dipanshu itc project

A

Project Study Report

On

Training Undertaken at

“Competitive Analysis of Yippee Noodles.”

Submitted in partial fulfillment for the

Award of

Post-Graduation Degree in Management

LACHOO MEMORIAL COLLEGE OF SCIENCE & TECHNOLOGY,

JODHPUR

Submitted By:

Dipanshu Mangal

MBA 3rd Sem.

Corporate Guide: Faculty Guide:Mr. Jai PrakashLata Dr. Ashish M. Mathur Area Executtive DMS, LMC, Jodhpur ITC Ltd., Jaipur

1

2011-2012

DECLARATION

I hereby declare that this project report entitled “Competitive Analysis of Yippee Noodles.”

is a Bonafide record of work done independently by me during the course of summer project

and it has not previously formed the basis for the award to me for any degree associate ship,

fellowship or other similar title, of any other institute/society.

Date: Dipanshu Mangal

2

ACKNOWLEDGEMENT

I,here with, take this opportunity to extent a sincere token of thanks to Dr. R. L. Dadhich,

Director, DMS, Lachoo Memorial College Of Science & Technology Jodhpur , for all the

guidance, support and help throughout my studies.

This study is also one of the outcomes of valuable, continuous and systematic guidance of

Dr. Ashish M. Mathur, Faculty Lachoo Memorial College of Science & Technology

Jodhpur, His support and constant help has made this study possible. I am grateful for his

invaluable support.

At the outset of a 45 Days long project study, I take this most awaited moment to express my

sincere and heartfelt gratitude to ITC LTD for giving me the opportunity to do such a

competent project. I am left with no words to express my thanks for its gracious favors and

valuable experiences.

This project would have been incomplete without the help and guidance of Mr. JAI

PRKASH LATA (Area Executive) for his tireless efforts to help me. His presence by my

side acted as a fountain of confidence that helped me to work with zeal for the success of this

project.

My experience of the project was an endeavor of many people and hence they are the

torchbearers through whom I could see the glimpse of the working style and scenario

prevalent in the industry. I am very thankful to all the suggestions and technical knowledge

and skills which were embodied into me by the valuable support of employees of ITC Ltd.

I take pride in mentioning the mental, moral and physical encouragement provided by my

parents and my sister. I would also like to mention many thanks to all my friends for their

continuous support and help during the project study.

Dipanshu Mangal

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Serial No. Content Page No.

1. Executive Summary 5

2. FMCG Sector in India 6

3. Profile Of The Industry 13

4. Profile Of The Organization 15

5. Introduction To Yippee 20

6. Objective Of The Study 23

7. Research Methodology 24

8. Limitation Of the Study 29

9. Data Analysis And Interpretation 30

10. Finding 54

11. Suggestion 55

12. Conclusion 56

13. SWOT Analysis 58

14. Bibliography 59

15. Annexure 61

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EXECUTIVE SUMMARY

With increasing foray into various category of food business ITC needs to determine the best

way to serve the grocery outlets and build equally strong distribution system that match the

long term growth plans of the company in the FMCG business.

This report provides competitive analysis of noodles industry of ITC and its vis-à-vis nestle.

The scope of the study is restricted to Jaipur city. The analysis is based on retailer

questionnaire. Various parameter such as credit term quality of service, delivery system,

knowledge of salesman etc. have been studied.

The result bring out Nestle as the preferred company, primarily on account high quality of

services and consumer demand. The report concluded with recommendation to increase the

brand image of the Yippee noodles.

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FMCG SECTOR IN INDIA

FMCG is an acronym for Fast Moving Consumer Goods, which refers to things that we buy

from local supermarket on daily basis, the thing that have high turnover and are relatively

cheaper.

A major portion of the monthly budget of each household is reserved for FMCG product. The

volume of money circulated in the economy against FMCG product is very high.

Competition in FMCG sector is very high resulting in high pressure on margins. FMCG

companies maintain intense distribution network. Companies spend a large portion of their

budget on maintaining distribution network. New entrants who wish to bring their product in

the national level need to invest huge sums of money on the promoting brands.

Manufacturing can be outsourced. A recent phenomenon in the sector was entry of

multinational and cheaper import. Also the market is more pressurized with presence of local

player in rural area and state brand.

The Indian FMCG sector is the fourth largest sector in the economy with a total market

size in excess of US $ 13.1 billion. It has a strong MNC presence and is characterized by a

well-established distribution network, intense competition between the organized and

unorganized segments and low operational cost. Availability of key raw materials, cheaper

labor cost and presence across the entire value chain gives India a competitive advantage.

