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Marketing Research of ITC

Marketing Research of ITC

Discuss Marketing Research of ITC within the Marketing Research ( MR ) forums, part of the PUBLISH / UPLOAD PROJECT OR DOWNLOAD REFERENCE PROJECT category; ITC Limited (BSE: 500875) public conglomerate company headquartered in Kolkata, India.[1] Its turnover is $6 billion and a market capitalization ...

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Marketing Research of ITC - March 29th, 2011

ITC Limited (BSE: 500875) public conglomerate company headquartered in Kolkata, India.[1] Its turnover is $6 billion and a market capitalization of over $30 Billion. The company has its registered office in Kolkata. It started off as the Imperial Tobacco Company, and shares ancestry with Imperial Tobacco of the United Kingdom, but it is now fully independent, and was rechristened to Indian Tobacco Company in 1970 and then to I.T.C. Limited in 1974
The company is currently headed by Yogesh Chander Deveshwar. It employs over 26,000 people at more than 60 locations across India and is listed on Forbes 2000. ITC Limited completed 100 years on 24 August 2010.
ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Personal Care, Stationery, Safety Matches and other FMCG products. While ITC is an outstanding market leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share even in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel, Personal Care and Stationery.
ITC's aspiration to be an exemplar in sustainability practices is manifest in its status as the only company in the world of its size and diversity to be 'carbon positive', 'water positive' and 'solid waste recycling positive.' In addition, ITC's businesses have created sustainable livelihoods for more than 5 million people, a majority of whom represent the poorest in rural India.
Indian Foods market is a monopolistic market. There are many competitors in all the categories and although they all have similar products available at similar prices, they are trying to prove themselves different through their marketing strategies. However, entry to this business is easy and ITC has utilized this fact very efficiently to their benefit as they entered into the several categories among this Foods business.
READY TO EAT
ITC entered into the branded and packaged foods business in with the launch of Kitchens of India brand. In 2004, the company launched KoI brand fruits and spice conserves and cooking pastes. The fruits and spice conserves, were developed jointly with Karen Anand, a food expert. Priced at Rs. 70, these were targeted at the premium segment. The KoI cooking pastes, which were priced at Rs.30 for a 100g pack, also targeted the high-end market. Multi-purpose cooking pastes were also launched under the Aashirvaad brand and these were priced at Rs. 10 for 80g pack. The manufacturing of these products was outsourced to contract manufacturers for saving the operating cost.
ITC entered the branded spices market in 2005 and the Instant Mix segment in 2006, both under the Aashirvaad Brand. As on April 2006, the total turnover in the Indian ready-to-eat and ready-to-cook segments was only around Rs. 700 million, but it continued to post an annual growth of 20%. By early 2006, though ITC had captured a 35% market share in the ready-to-eat segment, MTR was the clear market leader with close to 60% in market share. ITC exported 40-50% of KoI brand products (in terms of volumes) to the US, Canada, the UK, Switzerland, and Australia.
In May 2006, ITC planned to introduce ten more varieties under the KoI brand within a price range of Rs. 35 to Rs. 98. In 2007, some new products have been launched under Ready To Eat category like chutneys, curries, conserves, biryanis (Noor Mahal, Bhori Biryani and some new range of products under Gharana (Paneer Malai, Keema Mutter). After launching all these products ITC FOODS is looking to share 50 to 60% of market by

Brands Description
Gits
Gits produces the selected range of popular ready to cook and
instant foods that cover a range of ethnic Indian cuisine-and
where the recipes have "Global pallete acceptance".
Haldirams
Offers packaged Bhel puri chats such as Sev Puri, Chana
Masala, Samosa, Pakoras, Alu Tikki, Pao Bhaji, Gol Gappa,
Dhokla among others
Ethnic Kitchens
Offers packaged sweets,syrups,namkeens, cookies, pickles, aloo
Masala, Bhujia, Bhelpuri, Chana Dal, Kajui Ladoo and many
more items.
MTR
MTR foods currently comprise twenty-two delicious and
completely authentic Indian curries, gravies and rice.
Priyafoods
Priya has a range of popular traditional recipes starting from Dal
Makhani, Navaratan Kurma to Palak Paneer, Paneer Butter
Masala, Punjabi Chhole and Rajma Masala along with true
southern delicacies like Andhra Veg Pulav, Mango Dal, Gongura
Dal.
Market Share - Ready To Eat
48%
35%
8%
9%
ITC Ltd.
MTR
Kohinoor
Others(Gits, Priya
Foods etc.)
as on June, 2008

