Market analysis of Bingo chips

MARKETING MANAGEMENT PROJECT

Submitted By:

Derrick Vijayan

Marketing Management Project: Bingo

INDEX

Chapter Topic Page

1 ABOUT ITC AND BINGO 5

2 SITUATIONAL ANALYSIS 9

3 SWOT ANALYSIS OF BINGO 14

4 MARKETING OBJECTIVES 15

5 MARKETING RESEARCH 16

6 MARKETING STRATEGY 24

7 MARKETING ACTION PROGRAM 26

8 FINANCIAL OVERVIEW 28

9 RECOMMENDATIONS 32

10 REFERENCES 33

APPENDIX 34

ACKNOWLEDGEMENT

Indian Institute of Management, Kozhikode


We take this opportunity to express our heartfelt appreciation and gratitude to our guide and facilitator of the course, Dr G Shridhar.We also thank the Library staff and the Computer Center Department at IIM Kozhikode for providing us the facilities and infrastructure to proceed with and complete this project. We also thank the countless respondents of the consumer and retail surveys conducted by our group for the purpose of this project.



EXECUTIVE SUMMARY

‘Love me, hate me, but you can never forget me…’ This is exactly the philosophy with which Indian Tobacco Corporation forayed into the Indian salty savories market with its ‘No Confusion, Great Combination’ potato chips brand ‘Bingo’ on March 14, 2007. Right from an advertisement campaign that generated responses from ‘One of the best campaigns to be floated in recent times’ to ‘Was that even an advertisement!’, to taking on the only national player having a decade-long supremacy, in the low-cost branded potato chips market, Pepsi Co, by the horns, Bingo was up against the odds. But just as the very World Cup campaign that it was banking on (ITC was an associate sponsor for the Cricket World Cup 2007) to provide it an initial thrust in the Indian markets, went awry, Bingo hit a green patch in the Indian markets. Within ten months of launching, the wafer snack brand went on to capture 16 per cent market share branded snack market. The company leveraged its existing distribution network and easy access to the supply chain (farmers), to attain such rapid growth in such a short time. However, 30 months after Bingo’s launch, Frito-Lay continues to be top brand in this segment. With the increasing stress on Health-Conscious snacks, and launch of Aliva in June 2009, Frito-Lay is taking the battle in this Rs 2,000 crore branded snack market to the next level. In this project, we with the help of a consumer survey and a retailer survey have analysed the branded snack segment and devised a marketing plan for Bingo, as it strives to capture 50 per cent market share and emerge as the Numero Uno player in this segment.



CHAPTER 1

ABOUT ITC AND BINGO

1.1 About ITC

ITC limited started as Imperial Tobacco Company in 1910 in Kolkata. It has come a long way since then. From being in tobacco business ITC has expanded today in lot of diverse fields. Its business can be divided in 5 major divisions, viz. FMCG, Agri Business, Hotels, Information Technology & Paperboard and Packaging. Here is brief insight into its diversified business today:

1.1 (a) FMCG

Cigarettes - ITC is the market leader in cigarettes in India. It popular brands are Insignia, India Kings, Classic, Gold Flake, Silk Cut, Navy Cut, Scissors, Capstan, Berkeley, Bristol and Flake.

Foods - ITC's foray in this field began in August 2001 with the introduction of 'Kitchens of India' ready-to-eat Indian gourmet dishes. In 2002, ITC launched the brands mint-o and Candyman confectionery and Aashirvaad atta (wheat flour). In



2003 ITC’s Sunfeast was launched as a Company in the biscuits segment. In 2002 ITC's entered the fast growing branded snacks category with Bingo!

1.1(b) Lifestyle Retailing

ITC entered the Lifestyle Retailing business with the Wills Sport in 2000 and later expanded its range to include Wills Classic formal wear (2002) and Wills Club life evening wear (2003). ITC entered into the popular segment with its men's wear brand, John Players, in 2002.

1.1 (c) Personal Care

In July 2005 ITC introduced Essenza Di Wills, an exclusive range of fine fragrances and bath & body care products. Inizio, is a signature range that comes under Essenza Di Wills ,with Inizio Homme for men and Inizio Femme women. Company launched 'Fiama Di Wills', a premium range of Shampoos, Shower Gels and Soaps in September, October and December 2002 respectively. They also have 'Superia' range of Soaps and Shampoos in the mass-market segment and Vivel De Wills & Vivel range of soaps in the premium market.

