"Saffola Swasth ParivaarKe Dil Ki Dhadkan” "Abhi to main jawan hoon" "Aaj se Jeene

Ka Andaaz Sudhariye" “Healthy oil for Healthy people”

Guidance Prof P. Venugopal Team Gourav Agarwal 018 Himadri Sankar Singha 019 Man
oj Jindal 028 Mrigank Shekhar Adhikari 030 1
In today’s fast life people hardly have time to sit down at ease and have a hearty
breakfast, lunch or dinner. Thus depriving them of proper nutrition and leading
to various diseases. Heart disease is one of the most dreaded diseases due to i
mproper diet habit. Fortunately people in India especially the urban class consu
mers have started realizing this fact and have become very careful in what they
intake including the cooking oil. This project is about one such brand called Sa
ffola which is claimed to be Heart Friendly oil and prevent heart disease. Saffo
la...the Healthy Oil.
Saffola satisfying Health Needs:
All Saffola oils come with LoSorb Technology . Food fried in Saffola oils absor
bs less oil and thus reduces the consumption of oil in your diet.
Saffolla, The Heart of a Healthy family
Saffola oils fats are Free of trans’ Saffola encourages you to take care of your
heart by following a low saturated fat diet with regular exercise. By most of t
he households, Saffola is being considered as “ Dil Ko Rakhiye Jawan” edible oil. It
s main ingredients are Rice Bran Oil and Safflower Oil.
Rice Bran Oil (RBO):
Heart healthy nutrients in RBO such as tocopherols, tocotrienols and oryzanol ar
e known for their cholesterol lowering ability.
2
Safflower (Kardi) Oil:
This has the highest levels of Linoleic acid, an omega-6-polyunsaturated fatty a
cid, which is well known for reducing cholesterol levels. Safflower oil is a col
ourless and flavourless edible vegetable oil extracted from the seeds of the saf
flower. It has a light texture, non-greasy feel, easily absorbed, and is nutriti
onally similar to sunflower oil. It has a long shelf life when stored in a cool
dark place away from light and heat due to the presence of very high amount of v
itamin E naturally, about 34%. Health Benefits Safflower oil is low in saturated
fats and very high in unsaturated fats. Essential fatty acids are the precursor
s of prostaglandins, which are hormone like substances that have a variety of fu
nctions like contraction and relaxation of smooth muscles, control of blood pres
sure, inflammatory response, etc. in humans and animals. Good source of cis-lino
leic acid, the omega-6 fatty acid in safflower oil is responsible for prostaglan
din production. Cis-linoleic acid is also responsible for burning the brown fat
in the body for heat rather than storing as white fat. Thus, safflower also aids
in weight loss and its maintenance. 5. Has a very high content of vitamin E, ab
out 34%, which is an antioxidant that fights against free radicals and preserves
the integrity of cell membranes and reduces the risk of heart diseases, cancers
and other degenerative diseases. Nutritional Information per Serving: Serving S
ize % Daily Requirements Total Calories Calories from fat Total fat Saturated fa
t Palmitic acid Stearic acid Monounsaturated fat Oleic acid Polyunsaturated fat
Linoleic acid (Ω-6) Trans fat Cholesterol 884 884 100 g 6.2 g 4288 mg 1915 mg 74.6
g 74639 mg 14.3 g 14350 mg 0g 0g 0% 154% 31% 44% 100 g of Safflower oil, oleic
acid 70%

3
Total Omega-3 fatty acids Total Omega-6 fatty acids Vitamins Vitamin E Vitamin K
Phytosterols
0 mg 14350 mg
34.1 mg 7.1 mcg 444 mg
171% 9%
If we go by basic marketing product concept, a company can define tangible and i
ntangible benefits to provide value to the customer. To start with, Marico also
defined Saffola, the marketing product at three levels:
Technical Product:
Saffola cooking oil has the internationally proven formula of 80% of Rice
Bran Oil (RBO) and 20% of Safflower oil (Kardi Oil). Saffola Gold oil is made th
rough exclusive protection technology called LoSorb that makes the oil more stab
le during deep-frying. It is fortified with natural Vitamin-E. Vitamin-E helps t
o preserve the stability of the oil, and thereby increases the shelf-life.
Functional Product: Widely used by house-holds, restaurants for daily cooking, s
alad dressing
etc. As Saffola is extremely stable, it reduces consumption of cooking oil.
Emotional Product:
Here Saffola essentially satisfies the Health Need of consumers. The
product emphasizes on Heart Protection. It focussed on urging people to adopt a
healthy lifestyle. One of the major concerns today is the occurrence of heart di
sease and every fourth Indian being under threat. And adopting Saffola as your f
amily’s cooking medium is one big step that you can take towards safeguarding of y
our family.
Edible/Cooking oils could broadly be categorized into vegetable refined oil, hyd
rogenated oil (vanaspati) and bakery fats. The major edible oils produced and co
nsumed in India were groundnut, sunflower, safflower, soya, castor seed, cottons
eed, mustard and sesame seed. While pure groundnut oil could be directly consume
d or refined to have higher purity, others had to be refined to make them edible
grade. Groundnut oil was the most widely consumed oil in India. But groundnut w
as a monsoon crop (Kharif), vulnerable to the vagaries of monsoon. Background: C
limatic conditions in India favour growing a variety of oilseeds. On the demand
side, a growing population and vastly varied dietary habits have ensured a thriv
ing market for edible oil in the country. In fact, there is a substantial demand
overhang, which is expected to continue for some years. At present, this is off
set by imports that cater to almost half of the total domestic 4
consumption. With cheap imports threatening to cripple the domestic industry, th
e government is walking a tightrope between filling the demand supply gap and th
e political need to keep the domestic industry in good health. Unorganized, medi
um and small players dominate the industry. Hence, quality remains a concern. Th
ere is need for better regulatory control to protect consumers. An average India
n s yearly edible oil requirement has gone up from 7.0 kg in 1996-97 to 11.8 kg
in 2000-01. Despite the variety of oilseeds grown in India, the country imports
a substantial quantity of edible oil, which also works out cheaper. Allied facto
rs contributing to imports are the higher cost of cultivation in India and uneco
nomic oil extraction systems. India is one of the largest oilseed producers in t
he world (9.3%). Oilseeds in India account for around 5.0 percent of the Gross N
ational Product (GNP) and 14.0 percent of the country s area under cultivation o
f crops. Castor, Groundnut, Linseed, Niger, Rapeseed, Mustard, Safflower, Sesame
and Sunflower are some of the major oilseeds grown. India produces 10 percent o
f the world s oilseeds, but has a low productivity of around 850900 kg per hecta
re (compared to a world average of around 1,100-1,350 kg per hectare). The amoun
t of oil extracted from the seed varies with the type and quality of seed. In ma
ny cases, the oil recovery rate is upwards of 30 % with Sesame accounting for a
high 45 %. Domestic consumption of edible oils has been growing at 4 - 5 % a yea
r. The consumption in 2001-02 was around 25.75 million tons. Non-packaged oils a
ccount for nearly 50 % of consumption in both urban and rural markets. In the re
maining 50 % contributed by packaged oils, branded oils constitute a small porti
on of approximately 10 -15 %.
Major Source of Oilseeds:
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Major Players:
Edible Oils National Dairy Development Board (Anand) ITC Agro-Tech (Secunderabad
) Marico Industries (Mumbai) Ahmed Mills (Mumbai) Vanaspathi Hindustan Lever (Mu
mbai) Wipro (Bangalore) Rasoi (Calcutta) Avi Industries (Mumbai)
Market:
Industry Structure:

