A Study on International and Domestic Marketing of Cashew Kernels by Kerala State Cashew Development...

A STUDY ON INTERNATIONAL AND DOMESTIC MARKETING OF CASHEW KERNELS BY KERALA STATE CASHEW DEVELOPMENT

CORPORATION, KOLLAM, KERALA

JAYAKRISHNAN.S

Second year MBA

1

CHAPTER I

INTRODUCTION

2

1.1 INTRODUCTION

The study was done with data base from The Kerala State Cashew Development

Corporation, the largest exporter of Cashew nut in India. Cashew has emerged as a major

commodity of international trade. More than 20 countries of the world have taken up Cashew

cultivation, and more than 10 countries have started processing and exporting of Cashew kernels.

Now more than 60 countries import Cashew kernels. In India Cashew is attaining more and

more social economic significance. The cashew industry employs more than five lakhs workers

of which more than three lakhs are in processing and exporting sectors over 95% of women from

the lowest strata of society, mainly scheduled casts and troches, perhaps, there is no other

organized industry. In India which employs more than 95% of women from rural areas.

The Kerala State Cashew Development Corporation (KSCDC) a comparatively new

entrant under public sector ages was formed in 1970. The birth of the unit was a compulsive

one, it aimed at in fusing new life and vigor into a highly labor intensive industry in the private

sector employing lakhs of workers, men and women.

The industry, vitally important to Kerala on account of its employment potential

and its significant role as a foreign exchange earner was in bad shape, coming up against one

crisis after another primary for want of raw nuts which have to be imported mainly from Africa

and at best the work available to the workers was seasonal and they were not in a position to bear

the impact of the period description the industry had face.

KSCDC was setup to combat the ills of the industry and put it back on its to the

innumerable private sector units saddled with their problem which had repercussions on the

hapless workers who have least mobility of labour.

The organization study conducted at KSCDC provides an overview of the

functioning of various departments of the organization. The study also helps to have an insight

about the company.

3

1.2 INDUSTRY PROFILE

The cashew nut is the rich man’s food and poor man’s lively hood. The Cashew

industry is a traditional industry and is usually highly labour intensive technique. Cashew

processing is a female dominant industry. The world demand for Cashew kernels has been rising

steadily for several years. The processing of Cashew remains still a highly profitable industry.

Cashew nut is one of the important commercial crops of India. Its important derives mainly from

the valuable Foreign Exchange it earns for the national economy. Thus the Foreign Exchange

increases from513.80 crores in 1997-98 to 605.73 crores in 1998-99. The cashew industry

occupies a prominent place in the industrial map of Kerala.

At present there are about 288 Cashew processing units in Kerala distributed under the

private, public and Co-operative sector. Till 1969 the industry was monopolized by the public

sector. But in the corporative sector CAPEX Ltd. was registered in 1984, stated its commercial

processing in 1989. The main object of CAPEX society is to rendering assistance to the

affiliated societies is members of CAPEX with more than 6,000 labors.

The Cashew plantations are spread across almost 32 countries of the world. The

average yield of Cashew crop accords the Globe is 916 kg per hector of land. Countries like

India, Brazil, Vietnam and Nigeria boast of more than 90% of the Cashew crops collectively.

India itself produces around 4,000 Tones of Cashews per annum.

India, once the cashew king of the world, is seen to be at a crucial juncture in the

development of the cashew industry in the face of increased international competition from

countries like Vietnam, but all may not be lost yet. The largely untapped area of organic cashew

farming could open up a new flank for Indian cashew sector to be the global leader it once. This,

along with a focus on enhancing domestic production and productivity through a phased

replanting programme can nurse the sector back to strength, "Certified organic cashew and fair

trade marketing in India are relatively small, but are slowly catching up. These cashew nuts

command a price premium of about 30% in the UK. India's export of cashew kernels increased

4

from 97,550 tons in 2001 to 1, 14,000 tons in 2005-06, but the fall in international price of

cashew and the recent rise in rupee value are bound to affect export adversely, they point out.

India’s processing capacity of cashew far exceeds its production of raw nuts, with only half of

the cashews processed in the country being produced domestically.

5

1.3 COMPANY PROFILE

The Kerala State Cashew Development Corporation Ltd was incorporated in July 1969

and started Commercial activities in the year 1971 as a company fully owned by the Government

of Kerala. From the modest beginning in 1969 Corporation has now grown into a large

organization playing a pivotal role in cashew industry in the world. Corporation has now more

than a turnover of Rs. 100 cores. KSCDC is a public sector undertaking owned by Kerala

Government.

Now KSCDC is running 30 cashew factories all over the Kerala State. In these factories

more than 20000 workers and 1500 staff members are working. Corporation is a model employer

in the field of cashew industry mainly to protect the interest of workers and to provide maximum

employment to its workers and to give statutory benefits like minimum wages, bonus, etc.

prevailing in the cashew industry.

The main function of the company is the processing of raw nuts and there by production

of cashew kernels and its bye-products. The 80% of processed kernels are exported and 20%of

the kernels are sold in the Indian market.

For the local sale of processed nuts the company is following various techniques like

advertisement, sales, promotion, publicity etc. In order to capture the local market now KSCDC

has started a value addition unit for producing processed nuts in different flavors. The

promotional activity for capturing the market is in progress. To increase the production of

indigenous raw nuts Cashew Corporation has started cashew plantation in the state.

6

Location

The head office of KSCDC Ltd situated in mundakkal, 1km away from Kollam town and it

has 30 cashew factories and 2 tin factories in Kollam. It has three branches in Alapuzha, one one

branch at Trivandrum, one at Trissur.

Objectives of the company

Main objects to be pursued by the company on its incorporation are:-

1. To procure raw nuts from India and outside and sell processed cashew nuts, cashew shell

liquid and other by-products of cashew within and outside India.