1.1 (d) Stationery

ITC entered into this segment by launching Expressions range of greetings in 2000. A line of premium range of notebooks under brand “Paperkraft” in 2002 and a popular range of notebooks was launched under brand “Classmate” in 2003. Classmate is India’s largest brand of note books. In 2008, ITC repositioned the business as the Education and Stationery Products Business and launched India's first environment friendly premium business paper.

1.1(e) Safety Matches

ITC markets popular safety matches brands like iKno, Mangaldeep, Aim, Aim Mega and Aim Metro.

1.1 (f) Agarbattis

ITC's popular agarbattis brands include Spriha and Mangaldeep across a range of fragrances like Rose, Jasmine, Bouquet, Sandalwood, Madhur, Sambrani and Nagchampa.

1.1(g) Agri Business

Agri Commodities: They also market Food Ingredients, Food Grains, Edible Nuts, Marine Products, Processed Fruits, Coffee & Spices.



e- Choupal: e-Choupal initiative began in 2000 with soya farmers in Madhya Pradesh. Now it extends to 10 states covering over 4 million farmers. ITC's first rural mall, christened 'Choupal Saagar' was inaugurated in August 2004 at Sehore. On the rural retail front, 24 'Choupal Saagars' are now operatonal in the 3 states of Madhya Pradesh, Maharashtra and Uttar Pradesh.

Leaf Tobacco: ITC is the largest buyer, processor and exporter of leaf tobaccos in India. ITC buys nearly 50 per cent of all cigarette tobacco types grown in India. ITC's Green Leaf Processing plants at Chirala and Anaparti in Andhra Pradesh.

1.1 (h) Hotels

ITC entered into this field in 1925. They have a branding strategy by which; services are branded as 'ITC One', ‘Towers’, 'Executive Club' and hotels as Welcom Heritage, Fortune hotels, Luxury collection. They also have branded restaurants like Bukhara, Dakshin & Dumpunkt. ITC-Welcomgroup now has an exclusive tie-up with Starwood in bringing its premium brand, the 'Luxury Collection', to India.

1.1 (i) Information Technology

ITC’s Infotech has established itself as a key player in offshore outsourcing, providing outsourced IT solutions and services to leading global customers across key focus verticals - Manufacturing, BFSI, THT and Media & Entertainment.

1.1 (j) Paperboard and Packaging

• Paperboards & Speciality Papers: ITC caters to a wide spectrum of packaging, graphic, communication, writing, printing and specialty paper requirements through its four world-class mills in India.

• Packaging: ITC is the country's largest convertor of paperboard into packaging. It converts over 50,000 tonnes of paper and paperboard per annum into a variety of value-added packaging solutions for the food & beverage, personal products, cigarette, liquor, cellular phone and IT packaging industries. It has also entered the Flexibles and Corrugated Cartons business.

1.2 About Bingo

Bingo is one the main success stories in Indian marketing of recent times. A well crafted brand arising on the basis of an extensive market research followed by a great channel to distribute is a sure recipe for success. In year 2007, ITC on the backdrop of Cricket World Cup marked its presence in snack market by Bingo campaigns and it turned out to be such a success that even the failure of it launch vehicle( Indian team in World Cup) failed to make any dent in the Bingo success. No Confusion, Just Great combination – The punchline of Bingo looks like serving well even the clear cut strategy adopted by ITC to serve the market right. Available in different local tastes



on the basis of regional preferences this snack turned out to be major market scooper even if initially some people perceived it to be less preferred cousin of market leader FritoLays.

In a country where local snacks are loved by one and all Bingo filled the void between tasty and elegant snack option available. The untapped demand of branded version of local tastes was so well captured by Bingo that it became the case study in major B schools across the world. The combination of push and pull strategy created by solid media campaign and colourful racks on the retails stores across India is living example of crafting a well needed product and serving it best manner. The reason that Bingo has so much to offer to learn the concepts of marketing makes it an ideal choice even for us to take it up as our case study.