Highly fragmented industry Over 600 oil extraction units, 166 vanaspati manufact
uring units out of which only 10 edible oil units and 8 vanaspati units have nat
ional reach Over 50% of the units - sick or underutilised due to surplus capacit
y Idle capacities among these units due to shortage in feedstock supply Major oi
l brands - - Sundrop, Dhara, Saffola, Sweekar, Postman Vanaspati brands - Dalda,
Rath
Trends in Output:
Market Size:

Edible oils and vanaspathi markets - 9.6 million MT Oils market growing at 8.7 %
CAGR Vanaspathi market stagnating at around 1 million MT 6
Capacities:
Installed Capacity and Prodcution Vanaspathi Capacity Production Utilisation 2,7
20,000 990,534 36% Edible Oils 30,368,000 6, 250,000 21%
Installed capacities and Production - in MT per year Import:
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Key Inputs
Inputs Vanaspathi - Minor (solvent extracted) edible oils - Sunflower oil, Soybe
an oil, Ricebran oil Edible Oils - Oilseeds such as Groundnut, Sesame, Mustard,
Sunflower, Safflower and oil cakes and bran. Raw material Comprises 70% of the p
roduction cost Oilseeds - the largest cash crop Poor productivity - 873 Kg/ hect
are (global average of 2000 kg/ hectare) Though oilseeds have 14.5% share in gro
ss cropped area, only 25% of it is under assured irrigation. Technology : Refini
ng technology freely available indigenously Characteristics:

Oils : primarily a commodity market - Price sensitive Effective distribution cha

in - through a complex network of C&F agents, wholesalers/stockists & retailers
(kirana shops, supermarkets). Oil sold in bulk (tin, HDPE containers) to institu
tions; In retail packs (PET bottles, cans, jars, pouches) to small customers. Se
asonal demand for oils & vanaspathi - September to November (peak season). Regul
ation : Under the Edible Oils Packaging (Regulation) Order, 1998, edible oils ca
nnot be sold loose’ but can be sold only in `packed’ form . Oil consumption - North
is largest market, followed by South, West & East zones.
Key Success Factors:

Raw material sourcing : focus on improving yields, getting better quality oilsee
ds , ensuring regular supplies - through symbiotic relationship with farmer Bran
ding essential for success (Vanaspathi - Dalda, Oils – Saffola, Sundrop) Better di
stribution network to improve reach Efficiency in operation - to become price co
mpetent and withstand overseas competition.
Business Concerns:

Free imports, low import duties and slump in global prices - lead to `dumping’. Do
mestic industries of edible oils and vanaspathi affected - low realisation and i
dle capacities in oil and vanaspathi industries. Production slippages have also
forced imports. Excessive (cheap) imports of oilseeds - led to unremunerative pr
ices, locally Hence, farmers have shifted to other cash crops.
Increasing health awareness - impact of oils and vanaspati usage on individual’s c
holesterol levels. Growth: The industry is a high volume, medium growth sector c
haracterized by excess/idle capacities owing to in efficient operations. Imports
have been influencing prospects, leading to domestic industry crisis. 8
Threats of New Entry
The proliferation of regional brands has been one of the key threats to the nati
onal players in the branded edible oil market over the past couple of years. Wit
h the domestic supply of oilseeds dwindling, operating integrated oilseed proces
sing facilities no longer makes economic sense. Even Agro-Tech Foods, which has
made substantial investments in its integrated oil processing complex at Mantral
ayam (in Karnataka) over the years, has now cut back on production at the unit a
nd is reportedly scouting for refining capacities near port towns where it can c
ost-effectively import and package oil. This has significantly lowered the entry
barriers in the edible oils business, leading to a mushrooming of local and reg
ional brands. On the one hand, players such as Kaleesuwari Refineries (of the Go
ld Winner brand), Adani Exports (Fortune) and Ahmednagar Mills (Postman, Til Raj
) have been in a position to firmly establish their brands and actually glean aw
ay market share from the larger players. These brands use a combination of activ
e regional advertising and aggressive pricing (Gold Winner, for instance, adjust
s its selling prices at intervals of a week or less) to woo consumers. On the ot
her hand, international trading houses such as Cargill Foods (Nature Fresh) have
also made a foray into the market and have been actively looking to set up refi
ning capacities within the country. These brands appear to have whittled the mar
ket share of the national brands. For instance, in 2001-02, Gold Winner, a regio
nal brand, clocked a growth of well over 40 per cent, even as leading brands Sun
drop, Saffola and Sweekar reported de-growth in volumes.
Bargaining power of Buyers
The bargaining power of customers determines how much customers can impose press
ure on margins and volumes. In edible oil market, bargaining power of the buyers
is likely to be high because of the following reasons.