Brands Description
Gits
Gits produces the selected range of popular ready to cook and
instant foods that cover a range of ethnic Indian cuisine-and
where the recipes have "Global pallete acceptance".
Haldirams
Offers packaged Bhel puri chats such as Sev Puri, Chana
Masala, Samosa, Pakoras, Alu Tikki, Pao Bhaji, Gol Gappa,
Dhokla among others
Ethnic Kitchens
Offers packaged sweets,syrups,namkeens, cookies, pickles, aloo
Masala, Bhujia, Bhelpuri, Chana Dal, Kajui Ladoo and many
more items.
MTR
MTR foods currently comprise twenty-two delicious and
completely authentic Indian curries, gravies and rice.
Priyafoods
Priya has a range of popular traditional recipes starting from Dal
Makhani, Navaratan Kurma to Palak Paneer, Paneer Butter
Masala, Punjabi Chhole and Rajma Masala along with true
southern delicacies like Andhra Veg Pulav, Mango Dal, Gongura
Dal.
Market Share - Ready To Eat
48%
35%
8%
9%
ITC Ltd.
MTR
Kohinoor
Others(Gits, Priya
Foods etc.)
as on June, 2008
Entering the foods business was itself a strategic decision for ITC. While ITC‟s core business, tobacco, was under pressure owing to several factors like government bans on advertising and on smoking in public places, hikes in the excise duty for cigarettes, and anti tobacco campaigns, ITC planned to deploy its surplus in the packaged food business where it saw huge business potential. Following are some of the strategies that ITC adopted to make its food business a success:
 Entering into less competitive or unexplored markets (Ready to eat, Staples, Wafers): When ITC entered into the foods business in 2001, it focused on unleashing the areas where the competition is very less or there is no competition. It started with packaged ready to eat food and later extended that to Aashirvaad brand of edible salt and Atta. Recently ITC has announced its desire to forge in the frozen foods category in the domestic market. Players in this category are limited and ITC hope to exploit this fact. Also, in Bingo, although the competition is tough but there is only one player with whom ITC has to compete i.e. Frito Lay. This strategy has helped ITC to quickly establish itself in the above mentioned businesses.
 Distribution Network: ITC already had a huge distribution network due to its tobacco business. ITC used this network to distribute their biscuits and wafers. This not only provided a good launch to their products but also helped in boosting sales. Today, ITC‟s Bingo and Sunfeast are available at nearly 1.8 million outlets whereas Parle is available at only 1.5 million outlets.
 Market differentiation (Ready to eat, Biscuits): ITC started packaged foods business with the KoI brand of ready-to cook products. They were positioned as premium products
18
with target groups including tourists, NRIs, etc. In Biscuits also, ITC launched differentiated products in each and every segment. For e.g. it introduced an Orange Marie, a butterscotch cream biscuit, chilli flakes in a biscuit and even honey flavor under the Sunfeast brand.
In March 2005, ITC Foods launched Sunfeast Pasta, a whole wheat based product targeted at children. It was expected to compete with products like Nestle‟s Maggie noodles. With this strategy ITC built for itself new markets.
 Cost control strategy (all products): When ITC started the foods division, its main challenge was to compete with the players who were already there. To overcome this challenge, ITC realized that they have to offer products at a price which is either equal or less than what the competitors are offering. To do this, they planned to capitalize by leveraging the strength of the group‟s other businesses. ITC‟s printing and packaging business provided high-quality, cost-effective, and innovative packaging. ITC also enjoyed cost advantages over its competitors owing to its electronic procurement system called e-Choupal. This helped ITC to compete with the best.