The FMCG market is set to treble from US $ 11.6 billion in 2003 to US $ 33.4 billion in

2015. Penetration level as well as per capita consumption in most product categories like

jams, toothpaste, skin care, hair wash etc in India is low indicating the untapped market

potential. Burgeoning Indian population, particularly the middle class and the rural segments,

pressure an opportunity to markers of branded products to convert consumer to branded

product.

Growth is also likely to come from consumer upgrading in the matured product

categories. With 20 million people expected to shift to process and package food by 2010,

India around US $ 28 billion of investment in the food-processing industry.

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Automatic Investment approval(including foreign technology agreement within specific

norms). Up to 100 percent foreign equity or 100 percent for NRI and overseas corporate

Bodies (OCB’s) investment is allowed for most of the food processing sector.

FMCG sector generate 5% of total factory employment in the country and it is creating

employment for three million people, especially in small town and rural India.

Consumer Demographics & Buying Pattern of Indian Consumer

With a population of 1bn people, India is a big market for FMCG companies. Around 70% of

the total households in India reside in the rural areas. The total number of rural households is

expected to rise from 150 m to 165 m in 2012 which represent the largest potential market in

the world.

Rural and Urban potential

Urban Rural

Population Distribution in 2001-02(m House Hold) 53 135

Population 2009-10(M house Hold) 71 156

% Distribution(2001-02) 28 72

Market(Town/Village) 3870 635000

An average Indian spends around 40% of his income on groceries and 8% on personal care product. A larger part of the total spending pie along with a large base(in terms of population) makes India one of the largest FMCG markets.

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4% 11%

9%

8%

40%

28%

Spending Pattern(%)

Saving

other

Clothing

Personal Care

Grocery

Entertainment

Changing Life Style: Rising per capita income increased literacy and rapid urbanization

have caused rapid growth and change in the demand pattern. The rising aspiration levels,

increase in spending power has led to a change in the consumption pattern. Apart from the

demand for basic goods, convenience and luxury goods are growing at fast pace too. The

urban population between the ages of 15 to 34 year is expected to increase from 107m in

2001 to 141m in 2012, an increase of 32%. This would unleash a latent demand with more

money a new mindset. With growing income at both the rural and the urban level, the market

potential is expected to expand further.

FMCG is one sector which cater to the daily and more basic needs of consumer and therefore

don’t have to run out of focus. From oral care products to packed food to detergent, soap,

mosquito coil etc, are the various categories of products that FMCG market makes available

to lath of consumer across the country.

Initially, Indian buyers were a bit conservative partly due to lesser disposable income and

partly due to fewer competitive and more variety of product. But since almost a decade,

brand like nestle, horlicks, Pepsi, Coke, and various ITC Brand, Dabur products etc, have

made a stern attempt in providing higher quality product with relatively competitive prices,

making Indian consumer enjoy brands which deliver high quality and adhere to global

standard. The plethora of such brands was thrown open to Indian consumer during 1990s

which witnessed a rise and growth in FMCG industry. But from 2000 onward there has been

a negative growth of this industry. The reasons are manifold. Firstly, yesterday’s amenities

started becoming necessity like, mobile phones, cars, branded clothes, accessories.

8

Secondly, the disposable income of average Indian consumer rose sharply within the past 5

Year

Finally, availability of various financial aides made every reasonable and expensive

purchase, easy thereby giving the Indian consumer an unlimited exposure to experience the

same.

The sales of various brand belonging to key players and the overall FMCG industry

performance have picked up and the intense sales promotional efforts, cut throat competitive

strategies, stronger distribution efforts have helped various brands penetrate deeper into the

market and increased sales. Today, rural Indian consumer market has by far become the

highest revenue generator for many of the FMCG product companies and availability of

variety of range has allowed today’s Indian Consumer to analyze and judge each product

accurately and make an idea purchase decision.

Scope Of The Sector

The Indian FMCG sector with a market size of US$13.1 billion is the fourth largest sector in the

economy. A well-established distribution network, intense competition between the organized and

unorganized segments characterizes the sector. FMCG Sector is expected to grow by over 60% by

2010. That will translate into an annual growth of 10% over a 5-year period. It has been estimated

that FMCG sector will rise from around Rs 56,500crore in 2005 to Rs 98,100crores in 2011. Hair care,

household care, male grooming, female hygiene, and the chocolates and confectionery categories

are estimated to be the fastest growing segments

Growth Prospect

With the presence of 12.2% of the world population in the villages of India, the Indian rural

FMCG market is something no one can overlook. Increased focus on farm sector will boost

rural incomes, hence providing better growth prospects to the FMCG companies. Better

infrastructure facilities will improve their supply chain. FMCG sector is also likely to benefit

from growing demand in the market. Because of the low per capita consumption for almost

all the products in the country, FMCG companies have immense possibilities for growth. And

if the companies are able to change the mindset of the consumers, i.e. if they are able to take

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the consumers to branded products and offer new generation products, they would be able to

generate higher growth in the near future. It is expected that the rural income will rise in

2007, boosting purchasing power in the countryside

However, the demand in urban areas would be the key growth driver over the long term.