Customers buy a large volume, so there is a concentration of buyers. Customers a

re price sensitive and can switch to other substitutes. Substitutes are availabl
e in numbers.
Bargaining power of Suppliers
The term suppliers comprises all sources for inputs that are needed in order t
o provide goods or services. In edible oil market, bargaining power of suppliers
is likely to be moderate to low due to following reasons.

Domestic oil seed market is dominated by many (fragmented) suppliers rather than
few large suppliers. Customers’ suppliers are not too many, so buyers’ bargaining p
ower is moderate. Switching cost from one supplier to another is easy.
Threat of Substitute
A threat from substitutes exists if there are alternative products with lower pr
ices of better performance parameters for the same purpose. They could potential
ly attract a significant 9
proportion of market volume and hence reduce the potential sales volume for exis
ting players. Threat of Substitute in Edible oil market is significantly high.

Huge portion of customer is not still Brand Loyal Switching cost is high. Custom
ers are highly price sensitive.
Competitive Rivalry
This force describes the intensity of competition between existing players (comp
anies) in an industry. High competitive pressure results in pressure on prices,
margins, and hence, on profitability for every single company in the industry. I
n this industry, competition between existing player is likely to be high becaus
e of the following reasons.

Except few, all players have the similar strategy. Customers are not still Brand
Loyal. Products are not much differentiated. Switching cost is not high.
Parameter Political
Environment Stimulus Overall, India had a stable government with Trade policies
favourable to growth of Industries. 60% of the safflower seeds were imported, Th
e input costs depends heavily on Governments import policies and duties. (In Mar
ch 2001 the import duty on crude vegetable oil was increased from 35% to 75% as
a result the input cost soared) A large part of the population lived in rural ar
eas and belonged to the low income group. Even the urban population had lots of
other options and Saffola was expensive for them as well. With effect from 1st A
pril, 2008, the customs duty on crude and refined forms Soyabean Oil, Mustard Oi
l, Sunflower Oil, Safflower Oil, Groundnut Oil, Coconut Oil etc. reduced to zero
percent and 7.5% respectively People in general are not health conscious. Taste
is given more priority than Health National Vegetable Oil Development 10
Opportunity Threat Opportunity
Political
Threat
Response of Marico Industries Aggressive marketing strategies complemented with
expanded product range to target various segments. Launched blended low priced v
ariants. Even during period of shortages of safflower seeds Marico made sure the
consumer can buy other variants. Targeted population. the urban
Economic
Threat
Economic
Threat
Launched blended low priced variants Launched various low price products and inc
reased the market penetration activities
Economic
Opportunity
Socio Cultural Socio Cultural Socio
Threat Opportunity Threat Opportunity
Launched various initiatives to educate the people about heart diseases. Saffola
tasty blend was introduced. Participated in Program and
Cultural
Techno logical Legal
Board of India has a demand Developmental Programmes, Promotion of Oil seed Cult
ivation, Seed Production and Strengthening of Seed Farm, Mechanization & Process
ing. Other producers had superior technology to offer better quality, colourless
, odourless refined oil. Poor Public Transport System. Focussed Govt initiatives
to extend infrastructure in Rural and Semi-urban areas.
more focused the advertising on educating the public.
Threat
Opportunity
Acquired vegetable oil refinery, equipped with latest technology. Scaled up prod
uction (set-up 2nd Plant at Gurgaon) to meet demand from newer markets. This hel
ped establishing leadership position.
Marico Industries, a well-known Indian Fast Moving Consumer Goods (FMCG) company
, offers unique and ethnic Indian products. Marico was famous for its ‘Parachute’ an
d ‘Saffola’ brands. In a survey carried out by ‘Brand Equity’ of The Economic Times in e
arly 2003, for India’s 100 most trusted brands, Saffola ranked 75th and Parachute
ranked 29th. Marico’s brands had shown resilience against competition and maintain
ed their market shares over the years.
MARICO: Market Share (1998-2003)
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Product Feature Mix
Recent medical studies recommend diets high in monounsaturated and low in satura
ted to help reduce heart disease. Monounsaturates are also preferred for superio
r cooking performance. Saffola is the only leading cooking oil grown without pes
ticides. The following analysis shows the levels of saturation and cholesterol i
n various oils used for cooking.
Cholesterol (mg/tbsp) Canola Oil Safflower Oil Sunflower Oil Corn Oil Peanut Oil
Olive Oil Soybean Oil Margarine Vegetable Shortening Cottonseed Oil Chicken Fat
Lard Animal Fat Shortening Beef Fat Palm Oil Butter Coconut Oil
Saturated 0 0 0 0 0 0 0 0 0 0 11 12 9 14 0 33 0 6 9 11 13 13 14 15 18 26 27 30 1
2
Monounsaturated Polyunsaturated 62 78 20 25 49 77 24 48 43 19 47 41 44 51 51 54
77 47 47 44 39 30 6 54 61 29 25 69 62 33
Other 31
5 9
5 6
22 12 5 4 10 4 12 15
12
Brand Objectives
Achieve volume objectives Set up a distribution network Build a dealer franchise
Build equity with customer
Strategic Objectives
To achieve leadership in the refined oils market Set up state-of-the-art manufac
turing facilities in the heart of the oil belt Enter through a range of multibra
nd oils offerings Ensure the best in quality, packaging, pricing and focused dis
tribution Growth Strategy o Expansion through concentration o Expansion through
integration o Expansion through diversification o Expansion through cooperation
Marketing Mix
Product Cholesterol is a soft, waxy substance which is an important nutrient for
the brain,nerves, muscles and heart. However if too much cholesterol circulated
in the blood, it can build up inside the artery walls. It can slow the flow of
blood and eventually damage the heart. The body typically supplies or produces a
ll the cholesterol it needs; therefore none is needed in the diet. Saffola oil i
s a superior oil.it is excellent for frying. Due to its mild flavor, it is an al
l purpose oil. It has no off-flavors when cooking and frying. "Grown without pes
ticides" means that no pesticides are used on the farm to grow the crop. In addi
tion, pesticides are not used throughout harvesting, processing, and storage of
the seed or oil. Saffola s farming methods do not pollute the crop, soil, underg
round water or the air. In addition, farm workers are not exposed to any pestici
des while working with Saffola "grown without pesticides" crops. Price
13
This increase in market share is despite the fact that Saffola is available at a
higher price point to Sundrop. Saffola is priced at Rs 80-Rs 140 for various st
ock keeping units. Sundrop, on the other hand, comes at Rs 65, going up to Rs 12
0. With upbeat demand on fresh buying owing to marriage and festive season in In
dia, edible oil prices are expected to stay firm with imports playing a key role
in keeping a check on the prices. The crop estimation from rabi oil seed cultiv
ation suggest a marginal drop against the previous year. At the moment, there is
a fierce battle for market share in the super-premium-refined-edible-oil catego
ry. A C Nielsen data for the month of December ’09 shows that Saffola had a lead o
ver Sundrop in terms of volume share. It stood at 54 per cent for Saffola and 46
per cent for Sundrop respectively. Place Marico already had a very large existi
ng distribution network. They used that network only for the distribution and tr
ied to place Saffola initially in High value outlets and gradually after moving
to different price categories they increased the reach of the product to general
