The brand image seemed to be more 
important than the origin of the product, since the consumers were attracted by the brands. 
Thus brand image has an upper hand over the other factors influencing the consumption, and 
brand image as discussed earlier is built wit constant delivery of value to the consumers
22 
building positive relations with the customers. 
Silayoi and Speece (2004) suggest the significance of packaging and design as a way of 
branding and communicating in the highly competitive consumer markets of packaged food 
products. The packing conveys implied meaning, whether favourable or unfavourable and the 
presumption about the product. 
Underwood et al. (2001) advocates the impulsive imagination aspects of how a consumer 
reacts to the product tastes, looks, smells, feels, or sounds at the time when they are watching 
a product on the shelves. Furthermore, if the brand is competing in a highly competitive 
market or a crowded category, an eye catcher trick for the crowd could be disrupting their 
eyes as they walk past the shelf set. Some of the most vital quantitative tools are density, 
spectral data, ink trapping, dot area and control of the observed area. It should be insured that 
the printer uses these methods and devices for a better print quality on the package (Levey, 
2004). The theories of Levey and Underwood talk about the first impression of the product. It 
can be implied that the fist impression gives the customer a feel of the product. The product 
should be designed in such a way that it conveys a positive perceived value of the product. 
Jorin (1987) examined changes in spending power and buying habits of Swiss consumers 
since the beginning of the 20th century and in the more recent past. Current trends include 
greater emphasis on health and safety of foodstuffs and less attention to price, increased 
demand for low calorie light products and increased demand for organically grown foods. For 
young people, more concern with enjoyment and less for health, with more meals eaten away 
from home, and generally an increased demand for convenience foods. The prospects for high 
quality branded products are seen to be good. Quality is such an element in foods, which 
cannot be overlooked. 
Ryan (1982) recommended that attitude formation is influenced by normative beliefs, as 
perceptions might be based on the information and reviews provided by the experts or by the 
expectations and demands of other socially or personally significant people. He believed that 
external expectations do affect internal and psychological predispositions (attitudes). For 
example : in the case of new products. There are many ways of forming perceptions about the 
products. In the case of an established product, the reviews, past experiences, the availability 
and promotion by the company are few of the factors which lead to formation of moulding of 
perceptions about the product. While in the case of products to be launched, the pre-launch 
promotions, the product expectations, the content, innovation and etc. are seen.
23 
Sabeson (1992) in his study stated that, high quality, price and taste of the product were the 
major criteria based on which the consumers selected a brand of processed fruits and 
vegetable products. Fruits and vegetables when sold without association of any brands the 
above factors count. But after the radical change in grocery and food sales pattern, marketing 
strategies and brand image do matter and play a vital role in the buying behaviour. 
Rees (1992), observed that factors that influence the consumer’s intent and choice of 
packaged food are advertising, texture appearance, flavour, means, reduction in traditional 
cooking, disintegration of family, an increase in ‘snacking’. etc. Increasing use of microwave, 
ovens and household and demographic role changes have moulded the eating habits. 
Development and organization in retailing with as much as 80% of the food sales in 
supermarkets is said to be vital. Consumers have been responding positively to messages and 
notices about healthy and safe eating. They are particular of the ways in which the food is 
provided and produced and want ‘natural’, safe and high quality food, priced reasonably. 
While the study undertaken by Sheeja (1998) in Coimbatore district considered the quality 
aspects like aroma, taste, freshness and purity as the major factors deciding the preference for 
a particular brand of processed spices. It can be inferred that there are different characteristics 
that build up the brand image and positive buying attitude of customers for food items in 
India. 
Kamalaveni and Nirmala (2000) reported that, there is complete agreement between ranking 
given by the housewives and working women regarding the reasons promoting them to buy 
Instant food products. Age, occupation, education, family size and annual income had much 
influence on the per capita expenditure of the Instant food products. Women are still the 
decision makers for household stuffs in India. The companies ought to decide the marketing 
strategies according to the thinking, mind sets, perception and buying behaviour of women. 
Kubendran and Vanniarajan (2005) elicited that the change in consumption pattern was due to 
changes in food habits. If income and urbanization increase among consumers, the percentage 
of income spent on consumption increases. The urban consumers preferred mostly branded 
products compared to rural consumers. The most significant factors influencing buying 
decisions were accessibility, quality, regular supply, door delivery and the mode of payment. 
Ramaswamy et al. (2005) studied consumer behaviour towards instant food products in 
Madurai, the second largest city in Tamil Nadu, India and observed that consumers do build
24 
opinion about a brand on the basis of which various product features play an important role 
in decision making process. A large number of respondents (78%) laid emphasis on quality 
and 76% on price which is an important factor, while 64% of respondents attached 
importance to the image of the manufacturer and 50% considered packaging as an important 
factor and an equal percentage (50%) felt longer shelf life influenced them. 
Low and Lamb Jr. (2000) came out with an interesting finding that famous and renown 
brands exhibit multi-dimensional brand associations, complying with the fact that customer 
have a more developed remembrance and memory structures with brands more familiar to 
them. Consumers would generally spend more energy in recalling and processing earlier 
information relating to familiar brands as compared to novel and unfamiliar brands. 
From all the above researches it is clear that there are various factors that influence the 
consumers buying behaviour for food products. 
Some of the imperative ones are quality, price, promotion, social trends, family preferences, 
brand image, past experiences and etc. 
This research is concerned about the marketing strategies by the companies with reference to 
the marketing mix designed by the companies that lead to market penetration. 
2.6 Marketing strategies by companies 
Food marketing 
Food products usually require general marketing practices, techniques and approaches useful 
for the marketing of other types of products and services. Topics such as segmentation, 
targeting, positioning, test marketing, market entry strategy, branding, and consumer research 
is the most suitable and highly appropriate for food marketing. 
Above this, food marketing is influenced by various challenges and problems – such as to 
deal with perishable products, where availability and quality varies as a matter of current 
harvest conditions. Value chain – Value chain is the amount to which successive parties in 
marketing channel adds value to the final product – is predominantly important. Presently, 
new distribution and processing choices offer increasing opportunities available for food 
marketers and producers to provide the customers with convenience. Marketing, processing 
and services although added, result in visible higher costs (Kohls and Uhl, 2001)
25 
The analysis of consumers assists companies in developing the marketing strategies by 
gripping issues like : 
• The psychology of consumers choices affected by factors like reason, sense, and choice 
between different types of food (e.g. products, brands); 
• The psychology of consumer being affected by the environment (e.g., family, culture, 
media, signs); 
• The behaviour of consumers while shopping or making other marketing decisions; 
• Restrictions in consumer knowledge, customer education or information processing 
skills affecting decisions and marketing results; 
• How the customer motivation and decision strategies differ amongst food products, 
different in the level of importance or interest which is caused to the customers; and 
• How companies can develop and adjust the marketing strategies and marketing 
companies to access the consumer’s minds more effectively. 
The basic aim of the study after understanding the packaged food market is to analyse the 
marketing strategy of companies in the market. Relevant models will be used for doing the 
analysis, comparing the data with theories and coming on a conclusion. 
2.7 Importance of promotion 
The (Institute of Practitioners in Advertising (IPA) in tutor2u.net), the body representing 
advertising agencies, defines advertising as : 
"The means of providing the most persuasive possible selling message to the right prospects 
at the lowest possible cost". 
While Armstrong and Kotler (2003) give an alternative definition: 
"Advertising is any paid form of non-personal presentation and promotion of ideas, goods and 
services through mass media such as newspapers, magazines, television or radio by an 
identified sponsor". 
Mela Carl (1997) studied the long term effectiveness of promotion and advertisement on 
consumers brand choice behaviour. A panel data of 8 years for a frequently purchased 
packaged goods were taken as a base for answering two research questions. Firstly the 
consumers behavioural response to variables of marketing mix such as change of price over a 
long period of time. And secondly, the changes related to companies retailer promotion and
26 
advertisement policies. Using the results, the researcher drew implication for the trend in 
company policies related to pricing, promotion and advertisement. The researcher used a two-stage 
approach, allowing him to assess the quarterly (medium term) effects of promotion and 
advertisement along with their long term (infinite horizon) effects. The results observed were 
consistent complying with the hypothesis tested that consumers tend to be more of promotion 
and price sensitive across time as a result of increased promotion and reduced advertisement. 
Neslin Scott (1999) developed a model and tried to examine the role of retail promotions in 
assessing future brand loyalty of customers with the help of feedbacks given after purchases. 
Purchase feedbacks denoted the effects of present purchases on brand preferences in the 
future. The research was conducted on the basis of two product categories and comparison of 
the effectiveness of non-price versus price retail promotion was done. It was observed that in-store 
price promotion has a negative purchase feedback compared to non-promotion 
purchases, while non-price promotions like sampling or features display had a negligible 
effect or had a positive purchase feedback, compared to purchase made without promotion. 
2.8 Innovation in food marketing 
Roger and Shoemaker (1971), defines innovativeness as “the extent to which innovation is 
adopted by an individual earlier than others in the system”. This definition advocates the time 
adopted as a method to measure innovativeness by individuals. 
TQM represents principles that are similar with innovation (Dean; Mahesh; Tang, Roffe and 
Kanji; in TQM and innovation: a literature review and research ). In this context, the customer 
focus principal motivates the organizations to search constantly for different and new 
customer expectations and needs and hence leads the organization to be path breaking and 
innovative with reference of introducing and developing new and innovative products as 
recurrent adaptation to the changing needs in the market ( Juran, 1988). Consumer focus even 
advocates the significance of pleasing customers. It implies that suppliers and providers just 
do not need satisfy stated and basic requirements but to do it creatively that they exceed the 
expectations and needs beyond performance. This strategy is closely related with innovation. 
In a similar way, continuous improvement and up gradation encourages creative thinking and 
change in how the work is conducted and organized. To conclude, the principles of 
involvement, empowerment, and teamwork are also considerable in deciding the success of 
innovation in the organization.
27 
Midgley and Dowling (1978, p. 236) states innovativeness as: “the degree to which an 
individual is receptive to new ideas and makes innovation decisions independently of the 
communicated experience of others.” According to them, innovativeness is like a personality 
trait which can have an influence over a range of product-specific behaviours, comprising the 
early adoption of innovations. 
An intermediate level of innovativeness - ‘product-category-specific innovativeness’, which 
portrays definitive action on one hand, and abstract personality traits on the other has been 
recommended by Midgley and Dowling (1978). They try to measure the effect of “innate 
innovativeness” on the basis of various differences between individuals, situational factors 
and variables which have an influence on the actual adoption of innovations. 
Earlier studies have found that there is a relation between innovativeness and various 
consumer characteristics discovered by various researchers such as opinion leadership 
(Turnbull and Meenaghan, 1980), demographics, communication behaviour (Bass, 1969; 
Boyd and Mason, 1999), and various consumer values (Daghfous et al., 1999). Extremely 
innovative consumers generally are youths, economically affluent, highly educated and 
qualified opinion leaders, who get the new product specifications and information directly 
from the marketers and mass communication (Turnbull and Meenaghan, 1980). 
Hirschman (1980) disputes that distinctive innovativeness only partly accounts for the 
differences within individuals in the adoption behaviours. She anticipated that innate novelty 
seeking, “conceptually indistinguishable from the willingness to adopt new products” 
(Hirschman, 1980, p. 285) and creativity are complimentary, with the other variables, so that 
to serve to clarify or to distinguish adoption behaviour. 
Grounded on the two conceptual outlooks, Foxall (1988) advises that cognitive style 
influences objectified consumer innovativeness more than cognitive level (creativity),. 
Cognitive style is well-defined as “the individual’s characteristic mode of information 
processing and is distinguished both conceptually and operationally from level of creativity 
and cognitive level or complexity” (Foxall, 1988, pp. 80-81), and could be used to 
differentiate customers in relations of behaviour of innovation adoption. Bonfield (1974) 
discovered a greater normative influence on behavioural intents for customers with low brand 
loyalty and higher education. 
Apart from this, distribution and marketing concerned policies and decisions are now of the 
supreme significance in the food marketing world. This is with respect to the existing 
economic crisis state in most of the economic world and the cost effectiveness issues that
28 
ought to be considered at fluctuating level of economic development. While reviewing 
food-marketing systems from varied cultures, economic, political, environmental and cultural 
aspects should be considered of the respective countries involved (Kaynak, 2002). 
Furthermore, religious and cross-cultural food taboos should be taken into consideration 
while conducting food business globally. For example, it would be as grave as a sin, trying to 
sell pork-based products in Pakistan and other Muslim countries and beef-based products in 
India. As both the food products are strictly prohibited due to religious constraints in the 
respective countries, although their consumption is quite high in the western countries without 
any constraints. This is the reason all the foresaid issues and conspiracies must be considered 
while performing food marketing, globally. Though, best marketing and business practices 
should be established to increase the business performance appreciably. 
As the society has gradually turned into a knowledge society, the always rising significance of 
knowledge demands a modification in rationals concerning innovation. 
Nonaka, 1994 expressed that innovation is a process by which the organization creates and 
defines problems and then actively or pro-actively develops new knowledge systems to solve 
them. Nonaka's theory can be perceived as a continuation to the Schumpeterian theory, which 
opposes the focus on unchanging products/processes and believes that firms should make 
rivals' positions obsolete by creating or adopting innovations!Conner,(1991). Thus, the 
relationship between knowledge and innovation lies at the core of competitive advantage and 
can prove to give the firm sustainable competitive advantage over the competitors. 
Our approach of marketing innovation shadows Nonaka's belief and is within the framework 
of strategic value innovation. !Hamel, 1998; Kim and Mauborgne, 1999. Hamel, 1998 
stresses that strategy innovation leads to wealth creation; it is explained as the capacity to 
restructure the present industry model in such a way that it creates new and fresh value for 
customers, undermines competitors, and produce wealth for all stakeholders in newer ways. 
In marketing, the corresponding concept is marketing innovation. 
Innovation lies in different aspects and functions of the business. This research focuses to 
cover the significance of Innovation as an independent variable which has an effect on the 
three of the 4 P’s of the marketing mix, namely: 
• Product 
Innovation has a lot to do with the product development, especially in the food 
industry. Innovative techniques are being used to make the food taste better, to make 
the food healthier and cost it less to the customers. Innovativeness is also very vital in 
developing new products with creative ideas and efficient operations.
29 
• Place 
Packaged foods, a product purchased by the families or individuals to meet the 
hunger need, needs to be placed strategically and wise fully to penetrate in the 
markets. Ex. Availability of “lays chips” in the hill stations and remote areas. New 
innovative techniques are developed by the companies to place the goods strategically 
in the market such that, they do not loose out customers. 
• Promotion 
Innovative ways to promote the brands and spreading awareness are developed and 
used in the current food markets of India.
30 
3. Methodology 
This chapter gives an outlook of the methodology used for the research undertaken to study 
the Indian packaged food market, the awareness of consumers about packaged food products, 
factors influencing consumption in choosing the particular brands in the study area and to 
analyse the marketing strategies adopted by ITC Foods in the packaged food market. 
3.1 Research design 
The research design best suitable for our research is Exploratory type study. 
As the term suggests, exploratory research is often conducted because a problem has not been 
clearly defined as yet, or its real scope is as yet unclear. It allows to familiarize with the 
problem or concept to be studied. It is the initial research, before more conclusive 
research (definition of conclusive research) is undertaken. “Exploratory research helps 
determine the best research design, data collection method and selection of subjects, and 
sometimes it even concludes that the problem does not exist.” 