2. To establish, maintain and operate factories in any part of the state of Kerala for

processing cashew nuts and extraction of oil from the kernels.

3. To distribute cashew nuts and cashew apples to processing factories established in Kerala

and purchase cashew kernels, cashew shell liquid and other products and by products

from processing factories in Kerala.

4. To purchase and process cashew apple and shell the products and by products of cashew

apple.

5. To extract and process cashew shell liquid and sell the products and by products within

and outside India.

7

CHAPTER II

REVIEW OF LITERATURE

8

DEFINITION OF MARKETING

Marketing has been variously defined by different practioners and thinkers over the time. In

simple words, marketing is referred to activities that are undertaken in relation to market.

(1) According to American marketing association “marketing is the performance of

business activities that direct the flow of goods and services from the producers to

the customer or user.”

(2) According to William J Station marketing is defined as “it is the total system of

interacting business activities designed to plan, price, promote and distribute

wants satisfying products and services to present and potential customers.”

(3) Philip kotler defines marketing as working with markets to actualize potential

exchanges for the purpose of satisfying human wants and needs.

(4) EG, Mc carthy defines marketing as the performance of business activities that

divert the flow of goods and services from the producer to the customer or user in

order to satisfy the customer’s needs and wants.

INTERNATIONAL MARKETING

With the advancement in liberalization, privatization and globalization, the major competition

with many Indian firms encounter in the home market is from the foreign firm. International

marketing is perhaps best regarded as a short hand expression for the special international

aspects of marketing.

Walsh defines international marketing as

(a) The marketing of goods and services across national frontiers, and

(b) The marketing operation of an organization that sells and / or produces within a given

country when:

(1)That organization is part of, or associated with an enterprise which operates in

other countries

(2)There is some degree of influences of control or the organizations marketing

activities from outside the country in which itself and / or producers.

9

Another view is that international marketing is simply and attitude of mind, the approach of

the company with a truly global output seeking its profits impartially around the world, “home

market included on a planned and systematic basis.

10

CHAPTER III

RESEARCH METHODOLOGY

11

3.1 OBJECTIVES OF THE STUDY

i. To understand the marketing structure, division, practices, procedures policies of

KSCDC with regard to international and domestic marketing.

ii. To analyze ,assess and identify the problems faced by KSCDC in international and

domestic marketing.

iii. To explorate the strength, weakness, opportunities and threats of marketing cashew

kernels by KSCDC.

iv. To examine and find out why KSCDC cannot compete with private sector and make

profit as done by private sector.

v. To suggest ideas and recommendations to improve the marketing supply chain and

overall performance of KSCDC.

vi. To get first-hand knowledge and familiarize with preparing a project for international

and domestic market.

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3.2 SCOPE OF STUDY

The study is intended to attain the first-hand experience of the overall functioning of

marketing department of KSCDC. It also provides a chance to see the practical constrains faced

by the top executives and managers while putting the theory into practice.

Being a loss making unit there is wider scope for ideas, suggestions and project works than

a continuously profit running organizations.

There will be great mental satisfaction if my findings conclusions and suggestions will

help to improve the functioning of the department at least to certain extent.

13

3.3 LIMITATIONS OF THE STUDY

1. Method used mainly provides qualitative data, so may lack precision.

2. The personal interview may be affected by personal bias.

3. The personal resource of the corporation is limited, so it is a challenge to collect data

without interfering the normal operation of the corporation.

4. There are about 30 factories of KSCDC spread over the entire Kerala and it is expensive

and time consuming to visit all the factories to collect the matriculate data.

5. Hesitation to disclose confidential, trade secretes with a non member of the corporation.

14

3.4 METHOD OF DATA COLLECTION

It is proposed that the required data for the study are to be collected from both

primary and secondary sources. The primary sources include members of the director board,

officers and employees of KSCDC. It is intended to develop interview schedule/questionnaire by

incorporating questions related to all the variable to the identified through exhaustive literature

survey and discussions with different levels of employees and expects in the area.

Secondary data for the study are propose to be collected from the office records and

published statement of units and various research centers and institutions located in the various

parts of the various parts of the state.

Primary data

a. Direct interview and use of questionnaire to managers, employees, staff and labourers

etc of KSCDC head office and various factories.

b. Interview and questionnaire to dealers, traders, retailers and wholesalers etc.

c. Direct observation of marketing department.

d. Interaction with pioneers in the field of cashew experts in private sector.

Secondary data

a. Various annual reports of KSCDC.

b. Various annual reports of CEPC.

c. Export/ import directory.

d. Cashew bulletin

e. FICCI news journal

f. Indian trade weekly

g. News papers like business line, business standard, economic times and financial times

etc.

15

SAMPLE FRAME

There are 36 factories under KSCDC. The sample for study on international

marketing is taken from 8 factories i.e. 20% the total, selected as stratified random sample basis

from the 36 factories. It also includes managers, staff and employees of head office and various

factories of KSCDC and CEPC making the total number of respondent’s to100.

For domestic marketing 50 respondents selected from whole sales, retailers, dealers,

traders, agents and stockiest of KSCDC were taken as sample frame.

TOOLS USED FOR THE STUDY

Percentage analysis.

Bar Diagram

Pie Chart

Chi-square Test

16

CHAPTER IV

DATA ANALYSIS AND INTERPRETATION

17

ANALYSIS

The data collected from the study are to be tabulated and analyzed by employing quantitative

techniques such as percentages, and chi-square tests.

DOMESTIC & INTERNATIONAL MARKETING A THEORETICAL OVERVIEW

HUMAN WANTS

Human wants are unlimited and repetitive in nature. Business activities aim at acquiring

wealth, converting it into designed forms and marketing final products available for exchange,

for the satisfaction of human wants. This important and powerful function of exchanging final

products for the satisfaction of human wants is called marketing.