stores. But most of the rural area is still untapped. Supply Chain
RDC
6 RDCs (regional distribution centres)
Primary Sales Raw Material Vendors Direct Distributors
Secondary Sales
Plants
Depots
Retailer
30 depots
Super Distributors
Stockists
Total > 1100
Promotion The Saffola cooking oil, for instance, plugged the need for a product
that was simply, ‘healthy for the heart’. Advertising over the years (since the earl
y 1990s, to be precise) dwelt on what regular edible oils did to the vital organ
- build cholesterol that is - eventually damaging the heart. Used the health pl
atform by showing testimonials from doctors in advertisements 14
Advertisements focused on creating a strong franchise among consumers having hea
rt, blood pressure and health problems. Focused on reduction of cholesterol To w
in the faith of high income groups they showed Saffola as a Branded oil This cle
ver appropriation of the space with communication that played on the agony of al
most losing a loved one to a heart attack did the trick. Saffola today is synony
mous with preventive heart care in the country. As Harish Bijoor, chief executiv
e officer, Harish Bijoor Consults, says, “Saffola means heart. That is the positio
ning in the minds of people. Ironically, allied marketers could have played up t
his virtue. They did not. Saffola did.”
Profits
Marico’s second flagship brand, Saffola, is positioned strongly on the ‘good for the
heart’ platform and rides the trend in increasing concern around health and heart
health in India. With this increasing awareness several households have begun u
sing Saffola, as part of their adoption of a healthier lifestyle. The super-prem
ium niche of the branded refined edible oils market thus continues to expand. Du
ring Q1 FY11, Saffola refined oils recorded a strong volume growth of 17.5% over
Q1 FY10 and continued to maintains its leadership position. The higher volumes
are expected to increase the customer base for Saffola as the brand has a high r
etention rate. Saugata Gupta, CEO-Consumer Products, commented, “We are encouraged
by the expansion in franchise across all major segments – especially premium refi
ned edible oil. This sets us up to deliver strong volume growth during the year
as planned.” Saffola: An increase in the market share with a reasonable pricing pr
emium over the other edible oils and the promotion of the brand on the health an
d wellness platform would ensure Saffola achieves above 13% volume growth in the
coming years. However, due to the recent price reductions and promotional add-o
ns on the key variants, the overall value growth of Saffola would remain subdued
in Q1FY2011 and Q2FY2011.
Value Chain
Concept: The value chain categorizes the generic value adding activities of an o
rganization. The "primary activities" include: inbound logistics, operations (pr
oduction), marketing and sales (demand), and services (maintenance). The "suppor
t activities" include: administrative infrastructure management, human resource
management, technology (R&D), and procurement. The costs and value drivers are i
dentified for each value activity.
15
Support activities
Administrative Infrastructure Management Human Resource Management Technology (R
&D)
Profit
Procurement
Margin
Profit margin
Inbound
logistics
Operation Outbound
logistics
marketing
& sales
services
Primary activities
Primary activities: Inbound logistics: These are the activities concerned with r
eceiving the materials from suppliers, storing these externally sourced material
s, and handling them within the firm. Here goods are received from a company s s
uppliers. They are stored until they are needed on the production/assembly line.
Goods are moved around the organization. They purchase their raw material from
all around the world. In order to maximize their availability of raw material th
ey maintain good relationship with their suppliers. They use JIT (Just in Time)
approach for handling of raw material.
Operations: These are the activities related to the production of products and s
ervices. They are known for their reliability which comes from efficient operati
ons.
16
Outbound logistics: These are all the activities concerned with distributing the
final product and/or service to the customers. They manage their Distributor an
d Super Distributor in different rural and urban area. They make their product e
asily assessable.
Factory + Subcontractor
Depot
Distributor
Retailer
Marketing and sales: This functional area essentially analyses the needs and wan
ts of customers and is responsible for creating awareness among the target audie
nce of the company about the firm’s products and services. Companies make use of m
arketing communications tools like advertising, sales promotions etc. to attract
customers to their products. MARICO focuses more on TV ads and magazine for mar
keting. This area focuses strongly upon marketing communications and the promoti
ons mix. Service: There is often a need to provide services like pre-installatio
n or after sales service before or after the sale of the product or service. Thi
s includes all areas of service such as final checking, after-sales service Like
quality, quantity, packaging, weight etc.. MARICO values their customers. Suppo
rt activities: Procurement: This function is responsible for purchasing the mate
rials that are necessary for the company’s operations. An efficient procurement de
partment should be able to obtain the highest quality goods at the lowest prices
. They aim to secure the lowest possible price for purchases of the highest poss
ible quality. MARICO will be responsible for outsourcing and e-Purchasing (using
IT and webbased technologies to achieve procurement aims). 17
Human Resource Management: This is a function concerned with recruiting, trainin
g, motivating and rewarding the workforce of the company. Human resources are in
creasingly becoming an important way of attaining sustainable competitive advant
age. Employees are an expensive and vital resource. MARICO manage recruitment an
d selection, training and development, and rewards and remuneration. MARICO cons
ider their employees as HUMAN CAPITAL. Equal support comes from our HRD team, wh
ich expends its energies, formulating and building strategies to build a stable
and high - talent organisation. The innovations and the quest for excellence at
Marico continue unabated. Even as the success stories continue, the focus from t
he consumer never shifts. Technology Development: This is an area that is concer
ned with technological innovation, training and knowledge that is crucial for mo
st companies today in order to survive. They believe that technology is an impor
tant source of competitive advantage and try to innovate to reduce costs and to
protect and sustain competitive advantage. MARICO implemented production technol
ogy, Internet marketing activities, lean manufacturing, Customer Relationship Ma
nagement (CRM), and many other technological developments. Firm Infrastructure:
This includes planning and control systems, such as finance, accounting, and cor
porate strategy etc. This activity includes and is driven by corporate or strate
gic planning. MARICO implemented Management Information System (MIS) and other m
echanisms for planning and control in different departments. Environment Conscio
us: Saffola has taken further steps with their packaging to provide an environme
ntally responsible product. Saffola purchases plastic packaging from plastics su
ppliers that are taking part in voluntary recycling programs. All of Saffola s p
lastic packaging carries the triangular arrow recycling symbol on the bottom of
each bottle. The new retail-size bottles are made of PET plastic and take up les
s shelf space, and require less packaging in their shipping cartons. Differentia
l Advantage for Marico over competitors in terms of Ability to design new produc
ts: In house production – no outsourcing – high reliability suppliers – superior quali
ty assurance. India and foreign production location – spread benefit.

