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INTRODUCTION FMCG Fast Moving Consumer Goods (FMCG) goods are popularly named as consumer packaged goods. Items in this category include all consumables other than groceries/pulses. The most common in the list are toilet soaps, detergents, shampoos, toothpaste, shaving products, shoe polish, packaged foodstuff, and household accessories and extends to certain electronic goods. These items are meant for frequent consumption and have a high return. Typical characteristics of FMCG products include products that often cater to three very distinct but usually wanted for aspects - necessity, comfort, luxury. The volume of money circulated in the economy against FMCG products is very high, as the number of products the consumer use is very high. Key Segments The FMCG sector consists of four product categories, each with its own hosts of products that have relatively quick turnover and low costs: Household Care Personal Care Food and Beverage 1
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Page 1: Fast Moving Consumer Goods

INTRODUCTION

FMCG

Fast Moving Consumer Goods (FMCG) goods are popularly named as consumer packaged goods. Items in this category include all consumables other than groceries/pulses. The most common in the list are toilet soaps, detergents, shampoos, toothpaste, shaving products, shoe polish, packaged foodstuff, and household accessories and extends to certain electronic goods. These items are meant for frequent consumption and have a high return. Typical characteristics of FMCG products include products that often cater to three very distinct but usually wanted for aspects - necessity, comfort, luxury. The volume of money circulated in the economy against FMCG products is very high, as the number of products the consumer use is very high.

Key Segments

The FMCG sector consists of four product categories, each with its own hosts of products that have relatively quick turnover and low costs:

Household Care Personal Care Food and Beverage

Some of the merits of FMCG industry which made this industry as a potential one are low operational cost, strong distribution networks, and presence of renowned FMCG companies. Population growth is another factor which is responsible behind the success of this industry .

FMCG industry is regarded as the largest sector in New Zealand which accounts for 5% of Gross Domestic Product (GDP).

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Indian FMCG industry

The Indian FMCG sector 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 labour costs and presence across the entire value chain gives India a competitive advantage.

Burgeoning Indian population, particularly the middle class and the rural segments, presents an opportunity to makers of branded products to convert consumers to branded products.

The Indian FMCG sector is the fourth largest sector in the economy with a total market size of US$18 billion as of 2007.

By 2015, the sector is predicted to scale up to US$33.4 billion. The sector generates 5% of total factory employment in the country and is

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

With 200 million people expected to shift to processed and packaged food by 2010, India needs around US$ 28 billion of investment in the food-processing industry.

FMCG Sector in India is estimated to grow 60% by 2010. (Sources: Naukri Hub, IBEF, Chennai Online)

Leading FMCG companiesSome of the well known FMCG companies are Sara Lee, Nestlé, Reckitt Benckiser, Unilever, Procter & Gamble, Coca-Cola, Carlsberg, Kleenex, General Mills, Pepsi and Mars etc.

SAFETY MATCHES INDUSTRY

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The origin of the Safety Match Industry in India goes back to the beginning of 20 th

century. Around 1910 immigrant Japanese families who settled in Calcutta began making matches with simple hand- and power-operated machines. Local people soon learned the necessary skills and a number of small match factories sprang up in and around Calcutta.

Mechanization came to the Indian match industry in 1924 when M/s Wimco, Ltd. (Wimco), started operations in 1924 as a unit of the multinational Swedish Match Company. Wimco is still the only representative of the large scale sector in wooden match manufacturing and is the only fully mechanized match factory in the country with five automated factories and a national network of sales depots catering to over 1.5 million retail outlets. Wimco contributes about 18% of current match production with five factories situated in Ambarnath (near Bombay, Maharashtra), Bareilly (Uttar Pradesh), Calcutta (West Bengal), Dhubri (Assam) and Madras (Tamil Nadu)..

Wooden match production in India is split into three sectoral categories: the mechanized large-scale sector; the handmade small-scale sector; and the cottage sector. 82% of total match production is in the handmade small-scale (67%) and cottage (15%) sectors, where technology has remained relatively simple. These two non-mechanized sectors of the match industry are distinguished primarily by output size. The industry as a whole directly employs an estimated 250,000 people, with only 6,000 of these in the mechanized sector. Officially, the cottage industry in match making is defined as any manual production unit producing less than 75 million match sticks per year and is often household-based, accounts for about 50,000 workers.