Also, increase in the urban population, along with increase in income levels and the

availability of new categories, would help the urban areas maintain their position in terms of

consumption. At present, urban India accounts for 66% of total FMCG consumption, with

rural India accounting for the remaining 34%.

Indian Competitiveness and Comparison with the World Markets

The following factors make India a competitive player in FMCG sector:

Availability of raw materials

Because of the diverse agro-climatic conditions in India, there is a large raw material base

suitable for food processing industries. India is the largest producer of livestock, milk,

sugarcane, coconut, spices and cashew and is the second largest producer of rice, wheat and

fruits &vegetables. India also produces caustic soda and soda ash, which are required for the

production of soaps and detergents. The availability of these raw materials gives India the

location advantage.

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Labor cost comparison

Low cost labor gives India a competitive advantage. India's labor cost is amongst the lowest

in the world, after China & Indonesia. Low labor costs give the advantage of low cost of

production. Many MNC's have established their plants in India to outsource for domestic and

export markets.

Presence across value chain

Indian companies have their presence across the value chain of FMCG sector, right from the

supply of raw materials to packaged goods in the food-processing sector. This brings India a

more cost competitive advantage. For example, Amul supplies milk as well as dairy products

like cheese, butter, etc.

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Top 10 FMCG Companies

FMCG sector is an ever growing sector and is currently in a boom phase. There are many

jobs in FMCG sector at different levels like sales, supply chain, manager, operations,

purchasing, supervisor, administration, general management, product development, HR,

Finance and marketing. FMCG sector is famous for jobs that are not only well paying but

also gives the best perks and bonuses. Fresher’s are looking for jobs in FMCGsector as these

jobs will give them the best career in the industry.

S. NO. Companies

1. Hindustan Unilever Ltd.

2. ITC (Indian Tobacco Company)

3. Nestlé India

4. GCMMF (AMUL)

5. Dabur India

6. Asian Paints (India)

7. Cadbury India

8 Britannia Industries

9. Procter & Gamble Hygiene and

Health Care

10. Marico Industries

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PROFILE OF THE INDUSTRY

The Rs 1,300-crore instant noodles market in India is in a state of war, with three new players having

thrown their hats in the ring over the last one year. The year 2010 marked the end of the instant

noodle market as we know it. For two decades, consumers had a single brand of noodles to dig into

— Maggi — giving Nestle over 85 per cent share of the market. Players such as Indo-Nissin’s Top

Ramen, Capital Foods’ Ching’s Secret and Smith & Jones and CG Foods’ Wai-Wai tried to make a dent

but failed to take up more than 10-15 per cent of the Rs 1,300-crore market.

Now food companies seem to have woken up to the potential of the category growing at a

consistent 20 per cent for the last few years. Three new entrants have thrown their hats into

the ring over the last one year: Hindustan Unilever (HUL), GlaxoSmithKline (GSK) and ITC

with Knorr Soupy Noodles, Horlicks Foodles and Sunfeast Yippee! respectively.

ITC’s over Rs 2,500-crore food business (with blockbusters such as Bingo for finger snacks,

Aashirvaad for staples and Sunfeast for packaged foods) has a supply chain beginning right at

the farm, giving it cost and quality advantages. This, among other things, helped catapult it to

the league of top companies in packaged foods — such as HUL and Nestle — in the country

in less than a decade. It is not new to marketing offensive either, having shaken PepsiCo

Frito-Lay’s stranglehold on the packaged snack market with Bingo. In biscuits, ITC has

claimed the third spot, with Sunfeast competing against the bestseller brands of Britannia and

Parle that have been around for 30 to 40 years in the market.

Yet, till now ITC was challenging the incumbents with no new competitor in the ring. In

instant noodles, however, it has eager company. Both HUL and GSK have made flamboyant

entries and are playing to their strengths — distribution width and big bang media presence

— while Nestle has been stirred out of its complacency as well. CG Foods is also ramping up

its production and distribution beyond eastern India.

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For its part, ITC is targeting a total of 5lakh outlets. While none of the new players have reached

their full distribution strength, ITC would have to look out for HUL and Nestle’s potential spread. HUL

covers up to 6.5 million outlets out of a total 7.5 million outlets in India. Even Nestle spent years

perfecting Maggi’s masala flavor so that it appeals to all the regions. “Of course, incumbent Maggi is

not sitting idle. In 2010, it reinforced its emotional connect with consumers through an interactive

campaign and then went on to launch more variants of its noodles. Its previous attempts at healthier

Atta and rice noodles may not have found many repeat customers but the customer today is in a

mood to experiment. The task for ITC, therefore, will not be limited to fighting competition.