 Diversification of products (Biscuits, Wafers, and Ready to Eat): One of the ITC‟s successful strategies has been the method of diversifications among its various products. If we talk just about Bingo, ITC has come up with 16 flavors in comparison to its competitor „Lays‟ of „Frito Lay‟ which has only 4 major flavors. Same is the case with Ready to Eat food category and Biscuits.
This strategy has helped ITC to attract a wide range of market.
 Extensive advertising (Biscuit, confectionary, wafers): Just like a Bollywood movie needs good publicity to be a super hit, every new product launched in the market needs to be known to the consumers before it is launched. Advertising is where ITC made the difference in comparison to its competitors. They hired the best professionals and the best ambassadors in the country to make their products famous. This is evident form the award winning marketing campaign for Bingo and Minto Fresh. The tagline "Jab Laila ko karna tha impress to majnu ne khayi mint o fresh" has stood the test of times and is still widely known and remembered. Hiring the best people from the film industry and sports (Sharukh Khan and Sachin Tendulkar for Biscuits, Rakhi Sawant for Minto Fresh) showed ITC‟s urge to be the best.
On television, the company booked 10 to 15 spots per channel per day on youth channels such as MTV and Star World, mass Hindi channels like Zee and Star TV, and news
19
channels. It also had around 20 spots on a variety of radio channels and advertised in most leading national dailies. In the top-30 cities, over 1,000 outdoor hoardings advertised the product. According to industry estimates, ITC spent close to Rs 100 crore on marketing.
This kind of promotion of products helped ITC to make its products known to everyone and now it was not difficult to attract consumers.
 Regular introduction of new products (all products): Having acquired reasonable scale in a relatively short span of time, ITC realized that, to remain in the competition it had to introduce new products regularly. ITC has been expanding its distribution network aggressively and also their product range. In biscuits and wafers range, it is launching new products or flavors week after week. Same is the case with Ready to Eat and Kitchen of India.
 Innovation (all products): When the need to introduce new products arrived, ITC shifted its focus on to the innovation. Also, ITC was innovative in identifying the market or niche for all its products.
 Maintenance of freshness and hygiene (all products): ITC positioned its wheat flour on the health & hygiene and value for money terms. Success in the staples business, especially in the branded and packaged wheat flour business, depended on two factors – an effective distribution network and the quality of the product. Therefore, ITC attempted to ensure that the supply chain was responsive, and laid emphasis on making accurate sales forecasts using inputs from distributors, sales personnel and a well-managed MIS system. To maintain freshness of the product, the company strove to minimize the transit time by regulating the shippers to maintain company-specific transit norms. The physical aspects of the supply chain like warehouses and trucks were closely monitored to maintain cleanliness.
 From Analyzers to Prospectors (Biscuits): When ITC entered the biscuits market with Sunfeast in 2003, with three varieties of biscuits - glucose, marie, and cream, they did what any new player in the market does, imitating and emulating the leader that was Britannia. Their strategy was to manufacture those products which are already a success in the market. But, as ITC got hold of the market, it started to manufacture flavors which were never heard of. This was the result of ITC‟s desire to exploit new product and market opportunities.
20
All the above strategies and with the help of launch of Bingo in 2007, ITC finally tasted success in its food business in 2008 when it became a profitable business for the first time since its launch in 2001