Plant location as per raw materials availability

Ability to deliver the service: big distribution channel Ability to Market: Vari
ous Products, Domestic and Foreign market gainer Wide variety of product Low com
pany image Low promotion Fixed price
18
Ability to finance: High cost capital, reserves & surplus Cash management Centra
lized payment Decentralized collection
Ability to manage: Human resources high calibre. Quality management & personnel
par with competition Good personnel system Good industrial relation with other c
ompany
Expected future strategies
Brand Extension: During Q4 FY10, Saffola Arise was launched across key Saffola m
arkets, at invitational pricing and has been supported by insightful advertising
. The initial performance has been encouraging with indications that repeat purc
hases are taking place. With its health positioning, the company hopes to create
a sizable franchise for itself, in the rapidly growing Rs. 400 Cr packaged rice
market, over the next two to three years. In line with its strategy to launch f
oods under Saffola, the company introduced Saffola Oats in the month of June 201
0. The product is being prototyped primarily in the Modern Trade format, in sele
ct cities across India International Business: The Company launched the Saffola
brand of edible oil in international market recently and hopes to post strong re
venue growth and improved profitability. Marico is confident of achieving around
20-25% growth in its international business. Insight: Health more universal tha
n initially defined by Saffola. Now they have started focusing on overall a. Mai
ntenance of health b. Family health

Problem Recognition
In early nineties, there was low brand specification at the time of purchase, me
aning many consumers simply asked for a “Cooking Oil” and did not specify a particul
ar brand. There was no awareness among people regarding the effect of cooking oi
l on their health. By the name cooking oil customer only means that he needs oil
in which he can cook. The Saffola cooking oil, for instance, plugged the need f
or a product that was simply, ‘healthy for the heart’. Advertising over the years (s
ince the early 1990s, to be precise) dwelt on what regular edible oils did to th
e vital organ - build cholesterol that is - eventually damaging the heart.
Alternate Generation
During this era the consideration set primarily comprised of its key competitors
such as SUNDROP, DHARA, FORTUNE etc. Moving from Consideration appropriateness
Set to uniqueness Later on Saffola came out with different products to cater to
different segments. Saffola GOLD - Saffola Gold has the unique composition of 80
% Rice bran Oil and 20% Safflower Oil. Saffola Tasty - Saffola Tasty was the fir
st Saffola blend. This oil 19
blend provides the benefits of two oils, thereby giving added value to the consu
mer. It provides the high PUFA from Safflower (Kardi) oil and the taste of Corn
oil. Saffola Active - Saffola Active provides Omega 3 and Oryzanol, two importan
t compounds known for promoting heart health. This comes to you without odour. T
o get these benefits Saffola Active is made with Rice Bran Oil and Soya bean oil
. Saffola Active also contains Vitamin E. New Saffola - New Saffola comes with n
ew ingredients. New Saffola, a blend consisting of Safflower (Kardi) Oil (60%) &
Rice Bran Oil (40%), contains Vitamin E. Vitamin E is a well-known and potent a
ntioxidant.
Information search
From 2005-06, SAFFOLA has become renowned for its expertise in Heart Care, thank
s to the consistent introduction of innovative product like heart healthy cookin
g oil and foods. Saffola s products are the first in line of defense against hea
rt diseases. During this era its image changed from a mere Cooking Oil to a resp
onsible brand whose philosophy is to help people get the most out of life, Saffo
la always promotes the adoption of a healthier lifestyle for heart.
Technical and Functional Info
Evaluation
Attributes There are many players in the market and consumers had little experie
nce and expectations. People are basically evaluating these products based on pr
ice.
Purchase Decision
High – Main source of the purchase of Cooking Oil for people is Kirana stores in e
arlier days and now a days lot of urban consumers buy it from retail stores like
Reliance Fresh, Big Bazaar, More stores etc. Moderate – Earlier the time utility
was low but in later on the time utility picked up due to increasing rush in bus
y urban life. Medium – There were 2 variant available in the Cooking Oil. Can of 5
/10/15 Litres and 1 Litre plastic pouch. This was standard for most of the compe
titors. Over the years, the brand Saffola has become renowned for its expertise
in Heart Care, thanks to the consistent introduction of innovative product like
heart healthy cooking oil and foods. Saffola s products are the first in line of
defences against heart diseases, making transition to a healthier lifestyle a l
ot easier. This is a clear advantage against its competitors.
Place utility
Time utility
Form utility
Quality
20
Buying Behaviour
During this era of health conscious people, there is a natural inclination towar
ds taking less cholesterol and so taking good quality of oil, but this is a case
of urban India, for rural India this is still a challenge to educate the people
about the health effects due to consumption of Oil. Saffola has taken lot of in
itiatives to do it. Lot of advertisements and campaigning to educate people abou
t the effects of cooking oil on heart. Their all the advertisement are focused t
owards the health aspect. For example their tagline is “Jeene ka andaaz sudhariye”.
(Improve your style of living).
Segmentation
Type of Segment
Geographical: Urban India (Metro cities) Rural India (Small towns & villages) De
mographic Need satisfaction Health Consciousness Need Satisfaction Healthy oil w
as preferred by educated Housewives and not by uneducated rural women Saffola Go
ld, New Saffola, Saffola Active, Saffola Tasty Saffola Tasty
State of being
Suitable Product
Saffola Gold, New Saffola, Saffola Active, Saffola Tasty
Behavioural Segmentation Price
To compete with different brands available in market, Saffola launched 4 Saffola
Gold, New Saffola, different variants with different prices. Saffola Active, Sa
ffola Tasty
Targeting
Targeted Segment
Urban India: Indian Upper Middle Class
Evaluation Parameters