Marketing is the management function which organizes and directs all those business

activities involved in assessing and converting customer’s purchasing power into effective

demand for a specific product or service.

It is art of creating and satisfying customers at a profit.

Various concepts of marketing philosophy

The five distinct concept of business philosophy under which marketing activities are carried out

are

(1) The production concept

(2) The product concept

(3) The selling concept

(4) The marketing concept

(5) The societical marketing concept

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(1) The production concept (Marketing Oriented Philosophy)

Consumers usually buy those products that are widely available and have low cost. This

concept is usually followed in under developed countries where demand for a product exceeds its

supply.

(2) The product concept

According to this concept, the consumers are more interested in the quality and

performance of the product or the service rather than its volume of production or price.

(3) The selling concept

There must be strenuous and aggressive measures to persuade customers to buy

adequate quantity of products.

(4) The marketing concept

This concept aims to achieve the objectives by determining and knowing the needs and

wants of customers. ie. the target market, then designs and develops products to satisfy those

needs, make them available to consumers at reasonable price

(5) The societical marketing concept.

This approach postulates that the management should take into consideration of social

implication of their decisions and ensure that they contribute to the welfare of the society at

large. This concept maintains a balanced between individual, organizational and societical

objectives.

19

THE MARKETING MIX

It is a term used to describe “the effective combination of the four inputs/elements viz

product, price, promotional activities and physical distribution system” – popularly known as

“Four P’s “by the management to formulate plans, take decisions, increase market share and

profits etc.

1. Product

The management should first decide the product by knowing the needs and wants of

customers, and then its quality, shape, size, design, style, brand, package etc should be decided.

2. Price

The marked or announced amount of money asked from the buyer is known as price.

3. Promotion

Advertisement, personal selling and other promotional programmers to inform the

customer about the product and persuade them to buy is called promotional activities.

4. Place (physical distribution)

The delivery of the product at the right time and at the right time and at the right

place is called distribution.

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ANALYSIS OF DATA AND INTERPRIATION

Data on international marketing

The Data analysis on international marketing and its problems has been collected by

interviewing and getting answer to questionnaire put up to 100 respondents, based on the

following composition selected on proportionate stratified random basis

a. KSCDC head office

1. Marketing Dept head 1

2. Commercial Dept head 1

3. Administrative officer 1

4. Staff representative 2

5. Labour /employee representative 3

6. Trade union representative of head office(CITU, INTUC,

AITUC and UTUC

4

Total 12

b. 8 various factories out of 36 factories owned by KSCDC selected on satisfied random

basis

1. Factory manager 1X8=8

2. Administrative officer(office head) 1X8=8

3. Labour /employee representative since female

employees represent 80% of the strength, representative

selected from shelling; peeling and packing departments

are females and one male representative either from

supervisory staff(masory) or roasting Dept.

4X8=32

4. Union representing(one represented the ruling front: and

another from opposition front)

2X8=16

5. Office staff 1X8=8

21

Total 72

c. CEPC

1. Deputy Director 1

2. Researchers 1

3. Research Assistants 2

4. Staff and employees 2

Total 6

d. PVT processing unit

1. Managers of privet processing units 5

2. Exporting Agents of KSCDC 3

3. Global Communication 2

Total 10

Data on domestic marketing

The data on domestic marketing has been collected by interviewing and setting

questionnaire to 50 respondents selected at random from wholesalers, and retailers, dealers,

agents, traders and commissioners etc.

22

4.1 MARKETING CONCEPT OF KSCDC.

The marketing concept of KSCDC gives us an abstract idea about the marketing goals of

the KSCDC. The table shows what the marketing concept of KSCDC is.

Table 4.1: Marketing concept of KSCDC.

RESPONDENT’S VIEW NO. OF RESPONDENCE PERCENTAGE

Satisfy customer needs 20 20%

Global achievements 5 5%

Social requirement 15 15%

Systematic approach 10 10%

All of the above 50 50%

Figure 4.1

Satisfy

custo

mer need

s

Global achiev

emen

ts

Socia

l require

ment

System

atic a

pproach

All of th

e above

0

10

20

30

40

50

60

NO. OF RESPONDENCE

NO. OF RESPONDENCE

More than 50% of the respondents are of the view that to satisfy customer needs,

global achievement, social requirement, systematic approach are the main marketing concept

of KSCDC

23

4.2 TARGET CUSTOMERS OF KSCDC.

Customers are the king of the market. There are various customers for KSCDC kernels

such as international clients, domestic clients, retailers, domestic hotels.

Table 4.2: Target customers of KSCDC.


International clients 40 40%

Domestic clients 20 20%

Retailers 5 5%

Domestic bar hotels, restaurants etc 5 5%


Figure 4.2

International clients

Domestic clients

Retailers Domestic bar hotels,

restaurants etc

All of the above

0

5

10

15

20

25

30

35

40

45

NO. OF RESPONDENCE

NO. OF RESPONDENCE

Table depict that 40% are of the view that the target customers of the KSCDC

are international clients.

24

4.3 MARKETING MIX OF KSCDC

The marketing mix of KSCDC include all the 4 p’s, as evident from the opinion of majority

of respondents.

Table 4.3: Market mix


Product mix alone 10 10%

Place mix alone 10 10%

Promotion mix alone 10 10%

Price mix alone 10 10%

All of the above alone 60 60%

Figure 4.3

Product mix alone

Place mix alone

Promotion mix alone

Price mix alone

All of the above alone

0

10

20

30

40

50

60

70

NO. OF RESPONDENCE

NO. OF RESPONDENCE

More than 60% of the respondents are of the view that all the 4 p’s, are the marketing

mix of KSCDC.

4.4 FUNCTIONS OF COMMERCIAL WING OF KSCDC.

25

The commercial (marketing) wing of all organizations takes key decisions to the

marketing activities.

Table 4.4: Functions of commercial wing of KSCDC.