Satisfying the demand of the consumer who loves to experiment will be a much bigger challenge.

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PROFILE OF THE ORGANIZATION

ITC is one of India's foremost private sector companies with a market capitalization of over

US $ 30 billion and a turnover of US $ 6 billion. ITC is rated among the World's Best Big

Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes magazine,

among India's Most Respected Companies by Business World and among India's Most

Valuable Companies by Business Today. ITC ranks among India's `10 Most Valuable

(Company) Brands', in a study conducted by Brand Finance and published by the Economic

Times. ITC also ranks among Asia's 50 best performing companies compiled by Business

Week.

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 diversified status originates from its corporate strategy aimed at creating multiple

drivers of growth anchored on its time-tested core competencies: unmatched distribution

reach, superior brand-building capabilities, effective supply chain management and

acknowledged service skills in hoteliering. Over time, the strategic forays into new

businesses are expected to garner a significant share of these emerging high-growth markets

in India.

ITC's Agri-Business is one of India's largest exporters of agricultural products. ITC is one of

the country's biggest foreign exchange earners (US $ 3.2 billion in the last decade). The

Company's 'e-Choupal' initiative is enabling Indian agriculture significantly enhance its

competitiveness by empowering Indian farmers through the power of the Internet. This

15

transformational strategy, which has already become the subject matter of a case study at

Harvard Business School, is expected to progressively create for ITC a huge rural distribution

infrastructure, significantly enhancing the Company's marketing reach.

ITC's wholly owned Information Technology subsidiary, ITC InfoTech India Ltd, provides

IT services and solutions to leading global customers. ITC InfoTech has carved a niche for

itself by addressing customer challenges through innovative IT solutions.

ITC's production facilities and hotels have won numerous national and international awards

for quality, productivity, safety and environment management systems. ITC was the first

company in India to voluntarily seek a corporate governance rating.

ITC employs over 26,000 people at more than 60 locations across India. The Company

continuously endeavors to enhance its wealth generating capabilities in a globalizing

environment to consistently reward more than 4, 08,000 shareholders, fulfill the aspirations

of its stakeholders and meet societal expectations. This over-arching vision of the company is

expressively captured in its corporate positioning statement: "Enduring Value for the Nation,

for the Shareholder."

16

ITC BUSINESS PORT FOLIO

17

ITC

FMCG : Cigarettes and

OtherHotels Agri Business Paper

ITC’s corporate strategies are :

Create multiple drivers of growth by developing a portfolio of world class businesses

that best matches organizational capability with opportunities in domestic and export

markets.

Continue to focus on the chosen portfolio of FMCG, Hotels, Paper, Paperboards &

Packaging, Agri Business and Information Technology.

Benchmark the health of each business comprehensively across the criteria of Market

Standing, Profitability and Internal Vitality.

Ensure that each of its businesses is world class and internationally competitive.

Enhance the competitive power of the portfolio through synergies derived by blending

the diverse skills and capabilities residing in ITC’s various businesses.

Create distributed leadership within the organisation by nurturing talented and

focused top management teams for each of the businesses.

Continuously strengthen and refine Corporate Governance processes and systems to

catalyze the entrepreneurial energies of management by striking the golden balance

between executive freedom and the need for effective control and accountability.

FOOD DIVISION

Ready To Eat Foods Staples Confectionery Snack Foods

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Introduction To Yippee

ITC has launched noodles under its Sunfeast brand in Chennai, Coimbatore and Kerala. Of late, FMCG companies like GlaxoSmithKline and Hindustan Unilever and private labels like Big Bazaar's Tasty Treat have entered this segment.

ITC’s Sunfeast Yippee! Says, “Instant noodles was a one-brand category so far and most

consumers bought out of habit because there was hardly a choice. So, we had to make them

stop and think about the purchase they made.”

The new entrants claim market shares of 3-7 per cent in their first few months of launch in south

India. Nestle Maggi’s overall market share, meanwhile, has dipped from 90 per cent in 2009 to 85-86

per cent in 2010. “The category penetration is low as well, 25 per cent of the population only. There

is scope for these players to grow simultaneously.”

ITC launched Sunfeast Yippee! Instant noodles in December 2010, and differentiated it on

product attributes. ITC started working on instant noodles a couple of years back. Pasta

preceded noodles as it gave the brand a head start with hardly any competition around. It

continues to be a small section of the instant foods market as pasta is yet to establish itself as

a mainstream food option in India.

