ITC – CREATING ENDURING VALUE

ITC LTD PROFILE

History And Evolution of ITC Ltd

ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of India Limited

The Company was changed from Imperial Tobacco Company of India Limited to India Tobacco Company Limited in 1970 and then to I.T.C. Limited in 1974

In recognition of the Company's multi-business portfolio encompassing a wide range of businesses - Fast Moving Consumer Goods, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business and Information Technology

ITC's Packaging & Printing Business was set up in 1925

In 1975, the Company launched its Hotels business with the acquisition of a hotel in Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola' (now renamed My Fortune, Chennai).

In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam Paperboards Limited

In 1990, leveraging its agri-sourcing competency, ITC set up the Agri Business Division for export of agri-commodities

ITC also entered the Lifestyle Retailing business with the Wills Sport range of international quality relaxed wear for men and women in 2000

ITC launched line of premium range of notebooks under brand Paperkraft in 2002

In 2002, ITC also entered the confectionery and staples segments with the launch of the brands mint-o and Candyman confectionery and Aashirvaad atta (wheat flour)

In 2003, ITC witnessed the introduction of Sunfeast as the Company entered the biscuits segment

ITC entered the fast growing branded snacks category with Bingo! in 2007

In 2010, ITC launched Sunfeast Yippee! to enter the Indian instant noodles market

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

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

CORE VALUES ITC's Core Values are aimed at developing a customer-focused, high-performance organization which creates values for all its stakeholders

BUSINESS PORTFOLIO --- ITC LTD

ITC

FMCG HOTELSAGRI BUSINESS,LEAF

TOBACCO , AGRI COMMODITIES

PAPER BOARD, PAPER BOARD AND PACKAGING

CIGARETTE

PERSONAL CARE

PACKEGED FOOD PRODUCTS

PRODUCT MIX OF ITC LTD (FMCG Sector)

TRIPLE BOTTOM LINE PERFORMANCE – (Turnover and profits as on 17TH July 2012 )

Gross Income for the year grew by 14.9% to over Rs. 36,000 crores. Profit before tax increased by 22.4% to over Rs. 8,800 crores while Net Profits grew by 23.6% to over Rs. 6,100 crores.

The non-cigarette segment net revenue growing 12-fold from about Rs. 1,360 crores in 1996 to Rs. 16,150 crores today.

As a result, 57% of net segment revenue of your Company is now from businesses other than cigarettes

Your Company is today acknowledged as one of India's most valuable corporations. Market capitalisation, which stood at Rs. 5,570 crores in 1996, has multiplied over 35 times to touch Rs. 2 lakh crores.

ITC's traditional businesses have touched a turnover of over Rs. 5,500 crores in a relatively short span of time.

The topline from this segment is expected to triple over the next 5 to 7 years to a level of Rs. 15,000 crores,

HOW HAS THE FINANCIAL PERFORMANCE OF ITC LTD BEEN ? HOW HAS THE FINANCIAL PERFORMANCE OF ITC LTD BEEN ?

ACHIEVEMENTS

• ITC is the first Indian company and the second in the world to win the prestigious Development Gateway Award

• ITC is the first Corporate to receive the Annual FICCI Outstanding Vision Corporate Triple Impact Award in 2007

• ITC was conferred the World Business and Development Award 2012 at the historic Rio+20 United Nations Summit which concluded recently

• ITC has won the Golden Peacock Awards for 'Corporate Social Responsibility (Asia)' in 2007

• The Business Today Award for the Best Managed Company in recognition of its outstanding initiatives in the consumer products segment.

• The only Indian FMCG company to have featured in the Forbes 2000 list.