The strongholds of the small-scale, non-mechanized sector are in the Ramanathapuram and Tirunelveli districts of Tamil Nadu in South India, where 67% of India’s matches are produced. These districts are in a very dry, un-irrigated area where the rural population has traditionally been extremely poor. The cottage sector, responsible for the remaining 15% of match production a large proportion of these is in South India.

COMPANY PROFILE

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ITC Limited is an Indian conglomerate founded on 24 August 1910. The company (formerly known as Imperial Tobacco Company of India Limited) is currently headed by Yogesh Chander Deveshwar. The company has its registered office in Kolkata. It employs over 20,000 people at more than 60 locations across India.

It ranks third in pre-tax profit among India's private sector corporations. ITC is one of India's foremost private sector companies with a market capitalization of over US $ 22 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.

As one of India's most valuable and respected corporations, ITC is widely perceived to be dedicatedly nation-oriented. Chairman Y C Deveshwar calls this source of inspiration "a commitment beyond the market". In his own words: "ITC believes that its aspiration to create enduring value for the nation provides the motive force to sustain growing shareholder value.

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 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 transformational strategy, which has already

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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.

The Company continuously endeavors to enhance its wealth generating capabilities in a globalizing environment to consistently reward more than 358,000 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."

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ITC: SCORES A CENTURY IN BUSINESS!

Established August 24, 1910, ITC, one of India’s largest business conglomerates completed a 100 years of business on August 24, 2010. To mark the day, the company chairman YC Deveshwar addressed a webcast to employees all over the country from ITC Group's five star hotel ITC Sonar in Kolkata. ITC also plans to unveil a special anthem to mark this day.

ITC’S MISSION STATEMENT

To enhance the wealth generating capability of the enterprise in a globalising environment, delivering superior and sustainable stakeholder value.

ITC’S VISION STATEMENT

Sustain ITC’s position as one of India’s most valuable corporations through world class performance, creating growing value for the Indian economy and Company’s stakeholders.

ITC’S POSITIONING STATEMENT"Enduring Value. For the nation. For the Shareholder."

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.

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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 organization 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.

MARKETING SRATEGIES USED BY ITC

ITC started an earnest exercise by creating a new brand image and corporate philosophy by investing in new business categories like personal care, premium apparel, rural business (e- Choupal) and foods. All along using its famed distribution strengths built through its successful past businesses like cigarettes, paperboards and packaging, hotels and agri business, to create synergies across its verticals and help prop up its new businesses, like personal care and foods. ITC has a well thought-out strategic approach. Rather than acquiring weaker brands to get into these new segments inorganically, it created a range of new personal care and branded apparel brands.

The first step in this well-planned strategy was the launch of Wills Lifestyle, the premium branded apparel business in 2002.

ITC then moved on to take the competition head on in the FMCG domain, through ITC Foods in August 2001, and personal care business, which is the focal point of this story, in 2005. It has created good impact with its well etched-out Personal Care Brands. Under this category, brands like Essenza Di Wills, Fiama Di Wills, Vivel Di Wills, Vivel and the Superia were designed to take care of various sets of consumer segments.

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But behind this launch was five years of intensive on ground research of market conditions and consumer expectations. Over one lakh consumers were surveyed across the country to test various prototypes. Acceptance benchmark was kept as high as 90 percent for the final products. ITC called this exercise as '3E’ approach —explore, establish and execute. As an adage goes 'if you have to win a race, you have to clearly target the No 1', ITC too aimed the No 1 which happened to be the formidable HUL (which still reigns over 50 percent of the FMCG market). And ITC's target was HUL and P&G only. ITC roped in its tobacco business veteran Sandeep Kaul to spearhead the personal care launch; it also sought help from product formulation and branding experts in Europe and America to formulate the fragrance, aesthetics and packaging. Many of the brands have also been developed at its R&D centre. The results are there for everyone to see. In less than four years, ITC has been able to create brand awareness and consumer acceptance for its five product lines Essenza Di Wills, Fiama Di Wills, Vivel Di Wills, Vivel and the Superia—each targeted at the needs, aspirations and usage behaviour of different consumer segments. Kaul informs that the strategy for designing personal care is that everyone is a potential consumer.