RESPONDENT’S VIEW NO. OF

RESPONDENTS

PERCENTAGE

Systematic collection of marketing information 10 10%

Analysis of interpretation of marketing information 15 15%

Marketing planning and control 15 15%


Figure 4.4

System

atic c

ollection of m

arketi

ng inform

ation

Analysis

of inter

pretati

on of mark

eting in

formati

on

Marketi

ng plan

ning and co

ntrol

All of th

e above

0

10203040506070

Series1

More than 60% of the respondents are of the view that systematic collection of

marketing information, analysis of interpretation of marketing information, marketing planning

and control etc are the functions of commercial(marketing) wing of KSCDC.

4.5 PROCESSING UNITS IN AFRICAN COUNTRIES

26

In this time there is large number of processing units in African countries.

Table 4.5: Has the emergence of processing units in African countries affected the international

marketing prospectus of KSCDC?


YES 30 30%

NO 70 70%

Figure 4.5

YES NO0

10

20

30

40

50

60

70

80

NO. OF RESPONDENCE

NO. OF RESPONDENCE

The 70% of the respondents view that the emergence of processing units in African countries

not affected the international marketing prospectus of KSCDC.

4.6 OVER CROWDEDNESS OF INTERNATIONAL KERNELS MARKET

27

The international kernel market is highly over crowded due to the emergence of 7 to

10% of new entrants in private sector every year. This has been confirmed by the opinion of

majority of respondents as depicted in table.

Table 4.6: Over crowdedness of international market.


YES 85 85%

NO 15 15%

Figure 4.6

YES NO0

10

20

30

40

50

60

70

80

90

NO. OF RESPONDENCE

NO. OF RESPONDENCE

Table 4.7: How over crowdedness affected the international marketing potential of KSCDC

28

RESPONDENT’S VIEW NO. OF RESPONDENTS PERCENTAGE

Very badly 50 50%

Badly 20 20%

Medium 15 15%

Not at all 5 5%

Will affect in future 10 10%

Figure 4.7

Very badly Badly Medium Not at all Will affect in future 10 10%

0

10

20

30

40

50

60

NO. OF RESPONDENTS

NO. OF RESPONDENTS

Table depict that 50% are of the view that the over crowdedness seriously affected, the

marketing potential of KSCDC. 35% opined that the over crowdedness affects moderately to

badly.

4.7 WITHDROWAL OF RUSSIA FROM INDIAN MARKET

29

Withdrawal of Russia from Indian kernel market, has seriously affected the international

marketing of kernels from India as per report of cashew bulletin 2007-2008. This has also

affected KSCDC as opined by them and depicted in table

Table 4.8: Extent of effect due to withdrawal of Russia


Very badly 50 50%

Badly 20 20%

Medium 15 15%

Not at all 5 5%


Figure 4.8

Very badly Badly Medium Not at all Will affect in future 10

10%

0

10

20

30

40

50

60

NO. OF RESPONDENTS

NO. OF RESPONDENTS

Table depict that 50% are of the view that withdrawal of Russia has seriously affected

the international marketing potential KSCDC.

30

4.8 EMERGENCE OF SUBSTITUTE PRODUCTS LIKE ALMONDS, WALNUTS ETC.

As the report oh KSCDC, the emergence of new substitute products is threat to export of

Indian cashew kernels. The respondents view is depicted in table.

Table 4.9: Emergence of substitute product


YES 60 60%

NO 40 40%

Figure 4.9

YES NO0

10

20

30

40

50

60

70

NO. OF RESPONDENCE

NO. OF RESPONDENCE

Table depicts that 50 to 60% of respondents are of the opinion that the substitute

products is affecting the export potential of KSCDC very badly

4.9 RECENT ECONOMIC RECESSION

31

On verifying the records of KSCDC it seen that 80% of the sales up to the financial year

2007-2008, where through international exports. However due to the economic recession the

exports gradually declined to 30% as per annual report of CEPC and KSCDC. A questionnaire to

the staff and management of KSCDC also confirmed this fact as shown table

Table 4.10: Economic recession: how it affected international marketing prospects of KSCDC


Very badly 60 60%

Badly 20 20%

Medium 10 10%

Not at all 10 10%

Figure 4.10

VERY BADLY BADLY MEDIUM NOT AT ALL0

10

20

30

40

50

60

70

NO. OF RESPONDENTS

NO. OF RESPONDENTS

About 60% of the respondents have remarked that the recent economic recession has very

badly affected the international marketing prospects of KSCDC.

4.10 SALES OF PROCESSED KERNELS

32

The processed kernels of KSCDC enjoy a high demand. There is so many ways to sell the

kernels they are directly to customers, directly to retailers, directly to wholesalers, through agents of

international and domestic market, through dealers/agents. The table shows how is the processed

kernels sold in domestic and international markets.

Table 4.11: sale of processed kernels

RESPONDENT’S VIEW NO.OF RESPONDENTS PERCENTAGE

Directly to customers 5 5%

Through dealers/agents 25 25%

Directly to retailers 10 10%

Directly to wholesalers 20 20%

Through agents of international and domestic market 40 40%

Figure 4.11

Directl

y to cu

stomers

Thro

ugh dea

lers/a

gents

Directl

y to re

tailer

s

Directl

y to w

holesale

rs

Thro

ugh ag

ents

of inter

national

and domesti

c mark

et0

10203040

NO.OF RESPONDENTS

NO.OF RESPONDENTS

About 40% of the respondents have remarked that the processed kernels sold through

agents of international and domestic market.

4.11 ECONOMIC REFORMS (LPG)

33

As per annual report of the chamber of industries and commerce 2007-2008 the 1991

economic recession has badly affected the international and domestic marketing potential of

kernel industry, due to the liberalized policy of import /export. The following opinion also

supports the above report that KSCDC is under high pressure and competition from private

sector due to the liberalized policy.

