ITC LIMITEDITC LIMITED

Mariam Khan PGPM-

Business Strategy

IntroductionIntroduction

Type: Public (BSE:ITC)Founded: 24 August 1910Radha Bazar Lane, Kolkata, IndiaHeadquarters: Kolkata, IndiaKey people: Yogesh Chander Deveshwar, ChairmanK. Vaidyanath, Director, Partho Chatterjee, CFOIndustry: Tobacco, foods, hotels, stationery, greeting cardsProducts: Cigarettes, packaged food, hotels, apparelEmployees: over 25,000 (2009)Website: http://www.itcportal.com/Forbes Global 2000 List: 987 rank (2009)

Sales (Rs.crore):15388.11 Profits (Rs. million): 32636Market Value($ billion): 13.48

“From a leading cigarette manufacturer to an umbrella group that offers a diversified product mix”

ITC's diversification into related and unrelated areas in recent

years Why they did this ?

•Huge Impostion of Govt. on Cigarette Market •To reduce dependence on cigarette business

How they did ?

•The Company’s relentless efforts to create value through International quality products.•Significant investments in technology and product development•Strong portfolio of brands have enabled it to maintain its leadership position in terms of market standing and share.•Customization of product•Brand image enhancement

BCG MATRIX FOR ITC LTD -BCG MATRIX FOR ITC LTD -Stars

Hotels

Paperboards/ Packaging.

Agri business.

?

FMCG- Foods

Cows

FMCG-Cigarettes

Dogs

Maybe ITC InfoTech.

ITC PRODUCTSITC PRODUCTS

FMCG-FOODPackaged Food

Snack & confectionery

Indian Packaged Food industry

1. With improving living standards, Indian consumers are now becoming more Hygiene and health-conscious

2. Demand for neat and tidy packaged branded food in India.

3. The increasing number of working women and fast pace of life change social structure has driven the demand of packaged branded food.

4. Changing life style, the consumers now look for ways to reduce cooking time.

5. Processed food output in India is likely to grow by 44.2% to touch US$ 90.1 billion, while packaged food sales will increase by 67.5% to reachUS$ 21.7 bn by 2012

Snacks and Confectionery Industry

1. The Snacks and confectionery market is equally divided into the organised and unorganised sector.

2. The market size is estimated to the tune of US$3bn.

3. The organised sector of the snack food market is growing at 15-20 % per year

4. While the growth rate of unorganised sector is 7-8 per cent and the market

5. Size is estimated to be worth of US$ 1.56 bn.

FMCG –FOODS

Sales & Market Growth

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2006 2007 2008 2009

Sales for FMCG business

Sales

Market for Biscuits

11%

10%

33%15%

31% Sunfeast

Others

Parle

Priya Gold

Britannia

Promotion

Direct marketing:- Sign boards, posters at shops on point of sale

Sales force ITC has just packed a classic punch (Jazz,

Blues, Rocks) Interaction with customers in form of

Competitions

ITC. Touching your life. Everyday

15

Positioning of ITC

FARMERS

MARKETS

Cigarette Trade Marketing capability

BrandedFoods

Expanded FMCG distribution capability

e-choupal rural two-way fulfillment capability

A basis for strategic partnerships with other FMCG brand owners

VPN providing SCM, ERP & CRM capability

Lifestyle retailing

Education Stationery

Matches & Agarbattis

Personal Care

Products

Targeting

Bingo –Snacks The has flavors such as Masala Chaas, Chatpata Nimbu and Paneer Tikka, it has

variants with truly Indian flavors. The segmentation was mainly done on basis of the age of the people. The primary

target for Bingo is 18-30 year old people, who are willing to try out new flavors more easily than the small kids.

Bingo is positioned as a youthful and innovative snack.

KOI – READY-TO-EAT CATEGORY) targeted at Tourists Consumers who order at Home NRIs US/ canada Makets –Availabilty in more than 4500 stores Women in age group 25 plus

Sunfeast Pasta Treat Targeted towards children as Healthy snack Youngsters as Fun Food

Various marketing strategies -Various marketing strategies - The Company is planning to double its distribution and its advertisement budget to

counter the PepsiCo's Frito lay.