(http://www.uoguelph.ca/htm/MJResearch/ResearchProcess/ResearchDesignDataCollectionT 
echniquesandSelectionofSubjects.htm) 
Another common reason for conducting exploratory research is to test concepts before they 
are put in the marketplace, always a very costly endeavour. 
Exploratory research can be quite informal, relying on secondary research such as reviewing 
available literature and/or data, or qualitative (definition of qualitative research) approaches 
such as informal discussions with consumers, employees, management or competitors, and 
more formal approaches through in-depth interviews, focus groups, projective methods, case 
studies or pilot studies. 
(http://www.uoguelph.ca/htm/MJResearch/ResearchProcess/ResearchDesignDataCollectionT 
echniquesandSelectionofSubjects.htm)
31 
3.2 Secondary research 
Research will be based on the secondary data collected. Its basically a desk based research. 
Desk based research refers to analysis of data, collected by third party, often secondary 
research. 
Secondary data is the data that already exists which has been collected by someone else for 
some other purpose. Secondary research involves the investigation and analysis of data from 
secondary sources. 
The origin of sources for secondary data varies with the research. Secondary data sources can 
be from the firm itself – this is known as internal secondary data. Where as external 
secondary data is the data that has been published by other organizations. 
3.2.1 Sources of secondary research 
For the successful completion of the proposed objectives, a secondary research was 
undertaken. 
The sources of data for our analysis are various types of internal and external secondary data 
like annual reports by companies, market analysis by market research companies, newspaper 
articles, already done researches, trade journals and etc. 
Internal sources of secondary data: 
Every department in an organisation will have its own data records that represent a potential 
source of valuable data. For instance, records of past advertising campaigns within the 
marketing department can be compared with copies of invoices held in the sales department in 
order to judge their effectiveness and get ideas for future campaigns. Past sales figures can 
also be used to spot trends and forecast future figures. 
External sources of secondary data: 
There are several sources of existing data available from outside of the organisation. Many 
research, surveys and dissertation done by people will be used as the main source of data. 
There are many books and researches used which were found in the Aston Library. Websites 
such as Google, Google scholar, Emerald, EBSCOHOST, JSTOR, Aston E library were the
32 
websites mainly used to access data online. 
(http://tutor2u.net/business/marketing/research-secondary.html) 
The secondary research helped establish knowledge base and give better insights for 
interpretation, analysis and suggestions relating to the project. 
For implying the theories and relating it to the market, lecture slides on marketing and 
strategy, books by marketing experts, journals and articles will be used. According to the 
research structure designed, the first part of the research will comply of the market analysis. 
The analysis will comply the market leaders, the brand composition in the market, the brand 
preferences, reasons for preference and etc. 
Research will take a close look into the articles, readings, and publications of successful 
marketers and various packaged food companies strategy implications for giving the market 
overview. 
The second part of the research is explaining the Marketing strategies adopted by ITC foods 
by illustrations and Indian Market facts. It will cover the marketing strategies adopted by the 
company operating in the Indian packaged food market. 
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33 
3.3 Constructs 
The first Construct is taken as the marketing mix design of the companies. The elements of 
marketing mix are dependent on two of major factors. 
Product (ex. product development), place (ex. supply chain management and SKU’s), 
promotion (ex. innovative ways to promote and create awareness about the product) and price 
(ex. competitive pricing) are dependent on innovativeness and competitive strategy seeing the 
area of operation. These factors will help to design the 4 P’s. 
Therefore Product, place, price and promotion are the dependent variables, dependent on the 
independent variable Innovation and competitive strategy. 
The measurement of effectiveness of the 4 p’s will be the execution success of the marketing 
mix and the observed results after the implementation. 
Second construct is the effect of marketing mix in market penetration. Market penetration is 
dependent on the marketing strategy designed by the company, which is portrayed by the 
marketing mix of company. 
Sales, market share and other financials are the metrics which can be used to determine the 
market penetration. 
In the second construct, Market penetration is the dependent variable which is depended on 
the independent variables Product, Place, Price and Promotion. 
3.4 Propositions 
As per Prof. (Nick Lee, 2008, pg 127, 128) in the book Doing business research, a proposition 
is, a statement that predicts a relationship between two or more variables, one that answers 
research questions and makes predictions. The propositions valid for the research are as 
follows: 
• Marketing mix is led by Innovation and competitive strategy 
• Effects on market penetration with the helps of 4 P’s of marketing mix 
The propositions will be tested in the ITC Foods case.
34 
3.5 Case study (Company Analysis) 
Case study method is an in depth study of a particular situation rather than a sweeping 
statistical survey. It is a method used to narrow down a very broad field of research into one 
easily researchable topic. In simple terms case study is detailed analysis of a single case. A 
case is defined as a single social setting. 
A case study method is where, a case of market leader in the packaged foods market in India 
will be studied and the marketing strategies adopted by them will be analysed. 
(http://www.experiment-resources.com/case-study-research-design.html) 
Possibly the key decision in a case study is the choice of case itself. The case should be 
chosen for a solid theoretical reason, most commonly because it should be able to answer the 
research questions. Therefore the case study formed is of the current market leader in the 
packaged food market in India. 
The company taken for Case study formation on the basis of their product line is ITC Foods. 
ITC Foods is used in the analysis as a matter of fact to study the success factors and success 
formulas used by the company in the packaged food sector 
Company Segment Products 
ITC Ltd. Staples, Biscuits, Snack 
foods and Ready to eat 
foods 
Wheat flour, salt, ready-to-eat 
meals, biscuits, 
confectionaries, snacks 
and cooking pasta 
The main aim of forming the ITC case and giving its background is analysing the marketing 
strategies adopted by the company.
35 
3.6 Analysis type 
Analysis for the case studies tends are more opinion based than statistical methods. The 
general idea is to try and organize the company data into a convenient form and construct a 
narrative conclusion around it. Case study evaluation and analysis will be of qualitative 
research type. 
Qualitative research design is perhaps the most flexible of the numerous experimental 
techniques, comprehending a mixture of accepted methods and structures. This method of 
research is particularly useful for testing the theoretical models by using them in real world 
and market situations. 
3.7 Models and theories 
Theories are attempts to answer the `why' questions in social science. These theories differ in 
their complexity (number of variables and links), scope and abstraction. Different marketing 
theories and models are hence used in the analysis with a view of merging the gap between 
theory and market reality. Marketing theories and models propounded by marketing scholars 
like Kotler and Armstrong (2003) will be used with the due explanation. For example theories 
like porters generic strategy model, PESTEL analysis, Porters five forces for industry 
analysis, distribution channel and etc will be used.
36 
4. Market overview 
4.1 Area of Research: Indian Market 
Across the world, India is counted as an essential food producer mainly because of its huge 
and utmost arable land in terms of area. It is a leading producer of tea, milk, sugarcane and 
pulses in the world. Also it is the second largest producer of wheat , rice , fruits and 
vegetables. 
Food processing industry is among the major industries in India .It is ranked fifth in terms of 
export, production , consumption and the expected growth. The Indian food industry is valued 
over US$ 200 billion and is anticipated to surpass US$ 300 billion by 2015. Even though 
India is one of the major food producers in the world, it accounts for only 1.7 percent (valued 
at US$ 7.5 billion ) of the world trade in the food sector. It is expected that by 2015 this stake 
will increase to 3 percent (US$ 20 billion 
The food processing industry in India is estimated at US$70 billion. In 2003 its share in 
India’s GDP was 6.3 percent and 6 percent share in the overall industrial production. This 
industry provides employment to 1.6 million workers. 
India being the world's succeeding major producer of food after China , it has the potential to 
become the biggest in the agricultural and food sector. The Indian Food Industry is always at 
its peak as Indians have a feast around the year with large number of festivals and events 
taking place. The consumption pattern in the food sector has shown remarkable changes due 
to Indians having large disposable incomes and expenditure on food and their habits. 
The increase in income is always complemented by modifications in the food baskets for 
Indians. The proportionate expenses on cereals, salt, pulses, spices, edible oil , sugar etc 
reduces once the expenditure class is upgraded by the households in Urban India. Whereas it 
is seen that it is opposite where meat, eggs, fish , milk and its products, beverges, fruits are 
concerned. 
For example: In the rural India the proportionate expenses on staple food such as pulses, 
cereals, gram declined from 45 percent to 44 percent. The expenses settled at 32% of the net 
expenses in urban India for food.
37 
4.2 Processed Foods India : 
Processed foods have been majorly responsible for the change in consumption, where the 
processed foods in the net food market account for more than 32 percent. The Indian market 
is estimated to be US$ 91.66 billion out which processed food accounts for US$ 29.4 billion. 
According to Confederation of Indian Industry (CII), in the span of coming 10 years the food 
processing sector is capable to attract US$ 33 billion in terms of investment and employment 
to 9 million person-days. 
The government of India has framed and executed numerous Plan Schemes with a view of 
providing financial help for creation of infrastructure, development and modernization of the 
food processing units, research and development , support for human resource development 
and various other promotional means so that the country’s processed food sector grows. 
The food processing sector is enormous and it includes many activities like plantation, 
horticulture, agriculture, animal husbandry and fisheries. It even comprises of various 
industries that employ agricultural inputs for production and making of other edible products. 
As per the Indian government, Food Processing Ministry , the food processing industry 
consist od the following segments: processing of fruits and vegetable processing, poultry, 
fisheries, dairy, processing of grains, meat processing ,lastly consumer foods which include 
beverages , packaged foods and packaged drinking water . 
Even though the food processing industry is quite huge, it is still at an emerging stage. Just 2 
percent of the country’s total production which includes agricultural development and food 
production is processed. 
This industry is projected to grow at 9-12 percent in the phase of 2002 - 2007. Value 
additions in food and food products are likely to rise by 35 percent by 2025, from the current 
8 percent. Vegetable and fruit processing, which is 2 percent of the net production has 
increased to 10 percent by the year 2010 where as it is expected to be 25 per cent by 2025. 
The dairy sector contributes maximum to processed foods, where 37 percent production is 
processed of the total dairy production. out of which, organized sector only process 15 per 
cent. In the approaching decades this business is on the pathway to safeguard profitability 
and pull exceptional investments worth Rs 1400billion or more.
38 
(Annual report, Ministry of food processing India, 2004) 
India saw a speedy growth in the economic segment with the help of economic reforms 
during the phase of 2004 to 2007. FDI inflow increased and GDP growth was at 8-10 per cent 
during the period. The global economic downturn seen in 2008 had a deep impact on the 
economy with industrial output slowing down and inflation increasing by two percentage 
points over the previous year to 8.3 per cent. Nevertheless, the real GDP growth remained 
sturdy at 7.3 per cent. 
4.3 Indian Packaged foods market : 
The Indian packaged food market is projected to be US$ 10 million and is predictable to reach 
US$ 20 million by 2014. Of the F&G(food and Grocery ) market packaged food constitutes 4 
percent and is anticipated to be 5 percent of the F&G market by the end of year 2014.
39 
The main categories of packaged food include, baby food, dried/ canned processed food, 
dairy products, confectionery, frozen processed food, meal replacement products, ice cream, 
noodles, pasta, nutrition/staples, ready meals, dressings and condiments, sauces, snack bars, 
spreads, soup, sweet and savoury snacks, bakery products, etc. Exhibit 1 summarizes the key 
players in the packaged food segment. 
Company Segment Products 
Hindustan Unilever 
Staples, Beverages, Snack 
Limited (HUL) 
Foods, Dairy, 
Tea, biscuits, instant 
coffee, Ice creams, wheat 
flour, salt, instant drinks, 
jam, squash and soups, 
Nestle India Pvt. Ltd. Beverages, Dairy, Snack 
foods 
Instant coffee, dairy 
whitener, condensed milk, 
chocolates, infant food, 
and confectionaries 
ITC Ltd. Snack foods, Biscuits, 
ready to eat and staples 
Wheat flour, ready-to-eat 
meals, salt, biscuits, 
snacks, confectionaries 
and cooking pasta 
Pepsico Snack Foods and 
beverages 
Fruit juices, Snack foods, 
cereals, dairy derivatives 
Dabur India Ltd. Culinary Products and 
Beverages 
Fruit Juice, coconut milk, 
Cooking pastes, tomato 
puree, chilli powder, 
lemon drink, and honey 
Cadbury India ltd. Confectionary Chocolates, malt foods, 
hardboiled confectionary, 
cocoa powder 
Haldiram Marketing Pvt. 
Ltd. 
Snack foods Namkeen, Sweets, Syrups, 
chips, crushes and papads 
Britannia Industries Ltd. Bakery Products Biscuits, dairy whitener, 
flavoured milk, bread, 
cake, ghee and rusks 
Godrej Industries Ltd. Staples and Beverages Edible oils, bakery fats, 
vanaspati, fruit drinks,
40 
fruit juices, fruit nectar, 
and tomato puree 
Parle Agro Private Ltd. Bottled water, Beverages 
and Snack foods 
The growth of the Indian processed food market is expected to be supported by the growing 
and organized retail penetration. A number of categories, which are highly dependent on 
organised retail-like frozen food products - are expected to witness significant growth in the 
years ahead. 
The segment that has shown maximum exponential growth is the ready-to-eat segment. Ever 
since the processes of freezing and chilling products have become very refined, 
technologically sound and subject to stringent hygiene practices, this sector has expanded and 
is anticipated to grow in the coming few years. Staples, which are currently sold loose, are 
also expected to undergo significant changes with the advent of private labelling. The trends 
of wellness food, is expected to grow in the forms of nutritionally enhanced, fortified foods, 
organic foods and probiotic food. Organic food is rapidly becoming a distinct and well-defined 
category. Similarly, the other concepts mentioned here will grow as much and 
gradually occupy more shelf space in the near future.
41 
The market of packaged food in India is an anticompetitive monopolistic market. In all the 
different categories of packaged food there are several players which have similar product 
lines and comparable prices yet they are striving to differentiate their products with their 
planned marketing strategies .The market can be further segregated in 5 segments 
• Ready - to - eat packaged food 
• Dairy 
• Confectionaries 
• Biscuits 
• Snacks 
• Staples 
Ready to eat Meals 
The Indian ready- to- eat market, was estimated to be of Rs. 128 crores (2006) and was 
anticipated to grow to Rs. 2900 crore by 2015, according to the analysis done by Tata
42 
Strategic Management Group, (TSMG). In their analysis, it was assumed that the factors 
adding to the growth of this sub-sector would be changes like disintermediation, cold chain 
development, streamlining of taxation, diminishing culinary skills, economies of scale 
possessed by the supplier, complemented with rising disposable Indian's incomes, and the 
necessity of convenience on the customer side. 
Brands Description 
Gits 
Gits manufactures particular type of ready – to- eat, instant 
foods, which covers a variety of ethnic traditional Indian 
cuisine, and their recipes have a "Global acceptance". 
Haldirams 
The company provides particular Indian snacks in the packaged 
forms of chats like, bhel puri ,alu tikki, dhokla, chana masala, 
pao bhaji, pakoras, gol gappa and sev puri. 
Ethnic Kitchens 
Offers packaged syrups, sweets, namkeens, pickles, cookies, 
aloo Masala, Kajui Ladoo, Bhelpuri, Bhujia, Chana Dal and 
many more such items. 