CHAPTER 2

SITUATIONAL ANALYSIS

2.1 Savoury Snacks Market – Market Summary

The savoury snacks market consists of nuts & seeds, popcorn, potato chips, processed snacks and other savoury snacks. The market in India is diverse and large with over 1,000 different snack products and some 300 types of savouries

2.1(a) Market Value and Market Volume

In terms of volume, the savoury snacks market in India has grown by 2.9% in 2008 thereby reaching a volume of 887.1 million kilograms. The compound annual growth rate of the market volume in the period 2004-2008 was 3%.The value of the Indian savoury market grew by 4.5% in 2008 to reach a value of $2.2 billion, with a compounded annual market growth rate of 4.4%during the period 2004-2008. This market generated total revenues of $2.2 billion in 2008 where the Potato chips sales proved the most lucrative generating total revenues of $205.8 million, accounting for 9.3% of the market's overall value

2.1 (b) Market Forecast

In 2013, the Indian savoury snacks market is forecasted to have a volume of 1 billion kilograms, an increase of 13.5% since 2008 and the compound annual growth rate of the market volume in the period 2008-2013 is predicted to be 2.6%. In terms of value, in 2013, the market is forecasted to have a value of $2.6 billion, an increase of 19.5% since 2008. The compound annual growth rate of the market in the period 2008-2013 is predicted to be 3.6%.Table 11: India2.1 (c) Market Segmentation Potato chips generate 9.3% of revenues in the Indian savoury snacks market. Nuts and seeds account for a further 3.3%, processed foods 0.80% and pop corn 0.60%, of the market value and the rest 85.90% is accounted for by the other savoury snacks category. Japan dominates the Asia-Pacific snack market, holding a 59.5% share overall while India controls over 12.40% of the total Asia Pacific snack market share.

2.1 (d) Distribution The main distribution channel in the Indian savoury snack market is carried out by the independent retailers distributing 71% of the total value. Convenience stores are responsible for an additional 17.1% of distribution.



2.2 Market Growth Although there has been steady levels of growth in Indian savoury snack industry during the period 2004 -2008, the market is expected to see some fluctuations and some deceleration in the levels of growth between 2008 and 2013.The Indian savoury snacks market generated total revenues of $2.2 billion in 2008, representing a compound annual growth rate (CAGR) of 4.4% for the period spanning2004-2008. In comparison, the Japanese and Chinese markets grew with CAGRs of3.1% and 6.9%, respectively, over the same period, to reach respective values of$10.6 billion and $2.9 billion in 2008. Market consumption volumes increased with a CAGR of 3% between 2004-2008, to reach a total of 887.1 million kilograms in 2008. The market's volume is expected to rise to 1 billion kilograms by the end of 2013, representing a CAGR of 2.6% for the2008-2013 period.

Potato chips sales proved the most lucrative for the savoury snacks market in 2008, generating total revenues of $205.8 million, equivalent to 9.3% of the market's overall value. In comparison, sales of nuts and seeds generated revenues of $73.7 million in 2008, equating to 3.3% of the market's aggregate revenues. The performance of the market is forecast to decelerate, with an anticipated CAGR of 3.6% for the five-year period 2008-2013, which is expected to drive the market to a value of $2.6 billion by the end of 2013. Comparatively, the Japanese and Chinese markets will grow with CAGRs of 2.6% and 5.5%, respectively, over the same period, to reach respective values of $12.1 billion and $3.8 billion in 2013.



2.3 Competition:

The major players in the market are



CHAPTER 3

SWOT ANALYSIS OF BINGO

3.1 Strengths

Large Distribution network

Abundant availability and easy access to raw material

Vast domestic market

Urbanisation

3.2 Weaknesses

Lack of adequate quality control & testing methods when compared top international

brands like Lays or Pringles

Low availability of adequate infrastructural facilities and technology as it is a new

entrant in this segment

High requirement of working capital

3.3 Opportunities

Expansion of current markets

Rising income levels and changing consumption patterns

Favourable demographic profile and changing lifestyles

Integration of development in contemporary technologies offer vast scope for rapid

improvement and progress

3.4 Threats

Competition between national and international players

Competition from unbranded players

Affordability and cultural preferences of fresh food especially unbranded ones

High inventory carrying cost

High taxation

High packaging cost



CHAPTER 4

MARKETING OBJECTIVES

To increase the brand’s market share from 16% to 25% and eventually to 50% To make Bingo the most preferred brand for 40-50% of branded snack consumers To increase penetration in the metros and big cities To increase penetration in the smaller towns and rural markets To successfully tackle the threat from ‘health-conscious’ variants of competing brands