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.

ITC’s marketing strategies can be summarized as below:

1. 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 boost sales Today,

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ITC‟s Bingo and Sunfeast are available at nearly 1.8 million outlets whereas Parle is available at only 1.5 million outlets.

2. COST CONTROL SRATEGY(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.

3. 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.

4. 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 from 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 a very positive response of consumer.

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5. 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.

6. 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.

DISTIBUTION SYSTEM AT ITC

The process of passing down each passing the product down the chain to the next organization through Chain of intermediaries, before it finally reaches the consumer or end-user is known as the 'distribution chain' or the 'channel.'

A number of alternate 'channels' of distribution may be available:

Distributor, who sells to wholesalers and retailers,

Wholesaler, who sells to retailers and end customers

Advertisement typically used for consumption goods

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ITC follows:

CHANNEL WISE DISTRIBUTION Here the total product is divided into different channels like, Health

care product, Personal care products, Home products & etc.

BEAT WISE DISTRIBUTION Here total market is divided into different areas where the products are

served to all the outlets exist in that area.

ITC supply chain consists of diverse categories with different priorities More than 300+ SKUs Warehousing space of more than 3.5m SFT around 55+ locations Products manufactured at 45+ plants More than 650 trucks moved every day Direct distribution from factories to Distributors. Indirect movement through RDCs Combination of Rail,/Road/ movement within the country depending on the

product type. (Target is Safer, Faster, cost effective)

HISTORY AND EVOLUTION

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ITC was incorporated on August 24, 1910 under the name of 'Imperial Tobacco Company of India Limited'. Its beginnings were humble. A leased office on Radha Bazar Lane, Kolkata, was the centre of the Company's existence. The Company celebrated its 16th birthday on August 24, 1926, by purchasing the plot of land situated at 37, Chowringhee, (now renamed J.L. Nehru Road) Kolkata, for the sum of Rs 310,000. This decision of the Company was historic in more ways than one. It was to mark the beginning of a long and eventful journey into India's future. The Company's headquarter building, 'Virginia House', which came up on that plot of land two years later, would go on to become one of Kolkata's most venerated landmarks. The Company's ownership progressively Indianised, and the name of the Company was changed to I.T.C. Limited in 1974. In recognition of the Company's multi-business portfolio encompassing a wide range of businesses - Cigarettes & Tobacco, Hotels, Information Technology, Packaging, Paperboards & Specialty Papers, Agri-Exports, Foods, Lifestyle Retailing and Greeting Gifting & Stationery - the full stops in the Company's name were removed effective September 18, 2001. The Company now stands rechristened 'ITC Limited'.

Though the first six decades of the Company's existence were primarily devoted to the growth and consolidation of the Cigarettes and Leaf Tobacco businesses, the Seventies witnessed the beginnings of a corporate transformation that would usher in momentous changes in the life of the Company.

ITC's Packaging & Printing Business Division, was set up in 1925 as a strategic backward integration for ITC's Cigarettes business. It is today India's most sophisticated packaging house.

In 1975 the Company launched its Hotels business with the acquisition of a hotel in Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola'. The objective of ITC's entry into the hotels business was rooted in the concept of creating value for the nation. ITC chose the hotels business for its potential to earn high levels of foreign exchange, create tourism infrastructure and generate large scale direct and indirect employment. Since then ITC's Hotels business has grown to occupy a position of leadership, with over 70 owned and managed properties spread across India.