SWOT ANALYSIS SWOT ANALYSIS

Strength Strong Financial

Performance Products Portfolio Distribution Network Environmental Friendly Research & Development Socially Responsibility Brand Equity

Strength Strong Financial

Performance Products Portfolio Distribution Network Environmental Friendly Research & Development Socially Responsibility Brand Equity

Weakness Dependency on the tobacco

business Not present in many

important sectors Local Company

Weakness Dependency on the tobacco

business Not present in many

important sectors Local Company

Opportunities Leveraging its brand

equity Right size at the right time The unique reach and

distribution network of E-choupal:

Synergies across businesses and leveraging domain expertise for growth in other sectors

Opportunities Leveraging its brand

equity Right size at the right time The unique reach and

distribution network of E-choupal:

Synergies across businesses and leveraging domain expertise for growth in other sectors

Threats Competition Pressure groups and

Government Policy General threats

Threats Competition Pressure groups and

Government Policy General threats

SUNFEAST- AN OVER VIEW SUNFEAST- AN OVER VIEW

Sun"mascot - The brand ambassador reinforcing the positioning of the brand with an essence “Spread theSmile”

"Sunfeast" - The umbrella brand name introduced in the Glucose, Marie and Cream segments

“Sunfeast” - To be launched nationally in phases in over  one million retail outlets across the country.“

“Sunfeast" range of biscuits is competitively priced and would include two new product innovations - Orange flavored Marie and Butterscotch flavored Cream biscuits

Product innovation

http://www.itcportal.com/brands-microsite/packaged-foods/sunfeast.asp

SUNFEAST RANGE OF BISCUITS CONTD… SUNFEAST RANGE OF BISCUITS CONTD…

PRICING STRATEGY OF ITC LTD (FOOD DIVISION)

• The pricing of the ITC food division depends upon the Customers’ demand schedule, the cost function and the competitors’ price.

• The pricing of the company is such that it caters to the need of all income groups of people but special provision has been kept for Low and middle income group, and their pricing are competitive with respect to other players like Britannia, Parle and Briskfarm.

• The company follows the Going rate pricing that is the price of the product depends upon the competitors price. The firm chooses pricing more or less the same as Market leader.

PRICING STRATEGY FOR SUNFEAST PRICING STRATEGY FOR SUNFEAST

Sunfeast look at a two prolonged strategy:- High margin (High margins in cream variants)

High volumes (High volumes from the

Marie and Glucose segments)

Examplessunfeast glucose (200 gm): 20/-sunfeast marie light (130gm : 10/- Sunfeast dream cream (82): 10/-

 

DISTRIBUTION OF FOODS PRODUCTS DISTRIBUTION OF FOODS PRODUCTS

DISTRIBUTION NETWORK FOR SUNFEAST

The company used its existing network of convenience stores: the company’s name for the hole-in-the-wall pan-beedi shops for Sunfeast.

The company also looked at grocery stores and other retail formats.

The company says the brand is now available in nearly 1.8 million outlets.14 manufacturing units

The company has extended its manufacturing capacity by setting up three new biscuit plants in UP and West Bengal to focus on supply chain management strategy to enhance product freshness, market servicing and margins

Sunfeast school programme: cover 1000 schools across country, to familiarize children with sunfeast brand name and sunfeast mascot

Brand ambassador: shahrukh khan & surya (south actor)

Official sponsor of WTA tennis championship-sunfeast open

Launch of Sachin’s Fit Kit, the first product co-created with brand ambassador

Other activities:-On buses, print media , hoardings, TV and radio advertisements

PROMOTIONAL STRATEGY PROMOTIONAL STRATEGY

INDIAN BISCUIT INDUSTRY • Indian Biscuits Industry came into limelight after 20th century when the

urbanized society called for ready made food products at a tenable cost.

• It is assumed as sick-man's diet in earlier days .

• Bread and biscuits is the two major product of the bakery industry and covers around 80% of the total bakery market, out of which

• Industry size is about 14500 crore

• biscuit covers up to 70% of the total production

• The organized and unorganized sector of the biscuit

• industry is in the proportion of 65% : 35%

INDUSTRY CONSISTS OF

Major Players Minor Players Emerging PlayersForeign Niche

Players

United Biscuits(Bitain)Danone (French food giant) NubiscoUnibic (tied up with Food Bazaar launched Tasty Treat

ParleBritannia

ITC

Surya Biscuits Pvt Ltd

priyaGoldAnmol

Kraft’s Cadbury OreoPepsiCo : "protein-rich “ Aliva launched 2009

BRITANIA INDUSTRIES

LIMITED

PARLE PRODUCTS PVT LIMITED

SURYA FOOD AND AGRO LIMITED

MAJOR COMPETITORS

Established in 189690% of Britannia’s annual revenue of Rs2,200 crore comes from biscuitsKEY PRODUCTS: TIGER, GOODDAY, BORBON, 50-50, MARIE GOLD, TIME PASS

Established in 1929the largest selling brand of biscuits in the world 70% market share in India in the glucose biscuit category KEY PRODUCTS: Parle-G, Hide and Seek, Krack Jack, Monaco, Parle Marie, Milk Shakti, Parle 20-20.