CHAPTER 5

MARKET RESEARCH

The market research is based on two surveys conducted which are:

1. Consumer Survey2. Retailer Survey

5.1 Consumer Survey:

This survey has been conducted over a sample of 135 people from across India. The characteristics of the sample are as follows.

Demographics

Total number of respondents = 135



5.1(a) Preference for a particular product

Internal

The survey revealed that the most important factor for a consumer’s preference for a particular brand is the number of flavours (variants) on offer for a particular brand on snack.

Flavour - Bingo currently offers its potato chips in the following flavours. Masala, Salted, Tomato, Chatkila Nimbu Achar, Tandoori Paneer Tikka, Tedhe Medhe and Live Wires. The number on variants on offer for Bingo is larger than any other competing brand in the market. Frito-Lay with the flavours of American Flavour, Classic Salted, Tangy Tomato, Classic Salted, Chat Street has lesser number of flavours.

However, in the rice-chips category, the Bingo variants of Mad Angles and Tedhe Medhe are facing stiff competition from Kurkure (also a Frito-Lay brand with 8 flavours). The launch of the Aliva brand, with four Indian flavours of baked-wheat chips , by Frito-Lay in June is likely to provide further variety to the consumers under the Frito-Lay banner.

The second most influential factor for a consumer to determine the selection of a particular brand is the taste appeal.Most consumers surveyed in their feedback mentioned that the taste and also the after-taste for any variant of a brand plays a very important role in a consumer opting for the same. Bingo was said to have ‘sometimes too sour’, ‘sometimes too sweet’ a taste, by consumers who prefer Frito-Lay over Bingo.



External

Among the external factors affecting the choice of a product, the visibility and availability of a product were found to be the most important criteria for a consumer to opt for a particular product. The strong distribution network of ITC across the country has been leveraged very well by the company, to ensure the availability of its product across the country. To increase its visibility the company has also distributed ‘Bingo racks’ to retailers. It distributed about 4 lakh such large racks to display the brand at all points of sale. The idea was soon adopted by Frito-Lay too.

Advertisements and endorsements were found to have minimum impact on a consumers’ preference. On the basis of the survey, the endorsements roped in the from Bollywood and cricket stars like Saif Ali Khan, M S Dhoni, Kareena Kapoor and Chitrangada Singh have very little impact in influencing a consumers’ preference for a brand.

The greater significane of peer reviews and preferences, implies that word-of-mouth is the best way to induce the consumer into buying Bingo. Thus, internal factors of variants (flavours) and taste assume greater significance and would ensure greater penetration than mass media publicity.



5.1(b) Most preferred brand

Frito-Lay was surveyed to be the most preferred brand for about 32 per cent of the sample population. It also needs to be noted that Cheetos and Kurkure, too are brands owned by PepsiCo, pushing the company’s products as the most preferred for 53 per cent of the surveyed population.

5.1(c) When are branded snacks consumed?

With 44 per cent of the surveyed population consuming snacks during evening and night and another 19 per cent accepting that they consume branded snacks all through the day, a clear shift in the eating habits of the youth is observed. With 80 per cent of the surveyed population less than 24 years in age and 99 per cent less than 35 years in age, the sample population for the survey has been predominantly young.

With about 75 per cent of the population spending more than Rs 50 every week on the consumption of branded snacks, they have become a component of the daily diet of



the modern youth. Thus, with time, among similarly priced snacks, the consumers are likely to prefer healthier brands. The nutrition and calory values of a brand with time, may gain prominence with time, over taste and flavours in affecting a consumer’s choice among brands and products. The companies too have realised the same. While Bingo has launched rice chips under the sub-brand Mad Angles, Frito-Lay has three brands Cheetos, Kurkure and Aliva (since June 2009) that cater cornmeal, rice and wheat-based snacks, thus focussing on the nutritional value offered at the same price.