Table 4.12: Effect of economic reforms


Very badly 65 65%

Badly 15 15%

Medium 10 10%

Not at all 5 5%


Figure 4.12

VERY BADLY BADLY MEDIUM NOT AT ALL WILL AFFECT IN FUTURE

0

10

20

30

40

50

60

70

NO. OF RESPONDENTS

NO. OF RESPONDENTS

Table depicts that 65% of the respondents are of the view that the economic reforms

has very badly affected the export potentials of KSCDC.

4.12 PUBLIC AWARENESS OF KSCDC PRODUCTS

34

Public awareness of KSCDC products is on the average as per respondents view.

Table 4.13: Public awareness


Good 10 20%

Above average 5 10%

Average 25 50%

Below average 5 10%

Poor 5 10%

Figure 4.13

Good Above average Average Below average Poor0

5

10

15

20

25

30

NO. OF RESPONDENTS

NO. OF RESPONDENTS

More than 50% of the respondents are of the view that KSCDC products have average

public awareness.

4.13 AWARENESS OF VARIOUS GRADE / SPECIFICATION OF CASHEW KERNELS.

35

Many of the dealers and retailers are not aware of the various grades/specification of

cashew kernels processed by KSCDC.

Table 4.14: Awareness of various grade/ specification


YES 15 30%

NO 35 70%

Figure 4.14

YES NO0

5

10

15

20

25

30

35

40

NO. OF RESPONDENCE

NO. OF RESPONDENCE

70% of the traders / dealers/ retailers are not aware of the various grades and

specifications of cashew kernels processed by KSCDC

4.14 GRADES/ SPECIFICATIONS SOLD BY RETAILERS

36

All grades / specifications of cashew kernels processed by KSCDC are not sold by various

dealers/ retailers as is evident from the response to questionnaire put to dealers and traders as

is shown in table.

Table 4.15: Table showing whether all grades/ specification are sold.


YES 20 40%

NO 40 60%

Figure 4.15

YES NO0

5

10

15

20

25

30

35

40

45

NO. OF RESPONDENCE

NO. OF RESPONDENCE

60% of traders/ retailers are not selling all specifications/ grades of cashew

kernels.

4.15 REASON FOR SELLING AII GRADES/ SPECIFICATION

37

Various grades / specifications are intended for specific target marketing. eg. The high

costly, low count, export quality kernels are intended for international market, and the lowest

quality bits seconds etc are in very high demand in domestic market, hence usually sold at local

market itself.

Table 4.16: Non selling of all brands- reasons


Non availability of cheap variety 25 50%

High cost of expert quality 25 50%

Figure 4.16

Non availability of cheap variety High cost of expert quality0

5

10

15

20

25

30

NO. OF RESPONDENCE

NO. OF RESPONDENCE

50% each of the dealers have started that non availability of cheap variety and high

cost of export quality kernels are the reasons for not selling all grades of kernels.

4.16 QUALITY OF KSCDC KERNELS

38

KSCDC being the only public sector undertaking in this field maintains strict quality and

hygienic principles.

Table 4.17: Quality


Good 30 60%

Above average 10 20%

Average 5 10%

Below average 3 6%

Poor 2 4%

Figure 4.17

Good Above average Average Below average poor0

5

10

15

20

25

30

35

NO. OF RESPONDENTS

NO. OF RESPONDENTS

More than 60% of respondents are of the view that quality of KSCDC kernels are good,

and 20% feel that it is above average.

4.17 PRICE OF KSCDC NUTS

39

Based on the quality of nuts, the price appears to be average, but KSCDC is selling kernels

at a rate lower than the total cost of procurement and processing, to complete with private

sector leading to loss.

Table 4.18: Price of KSCDC


Very high 10 20%

High 10 20%

Average 25 50%

Low 3 6%

Same to private 2 4%

Figure 4.18

Very high High Average Low Same to private

0

5

10

15

20

25

30

NO. OF RESPONDENTS

NO. OF RESPONDENTS

More than 50% opines that the price of KSCDC nuts is in tune with its quality and

average.

4.18 PACKAGE OF KSCDC NUTS

40

For international exports the nuts are packed in corrugated cardboard cartons, bound by

nylon rope/twine. For domestic trade kernels are packed in vita pack method.

Table 4.19: Packing


Good 20 40%


Average 4 8%

Below average 5 10%

Poor 1 2%

Figure 4.19

Good Above average Average Below average poor0

5

10

15

20

25

NO. OF RESPONDENTS

NO. OF RESPONDENTS

40% expresses the view that packing of KSCDC nuts is good and another 40% for above

average and average respectively.

4.19 BRAND IMAGE OF KSCDC NUTS

41

The brand image of KSCDC nuts is called CDC nuts and the picture of child eating kernels is

the emblem. This is very popular, both internationally and nationality, due to the long period of

existence in this field.

Table 4.20: Brand image


Good 25 50%


Average 6 12%

Below average 3 6%

Poor 1 2%

Figure 4.20

Good Above average Average Below average Poor0

5

10

15

20

25

30

NO. OF RESPONDENTS

NO. OF RESPONDENTS

50% of respondents state that the brand image of KSCDC is good and popular.

4.20 TASTES AND FLAVOUR OF KSCDC NUTS

42

The various grades and specifications like wholes, scorched, salted etc have excellent

taste and flavor.

Table 4.21: Taste and flavor


Very tasty 30 60%


Average 3 6%

Below average 1 2%

Poor 1 2%

Figure 4.21

Very tasty Above average Average Below average Poor0

5

10

15

20

25

30

35

NO. OF RESPONDENTS

NO. OF RESPONDENTS

More than 60% are of the view that CDC nuts are very tasty.

4.21 SEVERE COMPETITIONS AND THREAT FROM UNAUTHORIZED PROCSSING UNIT

43

The authorized processing unit functioning during season time alone as ‘kudils’ is really

a threat to international market due to the poor quality, low processing change etc as opined

by majority.