Twenty percent of the country’s population lived in urban areas or large cities an
d consume11.2 Kgs of edible oil per year while the vast remainder lived in rural
areas, villages, and small towns. Saffola focused mainly on Urban population be
cause of its high quality product and benefits are very difficult to explain to
the rural India. Healthy oil category was undifferentiated in the minds of rural
India
Rural market was very unattractive because of following reasons: Per capita cons
umption is quite low Poor rural infrastructure & consumption habits were very di
fferent from the urban people and were two major obstacles to enter rural market
s. 21
 Age group- All
Affordability is a great factor for the reluctant of rural people buying Saffola
which is a high premium brand. India’s most of the people are influenced by the w
estern culture so they had a good potential for healthy eating habits. Keeping i
n mind about the health conscious people which are present in all age group, Saf
fola has kept its uniqueness of providing a healthy oil which is less on cholest
erol and hence good for heart.
Lower Income group Educated Youth
Lower income group was more or less not entertained by Saffola due to quality pr
oduct and cost cutting is not easy for them. Saffola created awareness in youth
towards the health implications of cooking oil and launched ads to educate youth
which they named as Saffola Cholesterol Management.
Positioning
Product Type of positioning
Perceived Quality
Strategy
Saffola Gold
Position it as a premium brand for health conscious people. A right combination
of Safflower Oil and Rice Bran Oil is more effective in reducing cholesterol tha
n each of the oils singly. Saffola Gold has the unique composition of 80% Rice b
ran Oil and 20% Safflower Oil. Saffola Tasty was the first Saffola blend. This o
il blend provides the benefits of two oils, thereby giving added value to the co
nsumer. It provides the high PUFA from Safflower (Kardi) oil and the taste of Co
rn oil. New Saffola comes with new ingredients. New Saffola , a blend consisting
of Safflower (Kardi) Oil (60%) & Rice Bran Oil (40%), contains Vitamin E. Vitam
in E is a well-known and potent antioxidant Saffola Active provides Omega 3 and
Oryzanol, two important compounds known for promoting heart health. This comes t
o you without odour. To get these benefits Saffola Active is made with Rice Bran
Oil and Soyabean oil. Saffola Active also contains Vitamin E.
Saffola Tasty
Perceived Taste and Quality
Saffola New
Perceived Quality
Saffola Active Health based
22
Demand Drivers

Macroeconomic factors : Population growth, per capita income, purchasing power,

oilseeds crop Other factors : Prices - domestic/

international, Availability - o
il, oilseeds Influence of branded products - health’ message Growing preference f
or convenience foods. With steady growth in population and personal income, Indi
an per capita consumption of edible oil has been growing steadily.
Key Success Factors

Raw material sourcing : focus on improving yields, getting better quality oilsee
ds , ensuring regular supplies - through symbiotic relationship with farmer Bran
ding essential for success (Vanaspati - Dalda, Oils - Sundrop) Better distributi
on network to improve reach Efficiency in operation - to become price competent
and withstand overseas competition Proposed Future trading in edible oils will h
elp curtail price volatility and lend knowledge - based assistance to farmers of
eliminate unofficial markets.
Future
In the next 5 years, the market for o Edible oils will grow by 8% to 12.65 milli
on MT o Vanaspati will grow to 1.5 million

MT Free imports, low import duties an
d slump in global prices - lead to dumping’ Domestic industries of edible oils an
d vanaspati affected - low realisation and idle capacities in oil and vanaspati
industries Currently, India accounts for 7.0% of world oilseeds output; 7.0% of
world oil meal production; 6.0% of world oil meal export; 6.0% of world veg. oil
production; 14% of world veg. oil import; and 10 % of the world edible oil cons
umption The demand for edible oils is expected to increase from Oil Year 2004-05
levels of 10.9 MT to 12.3 MT by 2006-07 (two years). This assumes a per capita
consumption increase of 4% and a population growth of 1.9% which translates to a
n overall growth in demand @ 6% p.a. Based on the above assumptions, edible oil
demand in the year 2015 is expected to be 21.3 million tonnes.