5.1(d) Where is Bingo ranked in consumers’ preferred brands list?

For 12 per cent of the surveyed population, Bingo figures as the most preferred brand, with another 36 per cent of the population placing it as the second most preferred brand.

Within a little over a year of its launch, Bingo had captured 16 per cent of the branded snack market as against the targeted 8 per cent ( AC Neilsen). The brand’s share in the total snacks and savouries market stood at 8 per cent by the end of 2008 (Datamonitor). To achieve the new target of 25 per cent of the branded snack market share, Bingo will not only have to further improve the smoothness in the taste of its potato chips, but will also have to increase sales of its rice-variants to compete against Kurkure.

5.1(e) Flexibility of the consumer base

With about 41 per cent of the surveyed population showing readiness to switch to its second most preferred brand on lack of availability of the first, without making any extra effort to procure the first brand; there is huge scope for Bingo to increase penetration within the existing markets.



5.1(f) What differentiates Bingo from the rest?

The distribution network of ITC that ensures that Bingo is available at every retail shelf at all points of time is what separates the brand from the rest of the competitors. About 29 per cent of the surveyed population has accepted, the brand’s ready availability across shops at all points of time is its differentiating factor. With taste and flavours the most important factors, the companies’ focus on these two factors of influence to increase sales is justified.

5.2 Retailer Survey

a) Number of retailers surveyed = 20

b) Location – Kozhikode

5.2(a) Availability

In Kozhikode, ITC has been successful in leveraging its distribution network. Every one of the 20 retailers surveyed confirmed that the supply-chain ensures constant



availability of Bingo at their shelves. The retailers also reiterated that ITC was the most proactive company as far as ensuring the availability of Bingo at the shop at every point in time was concerned.

5.2 (b) Fastest moving branded snack

However, constant availability and visibility has not yet translated into maximum preference in the Kozhikode markets. 12 of the 20 retailers confirmed that Frito-Lay was the fastest moving product. Of the 8 that had Bingo as the fastest moving product, 5 didn’t stock Frito-Lay. Bingo’s move to sell 20% extra in its potato chips snack than the rivals has also helped tilt the preference of a few undecided consumers towards Bingo, a few retailers noticed.



5.2(c) Number of flavours of Bingo catered

Majority of the retailers hosted between 4-6 flavours of Bingo. However, it was unanimously accepted by most shopkeepers that the bulk of the sales for the brand came from the Masala, Salted, Tomato and Mad Angles flavours.

5.2 (d) Customer Flexibility

100%

The retailers observed that consumers, usually never mind in shifting from one brand to the other if the other brand is famous. Every retailer conformed that unavailability of a brand at a shop, compulsively led to the consumer opting for his second preferred brand. “Usually customers of Frito-Lay don’t mind switching to Bingo. Most consumers in this region perceive Bingo to have an inferior taste/aftertaste compared to Frito-Lay. However, the availability of the product has resulted in a lot of consumers reluctant to try it, being forced to do so. These consumers very soon become regular consumers of Bingo and stop differentiating between the most preferred brand and Bingo,” pointed out a retailer.

5.2 (e) Internal factors affecting consumer preference

The fragmented replies to this question suggested two diverse opinions. The first stressed on the fact that the brand affiliation for a product weighed heavy over every other possible influencing internal factor, right from taste to flavours. About 50 per cent of the responding retailers conformed to this opinion.

Another popular opinion which emerged suggested that if a product has got an appealing taste, there will be a market for it even if it is unbranded. Low priced salty snacks which are unbranded or from local brands such as Grooves, had a bigger market than Lays, Bingo or both combined at a few of the retail outlets.



CHAPTER 6

MARKETING STRATEGY

6.1Segmentation

The segmentation for the branded snacks market can be done on the following grounds

6.1(a) Geographic:

Region wise: North, south, west, east, central, north eastCategory: Metros, major cities and towns

Geographic segmentation can be employed by the company to develop different variants (flavours) for different regions based on the local tastes and preferences of that region. The company can also further segment these regions into metros, cities and towns. Brand advertising firm Ogilvy and Mather, claimed that Bingo had achieved its maximum market share in cities, with it being as high as 66 per cent in a few cities. This clearly indicates, that the brand has been a huge success in a few geographical locations and lesser so in others.