Yippie comes in round stacks, as opposed to the usual rectangular ones to ensure longer

noodles strands. Also it resists clumping when served. Yippee! would need to evolve its

communication further , “Right now, it is in the stage of ‘Who am I’, introducing the brand,

its characteristics. Going forward, it is evolving the campaign and lending a clear personality

to the brand.

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PRODUCT Competitor

Maggi Nestle

Foodles Horlicks

Knorr Soupy Noodles HUL

Indo-Nissin Top Ramen

22

OBJECTIVE OF THE STUDY

Primary

To study distribution practices of the ITC & Contrast with nestle and other companies

To identify factors influencing retailers brand choice.

To examine comparative service quality across retailer base.

To provide necessary policy implications to augment brand image of Yippee after

research is carried out.

Secondary

To ensure availability and visibility of ITC’s Noodles at Retail outlets.

To offer suggestions for increasing market-share of ITC in Noodles Industry

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RESEARCH METHODOLOGY

Formulation of Hypothesis

Frequency of DS visit to the outlets: - sample has been taken from the normal

population.

Preference of the brand: - sample has been taken from the normal.

Is DS knowledgeable: - sample has been taken from the normal?

DS’ handling of the grievance: - samples have been taken from the normal.

Time gap between order captured and delivery: - samples have been taken from the

normal.

Payment terms: - sample has been taken from the normal.

Cash Discount: - sample has been taken from the normal.

Credit period: - sample has been taken from the normal.

Stock replacement: - sample has been taken from the normal.

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RESEARCH DESIGN

This study is an Exploratory Research (Both qualitative & quantitative). The primary

data is collected mainly with the aid of structured questionnaire & personal interview

conducted with retailers (Attached as annexure).

Benefit to Company

In Knowing the competitors strategy

In knowing the retailers perception about company’s Brand.

In knowing deficiencies in company’s distribution channel

Benefit to Retailer

Retailer can give their suggestion to the company that without this kind of

research they were not able to communicate

The can get better services if earlier they were not getting the upto their

expectation.

Benefit to Researcher

This will help the researcher in knowing the actual problems the retailers are going

through and comparison of the services provided to retailer by other companies.

EXPLORATORY RESEARCH

Exploratory Research is conducted when one is seeking insight into the general nature

of a situation, the possible decision alternative, and the relevant variable that need to

be considered. While conducting our study we used exploratory research, it was

flexible and was aimed at identifying all the attributes a retailer might look while

comparing ITC with our competitors nestle and others.

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RESEARCH METHOD

I have used both qualitative and quantitative research technique to carry out the

research.

Qualitative research technique has been used to find out the retailers opinion and

suggestion and satisfaction through in-depth interview and focus groups. The nature

of this type of research is exploratory and open-ended.

Quantitative research has been done using the questionnaire. The questionnaires have

been used to find out the factors where ITC is lagging behind nestle.

PARTICIPANTS

Owners of kirana Stores, General Stores, Departmental Stores, Convenience Store &

Wholesale outlets.

Sources of Data

Data is primary in nature, collected through surveying and interacting with

retail outlets of Jhotwara, Vaishallinagar, Tata nagar, Sodala, Sirsi Road,

Niwaru road, Pratapnagar,Malviya Nagar of Jaipur.

Secondary data is obtained through internet.

Method

The communication approach Structured Questioning i.e. personal interview

with the aid of printed questionnaire (Attached as annexure).

The questionnaire feedback has been analyzed using MS-Excel 2007.

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Questionnaire Design

Before questionnaire was designed, a pilot test was conducted for at 4 days covering

85 outlets, thereafter the desired questionnaire was designed.

The questionnaire contains both close ended and open ended questions. Fixed choices

are given to retailer and they had to select one out of that given choice but along with

it open ended questions where retailers were free to point their opinion were also used

in the questionnaire.

The questionnaire contains a maximum of 15 questions.

Sample Design

Retailer sample size: 453 retail outlets.

Sampling technique: Convenience Sampling

The division between type of outlet is as follow:

Kirana& General Stores

Departmental Stores

Wholesalers

Convenience stores

Time Frame:

The data collection was done over a period of 30 days, by visiting various Kirana

Stores & General Stores, Departmental Stores, Convenience Stores & Wholesale

outlets serviced by ITC in Jaipur.

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Scope of Study:

The research will help ITC to find out the factors that would help in increasing their

net sales & earning.

It will help ITC to review their quality, promotional method.

It will explore the way to improve Retailer satisfaction.

It will also explore the way to come up as increase in the market share in noodles

industry.

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LIMITATION OF THE STUDY

Non response:

Out of the total respondent surveyed some of them were not cooperative due to which

accurate prediction was not possible

Interviewer Error:

These can occur when the interviewer incorrectly record the responses from the

survey.

Biased Response:

The responses given by the respondent are assumed to be true however chance of

getting false and biased information can’t be look fully.