Business Concerns

Production slippages have also forced imports Excessive (cheap) imports of oilse
eds - led to unremunerated prices, locally Hence, farmers have shifted to other
cash crops Increasing health awareness - impact of oils and vanaspati usage on i
ndividual’s cholesterol levels.
23
Be More – Everyday. The Purpose of Marico is its reason to exist beyond making pro
fit. “To transform, in a sustainable manner, the lives of all those we touch, by n
urturing and empowering them to maximize their true potential.” Marico sustained i
ts profitable growth, by attempting to maximize the potential of the multiple st
akeholders in each sphere of their business, in India and overseas - be it farme
rs whose communities they sustain - or consumers whose lives they have endeavore
d to transform through wellness and beauty solutions. “Turning fallow land into a
profitable business. We pressed the right buttons.” Marico continuously benefit sa
fflower farmers by implementing various initiatives for them. They made contract
s with the farmers to grow safflower – a hardy non-seasonal crop that grows in har
sh conditions. Marico helped them maximize the potential of their unused land, t
urning their losses into thriving profitable business. “By forging win-win partner
ships across every link of the supply chain, we have increased the growth and su
stainability of our business, yielding winning results time after time, year aft
er year.”
“The net sales have grown by 13% to Rs 790.15 crore. This was led by volume growth
across categories. Volume growth was at 16%. Saffola refined oils recorded a st
rong volume growth of 17.5%” The input prices lowered by 22% with respect to previ
ous year. Brand passed on a part of this to consumers using a strategic mix of p
romotions and price reductions across select packs during the year to keep the p
remium over other branded refined edible oils at sustainable levels. This was su
pported by a media campaign and other marketing efforts. Higher volumes are expe
cted to increase the customer base of Saffola as the brand has a high retention
rate. Households buying Saffola have steadily increased with the number of house
holds estimated to have gone up by over 12% during FY10. The Saffola refined oil
franchise continues to hold its market leadership position in the super premium
ROCP (Refined Oil in Consumer Packs) segment. In the longer term, Saffola would
like to establish itself as a leading healthy lifestyle brand. It has commenced
its journey in the functional foods space and plans to have a basket of offerin
gs that provides healthy food options throughout the day to individuals consciou
s about heart health. During Q4 FY09, Saffola’s key markets at an invitational pri
ce and has been supported by insightful advertising. The initial performance has
been in line with expectations. With its health positioning, the company hopes
to create a sizable niche for itself over the next two to three years. Saffola i
s encouraged by the expansion in franchise across premium refined edible oil. Th
is sets us them to deliver strong volume growth during the year as planned. Mari
co s international business has had a satisfying journey over the last few years
. It feels confident that it will continue to find and leverage the right growth
drivers, in their quest to build a sustainable business that contributes meanin
gfully to the Marico Group s strategic objectives.
24
Customer Targets
Saffola is targeting busy and health conscious cooking oil consumers. Saffola is
leveraging the current leaning towards the health trend, the wellness concept i
n an innovative manner. The busy executives and professionals who come across st
resses in both professional and personal life are very much health conscious (es
pecially heart related issues) and they prefer to use cooking oil like Saffola.
Wives of professionals who are very much conscious of heart and cholesterol cont
ent of their husbands shall also prefer to use Saffola. Low absorb technology (L
oSorb) used by Marico helps Saffola Cooking oil to be stable during deepfrying.
Food fried in Saffola oils absorbs less oil and thus reduces the consumption of
oil in diet. So, normal household wives who very much cost sensitive shall prefe
r Saffola as their cooking oil. Saffola is still considered as a premium product
. Its price is fixed at a very higher level than its competitors. So there is al
ready a gap for medium price ranged product from Saffola. Also Saffola doesn’t emp
hasize in taste attribute. Bettering taste along with its health image can subst
antially increase its market share. Saffola has already launched Saffola Tasty b
rand but it is still to gain popularity.
Competitor Targets
Its competitors are targeting mainly the lower income segment of consumers as th
e premium charged for Saffola is high. Also competitor, like Sundrop, emphasizes
on Taste of cooking oil.
Core Strategy
Value proposition
It provides certain advantages that look after one’s health condition as well as t
he consumption amount of cooking oil: It focuses on urging people to adopt a hea
lthy lifestyle. One of the major concerns today is the occurrence of heart disea
se and every fourth Indian being under threat. And adopting Saffola as your fami
ly’s cooking medium is one big step that you can take towards safeguarding of your
family. Heart healthy nutrients in RBO such as tocopherols, tocotrienols and or
yzanol are known for their cholesterol lowering ability. This has the highest le
vels of Linoleic acid, an omega-6-polyunsaturated fatty acid, which is well know
n for reducing cholesterol levels. All Saffola oils come with LoSorb Technology
. Food fried in Saffola oils absorbs less oil and thus reduces the consumption
of oil in your diet.