6.1(b) Demographic:

Age: <18, 18-24, 25-35, >35 Income levels: middle-income and high-income groups

Bingo through its snazzy advertisements that talk of ‘Think Hatke’ has from the very onset been clear that its target segment is the 18-24 and 25-35 year olds category. The lifestyle and eating habits of this segment make it the most lucrative one for the branded snacks segment.

The products, which are priced at the lower end in the branded packaged snacks market, are targeting the middle income segment, the segment which has food habits conducive to packaged snacks and yet would be cost-conscious and would opt for snacks in the lower end of the cost-spectrum.

6.1(c) Psychographic:

Features: Taste, quality, quantity, price and packaging Awareness: Brand consciousness, movement towards health-conscious brands

6.1(d) Behavioural:

Time of consumption: Morning, afternoon, evening, night, all through the day. Weekly expenditure: >Rs 200, Rs 100-200, Rs 50-100, <Rs 50.



Loyalty status: Flexible, Loyalist, Indifferent.

6.2 Targeting

Bingo’s current focus would be on increasing its penetration in the metros and cities, its strongholds. The brand should bank on its strong distribution network to ensure that it has high visibility in the smaller towns. Taking heed from its advertisements during the launch face that focused on the cultural diversity in the country Bingo should look to target each of the geographical regions separately. The company should continue with its current focus on <35 year olds segment of the middle-income group.

6.3 Positioning

Bingo should not dilute its current market image of youthful trendy brand and should look to increase penetration in the metros and cities, through its advertisements.The trickle-down effect, high visibility and availability could also see its market share in the smaller town’s rise. Meanwhile, Bingo should also introduce different variants that suit the local tastes to target the regional markets.



CHAPTER 7

MARKETING ACTION PROGRAM

7.1 Product

Bingo is currently available in eight variants, in addition to the rice-meal snacks. Based on the market research, the company can incorporate the following improvements in its product portfolio.

7.1(a) Taste, aftertaste and quality

Bingo, inspite of its high penetration in a very short period of time, was perceived as less tasty and of a lower quality than Frito-Lay by a large section of the consumer sample.The following changes in the product were suggested Reduce the sharpness in the sour/sweet taste of the product. Tone down the spices

in the product. Research and try to achieve a good aftertaste (similar to Pringles) for Bingo

products Work on reducing the oiliness and the amount of masala that sticks to the fingers

during the process of eating.

7.1(b) Different flavors for different regions

The company must look to target each of the regions based on the spices and tastes prevalent in the region. It should look to introduce specific flavours for each region.

7.1(c) Moving towards health-conscious sub-brands

With competition slowly moving towards health-friendly brands (Aliva from Frito-Lay), it is imperative for Bingo too to move into cornmeal and baked wheat meal snacks categories.

7.2 Pricing

Bingo currently is among the lowest priced packaged snacks brands having a national presence. Bingo was the first brand to introduce, its snacks in Rs 5, Rs 10 and Rs 20 packets. Right now Bingo and its prime competitors, Frito-Lay, Kurkure and Cheetos are currently priced at the same levels.

In this price range, the consumers’ preference for a brand has been found to be indifferent of the exact price of the product. Only 5 per cent of the population has



suggested that its preference for Bingo over its rival brands could be on the basis of its pricing.

However, share of the branded snacks in the total savouries market currently is about 20 per cent. While lowering of prices might cause all the competing brands also to lower prices, it can help the branded snacks industry to increase its share in the savories market.

7.3 Placement

Both the consumer and the retail surveys have affirmed that Bingo’s greatest strength lies in its strong distribution network. The brand, through its appeal to the youth with the help of its snazzy advertisements, has been able to secure a strong youth customer base in the cities. High visibility and availability with the help of ITC’s strong distribution network has helped it penetrate into the smaller towns. The company must continue to leverage its distribution network. Bingo must go local, within India and devise variants (flavours) specific to each region. The company can also collaborate with various food joints not associated with PepsiCo , such as McDonalds to market Bingo as the Indian snacks on offer. It had already entered into a similar tie up with Big Bazaar retail, last year.

