ABDUL hadie + ADITYA laksmana + BIMA ruditya ESTIE nurina + ETGAR equator + HANIF widyanto

UNIVERSITAS INDONESIA

in our daily life

SNACKS

SNACKS INDUSTRY: INDIA

Processed Snack Food in India is worth around US$ 30 Billion
Branded Snacks is about 46% of total market

overview of current market

Retail Structure is dominated by unorganized retailers

3 Million retailers 2/3 located in rural areas Majority of total snack industry

Competition is extremely intense

Mortality Rate of new brands up to 70% Pepsico, Haldiram, ITC Foods, Snacko

Major Players

CASE STUDY: SNACKO INDIA LTD

company profile

Entered India market circa 1995 By 2010, SNACKO is in TOP 4 of Indian snack food industry
Growth Strategy: Based on Innovation
Products Packaging Advertising Promotion Inorganic Growth through M&A

SNACKOs Distribution Channel CFA

Distributors

Factory
Wholesalers

Retailers

Consumers

MAIN ISSUE: FLAT SALES GROWTH

Sales of Major Players
Company Pepsico Haldiram ITC Foods Snacko Total 2008
Sales

current condition

2009

Market Sales Share

Sales Market Growth

Share

Sales of Major Player

1000 900 800 700 600 500 388 266 130 120 173 122 660 866

660 56% 866 56% 266 23% 388 25% 130 11% 173 11% 120 10% 122 1176 1549 8%

24% 31% 25%

400 300

2%
24%

200 100 0

2008

2009

Pepsi

Haldiram

ITC

Snacko

Main Issues as of Nov 10: Sales Growth is marginal

o

Only 2% growth against industry average of 24%

Down from 10% in 2008 to 8% in 2009

Market Share is decreasing

WHAT HAVE SNACKO DONE?

The PROMOTION MIX approach:
1 ADVERTISING
print, radio, TV media, internet and mobile

the promotion mix

2 PERSONAL SELLING
Below-the-line (BTL) activities, Sales Representatives, experiential marketing

3 SALES PROMOTION
Consumer and Trade Promotions

CONSUMER PROMOTION TRADE PROMOTION

4 PUBLIC RELATIONS

Fun Race, brand associations through Indian Cricket Tournament

WHAT HAVE SNACKO DONE?

Snackos Trade Promotion schemes:
(+)

trade promotion schemes

(-) Gifts could get lost or damaged Irrelevant and insignificant to retailers Distributors could make fake reimbursement

Attached gift to the packages of brand of snack

Gifts could easily be seen by retailers Gifts incentivize retailers to sell the products Ditributors can give favorable rewards to retailers based on conditions

Flexibility to distributors in managing rewards/gifts to retailers

Extra discounts to SRs to focus on high-margin brands & products

Motivate SRs to sell Snackos products more aggressively

Less profit margin in sales revenue Low-margin brands & products become less preferable to sell

WHAT HAVE SNACKO DONE?

(+)

trade promotion schemes

(-) Makes other Snacko products less favorable

Jhatpat Tez Brand Offer

Helps to reduce inventory of slow moving products Flexibilty for retailers to choose favorable promotional items Strengthen Jhatpat Tez Brand Image Stimulate retailers to display Snackos variety of products with prizes Flexibilty for retailer to choose favorable promotional items Strengthen Cramm Brand Image

Tambola Scheme

Insignificant incentives to retailers Too many items to be fulfilled by retailers Makes other Snacko products less favorable Most costly scheme compared to the others (TV ads, prizes and efforts)

Cramm Brand Winner Extravaganza

Remarks: Most of the trade promotion schemes offered to retailers are irrelevant and insignificant

QUESTION OF THE DAY

the dilemma

The National Sales Manager wanted to know:

WHY SALES GROWTH WAS FLAT

in the last couple of years?

What should they DO to

boost sales growth regain market share

REFERENCES AND ANALYSIS

tackling the issues

Problem identification: FLAT SALES GROWTH

2% sales growth last year against industry average of 24% A strategic issue: couldnt be solved with marketing strategy only

THEORY Strategy Development 1 The three levels of strategy

1) Corporate-level Strategy 2) Business-level Strategy 3) Marketing-level Strategy Cocentric Diversification

Product Improvements

Product-Line Extensions
New products for same market

REFERENCES AND ANALYSIS

Business-level Strategy
FACTS 1

tackling the issues

Organized market for potato chips:

5,000 tons Valued at $1.2 Billion 80% of branded snacks category

Opportunity to gain market share in snack industry Marketing-level Strategy

FACTS 2 new product: potato chips

Retail structure is dominated by unorganized stores 2/3 of total stores in rural areas Majority of sales in snack industry

Trade Promotion with focus on rural areas

REFERENCES AND ANALYSIS

THEORY Marketing Mix 2 The 4Ps

tackling the issues

Price
4Ps

Comparable with competitors (non-issue)

Utilize suitable Sales Promotion Promotion

Place

Improve distribution channel to the rural areas

Conduct market research Product and launch chips product

REFERENCES AND ANALYSIS

THEORY Promotion Mix 3 Communication Toolkit Advertising

tackling the issues

Optimizing printed ads targeted specially to rural areas (down-to-earth contents)

Preparing Sales Kits which are easily understandable for mostly lowincome people

Promotion Mix

Personal Selling

Sales Integrated Sales Promotion Promotion with push and pull strategy

Public Charitable events, events at Relations local schools and communities

INTEGRATED SALES PROMOTION

Push Strategy
Trade Promotion

our proposal

Distribution Channel
Reward for distribution channel members for achieving certain targets (e.g. discount, paid vacation, etc.)

Retailers
Implementing schemes allowing retailers to obtain higher margins by achieving certain sales targets

Pull Strategy
Consumer Promotion

Bundling Products to Attract Consumers

With attractive gifts or other snacko products

Cramm Winner Extravaganza

Lucky draw contest with lots of gifts to attract consumers and promote it through TV ad and printed media

IN-FOCUS: RETAILERS
Higher Margins for Retailers
Incentives to Increase Reseller Purchases and Inventories

the ultimate push strategy

There are some incentives for Motivating Retailers: Slotting Allowance Quantity Discount Free Goods Cooperative Ad Program

Incentives to Increase Local Promotional Effort

Promotional Allowance Off Invoice Discount

Sales Target Achievement Benefit

Incentives to Increase Personal Selling Effort

Reward from Sales Contest

SNACKO CASE STUDY ANALYSIS

Strategy Development 1) Corporate-level Strategy 2) Business-level Strategy 3) Marketing-level Strategy
Advertising

the strategic roadmap

Price
Promotion

Personal Selling Sales Promotion

Push Strategy
Trade Promotion

Retailers

4Ps

Place
Product

Public Relations

Pull Strategy
Consumer Promotion

RECOMMENDATIONS

things to do

Focus on unorganized market in the rural areas

Boost Sales

Change business strategy by diversifying SNACKO products to include the more popular potato chips Integrated Sales Promotion used to deliver more focused results
Push and Pull strategy to motivate retailers and attract consumers

Regain Market Share