MTR 
The company presently offers twenty- two 
scrumptious, traditional and utterly ethnic Indian curries, 
gravies and rice. 
Priyafoods 
Priya offers a variety of famous traditional and authentic 
recipes like rajma masala, dal makhni, Punjabi chole, navaratan 
korma, palak paneer, paneer butter masala. It also offers 
southern delicacies like Mango Dal, Andhra Veg Pulav and 
Gongura Dal.
43 
Dairy 
Market Share - Ready To Eat 
9% ITC Ltd. 
48% 
8% 
35% 
MTR 
Kohinoor 
Others(Gits, Priya 
Foods etc.) 
The dairy sector ranks first in terms of processed foods with 37 per cent of the produce being 
processed. The organized sector processes an estimated 15 per cent of the total milk output in 
India. There are 676 dairy plants registered with Government of India, which come under the 
organized sector. Milk and its products contribute about seventeen percent of the country’s 
net expenditure on food and food products. The traditional products of dairy is responsible for 
about fifty per cent of the net amount of milk produced. The dairy products market is 
hopefully to grow at more than 20 per cent over the coming years. 
Following are the facts related to Indian dairy industry as per Indian Brand Equity Foundation 
(2008). Food Processing : Market and opportunities. 
• “ India stands first in the world in terms of milk production .The output is expected to 
be about 108 million tonnes, growing at a compounded annual growth rate of 4 per 
cent. 
• The dairy whitener market comprises of sweetened milk powders, condensed milk and 
creamers. Its market size is estimated at US$ 450 million. 
• Ghee is the most widely marketed and branded product with a nation-wide penetration 
of 24.1 per cent. It is estimated to be growing at a rate of 8 per cent per annum 
• The cheese market is estimated at US$ 2.49 million for (54000 tonnes in volume 
terms), growing at a rate of nearly 10 per cent per annum. The organized cheese 
market is dominated by processed cheese which accounts for 74 per cent market share 
• The ice-cream market in India is estimated at US$ 226 million, with the organized
44 
market at US$ 158.2 billion. This is currently growing at 20 per cent.” 
Confectionary 
The Indian Confectionary market is valued around Rs.2500 crore. The market is segregated 
into seven major categories: 
1. Hard boiled candies 
2. Toffies 
3. Eclairs 
4. Chewing gum 
5. Bubble gum 
6. Mints 
7. Lozenges 
Perfetti van melle ITC Ltd. Nestle Cadbury 
Cofitos 
Candyman 
Eclairs 
chocotella 
Minto 
Munch Pop Choc 
Alpenliebe 
Polo 
Centre mint 
Milk chocolate 
Centre fruit 
Munch 
Marbels 
Fun bar 
Chocoleibe 
Kit Kat 
Mentos 
Polo power mint 
Protex happydent 
Milky Bar 
Big babol 
Kit kat Lite 
Alpenliebe 
lollipop 
Happydent white 
Frittella 
Chatar patar 
Alpenliebe 
creamfills 
Centre shock 
Bubbaloo 
Dairymilk 
5 Star 
Gems 
Perk 
Halls 
Eclairs
45 
Biscuits 
The biscuit market in India is valued to be approximately worth Rs. 5000 crore. In the Indian 
Biscuit industry out of the net production 60% percent is produced by the organized sector 
and the rest 40% is produced by the bakeries which form a part of the unorganized sector. 
Britannia ITC Ltd 
(Sunfeast) 
Parle Priyagold 
Good Morning 
Milk bikis 
Pure magic 
Treat 
Good day 
Nutri choice 
50-50 
Tiger 
Marie 
Dream cream 
Milky Magic 
Fit kit 
Choco Nut 
Butter Nut 
Parle-g 
Krack-Jack 
Monaco 
Kreams 
Hide and Seek 
Milk Shakti 
Butter Bite 
Classic Cream 
Butter Lite 
Big Boss 
Marie Lite 
Magic Gold 
Market Share - Confectionery 
3% 
37% 
7% 11% 
42% 
ITC Ltd. 
Perfetti Van Melle 
Cadbury 
Nestle 
Others(Parle, 
Joyco, HUL etc.)
46 
Snacks: 
Snacks industry overview 
The Indian Snacks industry is valued to be of 1800 Crore Rs. and is growing at a remarkable 
10% every annum. In the world the Indian snack market is the largest and is dominated by 
potato chips which has a share of about 85% in the total snacks market. 
Product Price 
(ITC Ltd) 
Product Price 
(Frito Lay) 
Product Price 
(Haldiram) 
Bingo 
Rs. 5 
Rs. 10 
Rs. 20 
Lays 
Rs. 5 
Rs. 10 
Rs. 20 
Lehar Namkeen 
Rs. 5 
Rs. 20 
Kurkure 
Rs. 5 
Rs. 10 
Rs. 20 
Namkeen 
Rs. 5 
Rs. 10 
Rs. 20 
Market Share - Biscuits 
12% 
10% 
38% 
32% 
8% 
ITC Ltd. 
Priyagold 
Britannia 
Parle 
Others(Bonn, 
Anmol etc.)
47 
as on June, 2008 
Staples 
Key players in the stales market are : 
• ITC 
• HUL 
• Pilsbury 
• Marico 
• Nirma 
Market Sahre - Snacks 
16% 
45% 
27% 
12% 
ITC Ltd. 
FritoLay India 
Haldiram's 
Others 
Market Share - Staples 
42% 
21% 
24% 
13% 
ITC Ltd. 
HLL 
Pillsbury 
Others(Sri Lal 
Mahal, Local 
Brands etc.)
48 
4.4 Consumer Trends Fuelling the Indian Packaged Food Market 
Changing Demographics of the Indian Population 
The population of India is younger in age, mostly urban, with greater disposable income and 
high purchasing power parity (PPP). Urban consumers are typically busier and more affluent, 
thus they do not mind paying for the convenience that can be enjoyed. Convenient products 
are demanded more as a result of urbanization. Ready meals thus saw a strong 18 per cent 
growth in 2008 over the previous year, with these products observed as a convenient 
substitute of cooking from scratch. Packaged soup also benefited, with dehydrated soup 
growing by 21 per cent in current value terms, whereas instant noodles came out to be a meal 
component or at least an increasingly popular snack, proven by sales growing at 24 per cent. 
Convenience 
The demand for ‘convenience' is dominant in more than one segment. Apart from 
convenience in cooking at home, food services and chains have an equally strong share in the 
purchase of packaged foods. There was a strong focus on expanding consumer food service 
chains across urban areas, which is set to continue to grow. Consequently, urban commuters 
will enjoy easy access to trusted consumer food service brands offering affordable food. This 
demand for convenience also supported good growth in canned/preserved food and frozen 
processed food, with consumers appreciating the convenience of stocking up and keeping 
easily-prepared food at hand. Consequently, canned/preserved food saw 12 per cent of the 
present value growth in 2008 compared to 2007, while frozen processed food grew by 13 per 
cent 
Nutritional and Health Benefits 
It has been observed that, customers are focusing more on health conditions, with most 
consumers having at least a rudimentary awareness of cancer, diabetes and heart disease. The 
bulk of new product development is expected to focus on nutritionally enhanced and 
fortified/functional products, with these areas having proved successful. Increasingly, the two 
concepts will be combined, with low-fat impulse and indulgence products more and more 
likely to offer fortification. Players meanwhile launched numerous products with a health and 
wellness positioning. NestlAC India, for example, re-launched Maggi - Two Minute Noodles 
fortified with 20 per cent of the RDA of protein and calcium in 2008. While Gujarat Co-operative 
Milk Marketing Federation Ltd. in 2007, launched Amul Prolife Probiotic Wellness 
Ice Cream and Amul Sugar Free Probiotic Frozen Dessert thus creating a new niche of 
probiotic ice cream. Players will also seek to become first-movers within the niches of
49 
wellness and health packaged foods. Organic products are thus likely to see strong 
development, generally targeting affluent urban consumers. Naturally healthy products could 
also see a growing emphasis on their health benefits, with basmati rice, for example, having 
its low glycaemic index emphasised on the packaging. 
4.5 Key Growth Enablers 
Urbanisation 
India has witnessed on-going urbanisation in the past decade or so, and this is linked to the 
country’s economic growth and foreign direct investment. The main impact of urbanisation 
was a growing demand for convenient products, with consumers preferring to have ready 
access to easy-to-prepare foods that were either canned/preserved or frozen. 
Aggressive advertising campaigns by food companies have led urban consumers to develop 
an increasing interest in Western lifestyle trends. Urbanisation boosted sales of products such 
as breakfast cereals and ketchup, which grew by 13 per cent each in current value terms in 
2008 over the previous year. These products are strongly advertised and benefited from a 
fashionable western image. Canned/preserved food saw 12 per cent growth in 2008 over the 
previous year, while frozen processed food grew by 13 per cent. The graph below shows the 
share of food and grocery sales in the organised and unorganised sector between 2005 and 
2008 and its estimated growth expected in coming 6 years. 
This is expected to drive strong growth in many product areas in meal solutions, with pouch 
instant noodles, for example, set to see 115 per cent growth. These products offer a quicker 
and more convenient meal component than rice and, thanks to their use of flavouring, can also 
be consumed as a snack. This trend is also expected to benefit canned/preserved food, ready 
meals, frozen processed food, dressings, sauces and condiments, all of which make food 
preparation quicker and more convenient.
50 
Growth of Organised Retail 
Retailing saw strong growth in India benefiting from strong GDP growth and the emergence 
of a large consumer base-the urban, young middle class. Supermarkets notably saw strong 
growth, with sales rising by 108 per cent in 2008 alone. Exhibit 6 summarises the key facts of 
the growth of organised retail formats, and consumption of packaged food and grocery 
products. 
Supermarkets/hypermarkets gained share across the packaged foods throughout the review 
phase, thanks to expansion in the number of outlets. This channel more than doubled it’s 
share to 11 percent in 2008 from 5 percent in 2003. In the year 2008, 
supermarkets/hypermarkets also accounted for a dominant share in canned/preserved food and 
frozen processed food, at 68 per cent and 79 per cent respectively. The channel’s most 
significant growth was seen in impulse and indulgence products such as sweet and savoury 
snacks and ice cream and dairy beverages. Share of supermarkets/hypermarkets grew to 11 
percent in 2008 from below 4 percent in 2003, challenging the regional dairies’ dominance in 
this area by offering good quality fresh milk at affordable prices. 
Improvement in Packaging Technology 
Until recently, the majority of foodstuff was sold unpackaged. In last few years, all the sectors 
have increased their packaged production share. Although there is a certain rise in the amount 
of packaged food products, many of the products are still sold unpackaged. 
Sustainable packaging of products through technology with a view of increasing the shelf 
lives of the product is the matter of concern and hence is being adopted and developed very 
speedily. Along with the emergence of various forms of processed foods, a corresponding 
suitable packaging technology is also developing. Milk is one product which is sold in four 
different types of packaging, with each type further having different designs and forms.
51 
Advances in packaging technology have not only improved the shelf life of products but 
also significantly reduced the cost of packaging. 
New Product Introductions by Brands 
Many manufacturers/brands are creating the market by frequently introducing new products 
for packaged food. Large multinational companies like Nestle have been able to do this very 
successfully. The new products are customised as per the requirements of Indian consumers 
and are targeted at satisfying their unmet needs. 
In addition to existing brands, a number of importers are also importing a significant amount 
of processed food from European and South-east Asian countries. The imported product 
categories are targeted at the premium segment of the market. 
Growth in Freezer Space 
There has been a remarkable expansion in product categories and ranges due to considerable 
growth in freezer space in modern retail formats. The retail freezer space for 2008 is 
estimated to be 247,000 cu. ft. This is expected to grow to 531,000 cu. ft by 2014 at a CAGR 
of 14 per cent. The frozen food segment, originally covering only frozen meats, fish and 
poultry products, currently includes frozen vegetables, ready-to-eat foods also, and will grow 
to US$ 2.6 billion by 2014 from US$ 1.8 billion in 2008. This growth has been fuelled by the 
increasing availability of freezer space in modern retail shops. 
The graph below shows the increase in freezer space corresponding to the increase in number 
of stores in future. Dairy products, confectionery and ready-to-eat products have received a 
robust boost in obtaining shelf space and corresponding sales due to their positioning and 
supporting infrastructure. 
(Sajani Mrinalini Dutta, Rohit Chadha, Rohit Bhatiani (2008). Opportunities in the Packaged 
Food Market in India.www.technopak.com. 03)
52 
5. ITC Case 
5.1 ITC Company background 
ITC was set up in Kolkata as ‘the Imperial Tobacco Company of India Ltd’ on the twenty 
fourth of august 1910. In 1974 it was renamed as ‘ I.T.C Limited’ and in 2001 it was 
ultimately changed to ‘ITC Ltd’ . ITC is a part of many businesses such as apparel, tobacco, 
hotel, food, packaging, paper boards and confectionery. 
In 2001, ITC diversified in the food division. In the Ready-to-Eat segment the KOI brand was 
launched by them. They further expanded their brand in different segments such as staples, 
snack food and confectionery. 
ITC can achieve the first place in the market if its standards are maintained and increased in 
the future as at present it has been able to fulfil the requirements and needs of the nation. 
ITC’s hotel business has nurtured few restaurants such as Dum Pukth, Bukhras etc that are 
famous throughout the world. This shows that the company understands the Indian taste and 
has the required expertise who can convert the knowledge gained into pleasant experience of 
dining for the customers. For the last ninety eight years ITC has provided high quality 
products and many of its brands are benchmarked internationally because of its quality. 
The products offered by ITC foods are a result of rigorous market research based on the 
insights of the consumer. 
Many innovative new products besides the existing products are being developed in ITC’s 
state of the art Product Development facility situated at Bengaluru. ITC has developed 
intimate business relationships over ninety eight years with the farmers in India and is 
boosting the ability of the farmers to access the global markets via schemes like e choupal. 
This close relationship is used by the company so as to get quality agricultural products for 
their food business. This makes the procurement easy and feasible for ITC foods.
53 
5.2 ITC Packaged Foods 
In August 2001 ITC entered the branded and packaged food business by introducing the 
brand named Kitchens of India. A broader entry was made in June 2002 by launching brands 
in the staples, snacks and confectionery segment. The strengths of ITC in the fields of 
branded cuisine, hospitality, packaging, sourcing agricultural products can be utilized for 
packaged food business. 
To guarantee the customers high standard of food hygiene and safety, it assists outsourced 
manufacturers to implement hygiene standards that are world class by the certification of 
HACCP. ITC has quickly gained a standing in the market in all of its six brands such as 
sunfeast, Bingo, candyman, AAshirvad, Kitchens of India and mint o because of its strong 
commitment towards quality which is benchmarked internationally. Lately the food segment 
of ITC made plans on the first of August 2008 to extend into frozen food through brand- 
Kitchen of India. 
The business of branded packaged food is expanding as sales grew by twenty three percent 
from the last year. Along with the cost required for the development of new products, the 
company has to bear the current economic slowdown and also the increase in prices of 
various input commodities such as maize, vegetable oil, wheat, and skimmed-milk-powder. 
To add to it the fuel prices are also rising. 
ITC in a short time has gained a reasonable scale. They are increasingly focusing to 
consolidate the portfolio in some of the segments, enhancing servicing of the market and also 
motivating efficiencies in the supply chain. 