7.4 Promotion

The company must continue to promote itself as a youth-centric brand. This has helped it grow at a substantial pace in the metros and cities. With the growing awareness about health-conscious products and Frito-Lay’s launching of Aliva and Kurkure (cornmeal and rice snacks, perceived to be healthier than potato chips), Bingo needs to get into these segments. It needs to promote the Mad Angles sub-brand as a health-sensitive product. While the whacky advertisements of the company still find a lot of takers, there is no need to follow Frito-Lay’s footsteps and acquire celebrity endorsements as consumer surveys reveal their relative insignificance.



CHAPTER 8

FINANCIAL OVERVIEW

8.1 Snacks market and analysis

In 2008 the total snack market in India was 91.2 INR billion. Today in branded snack market, Frito Lay commands a share of 45%, followed by Haldiram’s at 27% and ITC at 16%. The rest is divided between new entrants, and regional players. Out of these ITC’s Bingo is a new entrant in the market, which was launched in 2007. Market consumption volumes increased by 3% between 2004-2008, to reach a total of 887.1 million kilograms in 2008. The market volume is expected to rise to 1 billion kilograms by the end of 2013.The snacks market is estimated to be a worth US$ 3 billion by 2013. The organised sector of the snack food market is growing at 15% - 20% a year while the growth rate is around $ 1.56 billion, and for un-organised sector it is 7% - 8%. Consumption level of commercial savoury snacks is 10 times higher than that in the rural markets. Around 1000 snack items and 300 types of savouries are sold in India. The segment is largely dominated by potato chips and potato-based products with over 85% share of the salty snack market. Potato chips sales proved the most lucrative for the savory snacks market in 2008, generating total revenues of $205.8 million, equivalent to 9.3% of the market's overall value.Following is the data of 2007 and 2008 showing consumption and growth of snack marketYear Kilogram (million) % Growth

2007 861.7 2.80%2008 887.1 2.90%

Following is market analysis for different categories of snack market and its market share

Fig.8.2 Details of snacks industry



8.2 Competitors

Following is the data showing different companies with their market share in snacks market

Company % Share

PepsiCo ltd 6.10

ITC limited 1.40

Haldiram’s 1.00

Others 91.50

Following are the calculations for knowing the growth of ITC because of ‘BINGO’ launch.

Since Bingo was launched in 2007, we will take the data of 2008. In 2008 the total snack market in India was 91.2 INR billion. Out of this ITC limited is having a 1.4% share.

91.2 billion INR * 1.4% = 1276800000 (1.27 INR billion)

So revenue generated by Bingo in 1st year of its operations come out to be Rs 127 crores.

Since snack industry is showing a growth rate of 3% in branded sector there are good prospects of Bingo to make a lot of profit even in near future.

In the pre launch press release by ITC it was mentioned the company is spending

Rs. 700 crore in setting up a manufacturing facility. Assuming it to be for Bingo, ITC will have a break even for this product in very short time.



8.3 Sales projection

Following is segmentation (pie chart) of all the product categories of ITC company

Fig 8.3- Pie chart of categories of product of ITC on basis of revenue

The above graph clearly shows that ITC has huge 21% of its total revenue from FMCG non-

cigarette category.

The following are the products of FMCG non-cigarette category.

(a) Foods

(b) Lifestyle retailing

(c) Personal care

(d) Education & Stationery

(e) Safety matches

(f) Incense sticks (Agarbattis)



Its FMCG category is in good growth. This can be understood from the following data.

FY2008 FY2009 (in thousands)

FMCG 25,068 30,016

So it is clear that this segment is having a growth of around 20% and Bingo can be a major

contributor to this growth.



CHAPTER 9

RECOMMENDATIONS

1) Reduce the sharpness in the sour/sweet taste of the product.2) Research to arrive at a more widely accepted aftertaste.3) Reducing the oiliness and the amount of masala that sticks to the fingers during the

process of eating.4) Launch different local flavours for different regions.5) Move towards health-conscious products; make the consumers aware about the same.6) Maintain the prices at current levels.7) Continue with whacky advertisement campaigns to keep appealing to the city youth.8) Focus on maintaining visibility and availability at retail outlets across the country.9) Partner with non-Pepsi brands like McDonalds to market Bingo as the Indian snack.