Confined Study:

The study was confined to the Jaipur city only.

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Data Analysis and interpretation

Data was collected through visiting and surveying 453 outlets (Departmental Stores. Grocery

Stores, Convenience Stores, Wholesale outlets) serviced by ITC in Jaipur. The outlets

covered were present in area covered by two WD’s of ITC, namely S.K. MonutradePvt .Ltd.

and Khanlwal WDS. The objective of the focused data collection was to get a clearer

comparative picture.

Area Covered

Sirsi road

Vaishalinagar

Pittal factory area

Jhotwara

Khatipura

Mansarovar

Malviya Nagar

Jagatpura

Area of Questioning

Companies stocked & preferred company.

Availability of product.

Frequency of salesman visit.

Cash and credit term.

Weekly sales.

Stock Replacement.

Trade scheme and consumer promotion.

1. SALESMEN’S VISIT TO THE MARKET

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ITC

NESTLE

HUL

0 50 100 150 200 250 300 350 400 450 500

453

338

380

Column2

Out of 453 outlets covered, since outlets were visited with the salesmen of ITC’s WD, so

all453 outlets are visited by the ITC’s salesmen, and nestle DS visits 338 outlets and HUL

DS visits 380 outlets. Since in rural area at many outlets the DS of nestle and HUL do not

visit the outlets.

2. DS Visit in a week

31

once a week

Twice a week

Thrice a week

more

0 50 100 150 200 250 300 350 400 450 500

453

0

0

0

287

51

0

0

302

50

28

0

HUL

Nestle

ITC

Once a week Twice a week Thrice a week More

ITC 453 0 0 0

Nestle 387 51 0 0

Hul 302 50 28 0

3. Availability of Product

32

ITC

Nestle

HUL

0 50 100 150 200 250 300 350 400 450 500

250

453

170

Column2

ITC NESTLE HUL

Availability of Product 250 453 170

Out of 453 outlets, In case of ITC DS visit all the outlets but only 253 outlets buy the yippee

noodles because of consumer demand. In case of nestle whether the salesmen visit or not but

all outlets keep the stock of nestle due to the high consumer demand. Only a70 outlets keep

the stock of HUL’s noodles.

4. Preferred company

33

ITC20%

NESTLE75%

HUL5%

Prefered Company

Total outlets ITC NESTLE HUL

453 90 340 23

The above data clearly indicate that Nestle is most preferred company by the outlets due to

the consumer demand and a strong brand image of the company. Some outlets prefer the ITC

and HUL just because of non-reach of the DS of the Nestle.

5. FACTORS AFFECTING PREFERENCE AMONG RETAILERS

34

TOTAL OUTLETS

FAVORONG ITC

Consume

r Demand

Schemes Price

Differentiation

Good Services

90 15 30 5 40

Consumer Demand

17%

Schemes33%

Price Differentiation6%

Good Services44%

ITC

Consumer Demand is a major concern ITC must work on it to increase the preference of the

retailer as well as the consumer.

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TOTAL OUTLETS

FAVORONG

NESTLE

Consume

r Demand

Schemes Price

Differentiation

Good Services

340 320 20 0 0

Consumer Demand93%

Schemes7%

Consumer Demand of the Nestle is very high,soretailers prefer to keep the stock of the

Nestle. Scheme and price differentiation does not matter if consumer is very keen to buy the

product

Consolidated Data Consumer

Demand

Schemes Price

Differentiation

Good Services

453 280 30 80 63

36

Consumer Demand62%

Schemes7%

Price Differentiation17%

Good service14%

The consolidated data shows that “Retailers buy what consumer want.” If consumer is not

willing to buy the product there is no use of that product for retailer.

6. Grievance handling by DS.

37

ITC Nestle HUL

Total Yes No Total yes no Total Yes No

453 350 103 338 290 48 380 300 80

Yes77%

No23%

ITC

Yes85%

No15%

Nestle

38

Yes79%

No21%

HUL

During the survey it was found that as compared to the DS of ITC, the DS of NESTLE are

more efficient in handling the grievances of retailer. However the salesman of ITC is

knowledgeable according to the response of the retailers. A frequent complaint is the result of

delay in the delivery and order capturing. There must be a training program for the retailers to

improve their knowledge and skills about the product and selling.

39

7. Time Gap between order captured and delivery

Same day 1 Day 2 Day 3 Day More0

50

100

150

200

250

0

120

220

6350

0

200

6050

28

0

100

180

60

40

ITC

Nestle

HUL

ITC Nestle HUL

Same day 0 0 0

1 Day 120 200 100

2 Day 220 60 180

3 Day 63 50 60

More 50 28 40

40

1 Day26%

2 Day48%

3 Day14%

More12%

ITC

1 Day59%2 Day

18%

3 Day15%

More8%

Nestle

41

1 Day27%

2 Day48%

3 Day15%

More10%

HUL

The above result shows that nestle is more efficient than ITC in delivery system as the

delivery period of nestle is one day in most of the responses and that of ITC take two days.

