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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
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
STARS
generate considerable income
Strategy: Invest more fund for future
growth
Question mark
Have potential to become stars or cash
cows
Strategy: Either invest more fund for growth
or disinvesting
Cash flow
Generate strong cash flow
Strategy: milk profits to finance
growth of Stars or Question marks
Dog
Generate little profits
Strategy: Consider withdrawingIN
DU
STRY
GR
OW
TH R
ATE
RELATIVE MARKET SHARE
HIG
HLO
W
LOWHIGH
ITC BCG MATRIX
STARS
HIGH MARKET SHARE
&
HIGH MARKET GROWTH
Hotels, packaging & Paper boards, e-choupal
CASH COWS
HIGH MARKET SHARE
&
LOW MARKET GROWTH
FMCG-Cigarette
DOGS
LOW MARKET SHARE
&
LOW MARKET GROWTH
ITC infotech
QUESTION MARKS
LOW MARKET SHARE
&
HIGH MARKET GROWTH
FMCG others
HIGH GROWTH
LOW GROWTH
HIGH MARKET SHARE
LOW MARKET SHARE
SUN FEAST BCG MATRIX
STARS
HIGH MARKET SHARE
&
HIGH MARKET GROWTH
Sunfeast Dark Fantasy Choco Fills and Sun feast
snack-foods-Bingo
CASH COWS
HIGH MARKET SHARE
&
LOW MARKET GROWTH
Milky Magic ,Marie Light Original and
orange, Sunfeast ‘Dual’ Dream Cream
DOGS
LOW MARKET SHARE
&
LOW MARKET GROWTH
Sun feast Fit-Kit
QUESTION MARKS
LOW MARKET SHARE
&
HIGH MARKET GROWTH
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
share
Unorganized sector cannot compete with major players in the case of
Advertising
THREATS OF NEW ENTRANTS
Low entry barriers because of Heavy competition from major
playersBUYERS
BARGAINING POWER
High because of,
Availability of many biscuits from low, moderate prices
Availability of biscuits from non organized
sector
Brand Loyalty makes buyers more powerful
in the case of new entries
THREAT OF SUBSTITUTES
High Growing packaged industry and bread industry
Traditional Indian homemade snacks
THREAT FROM SUPPLIERS
In 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
DIMPLE
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