The food market in India is monopolistic. In all the different categories there are several 
players who offer almost the same products and at the same price, yet they are differentiating 
themselves with their planned marketing strategies. It is very easy to enter this business and 
this is a big benefit to ITC as they have been able to enter numerous categories in this 
business. 
Packaged foods are divided into 5 major parts
54 
1. Ready to eat 
ITC diversified into the branded & packaged food segment through the introduction of a 
brand named Kitchens of India. In the year 2004, it launched the brand KoI which included 
spice conserves, spice and fruit conserves. The spice and fruit conserves were made jointly 
with a food expert named Karen Anand. To target the elite segment its price of spice and 
fruit conserve was set at Rs 70 and cooking paste for Rs 30 which was a hundred grams pack 
.The Aashirvaad brand introduced cooking pastes that were multipurpose and for a pack of 
eighty grams it was priced Rs 10. The production of these products was outsourced to save 
the operating cost to contract manufacturers. 
In 2005, ITC introduced itself to the branded spices segment and in the year 2006 to the 
segment of instant mix through Aashirvaad brand. The annual turnover as per April 2006, in 
the segment of ready to cook and ready to eat was about Rs. 700 million and posted a growth 
of twenty percent annually. In the year 2006 the ready to eat market was dominated by MTR 
which had 60 percent share whereas ITC had 35percent share. 40-50% products of the KoI 
brand were exported to Switzerland, Canada, The USA, Australia and the UK. 
During the mid of 2006, within the KoI brand ITC decided to offer 10 more varieties within 
the price of Rs 35- 98 . In the year 2007, few products were introduced in the ready-to-eat 
segment such as conserves, curries, chutneys ,biryanis ( Bhori Biryani, nor Mahal )and few 
new variety products from Gharana ( Keema Mutter, Paneer malai). ITC food expects to have 
a market share of 50- 60% by 2008-09 after the launch of these products. 
2. Confectionary 
ITC at present has the brands named ‘Candyman’ and ‘Mint-o’ in the market. Mint o fresh 
was able to secure 17 percent share in the market of cough lozenges in India whereas Perfetti 
the former leader was able to achieve only 14.3% share by chloromint. In the whole 
confectionary market ITC has just 3 percent share whereas Perfetti has 37 percent or more 
and offers many brands. Hence it can be seen that ITC is lagging behind.
55 
3. Staples 
In the year 2002 ITC introduced itself in the staples market by offering wheat flour with the 
brand Aashirvaad. The Aashirvaad brand was extended to edible salt in the year 2003 by ITC. 
In 2006, ITC had 40 percent share in the market of the whole packaged food industry worth 
Rs 6 billion. Its biggest Competitor was Annapurna brand by HUL which had a market share 
of just 18 percent. The market growth rate was 12 percent. ITC extended the Aashirvaad 
brand by launching mixers, salt and ready-to-cook pastes under the Aashirvaad Umbrella. In 
the organized salt market worth Rs. 4 billion (2006) ,ITC had a market share of mere 5 
percent compared to the market leader , Tata salt with market share of 28 percent. 
4. BISCUITS: 
.The biscuit market in India is valued to be approximately worth Rs. 5000 crore. In the Indian 
Biscuit industry out of the net production 60% percent is produced by the organized sector 
and the rest 40% is produced by the bakeries which form a part of the unorganized sector. 
SUNFEAST a premium product of ITC is helping the company to acquire a huge share in the 
market. They should get 12 percent market share within the next few years. 
5. Snacks 
The Indian Snacks industry is valued to be of 1800 Crore Rs. and is growing at a remarkable 
10% every annum. In the world the Indian snack market is the largest and is dominated by 
potato chips which have a share of about 85% in the total snacks market. ITC has been able to 
penetrate quickly into the market through its brand Bingo by its adaptive pricing technique 
and unique promotion. 
5.3 Company Culture 
ITC’s vision 
• Maintaining its position as one of the valuable corporations in India by providing world 
class performance. 
• To create increasing value for the stakeholders and ultimately to the Indian economy
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation
Marketing strategies of packaged food companies in india. Dissertation

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Marketing strategies of packaged food companies in india. Dissertation

  • 1. Marketing Strategies By Packaged Food Companies In India Nikunj Agrawal M.Sc. Marketing Management Aston Business School Academic Yr. 2010 -­‐ 2011
  • 2. 2
  • 3. 3 Acknowledgement Writing a dissertation is always the most challenging part of a student’s life. It was definitely the most important academic contribution by me. This however would not have been possible without the encouragement and support of a few people. Here I take this opportunity to display my gratitude towards them. First and foremost, I would like to thank my professor, Dr. Erik A. Mooi for being a source of support and encouragement, guidance and persistent help. Thank you sir for your time, support and patience. My Sincere thanks to both academic and non-academic staff of the Aston University and Aston Business School, for all their assistance. I would like to thank my parents for love and support bestowed on me. Thank you for your blessings. Also I would like to thank my friends for staying by me during the difficult parts in the strange and unknown country. I would then like to thank all the data sources which helped me complete the dissertation. Last but not the least, I would like to thank God for all. Nikunj Agrawal
  • 4. 4 Abstract This research attempts to study the packaged foods market in the lucrative Indian market. The study gives an overview of the Indian packaged food market. Market leaders in the Indian packaged food market in the six different categories of packaged foods are studied. Factors such as the market leaders, market share, factors influencing buying, key drivers in the packaged food market and future of the packaged foods in India are some of the important aspects of the research. To understand the successful marketing strategies and the role of marketing strategies in company’s success, a company analysis of ITC Foods from the point of view of marketing is done. Major information sources for the research is the internal and external data available online. Importance of Innovation and competitive strategy in the formation of marketing mix of ITC Foods is firstly studied. The effectiveness of proper execution of the marketing mix is then studied with the help of various marketing theories and models propounded by marketing scholars. The finding, recommendation of marketing strategies and the future on packaged foods in India is then stated.
  • 5. 5 Table of Contents 1. Introduction ..................................................................................................................... 7 1.1 Research Introduction ....................................................................................................... 7 1.2 Packaged Foods ................................................................................................................ 7 1.3 Industry Background. ....................................................................................................... 8 1.4 Indian Food Processing industry ...................................................................................... 8 1.5 Research objectives and road map. ................................................................................. 10 1.6 Research Structure .......................................................................................................... 11 1.7 Methodology ................................................................................................................... 11 2. Literature Review ......................................................................................................... 13 2.1 Definition of Marketing ................................................................................................. 13 2.2 Marketing Strategy ......................................................................................................... 13 2.2.1 Marketing mix ......................................................................................................... 16 2.2.2 Competitive Strategy ............................................................................................... 17 2.2.3 Porters Five Forces .................................................................................................. 18 2.3 Brand image .................................................................................................................... 19 2.4 Awareness of consumers and reasons for popularity ..................................................... 20 2.5 Factors influencing consumption and Brand Composition ............................................ 21 2.6 Marketing strategies by companies ................................................................................. 24 2.7 Importance of promotion ................................................................................................ 25 2.8 Innovation in food marketing ......................................................................................... 26 3. Methodology .................................................................................................................. 30 3.1 Research design .............................................................................................................. 30 3.2 Secondary research ......................................................................................................... 31 3.2.1 Sources of secondary research ................................................................................. 31 3.3 Constructs ....................................................................................................................... 33 3.4 Propositions .................................................................................................................... 33 3.5 Case study (Company Analysis) ..................................................................................... 34 3.6 Analysis type .................................................................................................................. 35 3.7 Models and theories ........................................................................................................ 35 4. Market overview ........................................................................................................... 36
  • 6. 6 4.1 Area of Research: Indian Market .................................................................................... 36 4.2 Processed Foods India : .................................................................................................. 37 4.3 Indian Packaged foods market : ...................................................................................... 38 4.4 Consumer Trends Fuelling the Indian Packaged Food Market ...................................... 48 4.5 Key Growth Enablers ...................................................................................................... 49 5. ITC Case ........................................................................................................................ 52 5.1 ITC Company background ............................................................................................. 52 5.2 ITC Packaged Foods ....................................................................................................... 53 5.3 Company Culture ............................................................................................................ 55 6. Analysis and Discussion ............................................................................................... 57 6.1 ITC Marketing strategy Analysis .................................................................................... 57 6.2 ITC Corporate Strategies : .............................................................................................. 58 6.3 Porters Five Forces - FMCG Sector Of ITC ................................................................... 59 6.4 ITC’s Strategies with respect to packaged foods are ...................................................... 64 6.4.1 Entry into packaged foods ....................................................................................... 64 6.4.2 Product ..................................................................................................................... 65 6.4.3 Price ......................................................................................................................... 66 6.4.4 Place ......................................................................................................................... 67 6.4.5 Promotion ................................................................................................................ 68 6.5 Analysis of ITC Food’s organizational effectiveness ..................................................... 69 6.6 Innovation And Competitive Strategy For Designing The Marketing mix - Marketing Mix Development For Sunfeast Biscuits .............................................................................. 70 6.7 ITC Bingos’s Marketing Mix ......................................................................................... 72 6.8 Financial Data ................................................................................................................. 73 6.9 Sales Of Food Sector And Its Projection : ...................................................................... 74 6.10 ITC Strategy analysis .................................................................................................... 75 6.11 ITC’S New Challenges: ................................................................................................ 75 6.12 ITC Case Conclusion : .................................................................................................. 76 7. Emerging New Categories and the future of Packed and processed foods in India77 8. Findings and Recommendations and Research Gap ................................................. 79 8.1 Findings of the research. ................................................................................................. 79 8.2 Recommendations ........................................................................................................... 80 8.3 Research Limitations and further research scope ........................................................... 81 9. References ...................................................................................................................... 82
  • 7. 7 1. Introduction 1.1 Research Introduction This study tries to give a picture of the current market scenario of the Indian packaged and Instant food industry and the marketing strategies used by the companies. The Indian Packaged food industry is observed in a complex and dynamic environment. The research begins by understanding the Indian Packaged food market. An overview of the consumers, their needs, the products in the Indian Market will be carefully analysed. The later part of the research explains the positioning of the market leaders in the market and the marketing strategies adopted by them to capture the lucrative Packaged food market. Apart from the Mighty 4 P’s there are many other factors which play a very important role for designing a strategy in such a way that it is flexible to the environments affecting the business and industry. To name a few Situation analysis, marketing tactics, marketing budget, resource allocation, operational timeline and etc. Innovation strategies used in the food industry will be studied, revealing an inappropriate focus on internal knowledge. 1.2 Packaged Foods The phrase 'food' means the chemical substances consumed by the human body in order to keep the body in an active and healthy condition. The body needs food for its growth, repair, replacement and treatment of the worn-out tissues. Therefore, food has to deliver the required energy, raw material, and other regulating constituents, like minerals and vitamins, for the efficient and smooth functioning of the body, apart from fulfilling the calorific needs like protein, fats, carbohydrates, etc., Oxford Advanced Learners Dictionary defined instant food products as “Instant food products which are prepared and packaged often in powered form are required only the addition of a liquid as water or milk for final preparation”. The Instant food products, which originated in Japan with Instant noodles had its beginning in India in 80’s, are found today in the kitchen shelves of every Indian household. The advancement of science and technology offered the people new foods processing vessels,
  • 8. 8 tools and equipment, despite this fact, people are still searching for new methods to prompt up the cooking activities with a view of coping up with their mechanical life, as they lack of adequate time to cook in the conventional Indian methods. In this ever changing social and domestic scenario, both women and men have to unavoidably go for work and are employed to supplement their income, as a result of this, cooking food in the conventional methods is a suffering for women. Capitalizing this situation, business houses ranging from small time manufactures to multinational corporations have started innovating and commercializing “easy to cook food items” like noodles, vermicelli, gulab jamun, instant idli, vada, dosa mix, etc., that are otherwise called instant. The instant food products are not only easy to cook but also have a significant role and place in the celebration of the family functions and religious functions of the people. 1.3 Industry Background. India being the world’s succeeding major producer of foods after China, is expected of being biggest food industry with agricultural and food sector contributing 26 per cent to Indian GDP. It has the capacity of producing over 700 million tons of food products every year; is expected to be doubled of what it is in the coming ten years. Foods has the largest share in consumer expenditures in India. Foods and food products count for more than 53 per cent of net private consumption. The stake in expenses is considerably more than in developed countries, where consumer spending for food and their food products sum up to about 20 per cent. (www.tata.com, 2010). 1.4 Indian Food Processing industry India saw quick economic growth powered by economic transformations during the phase of 2004 to 2007. FDI inflow increased and GDP growth was at 8-10 per cent during the period. The global economic downturn seen in 2008 had a deep impact on the economy with industrial output slowing down and inflation increasing by two percentage points over the previous year to 8.3 per cent. However, real GDP growth still remained as strong as 7.3 per cent. With India’s huge population base, steady macro-economic environment and a rise in middle class population, processed foods has been one of the fastest growing segments in the Indian market. Rapid lifestyle change, especially in the urban areas, has caused a histrionic rise in the demand for packaged, processed, ready-to-eat foods and food products.
  • 9. 9 With he entry of food multinational companies and the propagation of Quick Service and fast food Restaurants (QSR) outlets have indeed further added to the boost of the packaged food industry. The proliferation of modern-day retail business types and the rapid increase of hypermarkets/ supermarkets, fast food outlets and shopping malls combined with the promising industry trends is adding to the fundamental shifts in the Indian grocery and food industry. The food processing and production industry in India is considered to be one of the largest in terms of growth, production, export and consumption prospects. Significant sub sectors in the food processing industry are, fish-processing, processing of fruit and vegetable, milk processing, packaged/convenience foods, meat and poultry processing, grain processing, soft drinks, and alcoholic beverages. . (Sajani Mrinalini Dutta, Rohit Chadha, Rohit Bhatiani (2008). In the past few decades, Indian companies have taken big and vital steps in producing milk, food grains, vegetables and fruits. The production of raw food materials is worth over Rs 60,000 crore in India. After the calculation of primary, secondary and tertiary processes, total sum of the food industry is estimated as Rs.1,10,000 crores. This huge cost overrun replicates the alluring opportunities in the food-processing industry, offered to the Indian economy to the whole and to the entrepreneurs in individual. The attractive marketing opportunities lie in advancing the grains and commodities to branded and packaged products and into convenient foods, which yield value for money paid. Products aimed towards young adults and children and products providing to those who live a rapid modern-day life are the need of the hour. Appreciating the potentials in the food market and with a view of providing further boost, the government has provided exemption from excise duty for ice cream, condensed milk, preparations of meat, pectin’s, fish and poultry, yeast and pasta. Adding to the relief, excise duty on a few ready-to-eat and packaged foods is curtailed from 16% to 8%. (Budget, 2007) The volume of packaged foods market in India is valued to be US $ 10 million & with the rise in the segment, it is expected to cross US $ 20 million by the end of the year 2014. Packaged food contribution is now 4 % of the total Food and Grocery (F&G) market, is anticipated to reach 5 per cent of total food & grocery market by 2014. . (Sajani Mrinalini Dutta, Rohit Chadha, Rohit Bhatiani (2008). The Food processing industry plays an important role in associating the farmers to the end consumers in the Indian domestic together with the international markets. Food processing
  • 10. 10 along with efficient marketing efforts has the capacity of resolving the basic agricultural problems like wastages, surpluses, reasonable remuneration to the harvesters and growers and rural jobs. Keeping a view of 10 years ahead, production of foods is anticipated to double. These harvests, if processed and marketed briskly, can led to become India the leading suppliers of food, globally. Among the processed food segment, Packaged food products occupied a considerable shelf space in stores and super markets in India. Food companies through instant food products had provided high quality food choices, which would have been inconceivable to ancestors. Instant food mixes formed a range of convenience food for households, being easy to use without terminal processing and women found it very convenient to use. It helped them to save time and effort and relieved them of the tedious jobs of collecting various ingredients, cleaning and sorting them and preparing food. 1.5 Research objectives and road map. 1. Reasons of popularity and rising demand for packaged and instant foods in the indian market 2. The market leaders and the Brand Composition of the various packaged food products in the Indian Market. Factors that will help us analyse this are : • What made them the leaders • Reasons for the preference and Brand Loyalty. 3. Marketing strategies adopted by ITC Foods, in the Indian packaged food market. • The Strategy by ITC Foods with respect to demographics, product life cycle stage, competition, area of operations and etc will be studied and taken under consideration. • The efficiency and effectiveness of ITC Foods’s functional and departmental activities will be analysed.