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In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam Paperboards Limited, which today has become the market leader in India. Bhadrachalam Paperboards amalgamated with the Company effective March 13, 2002 and became a Division of the Company, Bhadrachalam Paperboards Division. In November 2002, this division merged with the Company's Tribeni Tissues Division to form the Paperboards & Specialty Papers Division. ITC's paperboards' technology, productivity, quality and manufacturing processes are comparable to the best in the world. It has also made an immense contribution to the development of Sarapaka, an economically backward area in the state of Andhra Pradesh. It is directly involved in education, environmental protection and community development. In 2004, ITC acquired the paperboard manufacturing facility of BILT Industrial Packaging Co. Ltd (BIPCO), near Coimbatore, Tamil Nadu. The Kovai Unit allows ITC to improve customer service with reduced lead time and a wider product range.

In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepal and British joint venture. Since inception, its shares have been held by ITC, British American Tobacco and various independent shareholders in Nepal. In August 2002, Surya Tobacco became a subsidiary of ITC Limited and its name was changed to Surya Nepal Private Limited (Surya Nepal).

In 1990, ITC acquired Tribeni Tissues Limited, a Specialty paper manufacturing company and a major supplier of tissue paper to the cigarette industry. The merged entity was named the Tribeni Tissues Division (TTD). To harness strategic and operational synergies, TTD was merged with the Bhadrachalam Paperboards Division to form the Paperboards & Specialty Papers Division in November 2002.

Also in 1990, leveraging its agri-sourcing competency, ITC set up the International Business Division (IBD) for export of agri-commodities. The Division is today one of India's largest exporters. ITC's unique and now widely acknowledged e-Choupal initiative began in 2000 with soya farmers in Madhya Pradesh. Now it extends to 9 states covering over 3.5 million farmers. ITC's first rural mall, christened 'Choupal Saagar' was inaugurated in August 2004 at Sehore. The year 2006 witnessed the ramping up of the Company's rural retailing

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network with 17 'Choupal Saagars' being operational in three states of Madhya Pradesh, Maharashtra and Uttar Pradesh.

In 2000, ITC spun off its information technology business into a wholly owned subsidiary, ITC Infotech India Limited, to more aggressively pursue emerging opportunities in this area. Today ITC Infotech is one of India’s fastest growing global IT and IT-enabled services companies and 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 (Banking, Financial Services & Insurance), CPG&R (Consumer Packaged Goods & Retail), THT (Travel, Hospitality and Transportation) and Media & Entertainment.

ITC's foray into the Foods business is an outstanding example of successfully blending multiple internal competencies to create a new driver of business growth. It began in August 2001 with the introduction of 'Kitchens of India' ready-to-eat Indian gourmet dishes. In 2002, ITC entered the confectionery and staples segments with the launch of the brands mint-o and Candyman confectionery and Aashirvaad atta (wheat flour). 2003 witnessed the introduction of Sunfeast as the Company entered the biscuits segment. ITC's entered the fast growing branded snacks category with Bingo! in 2007. In eight years, the Foods business has grown to a significant size with over 200 differentiated products under six distinctive brands, with an enviable distribution reach, a rapidly growing market share and a solid market standing.

In 2002, ITC's philosophy of contributing to enhancing the competitiveness of the entire value chain found yet another expression in the Safety Matches initiative. ITC now markets popular safety matches brands like iKno, Mangaldeep, Aim, Aim Mega and Aim Metro.

ITC's foray into the marketing of Agarbattis (incense sticks) in 2003 marked the manifestation of its partnership with the cottage sector. ITC's popular agarbattis brands include Spriha and Mangaldeep across a range of fragrances like Rose, Jasmine, Bouquet, Sandalwood, Madhur, Sambrani and Nagchampa.

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ITC introduced Essenza Di Wills, an exclusive range of fine fragrances and bath & body care products for men and women in July 2005. Inizio, the signature range under Essenza Di Wills provides a comprehensive grooming regimen with distinct lines for men (Inizio Homme) and women (Inizio Femme). Continuing with its tradition of bringing world class products to Indian consumers the Company launched 'Fiama Di Wills', a premium range of Shampoos, Shower Gels and Soaps in September, October and December 2007 respectively. The Company also launched the 'Superia' range of Soaps and Shampoos in the mass-market segment at select markets in October 2007 and Vivel De Wills & Vivel range of soaps in February and Vivel range of shampoos in June 2008.