CHAPTER 10

REFERENCES

1. http://www.flex-news-food.com/pages/17973/India/Snack/india-overview-us$3-billion-snack-food-sector.html

2. http://www.itcportal.com/newsroom/press06june07-b.htm3. http://www.flex-news-food.com/console/PageViewer.aspx?page=9208&str=itc bingo

4. http://www.itcportal.com/itc-annual-reports-2008/pdfs/Balance-sheet.pdf5. Datamonitor (Published November 2008)6. www.pepsico.com7. http://www.itcportal.com/newsroom/press-08jan08.htm


http://www.pepsico.com/

http://www.itcportal.com/itc-annual-reports-2008/pdfs/Balance-sheet.pdf

http://www.itcportal.com/newsroom/press06june07-b.htm

http://www.flex-news-food.com/pages/17973/India/Snack/india-overview-us$3-billion-snack-food-sector.html

http://www.flex-news-food.com/pages/17973/India/Snack/india-overview-us$3-billion-snack-food-sector.html


APPENDIX

Consumer Survey

A few questions about the snack you eat

1 Are you a regular consumer of packaged snacks of brands like Frito Lays, Kurkure, Haldiram, Pringles, Bingo etc?

2

Please indicate your sex.

Male

Female

3 Please select the category that includes your age.

4 Of the following, which is your most preferred brand of

packaged salted snacks?

Frito Lays

Bingo

Haldiram Namkin

Cheetos

Kurkure

Pringles



Other, please specify

5 What is it that makes you prefer a particular brand?

Brand Name

Variants offered

Price

Anything, which is easily available

Taste

6 Among similar priced products like Lays, Bingo, Kurkure, Cheetos; would you mind having to switch from your preferred brand to another on the count of availability?

Survey Page 1


7 Where would Bingo figure in your list of preferred snacks?

8



When are you most likely to consume salted packaged

snacks?

Morning (I am not a fitness freak, I'd rather have chips than corn flakes)

Afternoon (The most handy and easy to carry snack)

Night, Evening

All through the day

Chips are way too oily to fit in my diet regime

9 Something to ponder upon, what medium is most likely to

influence your decision in selecting a snack?

Snazzy advertisements in print and electronic media

Your favorite movie star and cricket team captain endorsing the product

Peer reviews and peer preferences

Visibility and availability in the market

Other, please specify

10 What is the one thing that differentiates Bingo from the

rest, if at all anything does?

Taste

The 8-plus varieties in which it is available

Availability at every single retail outlet, anywhere in the country

Quality, quantity and pricing

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Survey Page 2


11What is your weekly expenditure on branded snacks?

>Rs 200

Rs 100-200

Rs 50-100

<Rs 50

12In which state are you located right now?

13 What is the one change in the product that would make you a Bingo loyalist? Any suggestions you got for the brand and the company?



Retailer Survey

1Which are the various brands of salt snacks (Lays/ Bingo/ Pringle) that are catered from your shop?

2 Which are the top three fastest moving products in this category?

3

What are the factors, according to you that govern the consumer preference for a particular product? Kindly rank the following

1) Taste2) Flavours3) Availability4) Pricing

4

For similarly priced products, do the customers mind switching over from their preferred product, to the one available in your shop? Kindly ask for the percentage of customers that would not purchase from your shop just because a particular brand is not available.

5How many flavours of Bingo are available in your shop? Which is the most preferred flavor?

6 What is it that differentiates Bingo, if at all anything does?

7 Which is the company that is most proactive in ensuring that it's brands are always there on your shelf? He won't know company names probably, so talk about Bingo, Lays, Kurkure, Cheetos.

8 Can he give an age-wise, income-wise and number of consumers that prefer low-priced chips (Bingo, Lays) and high-priced items (Pringles, Haldiram). If he takes care to answer this, it will be great.

9 Ask him if he has any suggestions for improving sales of Bingo?


Market analysis of Bingo chips

Documents

Transcript of Market analysis of Bingo chips