  • 11. 11 1.6 Research Structure The research is structured in two fundamental parts. While the first part of the paper attempts to present a clear understanding of the current food industry situation, providing reasoning behind the increased amount of products and services continuously appearing on the market. The analysis will comply the market leaders, the brand composition in the market, the brand preferences, reasons for preference and etc. The second part aims at explaining the Marketing strategy adopted by the market leader by illustrations and Indian Market facts. It will cover the marketing strategies adopted by ITC Foods in the Indian packaged food market. A Case study based on the company’s current position will be formed and the marketing strategies adopted by the company will be then analysed. Once these two parts have been explained and fully understood, they will materialize 1.7 Methodology The research tends to understand the packaged foods market in India. For understanding the marketing strategy, The primary data sources are available public data, industry studies and selected private data files to measure trends in packed food sector. Research will take a close look into the articles, readings, and publications about successful marketers and various packaged food companies strategy implications. Additionally the structure of the research presented, so as to give a clear explanation of each construct and the propositions taken, is designed in such a way to answer the research questions with all the components of the paper. Research will be aided by graphical representations and marketing models to add theory aspect and make the research intact with the theories. The research is then followed by concrete recommendations to answer the final research question, that is understanding the Marketing strategies in the Indian Packaged food Industry. 1.8 Contribution by the Research The research tends to contribute towards the strategy planning and execution element of marketing, successfully executed or in progress in the Indian market. It will prove as a navigator for the managers of the SME’s which tend to enter the complicated but lucrative Indian packed food Industry.
  • 12. 12 The findings in the research of the successful marketers will act as a bench mark for the new entrants or failures in the packed food industry.
  • 13. 13 2. Literature Review In this chapter, research works done in the past regarding awareness, factors influencing the consumption, brand loyalty, brand composition and demand estimation of food products by researchers and scholars has been reviewed and presented. The literatures and the studies done will help in understanding the marketing mix of the companies. 2.1 Definition of Marketing “Marketing is a social process by which individuals and groups obtain what they need and want through creating and exchanging products and values with others.” - (Philip Kotler). Marketing is a process of analysis, planning, implementation, and control with a view of achieving organizational objectives by delivering value to the targeted market.. “It relies heavily on designing the organization’s offering in terms of the target markets’ needs and desires, and on using effective pricing, communication, and distribution to inform, motivate, and service the markets”. - (Philip Kotler, 2008). While Some of the definitions of marketing include The elements of profit. The Chartered Institute of Marketing defines the term as " the management process responsible for identifying, anticipating and satisfying customer requirement profitably ". (www.marketingteacher.com) According to others, like (Chandler in http://idl-bnc.idrc.ca/) have stressed into the promotional characteristic of marketing where marketing consists the vital components of – information about your customers/potential customers who are gearing your products and services and making sure they know about you. Cronin's definition covers everything outlined so far. To (Cronin in http://idl-bnc.idrc.ca/), marketing Is “a consumer-oriented philosophy”. According to Cronin, marketing can be very well defined in just a word, ‘proactivei1'. Hence according to service philosophy, marketing is an exchange relationship, being user-oriented rather than being product-oriented and ultimately aims towards satisfying customers needs. 2.2 Marketing Strategy Marketing strategy is where you specifically define, how the business is going to achieve its objectives, by setting goals and high-level strategies. A study into marketing strategy will take us through the different aspects of strategy formulation, implementation and its effects.
  • 14. 14 Kotler (2003) defined marketing strategy as “a set of business principles that an enterprise uses to serve its customers and achieve profitability.” Armstrong and Kotler (2003) realized that marketing strategy is designed to direct an organization to use its resources optimally to meet the customer requirements and realize its marketing goals in a more efficient way than its competitors. While some of the others regarded marketing strategy to be four dimensional, channel strategy, including low-cost strategy, branding strategy, and innovation strategy. Hence it can be derived that marketing strategy and product innovation are inter-related and closely linked. Therefore Innovation is given importance in our study and different aspects of Innovation related to the industry will be studied. Although marketing strategy has been proposed in many different ways, most researchers, scholars and theorists have explained marketing strategy via the incorporated aspect of 4P’s - Product, Price, Place, and Promotion. (Kotler, 2003). Implying the theories, it can be said that Marketing strategy is the marketing sense through which an organization tries to achieve its marketing objectives by optimum utilization of resources and opportunities in the market. It reflects the strategies for target markets and positioning accordingly to build the firm's differential advantage. It should include the market segments where the company will target. These segments differ in needs and wants, responses to marketing, and profitability. The company should then work into those market segments where it can best perform from a competitive point of view. It should develop a marketing strategy on the basis of feasibility and potential success for each targeted segment accordingly. Matching of the activities of an organization to the environment in which it operates is referred as strategy. Marketing strategy formulation involves setting the objectives of an organization by performing the internal and external analysis. Though formulating a strategy which is consistent and constant in nature is a difficult task for any marketing team, performing the strategy work that is, implementing it as it was planned throughout the organization structure – is even more difficult (Hrebiniak, 2008). There are countless factors that can potentially affect the process of successfully implementing the strategic plans in the organizational action. Strategy implementation, unlike strategy formulation is many times considered as a craft, instead of a science, and the previous researches have described it as as uneven and eclectic (Noble, 2008). It can be implied that, even after a comprehensive strategy, strategic framework or single strategic decision has been planned and formulated, significant difficulties and practical problems are usually experienced during the successive implementation process.
  • 15. 15 Here are some of the illustrations in the packaged food market over the previous few years, where many companies have successfully implemented their strategies and without increasing their sales volume significantly, they have increased the net earnings. It was done by implementing the strategies successfully. Either by improving productivity, raising prices, simplifying promotions, or by cutting product costs. Companies focused on Product development through line extensions than developing new products. In the coming years, beverages and packaged food sales are just expected to increase by mere 2 percent—and much of it is prospected through non-traditional and unorganized food service channels. As a result of the fact that beverage and food expenditure is virtually flat, competition among companies and producers is sure to intensify. In the cut throat Indian Packaged food market, it can be said that commercialization and product development is the need of the hour for succeeding. In our study of processed and packaged foods which are novel to Indian market and consumers, majority of Indian consumers and potential customers have had less of experience and hence have not exactly developed predisposed and willful attitudes towards processed and ready to eat products. Moreover, food and taste is closely affiliated with the rick Indian culture. Our research unearths that in order to achieve their business goals how important is the role of product development and commercialization. After a company defines its objectives clearly, level of performance would be realized. The dimension in which the company appears to be the most distinguish and capable from the rest, should incorporate the business practices foe its product development.
  • 16. 16 For designing the marketing mix for the strategy planned, a strategic fit of companies resources and the market opportunities should be considered. 2.2.1 Marketing mix Marketing mix is defined as A planned mix of the controllable elements of a product's marketing plan commonly termed as 4Ps: product, price, place, and promotion. These four elements are adjusted until the right combination is found that serves the needs of the product's customers, while generating optimum income. http://www.businessdictionary.com/definition/marketing-mix.html) A marketing mix must be designed with carefully keeping in mind the following aspects * the right product * sold at the right price * in the right place * using the most suitable promotion. Each element of the marketing mix should be designed keeping the following aspects in consideration: * The product should have the required right features – ex. It should be attractive and efficient. * The pricing must be reasonable and right. Consumer should buy in bulk to generate more profits * The goods should be placed in the right location at the right time. Having the goods available to the consumers every time. * The products need to be made aware to the public informing their existence and availability. (www.thetimes100.co.uk [online)
  • 17. 17 2.2.2 Competitive Strategy “A firm's relative position within its industry determines whether a firm's profitability is above or below the industry average. The fundamental basis of above average profitability in the long run is sustainable competitive advantage. There are two basic types of competitive advantage a firm can possess: low cost or differentiation. The two basic types of competitive advantage combined with the scope of activities for which a firm seeks to achieve them, lead to three generic strategies for achieving above average performance in an industry: cost leadership, differentiation, and focus. The focus strategy has two variants, cost focus and differentiation focus.” (Porter, Michael E., "Competitive Advantage". 1985)
  • 18. 18 2.2.3 Porters Five Forces “Porter's 5 Forces analyses the external factor to an industry that affect the nature of competition within it, the forces inside the industry (microenvironment) that influence the way in which firms compete, and so the industry’s likely profitability is conducted in Porter’s five forces model. A business has to understand the dynamics of its industries and markets in order to compete effectively in the marketplace. Porter (1980a) defined the forces that drive competition, contending that the competitive environment is created by the interaction of five different forces acting on a business. In addition to rivalry among existing firms and the threat of new entrants into the market, there are also the forces of supplier power, the power of the buyers, and the threat of substitute products or services. Porter suggested that the intensity of competition is determined by the relative strengths of these forces.” (http://www.coursework4you.co.uk)
  • 19. 19 2.3 Brand image The processed food consumer market is highly dependent on the factors like Brand Image and satisfaction. A study of Brand image will guide us understand the different aspects of Brand image and consumer perception on Branding and Product selection. Rajarashmi and Sudarsana (2004) revealed that, almost all the sample respondents preferred branded products and if their favourite brand is not available in the retail shop, they will go for another store and their favourite brand. If it is not available in the market, the respondents are ready to postpone their decision. It is clear with the research that consumers just don’t want to buy the product but give preference to the brand they like. In the Indian packaged food market where the buyers have lots of options, they still prefer the brands they want to buy. Kim-Hyunah et al. (2005) analysed the relationship among brand equity factors (brand awareness, brand image, brand preference and brand loyalty) and suggested a strategy for brand management in contract food service management companies. He concluded that brand awareness has positive effect on brand image and brand preference and recommended that the contract food service companies should focus on improving brand awareness as a brand strategy. In the intense race of packaged foods companies, it is thus very important for companies to design their promotion strategies in such a way that people are aware of the product. In addition, brand preference and brand image have significant positive effects on brand loyalty. Thus, the companies should strive to strengthen brand loyalty through building brand preference and brand image. Brand loyalty promotes more customer visits, which is directly related to profitability of contract food service management companies, the authors concluded. Al-Weqaiyan (2005), using the attitude behaviour model, conducted cross-national study, of fast-food meals purchase intentions in Kuwait, where it was found that long term marketing success was highly dependent on generating and maintaining brand loyalty. It was discovered that, repurchase action varies a result of four independent factors (1) Approach derived by past experiences with the product and brand;(2) Perceived barriers of switching to another brand from present brand; (3) propensity to go for variety as a result of boredom resulted because of dealing with the consistent and same brand choices. (4) cultural differences were seen in some characters of national character. It can be seen, that food products globally are chosen with a lot of particularity and brand preference is built on the basis of constant value
  • 20. 20 delivery to the customer. 2.4 Awareness of consumers and reasons for popularity The purchase action is influenced by many factors. Foremost the consumer needs to be aware of the product, its features, benefits derived and etc. Apart from advertising there are several other means of consumers being educated. For ex. Word of mouth, attractive packing, company image and etc. A study on consumer awareness and reasons for popularity will help us understand the importance, means and effects of consumer awareness. Indian purchasing pattern is changing. Branded products purchases have increased from 25 percent to 35 percent over the past years. Products like KFC’s Chicken and Basmati rice have been successfully implying the fact that there is a rise in demand for branded products, provided hygienically at affordable reasonable prices. Brown et al. (2000) reported that it has been important to educate the young consumers about the nutritional benefits of foods, observing the routine and general behaviour and food habits, especially during adolescence and found that there is an interaction between the youths food preferences and nutritional awareness within the three environments namely home, social and school. The observations indicate that there is development of some ‘individual traits’ especially during the adolescent years which surpasses the perceived domination of school, home or social environment. The researchers suggest that the food consumption and preferences are frequently of 'fast food' and ‘junk food’ types which feed them poor nutrition and unevenly balanced meals. Although the youth consumers were aware of the facts and healthy eating, the food consumption and preference behaviour did not seem to portray such knowledge, especially within the social and school environments. The study made it clear that educating the consumers about the product right from nurturing stage is equally important even if the foods does not offer much of nutritional value. Aaker (2000) regarded brand awareness as a remarkably durable and sustainable asset. It provided a sense of familiarity (especially in low- involvement products such as soaps), a sense of presence or commitment and substance and it was very important to recall at the time of purchasing process. Apart from the conventional mass media, there were other effective means to create awareness viz., event promotions, publicity, sampling and other attention-getting approaches. Packaged foods which are generally consumed by people living in the
  • 21. 21 urban areas, promotion and awareness thus becomes easier for the companies as the access to people in urban areas is easier and convenient. Beverland (2001) analysed the brand awareness for ZESPRI kiwi fruit within the markets of New Zealand. The efficiency of the branding strategy used for the kiwi fruits in New Zealand was studied. The implications from the research for ‘agribusiness’ in using the data, composed of surveys of the kiwi fruit consumers in three of the major super markets in Auckland, the findings suggested that there is a low level of Brand awareness of ZESPRI among the consumers (n=106). It was indicated that the brand awareness could increase by a customer relationship-making program, towards the targeted supply chain and target customers. Customer relationship, though being a modern day marketing concept has become a necessity for the companies to adhere, for creating a differential advantage over the competitors. Nandagopal and Chinnaiyan (2003) concluded that the level of awareness among the rural consumers about the brand of soft drinks was high which was indicated by the mode of purchase of the soft drinks by “Brand Name”. The major source of brand awareness was word of mouth followed by advertisements, family members, relatives and friends. From the research it is clear that buying behaviour in rural India is often an influence of trend prevailing in the society. Innovative ways of promoting the product is the necessity for spreading awareness and brand preference in the rural India. It can be concluded that brand awareness is the first stage of acquiring customers. But there are various ways of acquiring customers, it differs with the area of operation, price elasticity and ways of promotion 2.5 Factors influencing consumption and Brand Composition Kumar et al. (1987) examined the factors influencing the buying decision making of 200 respondents for various food products. Country of origin and brand of the products were cross-tabulated against age, gender and income. Results revealed that the considered factors were independent of age, education and income. The brand image seemed to be more important than the origin of the product, since the consumers were attracted by the brands. Thus brand image has an upper hand over the other factors influencing the consumption, and brand image as discussed earlier is built wit constant delivery of value to the consumers
  • 22. 22 building positive relations with the customers. Silayoi and Speece (2004) suggest the significance of packaging and design as a way of branding and communicating in the highly competitive consumer markets of packaged food products. The packing conveys implied meaning, whether favourable or unfavourable and the presumption about the product. Underwood et al. (2001) advocates the impulsive imagination aspects of how a consumer reacts to the product tastes, looks, smells, feels, or sounds at the time when they are watching a product on the shelves. Furthermore, if the brand is competing in a highly competitive market or a crowded category, an eye catcher trick for the crowd could be disrupting their eyes as they walk past the shelf set. Some of the most vital quantitative tools are density, spectral data, ink trapping, dot area and control of the observed area. It should be insured that the printer uses these methods and devices for a better print quality on the package (Levey, 2004). The theories of Levey and Underwood talk about the first impression of the product. It can be implied that the fist impression gives the customer a feel of the product. The product should be designed in such a way that it conveys a positive perceived value of the product. Jorin (1987) examined changes in spending power and buying habits of Swiss consumers since the beginning of the 20th century and in the more recent past. Current trends include greater emphasis on health and safety of foodstuffs and less attention to price, increased demand for low calorie light products and increased demand for organically grown foods. For young people, more concern with enjoyment and less for health, with more meals eaten away from home, and generally an increased demand for convenience foods. The prospects for high quality branded products are seen to be good. Quality is such an element in foods, which cannot be overlooked. Ryan (1982) recommended that attitude formation is influenced by normative beliefs, as perceptions might be based on the information and reviews provided by the experts or by the expectations and demands of other socially or personally significant people. He believed that external expectations do affect internal and psychological predispositions (attitudes). For example : in the case of new products. There are many ways of forming perceptions about the products. In the case of an established product, the reviews, past experiences, the availability and promotion by the company are few of the factors which lead to formation of moulding of perceptions about the product. While in the case of products to be launched, the pre-launch promotions, the product expectations, the content, innovation and etc. are seen.