Table 4.22: Threat from unauthorized processing unit


YES 80 80%

NO 20 20%

Figure 4.22

YES NO0

10

20

30

40

50

60

70

80

90

NO. OF RESPONDENCE

NO. OF RESPONDENCE

About 80% held the view that the authorized processing units is a threat to marketing

potential of KSCDC

4.22 COMPETITIONS FROM THE PRIVATE SECTOR FOR COLLECTION OF RAW NUTS.

44

An interview with various managers, staff and employees of KSCDC revealed

that competition from private sector is constrains in collection of raw nuts. This is also

confirmed from the respondents answer to question number 22 of questionnaire.

Table 4.23: competition from the private sector for collection of raw nuts.


YES 65 65%

NO 35 35%

Figure 4.23

YES NO0

10

20

30

40

50

60

70

NO. OF RESPONDENCE

NO. OF RESPONDENCE

65% of respondents accepted the view that there is a competition from the private

sector for collection of raw nuts.

4.23 IF THE COMPARATIVELY HIGH WAGES OF THE EMPLOYEES AFFECTS THE PROFITS OF

KSCDC

45

The employees of the KSCDC enjoy comparatively high wages than the private sector.

If that high wages of the employees affects the profits of KSCDC.

Table 4.24: If the comparatively high wages of the employees affects the profits of KSCDC.


YES 30 30%

NO 70 70%

Figure 4.24

YES NO0

10

20

30

40

50

60

70

80

NO. OF RESPONDENCE

NO. OF RESPONDENCE

The 70% of the respondents are of the opinion is that the comparatively high wages of

the employees is not affected the profit of KSCDC.

4.24 IF THE SELLING PRICE OF PRODUCTS AFFECTS THE PROFITS OF KSCDC.

46

The profits of KSCDC is comparatively low than the private sector. The selling price

of KSCDC is high than the private sector.

Table 4.25: If the selling price of products affects the profit of KSCDC.


YES 60 60%

NO 40 40%

Figure 4.25

YES NO0

10

20

30

40

50

60

70

NO. OF RESPONDENCE

NO. OF RESPONDENCE

The 60% of the respondents are of the view that the selling price of products affects

the profit of KSCDC.

4.25 IF THE STRIKES HAPPEN IN THE FACTORIES AFFECTS THE PROFITS OF KSCDC?

47

The strikes are always happened in KSCDC. Due to this strikes total working

days are reduced. The strikes are always for the wages. The strike rate in KSCDC is

comparatively higher than the private sector.

Table 4.26: If the strikes happen in the factories affects the profits of KSCDC?


YES 85 85%

NO 15 15%

Figure 4.26

The 85% of the respondents are of the view that If the strikes happen in the

factories affects the profits of KSCDC.

Chi-square Test 1

48

YES NO0

10

20

30

40

50

60

70

80

90

NO. OF RESPONDENCE

NO. OF RESPONDENCE

The null hypothesis is that there is no difference in the opinion of respondent. The

Chi-square Test is done in the first question as below.

Table 4.1: Marketing concept of KSCDC.


Satisfy customer needs 20 20%

Global achievements 5 5%

Social requirement 15 15%

Systematic approach 10 10%


Here the expressed frequency ∑O

= --------

n

100

= -----

5

= 20

Here the table will be as follows

49


Satisfy customer needs 20 20

Global achievements 5 20

Social requirement 15 20

Systematic approach 10 20

All of the above 50 20

Then using the χ2 test:

∑ (O - E)2

χ2 = -------------

E

(20 – 20)2 (5 – 20)2 (15 – 20)2 (10 – 20)2 (50 – 20)2

= ------------------------- + ------------------- + -------------------- + ------------------------- + ------------------------

20 20 20 20 20

(0)2 (-15)2 (-5)2 (-10)2 (30)2

= ---------------------- + ------------------- + -------------------- + ------------------- + --------------------

20 20 20 20 20

50

0 225 25 100 900

= ---------------- + ------------- + -------------- + --------------- + ----------------

20 20 20 20 20

= 0 + 11.25 + 1.25 + 5 + 45

= 62.5

If we assume the level of significance α = 0.05 and having the difference as (k-1) where k

is the number of categories, in this case (5-1) = 4, then we can compare it with the critical value of x 2

from the table. The critical value of x2 = 5.991. The expected value of x2 is more than the critical value we

reject the null hypothesis.

51

Chi-square Test 2

Table 4.7: How over crowdedness affected the international marketing potential of KSCDC


Very badly 50 50%

Badly 20 20%

Medium 15 15%

Not at all 5 5%



= --------

n

100

= -----

5

= 20

52



Very badly 50 20

Badly 20 20

Medium 15 20

Not at all 5 20

Will affect in future 10 20

Then using the χ2 test :

∑ (O - E)2

χ2 = -------------

E

(50 – 20)2 (20 – 20)2 (15 – 20)2 (5 – 20)2 (10 – 20)2

= ------------------------- + ------------------- + -------------------- + ------------------------- + ------------------------

20 20 20 20 20

(30)2 (0)2 (-5)2 (-15)2 (-10)2

= ---------------------- + ------------------- + -------------------- + ------------------- + --------------------

20 20 20 20 20

53

900 0 25 225 100

= ---------------- + ------------- + -------------- + --------------- + ----------------

20 20 20 20 20

= 45 + 0 + 1.25 + 11.25 + 5

= 62.5





54

Table 4.17: Quality


Good 30 60%


Average 5 10%

Below average 3 6%

Poor 2 4%


= --------

n

50

= -----

5

= 10

55



Good 30 10

Above average 10 10

Average 5 10

Below average 3 10

Poor 2 10

Then using the χ2 test :

∑ (O - E)2

χ2 = -------------

E

(30 – 10)2 (10 – 10)2 (5 – 10)2 (3 – 10)2 (2 – 10)2

= ------------------------- + ------------------- + -------------------- + ------------------------- + ------------------------

10 10 10 10 10

(20)2 (0)2 (-5)2 (-7)2 (-8)2

= ---------------------- + ------------------- + -------------------- + ------------------- + --------------------

10 10 10 10 10

56

400 0 25 49 64

= ---------------- + ------------- + -------------- + --------------- + ----------------

10 10 10 10 10

= 40 + 0 + 2.5 + 4.9 + 6.4

= 53.8





57

CHAPTER V

FINDINGS

SUGESSIONS

CONCLUTIONS

58

FINDINGS

The present study is undertaken to evaluate the international and domestic marketing of

cashew kernels by KSCDC. The study is based on primary data and secondary data collected

from various sources.