Entering the foods business was itself a strategic decision for ITC. While ITC‟s core business, tobacco, was under pressure owing to several factors like government bans on advertising and on smoking in public places, hikes in the excise duty for cigarettes, and anti tobacco campaigns, ITC planned to deploy its surplus in the packaged food business where it saw huge business potential. Following are some of the strategies that ITC adopted to make its food business a success:
 Entering into less competitive or unexplored markets (Ready to eat, Staples, Wafers): When ITC entered into the foods business in 2001, it focused on unleashing the areas where the competition is very less or there is no competition. It started with packaged ready to eat food and later extended that to Aashirvaad brand of edible salt and Atta. Recently ITC has announced its desire to forge in the frozen foods category in the domestic market. Players in this category are limited and ITC hope to exploit this fact. Also, in Bingo, although the competition is tough but there is only one player with whom ITC has to compete i.e. Frito Lay. This strategy has helped ITC to quickly establish itself in the above mentioned businesses.
 Distribution Network: ITC already had a huge distribution network due to its tobacco business. ITC used this network to distribute their biscuits and wafers. This not only provided a good launch to their products but also helped in boosting sales. Today, ITC‟s Bingo and Sunfeast are available at nearly 1.8 million outlets whereas Parle is available at only 1.5 million outlets.
 Market differentiation (Ready to eat, Biscuits): ITC started packaged foods business with the KoI brand of ready-to cook products. They were positioned as premium products
18
with target groups including tourists, NRIs, etc. In Biscuits also, ITC launched differentiated products in each and every segment. For e.g. it introduced an Orange Marie, a butterscotch cream biscuit, chilli flakes in a biscuit and even honey flavor under the Sunfeast brand.
In March 2005, ITC Foods launched Sunfeast Pasta, a whole wheat based product targeted at children. It was expected to compete with products like Nestle‟s Maggie noodles. With this strategy ITC built for itself new markets.
 Cost control strategy (all products): When ITC started the foods division, its main challenge was to compete with the players who were already there. To overcome this challenge, ITC realized that they have to offer products at a price which is either equal or less than what the competitors are offering. To do this, they planned to capitalize by leveraging the strength of the group‟s other businesses. ITC‟s printing and packaging business provided high-quality, cost-effective, and innovative packaging. ITC also enjoyed cost advantages over its competitors owing to its electronic procurement system called e-Choupal. This helped ITC to compete with the best.
 Diversification of products (Biscuits, Wafers, and Ready to Eat): One of the ITC‟s successful strategies has been the method of diversifications among its various products. If we talk just about Bingo, ITC has come up with 16 flavors in comparison to its competitor „Lays‟ of „Frito Lay‟ which has only 4 major flavors. Same is the case with Ready to Eat food category and Biscuits.
This strategy has helped ITC to attract a wide range of market.
 Extensive advertising (Biscuit, confectionary, wafers): Just like a Bollywood movie needs good publicity to be a super hit, every new product launched in the market needs to be known to the consumers before it is launched. Advertising is where ITC made the difference in comparison to its competitors. They hired the best professionals and the best ambassadors in the country to make their products famous. This is evident form the award winning marketing campaign for Bingo and Minto Fresh. The tagline "Jab Laila ko karna tha impress to majnu ne khayi mint o fresh" has stood the test of times and is still widely known and remembered. Hiring the best people from the film industry and sports (Sharukh Khan and Sachin Tendulkar for Biscuits, Rakhi Sawant for Minto Fresh) showed ITC‟s urge to be the best.
On television, the company booked 10 to 15 spots per channel per day on youth channels such as MTV and Star World, mass Hindi channels like Zee and Star TV, and news
19
channels. It also had around 20 spots on a variety of radio channels and advertised in most leading national dailies. In the top-30 cities, over 1,000 outdoor hoardings advertised the product. According to industry estimates, ITC spent close to Rs 100 crore on marketing.
This kind of promotion of products helped ITC to make its products known to everyone and now it was not difficult to attract consumers.
 Regular introduction of new products (all products): Having acquired reasonable scale in a relatively short span of time, ITC realized that, to remain in the competition it had to introduce new products regularly. ITC has been expanding its distribution network aggressively and also their product range. In biscuits and wafers range, it is launching new products or flavors week after week. Same is the case with Ready to Eat and Kitchen of India.
 Innovation (all products): When the need to introduce new products arrived, ITC shifted its focus on to the innovation. Also, ITC was innovative in identifying the market or niche for all its products.
 Maintenance of freshness and hygiene (all products): ITC positioned its wheat flour on the health & hygiene and value for money terms. Success in the staples business, especially in the branded and packaged wheat flour business, depended on two factors – an effective distribution network and the quality of the product. Therefore, ITC attempted to ensure that the supply chain was responsive, and laid emphasis on making accurate sales forecasts using inputs from distributors, sales personnel and a well-managed MIS system. To maintain freshness of the product, the company strove to minimize the transit time by regulating the shippers to maintain company-specific transit norms. The physical aspects of the supply chain like warehouses and trucks were closely monitored to maintain cleanliness.
 From Analyzers to Prospectors (Biscuits): When ITC entered the biscuits market with Sunfeast in 2003, with three varieties of biscuits - glucose, marie, and cream, they did what any new player in the market does, imitating and emulating the leader that was Britannia. Their strategy was to manufacture those products which are already a success in the market. But, as ITC got hold of the market, it started to manufacture flavors which were never heard of. This was the result of ITC‟s desire to exploit new product and market opportunities.
20
All the above strategies and with the help of launch of Bingo in 2007, ITC finally tasted success in its food business in 2008 when it became a profitable business for the first time since its launch in 2001


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Last edited by abhishreshthaa; March 29th, 2011 at 12:19 PM..
   
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