“SHARUKH KHAN” “DHONI” & “SURYA” as brand ambassador of SUNFEAST

Sunfeast World 10K Bangalore-Brand philosophy -Spread the smile

E-COMMERCE activities for READY-TO-EAT Snack brand KOI

Tie-up with leading portals to promote snack range

Online advertising & can order snack on toll-free number – 1600

ITC Foods has contract manufacturing facility.

Panel tastes & approves it before processing takes place.

Organizational Structure for Organizational Structure for FMCG FoodsFMCG Foods

FOODFOOD

MARGINSMARGINSCREDIT SYSTEMSCREDIT SYSTEMS

STOCK OUTSSTOCK OUTS

WASTAGESWASTAGES

PROMOTIONS PROMOTIONS

DISTRIBUTION CHANNELS DISTRIBUTION CHANNELS

Important factors

Strict compliance standards, low profit margins, intense competition, high customer-service Strict compliance standards, low profit margins, intense competition, high customer-service expectations.expectations.

Fast and effective sales ordering processes.Fast and effective sales ordering processes. FlexibilityFlexibility Quick reactionQuick reaction

ITC uses FIFO method ITC uses FIFO method

They also keep the good on constant move from low sales area to high sales area.They also keep the good on constant move from low sales area to high sales area.

The company collects all the expired goods four times a year, and destroys them.The company collects all the expired goods four times a year, and destroys them.

Retailers must return expired or damaged products within six months after the date of expire.Retailers must return expired or damaged products within six months after the date of expire.

Adjustment for them is done in three months time.Adjustment for them is done in three months time.

ITC provides their retailers with racks, hangers, etc to display the products.ITC provides their retailers with racks, hangers, etc to display the products.

The benefits received by the retailers depend upon their sales volume and also the location of The benefits received by the retailers depend upon their sales volume and also the location of their shops.their shops.

ITC has hired IMRB to do the market research.ITC has hired IMRB to do the market research.

Distribution of Food ProductsDistribution of Food Products

Flow DiagramFlow Diagram

FACTORFACTORYY

FACTORFACTORYY

CNFCNFCNFCNF

WHOLESALE WHOLESALE DISTRIBUTODISTRIBUTO

RR

WHOLESALE WHOLESALE DISTRIBUTODISTRIBUTO

RR

WHOLESALE WHOLESALE DEALER DEALER

BASEBASE

WHOLESALE WHOLESALE DEALER DEALER

BASEBASE

RETAILERRETAILERRETAILERRETAILER

ITC. Touching your life. Everyday

PlacesPlaces

e-Choupale-Choupal To Tackle Challenges Fragmented farms Weak infrastructure Involvement of various intermediaries e-Choupal unshackles low investment low productivity weak market orientation low value addition low margin low risk taking ability

e-Choupal

Outbound LogisticsOutbound Logistics

Display & Inspectio

n

Display & Inspectio

n

AuctionAuction

Bagging & weighing

Bagging & weighing

PaymentPayment

PricingPricing

Mandi

Inspection & GradingInspection & Grading

Inbound LogisticsInbound Logistics

Inbound LogisticsInbound Logistics

Weighing & Payment

Weighing & Payment

Hub Logistics

Hub Logistics

e-Choupal

Operational Process

Business ModelBusiness Model

The e-Choupal ServicesThe e-Choupal Services

InformationKnowledgePurchase-choupal saagarSales

Distribution Challenges first time internet users infrastructural inadequacies, How challenges are

encountered Power back Upgrading BSNL exchanges

by installation of VSAT equipment, Mobile Choupals, 24x7 helpdesk etc

VSAT equipment

Mobile Choupal

Solar Power

Over Coming Challenges Through

Trustmanship Creating Goodwill

NEW PRODUCTS LAUNCHED-2008-09NEW PRODUCTS LAUNCHED-2008-09

Paperkraft Copier Paper Classmate Invento Classmate Pencils

Classmate PensMangaldeep Durbar Gold Mikkel

Classic Verve Fortune Select Dasve Fortune Select Manohar

No Questions

Thank you ..