FINDINGS ABOUT GENERAL INDUSTRY

1. Cashew industry is one of the most important traditional industry in India.

2. India exports cashew kernels to many foreign countries.

3. Cashew industry plays an important role in the development of Kerala.

4. It provides employment opportunity to more than two lakh people in Kerala most

women.

5. KSCDC has made valuable service for the development of the industry for the last forty

years and earned a huge return in the form f foreign exchange.

6. KSCDC is now in a declining stage of its life cycle.

FINDING ON PROBLEMS OF INTERNATIONAL MARKETING

1. The recent economic recession has affected the international marketing prospectus of

KSCDC very badly. Exports have declined to 30% of the total production from 80%

during 3 years back.

2. The presence of middleman, commission agents etc in procuring raw nuts from

international markets such as Tanzania, and other African countries have escalated the

procurement cost due to commission, thereby reducing the profits on exports.

3. The 1991 economic reforms through liberalization, has affected the international

marketing prospects due to increase to competition from existing and new entrants in

private sector.

4. The unauthorized operation of cashew industry as ‘kudils ’ manufacturing poor quality

nuts, at low cost is really a threat to international market since all Indian brands may be

regarded as poor quality.

59

5. Withdrawal of Russia from Indian kernels market has seriously affected the international

prospects of KSCDC since Russia and its Allies were the major long term

purchasers/consumers of KSCDC kernels.

6. Emergence of substitute products like Almonds, Walnuts, pea nuts etc have also

seriously affected the European markets of KSCDC.

7. The over crowdedness in cashew industry and ever increasing private sector at the rate

of 10% per year has made the industry too over crowded leading to unhealthy

competition and loss in public sector undertaking.

8. Non availability of raw nuts

Insufficient supply of raw nuts is the major problem faced by units under KSCDC.

The country produces only a very limited quality of raw nuts as compared to

requirements of the industry. The availability is also declining every year.

9. Constrains in collection of raw nuts

The various problems connects with the procurement of raw nuts are

a. Non availability of raw nuts throughout the year, or in time, due to the seasonal

nature of industry.

b. Insufficient working capital to collect raw nuts during season.

c. Insufficient godown facility to store raw nuts for off season use.

d. Competition from private sector in collecting the scarce available raw nuts.

e. Increase in number of processing units.

10. High cost of importing raw nuts

Due to non availability of domestic nuts, KSCDC has to import nuts from African

countries to provide employment and keep factories running throughout the year.

11. Target customers of KSCDC

The target customers of KSCDC include international clients, domestic clients,

domestic clients, retailers, wholesalers etc.

12. Marketing mix of KSCDC

Marketing mix of KSCDC includes all the 4p’s viz product mix, place mix, promotion

mix, place mix.

60

13. Stiff competition from African countries

One important problem faced the KSCDC and all other processing units in India is

the stiff competition from African countries.

14. The social obligations like providing employment throughout the year(on off season

times also), ESI, PF, DA, maternity benefits, bonus, pensionary benefits, etc increase the

procuring cost of KSCDC and hence cannot compete with the private sector.

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FINDINGS ON DOMESTIC MARKET

1. The domestic traders, dealers, retailers etc sell CDC nuts along with various other brands

like VLC, Urban’s, western India, Delnit nuts etc.

2. The awareness of KSCDC’s and its products by the general public and traders are not

through any media such as TV, Radio, or news paper, it is due to the reputation of

Kollam being the “Cashew Capital of the Globe”

3. Many of the domestic traders and dealers prefer to sell KSCDC nuts due to its quality,

brand image, taste, higher sales etc.

4. Most of the retailers, stockiest, dealers and traders of KSCDC nuts are not aware of the

various grades and specifications of KSCDC kernels.

5. Due to unawareness and non availability of all grades and specification, majority of

traders are selling only the general medium grade kernels of KSCDC.

6. The high cost export quality grades, and the low cost pieces seconds etc are not

available or sold by all domestic dealers since the export quality are intended for

international market and the low cost seconds and pieces, seconds and pieces are sold

in local market itself.

7. The quality of KSCDC nuts is opined to be good by majority of traders and dealers.

8. The price of KSCDC nuts appears to be average and worthy to the quality of nuts.

9. Vita pack for domestic clients is generally appreciated by all domestic traders.

10. KSCDC nuts have a good brand image and are popular domestically.

11. The taste and flavor of KSCDC nuts is also satisfactory.

12. The advertisement of KSCDC products is just sufficient since it aims at international

market rather than domestic market.

13. The margin of profit to the dealers and traders, through low, is satisfactory due to the

higher volume or sales than private sector.

14. There is very high domestic demand for KSCDC products.

15. The reason for high domestic demand of KSCDC products than private branch is due to

the quality of products and confidences of consumers.

62

GENERAL SUGGESTIONS

1. A cashew board in the line of rubber board, coffee board, spice board etc is to be set up

for overall improvement of cashew cultivation. It can function as a catalyst of the

industry by providing hybrid cashew saplings, manure, pesticides and also extend

necessary guidance in scientific farming.