25
Product Positioning
Demographic Segmentation:
Basis of segmentation is income, occupation and age as follows; Income High Inco
me Groups Middle Income Groups Occupation Housewives Working Professionals Age 2
1-40 years of people Above 40 years of people
Targeting:
On the basis of the above matrix, Saffola will be targeted at the following segm
ents; Segments Key Features Middle/High Income Saffola serves the purpose of coo
king oil which takes care of Heart disease. Group Saffola tasty serves Middle in
come group also. Less consumption goes well with Middle income group. Housewives
Takes care of husbands’ health. Working Professionals Working professionals who g
o through a stressful ambience in office are conscious about health and especial
ly heart. Saffola is a wise choice. Age above 40 years This group of people are
more vulnerable to Heart Disease. So Saffola is a definite choice.
Perceptual MAP for SVS
HIGH Saffola Health Conscious Image Sundrop Saffola Tasty
LOW
Gold Drop Sweeker Dalda
Gold Winner Dhara
Fortun e
Price
HIGH
Low The above figure shows the perceptual map for Saffola cooking oil. SVS is to
be positioned based on two parameters – Health Conscious Image and Price. It is t
o be rated high in health conscious image and low in price because of the follow
ing reasons: Competition is less in this particular attribute. It develops a Cre
dence attribute. 26
Integrated Marketing Communications Programs
In 1993, after a thorough analysis of heart disease patients, Marico decided to
position Saffola as Good for your heart and the slogan Healthy Oil for Healthy P
eople. Marico first created fear in the minds of people about the incidence of h
eart attacks and then presented Saffola as a preventive. Saffola was also prescr
ibed by doctors, as it was low on cholesterol. Saffola was awarded the ‘Brand of t
he year’ in 1993 by the Advertising Club of Bombay.
In the same year, Marico launched the Saffola Healthy Hearts Foundation (SHHF),
to educate consumers about heart care and healthcare. The Foundation provided ea
sy-to-read-and understand consumer information booklets and useful reference mat
erial like emergency directories. It also conducted free heart check-up camps th
at provided ECG, cholesterol, sugar, blood pressure testing besides advice from
eminent cardiologists.
27
The Foundation also arranged for free counselling and diet guidance from dietici
ans. It actively participated on important days like World Health Day, World Hea
rt Day and Doctor s Day to spread awareness about preventive health care. Integr
ated Marketing Communication Program used all 4 P’s of marketing together;
Pricing strategy of Saffola
Saffola has different products to suit different customers. Marico s reasoning i
s that since Saffola oil commands a premium of 10 to 15 per cent over other edib
le oil brands, the company should be able to cater to the demand of the all the
customer from different purchasing power groups. The company wants to leverage t
he Saffola brand equity through brand extension.
28
Their Main strategy for price discrimination is to make customer aware that the
different price are associated with different products which are suitable for di
fferent needs.
Channel Strategy
Saffola is using wholesale distributors, Big Malls, Grocery stores etc. as their
distribution channels to result in meeting the customer needs effectively and e
fficiently.
29
Saffola was using their key strength which was showing the oil as the healthy oi
l for people, this is their USP for selling the oil at even premium over the com
petitors. Even Saffola has gone to the extent of launching the website especiall
y for the health care for the consumers. www.saffolalife.com On the brand’s homepa
ge, the site’s colour scheme is reminiscent of the brand’s bright yellow packaging t
hat stands out in grocery stores. Sticking to its objective, the site has all th
e necessary tools to effectively characterize Saffola as a “health-conscious” brand.
The Eating Right section educates the reader about nutrition myths, beverages,
health benefits from particular plants and other pertinent health topics The Hea
lthy Heart link on the homepage transports the web user to a section that outlin
es the initiatives the brand has taken in the community. The company has organiz
ed several outreach programs, and details on such events are available online. C
orporate social responsibility is an important facet of any brand today, and Saf
fola does an admirable job describing these initiatives on its site. Saffola had
always focused on the heart. The brand’s image had suffered a setback in the earl
y 2000s with the ambulance commercial, which portrayed that one had to rush to t
he hospital if he did not use Saffola. Later, Marico changed Saffola’s positioning
, focusing on the health of the entire family with its Sehat se jeena hai campai
gn. Since the overall health positioning did not yield results, Saffola was move
d from the family health positioning, once again to the original heart care posi
tioning in 2004. In February 2004, Marico launched a fresh advertising campaign
for Saffola, after a gap of two years. The campaign by Grey Worldwide had a new
tagline, Aaj se jeene ka andaaz sudhariye (Improve your lifestyle today), urging
every Indian to take up a healthy lifestyle. The TV Commercial focused on a lit
tle girl approaching various groups of people to pass on the message of heart ca
re. The new campaign was based on research done by SHHF. Almost one-fourth of th
e country s population was vulnerable to a heart related ailment and a majority
was unaware of the risks related with heart problems. In September 1999, Marico
launched a website to provide information on heart care through dietary interven
tion. Targeted at health-conscious consumers, the website offered a personalized
diet plan. The site also offered general information on heart care and healthy
food habits. In 2000, SHHF launched a multi-level awareness campaign, where a se
lect group of housewives distributed literature on heart care to friends. The fr
iends in turn spread the initiative to their friends and so on. The motive was t
o convert each consumer into an agent for spreading ‘Easy to follow tips for a hea
lthy heart’, to strengthen the association between Saffola and heart care.
Research
Marico’s Research & Development center, continuously work towards incorporating th
e latest technological advances in all their products. This ensures that any pro
duct, which comes out from Saffola, incorporates the latest learning in the fiel
d of heart care. According to Dr. Sudhakar Mhaskar from Marico’s Research & Develo
pment Center, “We continuously strive to innovate products to improve the healthy
living of the people. To achieve this target we put lot of emphasis on R & D whi
ch leads to enhance the oil’s ability to maintain a healthy level of total, LDL &
HDL cholesterol in the body.” Every product from Saffola is made through an exclus
ive protection technology called Losorb that makes the oil more stable during de
ep-frying. No other oil or blend of oil in the country has this technology. When
food is fried in Saffola gold, there is lesser of the unhealthy degraded compou
nds formed. This kind of health initiatives is the core of Saffola’s strategy and
they spend a handsome amount of money in R & D to keep their product superior.
30
Financial Budgets
Marico uses the following techniques for allocating funds for promotion.
Percentage of sales method – Marico is currently using this method. In this approa
ch the
budget is determined by taking a fixed percentage of the sales. Marico’s expenditu
re on advertising and sales promotion is 13.2% of sales in 2009-2010 as compared
to 10.2% in the year 2008-2009. Out of the allocated budget the ratio of advert
ising to sales promotion expenditure is 40:60 and out of the 60% allocated to sa
les promotion, 40% is spent on consumer promotion, 50% on trade promotion and 10
% on sales-force promotion. Unit of Sales method - This method is used for highl
y priced goods or consumer durables wherein a promotion budget is arrived by mul
tiplying the units of goods sold with a fixed amount. Competitive parity method –
In this method the budget is decided by what others are offering in the market.
This method is to use as the only information required is about the amount of mo
ney spent by the competitors. All-You-Can-Afford Method – In this approach to budg
et allocation, the amount that is left over after all relevant allocation have b
een earmarked for sales promotion. This approach is generally taken by small com
panies with small budget. Objective-and-Task Method – In this method the promotion
manager starts by making thorough study of the market, the product, and competi
tion and consumer behaviour in order to set appropriate promotion objectives. Th
e next step is to decide how much money will be required to achieve the objectiv
es. If the cost happens to be more than the money available, then either the pro
motion objectives are adjusted or more funds are made available from the conting
ency reserve or by reducing the budget from other promotional activities.

Marketing Metrics
Sl. No 1 Metric(Value) Construction Revenue Market Sales revenue as Share (24%)
a percentage of market sales revenue Unit Market Share Unit sales as a (54%) per
centage of Market Unit sales Relative Market Brand market Share(54/46=1.173) sha
re divided by the largest competitors market share Considerations Purpose Scope
of market Measure of definition competitiveness
2
Scope of market Measure of definition competitveness Can use either unit or reve
nue shares. Assesses comparative market strength.
3
31
Set up a team that would monitor operations so that problems are revealed much e
arlier and we can be proactive rather than reactive. This team would monitor mar
ket place and financial results as well as the implications of any other changes
(like govt. policies, legal obligations, consumer behaviour) and other aspects
that have been identified as threats in the SWOT analysis. We should go for a pe
riodic review and analysis of our corporate strategies, market strategies, prici
ng philosophy, positioning philosophy etc. This would just give an insight when
to launch a contingency plan. At present we are in a very good position in the m
arket and enjoying a virtual market leader position in premium health edible oil
category. However if in near future some competitor arises, we will have to rev
isit our strategies to either develop the market barriers or to come up with the
superior products to regain our supremacy.
32