  • 23. 23 Sabeson (1992) in his study stated that, high quality, price and taste of the product were the major criteria based on which the consumers selected a brand of processed fruits and vegetable products. Fruits and vegetables when sold without association of any brands the above factors count. But after the radical change in grocery and food sales pattern, marketing strategies and brand image do matter and play a vital role in the buying behaviour. Rees (1992), observed that factors that influence the consumer’s intent and choice of packaged food are advertising, texture appearance, flavour, means, reduction in traditional cooking, disintegration of family, an increase in ‘snacking’. etc. Increasing use of microwave, ovens and household and demographic role changes have moulded the eating habits. Development and organization in retailing with as much as 80% of the food sales in supermarkets is said to be vital. Consumers have been responding positively to messages and notices about healthy and safe eating. They are particular of the ways in which the food is provided and produced and want ‘natural’, safe and high quality food, priced reasonably. While the study undertaken by Sheeja (1998) in Coimbatore district considered the quality aspects like aroma, taste, freshness and purity as the major factors deciding the preference for a particular brand of processed spices. It can be inferred that there are different characteristics that build up the brand image and positive buying attitude of customers for food items in India. Kamalaveni and Nirmala (2000) reported that, there is complete agreement between ranking given by the housewives and working women regarding the reasons promoting them to buy Instant food products. Age, occupation, education, family size and annual income had much influence on the per capita expenditure of the Instant food products. Women are still the decision makers for household stuffs in India. The companies ought to decide the marketing strategies according to the thinking, mind sets, perception and buying behaviour of women. Kubendran and Vanniarajan (2005) elicited that the change in consumption pattern was due to changes in food habits. If income and urbanization increase among consumers, the percentage of income spent on consumption increases. The urban consumers preferred mostly branded products compared to rural consumers. The most significant factors influencing buying decisions were accessibility, quality, regular supply, door delivery and the mode of payment. Ramaswamy et al. (2005) studied consumer behaviour towards instant food products in Madurai, the second largest city in Tamil Nadu, India and observed that consumers do build
  • 24. 24 opinion about a brand on the basis of which various product features play an important role in decision making process. A large number of respondents (78%) laid emphasis on quality and 76% on price which is an important factor, while 64% of respondents attached importance to the image of the manufacturer and 50% considered packaging as an important factor and an equal percentage (50%) felt longer shelf life influenced them. Low and Lamb Jr. (2000) came out with an interesting finding that famous and renown brands exhibit multi-dimensional brand associations, complying with the fact that customer have a more developed remembrance and memory structures with brands more familiar to them. Consumers would generally spend more energy in recalling and processing earlier information relating to familiar brands as compared to novel and unfamiliar brands. From all the above researches it is clear that there are various factors that influence the consumers buying behaviour for food products. Some of the imperative ones are quality, price, promotion, social trends, family preferences, brand image, past experiences and etc. This research is concerned about the marketing strategies by the companies with reference to the marketing mix designed by the companies that lead to market penetration. 2.6 Marketing strategies by companies Food marketing Food products usually require general marketing practices, techniques and approaches useful for the marketing of other types of products and services. Topics such as segmentation, targeting, positioning, test marketing, market entry strategy, branding, and consumer research is the most suitable and highly appropriate for food marketing. Above this, food marketing is influenced by various challenges and problems – such as to deal with perishable products, where availability and quality varies as a matter of current harvest conditions. Value chain – Value chain is the amount to which successive parties in marketing channel adds value to the final product – is predominantly important. Presently, new distribution and processing choices offer increasing opportunities available for food marketers and producers to provide the customers with convenience. Marketing, processing and services although added, result in visible higher costs (Kohls and Uhl, 2001)
  • 25. 25 The analysis of consumers assists companies in developing the marketing strategies by gripping issues like : • The psychology of consumers choices affected by factors like reason, sense, and choice between different types of food (e.g. products, brands); • The psychology of consumer being affected by the environment (e.g., family, culture, media, signs); • The behaviour of consumers while shopping or making other marketing decisions; • Restrictions in consumer knowledge, customer education or information processing skills affecting decisions and marketing results; • How the customer motivation and decision strategies differ amongst food products, different in the level of importance or interest which is caused to the customers; and • How companies can develop and adjust the marketing strategies and marketing companies to access the consumer’s minds more effectively. The basic aim of the study after understanding the packaged food market is to analyse the marketing strategy of companies in the market. Relevant models will be used for doing the analysis, comparing the data with theories and coming on a conclusion. 2.7 Importance of promotion The (Institute of Practitioners in Advertising (IPA) in tutor2u.net), the body representing advertising agencies, defines advertising as : "The means of providing the most persuasive possible selling message to the right prospects at the lowest possible cost". While Armstrong and Kotler (2003) give an alternative definition: "Advertising is any paid form of non-personal presentation and promotion of ideas, goods and services through mass media such as newspapers, magazines, television or radio by an identified sponsor". Mela Carl (1997) studied the long term effectiveness of promotion and advertisement on consumers brand choice behaviour. A panel data of 8 years for a frequently purchased packaged goods were taken as a base for answering two research questions. Firstly the consumers behavioural response to variables of marketing mix such as change of price over a long period of time. And secondly, the changes related to companies retailer promotion and
  • 26. 26 advertisement policies. Using the results, the researcher drew implication for the trend in company policies related to pricing, promotion and advertisement. The researcher used a two-stage approach, allowing him to assess the quarterly (medium term) effects of promotion and advertisement along with their long term (infinite horizon) effects. The results observed were consistent complying with the hypothesis tested that consumers tend to be more of promotion and price sensitive across time as a result of increased promotion and reduced advertisement. Neslin Scott (1999) developed a model and tried to examine the role of retail promotions in assessing future brand loyalty of customers with the help of feedbacks given after purchases. Purchase feedbacks denoted the effects of present purchases on brand preferences in the future. The research was conducted on the basis of two product categories and comparison of the effectiveness of non-price versus price retail promotion was done. It was observed that in-store price promotion has a negative purchase feedback compared to non-promotion purchases, while non-price promotions like sampling or features display had a negligible effect or had a positive purchase feedback, compared to purchase made without promotion. 2.8 Innovation in food marketing Roger and Shoemaker (1971), defines innovativeness as “the extent to which innovation is adopted by an individual earlier than others in the system”. This definition advocates the time adopted as a method to measure innovativeness by individuals. TQM represents principles that are similar with innovation (Dean; Mahesh; Tang, Roffe and Kanji; in TQM and innovation: a literature review and research ). In this context, the customer focus principal motivates the organizations to search constantly for different and new customer expectations and needs and hence leads the organization to be path breaking and innovative with reference of introducing and developing new and innovative products as recurrent adaptation to the changing needs in the market ( Juran, 1988). Consumer focus even advocates the significance of pleasing customers. It implies that suppliers and providers just do not need satisfy stated and basic requirements but to do it creatively that they exceed the expectations and needs beyond performance. This strategy is closely related with innovation. In a similar way, continuous improvement and up gradation encourages creative thinking and change in how the work is conducted and organized. To conclude, the principles of involvement, empowerment, and teamwork are also considerable in deciding the success of innovation in the organization.
  • 27. 27 Midgley and Dowling (1978, p. 236) states innovativeness as: “the degree to which an individual is receptive to new ideas and makes innovation decisions independently of the communicated experience of others.” According to them, innovativeness is like a personality trait which can have an influence over a range of product-specific behaviours, comprising the early adoption of innovations. An intermediate level of innovativeness - ‘product-category-specific innovativeness’, which portrays definitive action on one hand, and abstract personality traits on the other has been recommended by Midgley and Dowling (1978). They try to measure the effect of “innate innovativeness” on the basis of various differences between individuals, situational factors and variables which have an influence on the actual adoption of innovations. Earlier studies have found that there is a relation between innovativeness and various consumer characteristics discovered by various researchers such as opinion leadership (Turnbull and Meenaghan, 1980), demographics, communication behaviour (Bass, 1969; Boyd and Mason, 1999), and various consumer values (Daghfous et al., 1999). Extremely innovative consumers generally are youths, economically affluent, highly educated and qualified opinion leaders, who get the new product specifications and information directly from the marketers and mass communication (Turnbull and Meenaghan, 1980). Hirschman (1980) disputes that distinctive innovativeness only partly accounts for the differences within individuals in the adoption behaviours. She anticipated that innate novelty seeking, “conceptually indistinguishable from the willingness to adopt new products” (Hirschman, 1980, p. 285) and creativity are complimentary, with the other variables, so that to serve to clarify or to distinguish adoption behaviour. Grounded on the two conceptual outlooks, Foxall (1988) advises that cognitive style influences objectified consumer innovativeness more than cognitive level (creativity),. Cognitive style is well-defined as “the individual’s characteristic mode of information processing and is distinguished both conceptually and operationally from level of creativity and cognitive level or complexity” (Foxall, 1988, pp. 80-81), and could be used to differentiate customers in relations of behaviour of innovation adoption. Bonfield (1974) discovered a greater normative influence on behavioural intents for customers with low brand loyalty and higher education. Apart from this, distribution and marketing concerned policies and decisions are now of the supreme significance in the food marketing world. This is with respect to the existing economic crisis state in most of the economic world and the cost effectiveness issues that
  • 28. 28 ought to be considered at fluctuating level of economic development. While reviewing food-marketing systems from varied cultures, economic, political, environmental and cultural aspects should be considered of the respective countries involved (Kaynak, 2002). Furthermore, religious and cross-cultural food taboos should be taken into consideration while conducting food business globally. For example, it would be as grave as a sin, trying to sell pork-based products in Pakistan and other Muslim countries and beef-based products in India. As both the food products are strictly prohibited due to religious constraints in the respective countries, although their consumption is quite high in the western countries without any constraints. This is the reason all the foresaid issues and conspiracies must be considered while performing food marketing, globally. Though, best marketing and business practices should be established to increase the business performance appreciably. As the society has gradually turned into a knowledge society, the always rising significance of knowledge demands a modification in rationals concerning innovation. Nonaka, 1994 expressed that innovation is a process by which the organization creates and defines problems and then actively or pro-actively develops new knowledge systems to solve them. Nonaka's theory can be perceived as a continuation to the Schumpeterian theory, which opposes the focus on unchanging products/processes and believes that firms should make rivals' positions obsolete by creating or adopting innovations!Conner,(1991). Thus, the relationship between knowledge and innovation lies at the core of competitive advantage and can prove to give the firm sustainable competitive advantage over the competitors. Our approach of marketing innovation shadows Nonaka's belief and is within the framework of strategic value innovation. !Hamel, 1998; Kim and Mauborgne, 1999. Hamel, 1998 stresses that strategy innovation leads to wealth creation; it is explained as the capacity to restructure the present industry model in such a way that it creates new and fresh value for customers, undermines competitors, and produce wealth for all stakeholders in newer ways. In marketing, the corresponding concept is marketing innovation. Innovation lies in different aspects and functions of the business. This research focuses to cover the significance of Innovation as an independent variable which has an effect on the three of the 4 P’s of the marketing mix, namely: • Product Innovation has a lot to do with the product development, especially in the food industry. Innovative techniques are being used to make the food taste better, to make the food healthier and cost it less to the customers. Innovativeness is also very vital in developing new products with creative ideas and efficient operations.
  • 29. 29 • Place Packaged foods, a product purchased by the families or individuals to meet the hunger need, needs to be placed strategically and wise fully to penetrate in the markets. Ex. Availability of “lays chips” in the hill stations and remote areas. New innovative techniques are developed by the companies to place the goods strategically in the market such that, they do not loose out customers. • Promotion Innovative ways to promote the brands and spreading awareness are developed and used in the current food markets of India.