Incorporated 1992Manufacturing and selling of biscuit under brand “ PRIYAGOLD” in octoer1993. Key products: Classic Cream, Butter Bite, Bourbon, Marie Lite, Magic Gold, CNC , Sanack, zig zag,

STRATEGIC COMPARISON

• Biscuit Industry Market (in crore)

• PER CAPITA CONSUMPTION IN KG

AS PER FEDERATION OF BISCUIT MANUFACTURERS’ OF INDIA (FBMI)

India USA UK Japan China0

1

2

3

4

5

6

7

8

9

10

2.1

10 10

7.5

1.9

2004-06 2007-08 2008-09 2009-10 2010-110

2000

4000

6000

8000

10000

12000

14000

16000

4000

6800

9830

11206

14500

• Annual growth rate of biscuit industry

• Annual production (in lakh metric tonnes)

INDIAN BISCUIT MANUFACTURERS’ ASSOCIATION (IBMA )

2005-06 2006-07 2007-08 2008-09 2009-10 2010-110%

2%

4%

6%

8%

10%

12%

14%

16%14%

13%

15%

10%

14%15%

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-110

2

4

6

8

10

12

14

16

18

20

1112.54

14.29

16.1417.44

16.57

18.2519.6

BCG MATRIX: OBJECTIVES

• BCG matrix is a tool to determine the future strategic plan for each SBU

• SBU can be a company division, a product line or even individual brands

• Companies have multiple products and businesses under their umbrella

• While preparing the marketing strategy companies need to decide about adding new products or identify products should no longer be retained.

• So the first step is to identify the various Strategic Business Units (SBUs) in a company portfolio.

BCG Market share/Market Growth Matrix

IND

UST

RY G

RO

WTH

RAT

ERELATIVE MARKET SHARE

HIG

HLO

W

LOWHIGH

ITC BCG MATRIX

HIGH GROWTH

LOW GROWTH

HIGH MARKET SHARE

LOW MARKET SHARE

SUN FEAST BCG MATRIX

HIGH GROWTH

LOW GROWTH

HIGH MARKET SHARE

LOW MARKET SHARE

PORTER’S FIVE FORCES

PORTER’S FIVE FORCES ANALYSIS

Major players dominate the

Indian Market.High

competition to capture

maximum market shareUnorganized sector cannot compete with

major players in the case of Advertising

THREATS OF NEW

ENTRANTSLow entry

barriers because of Heavy

competition from major

playersBUYERS BARGAINING

POWERHigh because of,Availability of many biscuits

from low, moderate pricesAvailability of biscuits from non organized

sector Brand Loyalty makes buyers

more powerful in the case of new

entries

THREAT FROM

SUPPLIERSIn the case of major players

bargaining power of

suppliers is very low as they dictate the

prices.

The ingredients are basic

commodities such as wheat ,

sugar etc.

Bakery Items, Fast foods, Ready-to-eat

Britannia, Parle

Oreo, PepsiCo

Inflation in sugar & wheat prices

Premium products are increasing in

market

PORTER’S FIVE FORCES SUN FEAST

OF SUNFEAST BiscuitSegmentingTargetingPricingSunfeastglucosebiscuitNatural goodness of wheatChildren betweenthe age group 4-14 yrs100gms -Rs. 4, 75gms -Rs 3, 19gms -Rs. 1SunfeastorangemarieA very differentiateofferingHousewives 200gms -Rs. 13SunfeastmarielightTight and CrispyChildren betweenthe age group 4-14 yrs200gms -Rs. 13, 400gms-Rs.24SunfeastorangecreamSmooth and yummyCreamChildren betweenthe age group 4-14 yrs100gms -Rs.11SunfeastButterscothCreamSmooth and yummyCreamChildren betweenthe age group 4-14 yrs100gms -Rs. 11SunfeastbourboncreamSmooth and yummyCreamChildren betweenthe age group 4-14 yrs100gms -Rs12