42

8. One Time Full Delivery

Yes No

ITC 210 243

Nestle 200 138

HUL 250 130

Yes46%

No54%

ITC

Yes59%

No41%

NESTLE

43

Yes66%

No34%

HUL

The one time full delivery should be taken into care. Retailer complaints that they are never

delivered with complete order or order given is out of stock.

44

9. Payment Term

ITC Nestle HUL

Only Cash 159 250 200

Only Credit 172 30 120

Cash + Credit 122 58 60

Only Cash35%

Only Credit38%

Cash+Credit27%

Payment Term Of ITC

45

Only Cash73%

Only Credit9%

Cash+Credit18%

Payment Term Of Nestle

Only Cash52%

Only Credit32%

Cash+Credit16%

Payment Term Of HUL

46

10.Cash Discount

Yes No

ITC 0 453

Nestle 338 0

HUL 250 130

100%

Cash Discount ITC

Yes

No

47

100%

Cash Discount Nestle

Yes

66%

34%

Cash Discount HUL

Yes

No

48

11.Credit Period

One week Two week Three week More

ITC 170 80 44 0

Nestle 50 30 8 0

Hul 110 50 20 0

One week58%

Two week27%

Three week15%

Credit period of ITC

49

One week56%

Two week34%

Three week10%

Credit period of Nestle

One week61%

Two week28%

Three week11%

Credit period of HUL

The credit period is extended for 1 week only in all companies. But some time company

provides two or three week to its premium customer. So credit policy is flexible in almost all

companies

50

12.Satisfaction on D&D(Damage and Destroy) replacement.

Yes No

ITC 295 158

Nestle 250 88

HUL 250 130

Yes65%

No35%

ITC

51

Yes74%

No26%

NESTLE

Yes65%

No35%

HUL

The replacement of the expiry or damaged Noodles is also a thing that needs a focus.

The replacement of Nestle and HUL is more frequent than ITC. Most of the retailer refuse to

place any order just because they were having a lot of stock to be replaced and told that they

will place order only when the stock would be replaced

52

13.Managing Stock Out

Total Outlets Contact Ds Contact WD

directly

Other

453 135 90 225

Contact Ds30%

Contact WD directly20%

Other50%

Managing Stock Out

In the situation of stock out, nearly 5o% outlets point out that they wait for next visit by DS

or buy substitute (other) where as 23% said they purchase product from secondary

wholesalers.

53

FINDINGS

Important factors

During the project, it was found most of the retailers were complaining against the

supply of the expired stock by ITC WD’s.

In the area I visited the market share of nestle is four times more than ITC.

As far as the retailers‘preference towards the brand is concerned, they clearly favor Nestle,

solely on the basis of consumer demand. Nestle gives cash discount 1-2% to retailers.

54

FOOd

Suggestions And Policy Implications

ITC can put some small toys into Yippee to attract childrens.

ITC should distribute free cooked Yippee noodles it will give correct feedback from

market.

ITC can launch other flavors of Yippee.

ITC should give hangers to retailers for hang Yippee ladi pack.

Focus more on advertisement as some consumers are not aware of the product

Opt for a differentiation strategy because even if people buy yippee, they demand it as

“maggi dena”.

Improve the taste of classic flavor.

Change its packaging style as its similar to Maggi.

Retailer should be provided some attractive schemes.

Schools can also be targeted for making awareness among the kids because they are

the major consumer.

POP and display activities should be on regular basis.

There should be training for salesman because salesman also sale the Yippee with

name Maggi.

Reward to highest seller (wholeseller/retailer) of Yippee.

Retailer should be provided with a helpline no. so that they can solve their problem.

Cash discount should be given to the retailer to encourage prompt cash payment.

55

CONCLUSION

The skeleton of distribution system is same for all the companies. Company tries very

hard to make a difference at some point to get the competitive advantage. ITC has a

very strong distribution network for their cigarette brand and they are using this

network to push their new biscuit brand. Credit system also depends upon the position

of the product in the market. In Jaipur market, nestle is clearly the leading brand in

terms of consumer’s as well as retailer’s preference. With emergence of various

players like Horlicks, HUL the competition has toughened in noodles industry these

player gives good margin to the retailer.

But after the introduction of the yippee there is constant fall in the sale of the maggi,

however magi is still most preferred brand but the market share in 2010 it was 90%

has come down to 75%.