  • 30. 30 3. Methodology This chapter gives an outlook of the methodology used for the research undertaken to study the Indian packaged food market, the awareness of consumers about packaged food products, factors influencing consumption in choosing the particular brands in the study area and to analyse the marketing strategies adopted by ITC Foods in the packaged food market. 3.1 Research design The research design best suitable for our research is Exploratory type study. As the term suggests, exploratory research is often conducted because a problem has not been clearly defined as yet, or its real scope is as yet unclear. It allows to familiarize with the problem or concept to be studied. It is the initial research, before more conclusive research (definition of conclusive research) is undertaken. “Exploratory research helps determine the best research design, data collection method and selection of subjects, and sometimes it even concludes that the problem does not exist.” (http://www.uoguelph.ca/htm/MJResearch/ResearchProcess/ResearchDesignDataCollectionT echniquesandSelectionofSubjects.htm) Another common reason for conducting exploratory research is to test concepts before they are put in the marketplace, always a very costly endeavour. Exploratory research can be quite informal, relying on secondary research such as reviewing available literature and/or data, or qualitative (definition of qualitative research) approaches such as informal discussions with consumers, employees, management or competitors, and more formal approaches through in-depth interviews, focus groups, projective methods, case studies or pilot studies. (http://www.uoguelph.ca/htm/MJResearch/ResearchProcess/ResearchDesignDataCollectionT echniquesandSelectionofSubjects.htm)
  • 31. 31 3.2 Secondary research Research will be based on the secondary data collected. Its basically a desk based research. Desk based research refers to analysis of data, collected by third party, often secondary research. Secondary data is the data that already exists which has been collected by someone else for some other purpose. Secondary research involves the investigation and analysis of data from secondary sources. The origin of sources for secondary data varies with the research. Secondary data sources can be from the firm itself – this is known as internal secondary data. Where as external secondary data is the data that has been published by other organizations. 3.2.1 Sources of secondary research For the successful completion of the proposed objectives, a secondary research was undertaken. The sources of data for our analysis are various types of internal and external secondary data like annual reports by companies, market analysis by market research companies, newspaper articles, already done researches, trade journals and etc. Internal sources of secondary data: Every department in an organisation will have its own data records that represent a potential source of valuable data. For instance, records of past advertising campaigns within the marketing department can be compared with copies of invoices held in the sales department in order to judge their effectiveness and get ideas for future campaigns. Past sales figures can also be used to spot trends and forecast future figures. External sources of secondary data: There are several sources of existing data available from outside of the organisation. Many research, surveys and dissertation done by people will be used as the main source of data. There are many books and researches used which were found in the Aston Library. Websites such as Google, Google scholar, Emerald, EBSCOHOST, JSTOR, Aston E library were the
  • 32. 32 websites mainly used to access data online. (http://tutor2u.net/business/marketing/research-secondary.html) The secondary research helped establish knowledge base and give better insights for interpretation, analysis and suggestions relating to the project. For implying the theories and relating it to the market, lecture slides on marketing and strategy, books by marketing experts, journals and articles will be used. According to the research structure designed, the first part of the research will comply of the market analysis. The analysis will comply the market leaders, the brand composition in the market, the brand preferences, reasons for preference and etc. Research will take a close look into the articles, readings, and publications of successful marketers and various packaged food companies strategy implications for giving the market overview. The second part of the research is explaining the Marketing strategies adopted by ITC foods by illustrations and Indian Market facts. It will cover the marketing strategies adopted by the company operating in the Indian packaged food market. ! ! ! ! !! ! INNOVATION ! & ! COMPETITIVE STRATEGY ! ! ! ! ! !PRODUCT PLACE PRICE PROMOTION MARKET SHARE SALES MARKET PENETRATION ! " # $ % & ' ! %(( ( )( ( ( ! " # $ % & ' ! %((( *(
  • 33. 33 3.3 Constructs The first Construct is taken as the marketing mix design of the companies. The elements of marketing mix are dependent on two of major factors. Product (ex. product development), place (ex. supply chain management and SKU’s), promotion (ex. innovative ways to promote and create awareness about the product) and price (ex. competitive pricing) are dependent on innovativeness and competitive strategy seeing the area of operation. These factors will help to design the 4 P’s. Therefore Product, place, price and promotion are the dependent variables, dependent on the independent variable Innovation and competitive strategy. The measurement of effectiveness of the 4 p’s will be the execution success of the marketing mix and the observed results after the implementation. Second construct is the effect of marketing mix in market penetration. Market penetration is dependent on the marketing strategy designed by the company, which is portrayed by the marketing mix of company. Sales, market share and other financials are the metrics which can be used to determine the market penetration. In the second construct, Market penetration is the dependent variable which is depended on the independent variables Product, Place, Price and Promotion. 3.4 Propositions As per Prof. (Nick Lee, 2008, pg 127, 128) in the book Doing business research, a proposition is, a statement that predicts a relationship between two or more variables, one that answers research questions and makes predictions. The propositions valid for the research are as follows: • Marketing mix is led by Innovation and competitive strategy • Effects on market penetration with the helps of 4 P’s of marketing mix The propositions will be tested in the ITC Foods case.
  • 34. 34 3.5 Case study (Company Analysis) Case study method is an in depth study of a particular situation rather than a sweeping statistical survey. It is a method used to narrow down a very broad field of research into one easily researchable topic. In simple terms case study is detailed analysis of a single case. A case is defined as a single social setting. A case study method is where, a case of market leader in the packaged foods market in India will be studied and the marketing strategies adopted by them will be analysed. (http://www.experiment-resources.com/case-study-research-design.html) Possibly the key decision in a case study is the choice of case itself. The case should be chosen for a solid theoretical reason, most commonly because it should be able to answer the research questions. Therefore the case study formed is of the current market leader in the packaged food market in India. The company taken for Case study formation on the basis of their product line is ITC Foods. ITC Foods is used in the analysis as a matter of fact to study the success factors and success formulas used by the company in the packaged food sector Company Segment Products ITC Ltd. Staples, Biscuits, Snack foods and Ready to eat foods Wheat flour, salt, ready-to-eat meals, biscuits, confectionaries, snacks and cooking pasta The main aim of forming the ITC case and giving its background is analysing the marketing strategies adopted by the company.
  • 35. 35 3.6 Analysis type Analysis for the case studies tends are more opinion based than statistical methods. The general idea is to try and organize the company data into a convenient form and construct a narrative conclusion around it. Case study evaluation and analysis will be of qualitative research type. Qualitative research design is perhaps the most flexible of the numerous experimental techniques, comprehending a mixture of accepted methods and structures. This method of research is particularly useful for testing the theoretical models by using them in real world and market situations. 3.7 Models and theories Theories are attempts to answer the `why' questions in social science. These theories differ in their complexity (number of variables and links), scope and abstraction. Different marketing theories and models are hence used in the analysis with a view of merging the gap between theory and market reality. Marketing theories and models propounded by marketing scholars like Kotler and Armstrong (2003) will be used with the due explanation. For example theories like porters generic strategy model, PESTEL analysis, Porters five forces for industry analysis, distribution channel and etc will be used.
  • 36. 36 4. Market overview 4.1 Area of Research: Indian Market Across the world, India is counted as an essential food producer mainly because of its huge and utmost arable land in terms of area. It is a leading producer of tea, milk, sugarcane and pulses in the world. Also it is the second largest producer of wheat , rice , fruits and vegetables. Food processing industry is among the major industries in India .It is ranked fifth in terms of export, production , consumption and the expected growth. The Indian food industry is valued over US$ 200 billion and is anticipated to surpass US$ 300 billion by 2015. Even though India is one of the major food producers in the world, it accounts for only 1.7 percent (valued at US$ 7.5 billion ) of the world trade in the food sector. It is expected that by 2015 this stake will increase to 3 percent (US$ 20 billion The food processing industry in India is estimated at US$70 billion. In 2003 its share in India’s GDP was 6.3 percent and 6 percent share in the overall industrial production. This industry provides employment to 1.6 million workers. India being the world's succeeding major producer of food after China , it has the potential to become the biggest in the agricultural and food sector. The Indian Food Industry is always at its peak as Indians have a feast around the year with large number of festivals and events taking place. The consumption pattern in the food sector has shown remarkable changes due to Indians having large disposable incomes and expenditure on food and their habits. The increase in income is always complemented by modifications in the food baskets for Indians. The proportionate expenses on cereals, salt, pulses, spices, edible oil , sugar etc reduces once the expenditure class is upgraded by the households in Urban India. Whereas it is seen that it is opposite where meat, eggs, fish , milk and its products, beverges, fruits are concerned. For example: In the rural India the proportionate expenses on staple food such as pulses, cereals, gram declined from 45 percent to 44 percent. The expenses settled at 32% of the net expenses in urban India for food.
  • 37. 37 4.2 Processed Foods India : Processed foods have been majorly responsible for the change in consumption, where the processed foods in the net food market account for more than 32 percent. The Indian market is estimated to be US$ 91.66 billion out which processed food accounts for US$ 29.4 billion. According to Confederation of Indian Industry (CII), in the span of coming 10 years the food processing sector is capable to attract US$ 33 billion in terms of investment and employment to 9 million person-days. The government of India has framed and executed numerous Plan Schemes with a view of providing financial help for creation of infrastructure, development and modernization of the food processing units, research and development , support for human resource development and various other promotional means so that the country’s processed food sector grows. The food processing sector is enormous and it includes many activities like plantation, horticulture, agriculture, animal husbandry and fisheries. It even comprises of various industries that employ agricultural inputs for production and making of other edible products. As per the Indian government, Food Processing Ministry , the food processing industry consist od the following segments: processing of fruits and vegetable processing, poultry, fisheries, dairy, processing of grains, meat processing ,lastly consumer foods which include beverages , packaged foods and packaged drinking water . Even though the food processing industry is quite huge, it is still at an emerging stage. Just 2 percent of the country’s total production which includes agricultural development and food production is processed. This industry is projected to grow at 9-12 percent in the phase of 2002 - 2007. Value additions in food and food products are likely to rise by 35 percent by 2025, from the current 8 percent. Vegetable and fruit processing, which is 2 percent of the net production has increased to 10 percent by the year 2010 where as it is expected to be 25 per cent by 2025. The dairy sector contributes maximum to processed foods, where 37 percent production is processed of the total dairy production. out of which, organized sector only process 15 per cent. In the approaching decades this business is on the pathway to safeguard profitability and pull exceptional investments worth Rs 1400billion or more.
  • 38. 38 (Annual report, Ministry of food processing India, 2004) India saw a speedy growth in the economic segment with the help of economic reforms during the phase of 2004 to 2007. FDI inflow increased and GDP growth was at 8-10 per cent during the period. The global economic downturn seen in 2008 had a deep impact on the economy with industrial output slowing down and inflation increasing by two percentage points over the previous year to 8.3 per cent. Nevertheless, the real GDP growth remained sturdy at 7.3 per cent. 4.3 Indian Packaged foods market : The Indian packaged food market is projected to be US$ 10 million and is predictable to reach US$ 20 million by 2014. Of the F&G(food and Grocery ) market packaged food constitutes 4 percent and is anticipated to be 5 percent of the F&G market by the end of year 2014.
  • 39. 39 The main categories of packaged food include, baby food, dried/ canned processed food, dairy products, confectionery, frozen processed food, meal replacement products, ice cream, noodles, pasta, nutrition/staples, ready meals, dressings and condiments, sauces, snack bars, spreads, soup, sweet and savoury snacks, bakery products, etc. Exhibit 1 summarizes the key players in the packaged food segment. Company Segment Products Hindustan Unilever Staples, Beverages, Snack Limited (HUL) Foods, Dairy, Tea, biscuits, instant coffee, Ice creams, wheat flour, salt, instant drinks, jam, squash and soups, Nestle India Pvt. Ltd. Beverages, Dairy, Snack foods Instant coffee, dairy whitener, condensed milk, chocolates, infant food, and confectionaries ITC Ltd. Snack foods, Biscuits, ready to eat and staples Wheat flour, ready-to-eat meals, salt, biscuits, snacks, confectionaries and cooking pasta Pepsico Snack Foods and beverages Fruit juices, Snack foods, cereals, dairy derivatives Dabur India Ltd. Culinary Products and Beverages Fruit Juice, coconut milk, Cooking pastes, tomato puree, chilli powder, lemon drink, and honey Cadbury India ltd. Confectionary Chocolates, malt foods, hardboiled confectionary, cocoa powder Haldiram Marketing Pvt. Ltd. Snack foods Namkeen, Sweets, Syrups, chips, crushes and papads Britannia Industries Ltd. Bakery Products Biscuits, dairy whitener, flavoured milk, bread, cake, ghee and rusks Godrej Industries Ltd. Staples and Beverages Edible oils, bakery fats, vanaspati, fruit drinks,
  • 40. 40 fruit juices, fruit nectar, and tomato puree Parle Agro Private Ltd. Bottled water, Beverages and Snack foods The growth of the Indian processed food market is expected to be supported by the growing and organized retail penetration. A number of categories, which are highly dependent on organised retail-like frozen food products - are expected to witness significant growth in the years ahead. The segment that has shown maximum exponential growth is the ready-to-eat segment. Ever since the processes of freezing and chilling products have become very refined, technologically sound and subject to stringent hygiene practices, this sector has expanded and is anticipated to grow in the coming few years. Staples, which are currently sold loose, are also expected to undergo significant changes with the advent of private labelling. The trends of wellness food, is expected to grow in the forms of nutritionally enhanced, fortified foods, organic foods and probiotic food. Organic food is rapidly becoming a distinct and well-defined category. Similarly, the other concepts mentioned here will grow as much and gradually occupy more shelf space in the near future.
  • 41. 41 The market of packaged food in India is an anticompetitive monopolistic market. In all the different categories of packaged food there are several players which have similar product lines and comparable prices yet they are striving to differentiate their products with their planned marketing strategies .The market can be further segregated in 5 segments • Ready - to - eat packaged food • Dairy • Confectionaries • Biscuits • Snacks • Staples Ready to eat Meals The Indian ready- to- eat market, was estimated to be of Rs. 128 crores (2006) and was anticipated to grow to Rs. 2900 crore by 2015, according to the analysis done by Tata
  • 42. 42 Strategic Management Group, (TSMG). In their analysis, it was assumed that the factors adding to the growth of this sub-sector would be changes like disintermediation, cold chain development, streamlining of taxation, diminishing culinary skills, economies of scale possessed by the supplier, complemented with rising disposable Indian's incomes, and the necessity of convenience on the customer side. Brands Description Gits Gits manufactures particular type of ready – to- eat, instant foods, which covers a variety of ethnic traditional Indian cuisine, and their recipes have a "Global acceptance". Haldirams The company provides particular Indian snacks in the packaged forms of chats like, bhel puri ,alu tikki, dhokla, chana masala, pao bhaji, pakoras, gol gappa and sev puri. Ethnic Kitchens Offers packaged syrups, sweets, namkeens, pickles, cookies, aloo Masala, Kajui Ladoo, Bhelpuri, Bhujia, Chana Dal and many more such items. MTR The company presently offers twenty- two scrumptious, traditional and utterly ethnic Indian curries, gravies and rice. Priyafoods Priya offers a variety of famous traditional and authentic recipes like rajma masala, dal makhni, Punjabi chole, navaratan korma, palak paneer, paneer butter masala. It also offers southern delicacies like Mango Dal, Andhra Veg Pulav and Gongura Dal.
  • 43. 43 Dairy Market Share - Ready To Eat 9% ITC Ltd. 48% 8% 35% MTR Kohinoor Others(Gits, Priya Foods etc.) The dairy sector ranks first in terms of processed foods with 37 per cent of the produce being processed. The organized sector processes an estimated 15 per cent of the total milk output in India. There are 676 dairy plants registered with Government of India, which come under the organized sector. Milk and its products contribute about seventeen percent of the country’s net expenditure on food and food products. The traditional products of dairy is responsible for about fifty per cent of the net amount of milk produced. The dairy products market is hopefully to grow at more than 20 per cent over the coming years. Following are the facts related to Indian dairy industry as per Indian Brand Equity Foundation (2008). Food Processing : Market and opportunities. • “ India stands first in the world in terms of milk production .The output is expected to be about 108 million tonnes, growing at a compounded annual growth rate of 4 per cent. • The dairy whitener market comprises of sweetened milk powders, condensed milk and creamers. Its market size is estimated at US$ 450 million. • Ghee is the most widely marketed and branded product with a nation-wide penetration of 24.1 per cent. It is estimated to be growing at a rate of 8 per cent per annum • The cheese market is estimated at US$ 2.49 million for (54000 tonnes in volume terms), growing at a rate of nearly 10 per cent per annum. The organized cheese market is dominated by processed cheese which accounts for 74 per cent market share • The ice-cream market in India is estimated at US$ 226 million, with the organized
  • 44. 44 market at US$ 158.2 billion. This is currently growing at 20 per cent.” Confectionary The Indian Confectionary market is valued around Rs.2500 crore. The market is segregated into seven major categories: 1. Hard boiled candies 2. Toffies 3. Eclairs 4. Chewing gum 5. Bubble gum 6. Mints 7. Lozenges Perfetti van melle ITC Ltd. Nestle Cadbury Cofitos Candyman Eclairs chocotella Minto Munch Pop Choc Alpenliebe Polo Centre mint Milk chocolate Centre fruit Munch Marbels Fun bar Chocoleibe Kit Kat Mentos Polo power mint Protex happydent Milky Bar Big babol Kit kat Lite Alpenliebe lollipop Happydent white Frittella Chatar patar Alpenliebe creamfills Centre shock Bubbaloo Dairymilk 5 Star Gems Perk Halls Eclairs
  • 45. 45 Biscuits The biscuit market in India is valued to be approximately worth Rs. 5000 crore. In the Indian Biscuit industry out of the net production 60% percent is produced by the organized sector and the rest 40% is produced by the bakeries which form a part of the unorganized sector. Britannia ITC Ltd (Sunfeast) Parle Priyagold Good Morning Milk bikis Pure magic Treat Good day Nutri choice 50-50 Tiger Marie Dream cream Milky Magic Fit kit Choco Nut Butter Nut Parle-g Krack-Jack Monaco Kreams Hide and Seek Milk Shakti Butter Bite Classic Cream Butter Lite Big Boss Marie Lite Magic Gold Market Share - Confectionery 3% 37% 7% 11% 42% ITC Ltd. Perfetti Van Melle Cadbury Nestle Others(Parle, Joyco, HUL etc.)