OF SUNFEAST BiscuitSegmentingTargetingPricingSunfeastglucosebiscuitNatural goodness of wheatChildren betweenthe age group 4-14 yrs100gms -Rs. 4, 75gms -Rs 3, 19gms -Rs. 1SunfeastorangemarieA very differentiateofferingHousewives 200gms -Rs. 13SunfeastmarielightTight and CrispyChildren betweenthe age group 4-14 yrs200gms -Rs. 13, 400gms-Rs.24SunfeastorangecreamSmooth and yummyCreamChildren betweenthe age group 4-14 yrs100gms -Rs.11SunfeastButterscothCreamSmooth and yummyCreamChildren betweenthe age group 4-14 yrs100gms -Rs. 11SunfeastbourboncreamSmooth and yummyCreamChildren betweenthe age group 4-14 yrs100gms -Rs12

STP OF SUNFEAST

Biscuit Segmenting Targeting Positioning

Age

Sunfeast orange Marie

Sunfeast marielight

Sunfeast orange cream

Sunfeast Butterscotch Cream

Sunfeast bourbon cream

A very differentiate offering

Children between the age group 4-14 yr

Children between the age group 4-14 yr

Children between the age group 4-14 yr

Children between the age group 4-14 yrs

Housewives

Children between the age group 4-14 yrs

Smooth and yummy Cream

Smooth and yummy Cream

Smooth and yummy cream

Natural goodness of wheat

Tight and CrispyIncome

Education

Demographic

Geographic

Sunfeast glucose biscuit

Lifestyle

PRODUCT FOCUS

high quality

great tasting biscuits

With Different Segments

Brand Essence "Spread the Smile"

DIVERSIFICATION Indian rural and agri. market is 70% to other resources in India ,but only 30 % of GDP is from agriculture sector . ITC realized it that their cigarette business has a limit future which they wont be able to tap profit and their expansion plans. So diversification was needed in any case, to build a foothold in Indian market.

FMCG being the fourth largest sector in the field which is expanding at a very fast pace and it has huge potential , along with the benefit that it can be accrued by organizing the existing fragmented market accrued by market leading to concept of ‘one stop shop’.

Further India being one of the largest economies with the benefit of its vast market ,it attracted ITC to the expand its operation in various areas of hospitality, FMCG ,Greeting cards Branded Apparels etc.

PRICING STRATEGY

Essentially, Parle plays a high volume, low margin game.

But Sunfeast look at a two-pronged strategy, High margins in cream variants

and volumes from the Marie and Glucose segments. For instance, cream biscuits

from both Sunfeast cost Rs10 for 100 grams.

Parle, however, only charges Rs 5 for its cream variants.

Except for Hide & Seek, all of Parle 'products lie in the price range between Rs 4

and Rs 6for 100 gram packs.

There is Two method of Pricing1. Low Margin2. Two-Pronged Strategy

In August 2003, a month after Sunfeast launch, the company undertook a major sampling exercise to promote the product. For two years then, the brand did all the usual rounds -- riding behind buses, blocking television spots, booking that corner space in your favorite

newspaper and soon.

BRAND PRAMOTION

The company says the brand is now available in nearly 1.8million outlets, Well differentiated advertisements, some which showed a complete cream world with cream rivers, cream mountains and cream trees, were targeted at kids watching cartoon channels. In April 2005, Sunfeast launched its major campaign. It signed on Hindi film actor, Shahrukh Khan as its brand ambassador

SUGGESTIONS AND RECOMMENDATION

• Sun feast has to give attention towards Advertisement.

• Sun feast has to maintain its status by providing more and more facilities.

• Sun feast has to develop more variety of biscuit so that the customer could not return in case of lack of choice.

• The company should also give emphasis on other gift scheme

THANK YOU

SWARUPANANDA DEOGHARIA 36

KRISHNAKUMAR MAURYA 27

ABHIJIT SHARMA 21