2. The cashew industry must be declared as a”women’s industry”, to get various grants

and aids for KSCDC from Government of India.

3. The waste and ‘purampokku’ lands should be used for cultivating cashew trees under

social forestry scheme.

4. Long term financial assistance is to be provided from land development banks or SIDBI

for cultivation of cashew.

5. A financial institution should be set up exclusively to cater to the needs of traditional

industries like cashew, coconuts, tiles, bricks etc.

6. The procurement of raw nuts has to be done in advance in order to ensure quality of

commodity and reasonable quality.

7. Government should fix ground price and declare monopoly procurement of raw nuts

produced I Kerala.

8. Various officers of CEPC functioning at Kochi and Kollam should be board together and a

Cashew Bhavan should be establishing at Kollam.

9. Sustainable cashew nut production under National Horticulture Mission(NHM) should

be implemented through Kerala state Agency for expansion of Cashew Cultivation(KACC)

in associated with Kerala Agricultural University.

63

MARKETING SUGGESTIONS

1. To avoid the presence of middleman, commission agents etc Government of India

should have a direct tie up with African countries like Tanzania etc to procure raw nuts

directly avoiding commission.

2. To compensate the loss of foreign export market due to economic recessions, value

added products should be launched to conquer domestic market. There is large scale

potential for domestic sales of cashew kernels.

3. Government should bar the ‘kudils’ and unauthorized processing units.

4. Minimum wages act and other benefits should be declared statutory and mandatory for

private sector also it reduces competition.

5. There should be some control on new private entrants in the cashew field as it is already

saturated an overcrowded.

6. There must be segmentation of market consumers, the various products should be

differentiated and price fixed accordingly.

7. Step should be taken to utilize the installed capacity at the maximum level.

8. The profit margin of KSCDC should be increased by reducing cost elements,

procurement cost of raw nuts trading expenses etc and also by securing maximum price

for the kernels sold.

9. Until recently KSCDC has depending on export market and only 20% domestic sales

without realizing that there is ample scope for domestic market. KSCDC can surely

conquer domestic market due to its good brand image, demand and confidence of

customers.

10. KSCDC can explore the emerging trends in food habits of consumers. There is great

potential for significant growth in export of organically produced cashew nuts. The

market for all organic food products are booming, especially in developed countries. It is

widely accepted fact that Indian cashew is predominantly organic and cashew trees are

owned by small farmers who sell them use synthetic fertilizers.

11. Various other products of cashew can also be manufactured by KSCDC.

64

a. The cashew apple which is at present mostly wasted, can be used for many

preparations like jams, juices, candies, pickles, chutneys and alcoholic beverages like

‘Feni’.

b. Cashew nuts shell liquid can be used in polymer based industries such as friction

dust, brake linings, paints varnishes, laminating resins, cashew cements, foundary

chemicals.

c. The cashew shell can be used for manufacturing of particle boards for package

industry, besides as fuel. It can also used for removing pollutants like cadmium.

d. Tannin can be used extracted from the brown skin (testa), of the kernels and applied

in leather industry.

12. There is great domestic marketing potential for KSCDC kernels through the approximate

20,000 petrol pumps under IOC, HPC, BPC, IBP etc. which has snack bars on having a

marketing tie up with these public sector undertaking.

65

CONCLUSION

The following marketing strategies can be applied for developing international and

domestic marketing of cashew kernels of KSCDC.

1. Advertisement

2. Personal selling

3. Sales promotion

4. Public relation

1. advertisement

a. promotion cashew as a health nuts, use nutrition as a tool, say that cashew is

cholesterol free, reduces risks of heart attacks, stabilities nervous symptoms etc.

b. Promote cashew in different segments, ie, old people, school children pregnant

women, convalescing patients, who need extra nutrients with minimum food

intake.

c. Promote cashew as a “premium life style nut” sought after by the super rich.

d. Generate eye catching logo for promotion participates in food fairs, specialized

events.

2. Personal selling

a. Delivery van sales- door to door selling.

b. Engage sales representatives on commission bases to maintain inter personal

communication with dealers, stockiest etc.

c. Reduce the cost physical distribution by reducing the cost of transportation,

warehousing, storage inventory control etc.

d. Personal selling must be aimed at target consumers rather than consumers at a

large.

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3. Sales promotion

a. Selection of distribution channel such as wholesalers, retailers, C&F agent other

dealers and traders.

b. Persuasive communication to make awareness of various grades and

specifications of kernels.

c. Social campaigning.

d. Utilize displays, demonstration, contest, premiums etc to supplement

advertisement and personal selling.

4. Public relation

a. Maintain high visibility in professional and social organizations.

b. Get involved in community affairs.

c. Use publicity and public relations as simulative supportive items for the marketing

of KSCDC products.

Thus conclude that there is great unexplored market potential for KSCDC kernels in

domestic market, especially through the approximate 20000 retail petrol pump outlets

controlled by public sector undertaking companies like IOC, HPC, BPC, IBP etc. only a very small

investment and space area is required to sell this as a snack.

67

BIBLIOGRAPHY

1. BERI. G.C - Marketing Research

Tata Mc Graw Hill Publishers Company Ltd.

3rd Edition-2000

2. GALLAGHER .J.WILLIAM - Report Writing for Management

Addition – Wesley Publications

4th edition-2005

3. KOTHARI.C.R - Research Methodology

Vishwa prakashan publishers

2nd Edition-2003

4. PHILIP KOTLER - Marketing Management

Personal Education Pvt Ltd

11th edition-2004

5. Cashew Bulletin, Seminars on cashew industry, Research papers on cashew etc

published by CEPC, FICCI, India Trade Journal.

6. Annual Reports of KSCDC, CDPC etc.

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A Study on International and Domestic Marketing of Cashew Kernels by Kerala State Cashew Development...

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