  • 46. 46 Snacks: Snacks industry overview The Indian Snacks industry is valued to be of 1800 Crore Rs. and is growing at a remarkable 10% every annum. In the world the Indian snack market is the largest and is dominated by potato chips which has a share of about 85% in the total snacks market. Product Price (ITC Ltd) Product Price (Frito Lay) Product Price (Haldiram) Bingo Rs. 5 Rs. 10 Rs. 20 Lays Rs. 5 Rs. 10 Rs. 20 Lehar Namkeen Rs. 5 Rs. 20 Kurkure Rs. 5 Rs. 10 Rs. 20 Namkeen Rs. 5 Rs. 10 Rs. 20 Market Share - Biscuits 12% 10% 38% 32% 8% ITC Ltd. Priyagold Britannia Parle Others(Bonn, Anmol etc.)
  • 47. 47 as on June, 2008 Staples Key players in the stales market are : • ITC • HUL • Pilsbury • Marico • Nirma Market Sahre - Snacks 16% 45% 27% 12% ITC Ltd. FritoLay India Haldiram's Others Market Share - Staples 42% 21% 24% 13% ITC Ltd. HLL Pillsbury Others(Sri Lal Mahal, Local Brands etc.)
  • 48. 48 4.4 Consumer Trends Fuelling the Indian Packaged Food Market Changing Demographics of the Indian Population The population of India is younger in age, mostly urban, with greater disposable income and high purchasing power parity (PPP). Urban consumers are typically busier and more affluent, thus they do not mind paying for the convenience that can be enjoyed. Convenient products are demanded more as a result of urbanization. Ready meals thus saw a strong 18 per cent growth in 2008 over the previous year, with these products observed as a convenient substitute of cooking from scratch. Packaged soup also benefited, with dehydrated soup growing by 21 per cent in current value terms, whereas instant noodles came out to be a meal component or at least an increasingly popular snack, proven by sales growing at 24 per cent. Convenience The demand for ‘convenience' is dominant in more than one segment. Apart from convenience in cooking at home, food services and chains have an equally strong share in the purchase of packaged foods. There was a strong focus on expanding consumer food service chains across urban areas, which is set to continue to grow. Consequently, urban commuters will enjoy easy access to trusted consumer food service brands offering affordable food. This demand for convenience also supported good growth in canned/preserved food and frozen processed food, with consumers appreciating the convenience of stocking up and keeping easily-prepared food at hand. Consequently, canned/preserved food saw 12 per cent of the present value growth in 2008 compared to 2007, while frozen processed food grew by 13 per cent Nutritional and Health Benefits It has been observed that, customers are focusing more on health conditions, with most consumers having at least a rudimentary awareness of cancer, diabetes and heart disease. The bulk of new product development is expected to focus on nutritionally enhanced and fortified/functional products, with these areas having proved successful. Increasingly, the two concepts will be combined, with low-fat impulse and indulgence products more and more likely to offer fortification. Players meanwhile launched numerous products with a health and wellness positioning. NestlAC India, for example, re-launched Maggi - Two Minute Noodles fortified with 20 per cent of the RDA of protein and calcium in 2008. While Gujarat Co-operative Milk Marketing Federation Ltd. in 2007, launched Amul Prolife Probiotic Wellness Ice Cream and Amul Sugar Free Probiotic Frozen Dessert thus creating a new niche of probiotic ice cream. Players will also seek to become first-movers within the niches of
  • 49. 49 wellness and health packaged foods. Organic products are thus likely to see strong development, generally targeting affluent urban consumers. Naturally healthy products could also see a growing emphasis on their health benefits, with basmati rice, for example, having its low glycaemic index emphasised on the packaging. 4.5 Key Growth Enablers Urbanisation India has witnessed on-going urbanisation in the past decade or so, and this is linked to the country’s economic growth and foreign direct investment. The main impact of urbanisation was a growing demand for convenient products, with consumers preferring to have ready access to easy-to-prepare foods that were either canned/preserved or frozen. Aggressive advertising campaigns by food companies have led urban consumers to develop an increasing interest in Western lifestyle trends. Urbanisation boosted sales of products such as breakfast cereals and ketchup, which grew by 13 per cent each in current value terms in 2008 over the previous year. These products are strongly advertised and benefited from a fashionable western image. Canned/preserved food saw 12 per cent growth in 2008 over the previous year, while frozen processed food grew by 13 per cent. The graph below shows the share of food and grocery sales in the organised and unorganised sector between 2005 and 2008 and its estimated growth expected in coming 6 years. This is expected to drive strong growth in many product areas in meal solutions, with pouch instant noodles, for example, set to see 115 per cent growth. These products offer a quicker and more convenient meal component than rice and, thanks to their use of flavouring, can also be consumed as a snack. This trend is also expected to benefit canned/preserved food, ready meals, frozen processed food, dressings, sauces and condiments, all of which make food preparation quicker and more convenient.
  • 50. 50 Growth of Organised Retail Retailing saw strong growth in India benefiting from strong GDP growth and the emergence of a large consumer base-the urban, young middle class. Supermarkets notably saw strong growth, with sales rising by 108 per cent in 2008 alone. Exhibit 6 summarises the key facts of the growth of organised retail formats, and consumption of packaged food and grocery products. Supermarkets/hypermarkets gained share across the packaged foods throughout the review phase, thanks to expansion in the number of outlets. This channel more than doubled it’s share to 11 percent in 2008 from 5 percent in 2003. In the year 2008, supermarkets/hypermarkets also accounted for a dominant share in canned/preserved food and frozen processed food, at 68 per cent and 79 per cent respectively. The channel’s most significant growth was seen in impulse and indulgence products such as sweet and savoury snacks and ice cream and dairy beverages. Share of supermarkets/hypermarkets grew to 11 percent in 2008 from below 4 percent in 2003, challenging the regional dairies’ dominance in this area by offering good quality fresh milk at affordable prices. Improvement in Packaging Technology Until recently, the majority of foodstuff was sold unpackaged. In last few years, all the sectors have increased their packaged production share. Although there is a certain rise in the amount of packaged food products, many of the products are still sold unpackaged. Sustainable packaging of products through technology with a view of increasing the shelf lives of the product is the matter of concern and hence is being adopted and developed very speedily. Along with the emergence of various forms of processed foods, a corresponding suitable packaging technology is also developing. Milk is one product which is sold in four different types of packaging, with each type further having different designs and forms.
  • 51. 51 Advances in packaging technology have not only improved the shelf life of products but also significantly reduced the cost of packaging. New Product Introductions by Brands Many manufacturers/brands are creating the market by frequently introducing new products for packaged food. Large multinational companies like Nestle have been able to do this very successfully. The new products are customised as per the requirements of Indian consumers and are targeted at satisfying their unmet needs. In addition to existing brands, a number of importers are also importing a significant amount of processed food from European and South-east Asian countries. The imported product categories are targeted at the premium segment of the market. Growth in Freezer Space There has been a remarkable expansion in product categories and ranges due to considerable growth in freezer space in modern retail formats. The retail freezer space for 2008 is estimated to be 247,000 cu. ft. This is expected to grow to 531,000 cu. ft by 2014 at a CAGR of 14 per cent. The frozen food segment, originally covering only frozen meats, fish and poultry products, currently includes frozen vegetables, ready-to-eat foods also, and will grow to US$ 2.6 billion by 2014 from US$ 1.8 billion in 2008. This growth has been fuelled by the increasing availability of freezer space in modern retail shops. The graph below shows the increase in freezer space corresponding to the increase in number of stores in future. Dairy products, confectionery and ready-to-eat products have received a robust boost in obtaining shelf space and corresponding sales due to their positioning and supporting infrastructure. (Sajani Mrinalini Dutta, Rohit Chadha, Rohit Bhatiani (2008). Opportunities in the Packaged Food Market in India.www.technopak.com. 03)
  • 52. 52 5. ITC Case 5.1 ITC Company background ITC was set up in Kolkata as ‘the Imperial Tobacco Company of India Ltd’ on the twenty fourth of august 1910. In 1974 it was renamed as ‘ I.T.C Limited’ and in 2001 it was ultimately changed to ‘ITC Ltd’ . ITC is a part of many businesses such as apparel, tobacco, hotel, food, packaging, paper boards and confectionery. In 2001, ITC diversified in the food division. In the Ready-to-Eat segment the KOI brand was launched by them. They further expanded their brand in different segments such as staples, snack food and confectionery. ITC can achieve the first place in the market if its standards are maintained and increased in the future as at present it has been able to fulfil the requirements and needs of the nation. ITC’s hotel business has nurtured few restaurants such as Dum Pukth, Bukhras etc that are famous throughout the world. This shows that the company understands the Indian taste and has the required expertise who can convert the knowledge gained into pleasant experience of dining for the customers. For the last ninety eight years ITC has provided high quality products and many of its brands are benchmarked internationally because of its quality. The products offered by ITC foods are a result of rigorous market research based on the insights of the consumer. Many innovative new products besides the existing products are being developed in ITC’s state of the art Product Development facility situated at Bengaluru. ITC has developed intimate business relationships over ninety eight years with the farmers in India and is boosting the ability of the farmers to access the global markets via schemes like e choupal. This close relationship is used by the company so as to get quality agricultural products for their food business. This makes the procurement easy and feasible for ITC foods.
  • 53. 53 5.2 ITC Packaged Foods In August 2001 ITC entered the branded and packaged food business by introducing the brand named Kitchens of India. A broader entry was made in June 2002 by launching brands in the staples, snacks and confectionery segment. The strengths of ITC in the fields of branded cuisine, hospitality, packaging, sourcing agricultural products can be utilized for packaged food business. To guarantee the customers high standard of food hygiene and safety, it assists outsourced manufacturers to implement hygiene standards that are world class by the certification of HACCP. ITC has quickly gained a standing in the market in all of its six brands such as sunfeast, Bingo, candyman, AAshirvad, Kitchens of India and mint o because of its strong commitment towards quality which is benchmarked internationally. Lately the food segment of ITC made plans on the first of August 2008 to extend into frozen food through brand- Kitchen of India. The business of branded packaged food is expanding as sales grew by twenty three percent from the last year. Along with the cost required for the development of new products, the company has to bear the current economic slowdown and also the increase in prices of various input commodities such as maize, vegetable oil, wheat, and skimmed-milk-powder. To add to it the fuel prices are also rising. ITC in a short time has gained a reasonable scale. They are increasingly focusing to consolidate the portfolio in some of the segments, enhancing servicing of the market and also motivating efficiencies in the supply chain. The food market in India is monopolistic. In all the different categories there are several players who offer almost the same products and at the same price, yet they are differentiating themselves with their planned marketing strategies. It is very easy to enter this business and this is a big benefit to ITC as they have been able to enter numerous categories in this business. Packaged foods are divided into 5 major parts
  • 54. 54 1. Ready to eat ITC diversified into the branded & packaged food segment through the introduction of a brand named Kitchens of India. In the year 2004, it launched the brand KoI which included spice conserves, spice and fruit conserves. The spice and fruit conserves were made jointly with a food expert named Karen Anand. To target the elite segment its price of spice and fruit conserve was set at Rs 70 and cooking paste for Rs 30 which was a hundred grams pack .The Aashirvaad brand introduced cooking pastes that were multipurpose and for a pack of eighty grams it was priced Rs 10. The production of these products was outsourced to save the operating cost to contract manufacturers. In 2005, ITC introduced itself to the branded spices segment and in the year 2006 to the segment of instant mix through Aashirvaad brand. The annual turnover as per April 2006, in the segment of ready to cook and ready to eat was about Rs. 700 million and posted a growth of twenty percent annually. In the year 2006 the ready to eat market was dominated by MTR which had 60 percent share whereas ITC had 35percent share. 40-50% products of the KoI brand were exported to Switzerland, Canada, The USA, Australia and the UK. During the mid of 2006, within the KoI brand ITC decided to offer 10 more varieties within the price of Rs 35- 98 . In the year 2007, few products were introduced in the ready-to-eat segment such as conserves, curries, chutneys ,biryanis ( Bhori Biryani, nor Mahal )and few new variety products from Gharana ( Keema Mutter, Paneer malai). ITC food expects to have a market share of 50- 60% by 2008-09 after the launch of these products. 2. Confectionary ITC at present has the brands named ‘Candyman’ and ‘Mint-o’ in the market. Mint o fresh was able to secure 17 percent share in the market of cough lozenges in India whereas Perfetti the former leader was able to achieve only 14.3% share by chloromint. In the whole confectionary market ITC has just 3 percent share whereas Perfetti has 37 percent or more and offers many brands. Hence it can be seen that ITC is lagging behind.
  • 55. 55 3. Staples In the year 2002 ITC introduced itself in the staples market by offering wheat flour with the brand Aashirvaad. The Aashirvaad brand was extended to edible salt in the year 2003 by ITC. In 2006, ITC had 40 percent share in the market of the whole packaged food industry worth Rs 6 billion. Its biggest Competitor was Annapurna brand by HUL which had a market share of just 18 percent. The market growth rate was 12 percent. ITC extended the Aashirvaad brand by launching mixers, salt and ready-to-cook pastes under the Aashirvaad Umbrella. In the organized salt market worth Rs. 4 billion (2006) ,ITC had a market share of mere 5 percent compared to the market leader , Tata salt with market share of 28 percent. 4. BISCUITS: .The biscuit market in India is valued to be approximately worth Rs. 5000 crore. In the Indian Biscuit industry out of the net production 60% percent is produced by the organized sector and the rest 40% is produced by the bakeries which form a part of the unorganized sector. SUNFEAST a premium product of ITC is helping the company to acquire a huge share in the market. They should get 12 percent market share within the next few years. 5. Snacks The Indian Snacks industry is valued to be of 1800 Crore Rs. and is growing at a remarkable 10% every annum. In the world the Indian snack market is the largest and is dominated by potato chips which have a share of about 85% in the total snacks market. ITC has been able to penetrate quickly into the market through its brand Bingo by its adaptive pricing technique and unique promotion. 5.3 Company Culture ITC’s vision • Maintaining its position as one of the valuable corporations in India by providing world class performance. • To create increasing value for the stakeholders and ultimately to the Indian economy