56

Work Process

To get rid of old stock being delivered ITC work upon setting manufacturing

unit near Jaipur which will make stock reach the market soon and will also

reduce dissatisfaction level among the retailers as well as consumer against

expired stock.

D & D (Damage & Destroy) tracking should be undertaken for retail outlets

also. This would help to ascertain outlets where are stocks are not moving and

also help to understand the stock trend for particular routes.

Display space should be purchased because most of the outlets complaints that

company does not provide display and nestle and other company provides so

we sell their product.

The high visibility of Yippee must be ensured.

For retailers

Retailer think about the GMROI(Gross margin return on investment) and they

promote the brand which provide them highest. They expect return in the form

of profit margin, company schemes, window display and references of the

shop. Among these, company scheme make the difference and are highest

source of motivation after profit margin.

There is a greater need to understand the retailers’ behavior considering them

as a team working for the company may help them to attached with the

company. There should be feeling of belongingness to the company in inner of

the retailers. Selling values club for retailer so that they may exchange views

with the company and help in understanding consumer behavior.

New promotional schemes should be introduced to attract more retailers &

encourage them to push our brand to consumer.

Cash discount should be given to retailers to encourage cash payment.

Occasional discount: The Company may go for occasional discount offer or

price off from time to time specially during festival.

57

SWOT ANALYSIS

Strength

Wide expanded distribution network.

Sales and distribution activity is done in a timely manner.

Well established Image of ITC.

Regular supervision of market.

Direct dealing with retailer.

D&D policy (Damage and Destroy).

Weakness

Promotion strategy of yippee.

Brand image of yippee.

Less flavor availability.

Packaging is not effective.

Non availability of family pack.

Opportunity

Still the rural market is uncovered.

Scope for target oriented sale offer for retailer.

ITC can introduce a family pack.

Threat

Pre-Established Strong Brand Image of Maggi.

Additional discount and schemes offered by other companies.

Bibliography

58

Reference book

C.R. Kothari Research methodology: methods and techniques New Age International Pvt. Ltd. 1985.

Marketing Management Philip Kotler, NorthWestern University.

Marketing Research by G.C.Beri.

Website

Google search: (www.google.com)

Wikipedia search: (www.wikipedia.com)

Yahoo search: www.yahoo.com

www.itcportal.com

http://www.itcportal.com/sets/food_frameset.html

http://managementfunda.com/tag/sunfeast

Newspapers

Times Of India

The Economic Times

The Hindu

Reference Journals

India Today

4 P`s of Marketing

RETAILER QUESTIONNAIRE

59

http://managementfunda.com/tag/sunfeast

http://www.itcportal.com/sets/food_frameset.html

http://www.itcportal.com/

http://www.yahoo.com/

http://www.wikipedia.com/

http://www.google.com/

Outlet Name _______________________________

Date________________

Location ___________________________________

1. Which Noodles company do you stock ?

ITC nestle Horlicks Hul________

2. Which is your most favored company?

ITC Hul Nestle Horlicks________

Why (Give triggers:- Consumer demand, Scheme, price difference etc.)

____________________________

3. How often does DS Visit you?

ITC

Once a week twice a week Thrice a week More than thrice

Hul

Once a wee twice a week thrice a week More than thrice

Nestle

Once a week twice a week thrice a week More than thrice

4. Is The DS knowledgeable? And able to answer all your queries?

ITC Hul Nestle Horlicks

Yes No Yes No Yes No Yes No

5. Does DS Redress your grievances satisfactorily?

ITC Hul Nestle Horliks


60

6. What is the time gap between order capture and delivery?

ITC

1 Day 2 Days 3 day > 3 Day

Hul

1 Day 2 Days 3 day > 3 Day

Nestle

1 Day 2 Days 3 day > 3 Days

7. How is the order delivered to you?

ITC

Hawker Delivery Van Other_______

Hul

Hawker Delivery Van Other________

Nestle


Horlicks


8. Are there any company’s products being carried by DS/delivery van?

Yes No

If yes then which product ________________.

9. Are your order always received on time?

61



10. What are the payment terms?

ITC

Only Cash Only Credit Cash + credit

Hul


Nestle


If cash, do you get any cash discount?

Yes No

If credit then what is credit period?

1 Week 2 Week 3 Week > 3 Week

11. How long does your stock last?

ITC


Hul


Nestle


12. Do the companies do any stock replacement?



If yes the what are the replacement norms__________________

13. How do you manage your stock out?

62

Contact to D Contact to WD Other__________

How long does the replenishment take? __________________________

14. What is your monthly sale of?

ITC _____________________

Hul _________________

Nestle____________________

Horlicks ___________________

15. What is margin you receive ?

ITC____________________

Hul________________

Nestle___________________

Horlicks __________________

63

dipanshu itc project

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