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ITC’s FMCG portfolio comprises:

 

 

 ITC FMCGC:

CIGARETTES

ITC is the market leader in cigarettes in India. It’s highly popular portfolio of brands includes Insignia, India Kings, Classic, Gold Flake, Silk Cut, Navy Cut, Scissors, Capstan, Berkeley, Bristol and Flake.

ITC's cigarettes are produced in its state-of-the-art factories at Bangalore, Munger, Saharanpur and Kolkata. These factories are known for their high levels of quality, contemporary technology and work environment.

ITC's has presence in overseas markets as well. In the extremely competitive US market, ITC offers high-quality, value-priced cigarettes and Roll-your-own solutions. In West Asia, ITC has become a key player in the GCC markets through growing volumes of its brands.

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FOODS

ITC made its entry into the branded & packaged Foods business in August 2001 with the launch of the Kitchens of India brand. A more broad-based entry has been made since June 2002 with brand launches in the Confectionery, Staples and Snack Foods segments.

The Foods business strives to deliver quality food products to the consumer. All products of ITC's Foods business available in the market today have been crafted based on consumer insights developed through extensive market research. ITC's state-of-the-art Product Development facility is located at Bangalore.

The Foods business is represented in 4 categories in the market. These are:

Ready To Eat Foods Staples

Confectionery

Snack Foods

Today ITC’s five brand of food include:

Aashirvaad Sun feast

Mint-o

Candyman

Bingo

LIFESTYLE RETAILING

ITC’s ventured into Lifestyle Retailing Business Division through its Wills Lifestyle chain of exclusive specialty stores.

Wills Lifestyle, the fashion destination, offers a tempting choice of Wills Classic work wear, Wills Sport relaxed wear, Wills Club life evening wear, fashion accessories and Essenza Di Wills – an exclusive range of fine fragrances and bath & body care products and Fiama Di Wills - a range of premium shampoos and shower gels. Wills Lifestyle has also introduced Wills Signature designer wear, designed by the leading designers of the country.

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With a distinctive presence across segments at the premium end, ITC has also established John Players as a brand that offers a complete fashion wardrobe to the male youth of today.

EDUCATION & STATIONARY

ITC made its entry into the stationery business in the year 2002 with its premium range of notebooks. ITC's Education and Stationery Products are marketed under the brands "Classmate" and "Paperkraft".

The Classmate range of products is targeted at satisfying education & stationery needs of students & young adults. The product range includes Notebooks, Math Instruments, Scholastic Products as well as Writing Instruments.

The Paperkraft range of products aims at satisfying the stationery needs & office consumables need of office executives & working professional. The continuously expanding product range under Paperkraft includes Premium Business Paper, Paper Stationery, Markers & Highlighters.

SAFETY MATCHES

ITC’s range of Safety matches include popular brands like i Kno, Mangaldeep, Aim, Aim Mega and Aim Metro. With differentiated product features and innovative value additions, these brands effectively address the needs of different consumer segments. The Aim brand is the largest selling brand of Safety Matches in India.

ITC also exports regular and premium safety matches brands to markets such as Middle East, Africa and the USA. ITC aims to enhance the competitiveness of the small and medium scale sectors through its complementary R&D based product development and marketing strengths, especially the breadth and depth of the Company's trade marketing and distribution.

AGGARBATTIS

ITC commenced marketing Agarbattis (Incense Sticks) sourced from small-scale and cottage units in 2003. Mangaldeep Agarbattis are available in a wide range of fragrances like Rose, Jasmine, Bouquet, Sandalwood, Madhur, Durbar, Tarangini, Anushri, Ananth and Mogra. Durbar Gold is a new offering from Mangaldeep launched in Andhra Pradesh and has received wide consumer acceptance. The

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premium range from ITC, Mangaldeep Spriha has two offerings, Pratiti and Sarvatra and is specially hand rolled by Cottage Industries, Sri Aurobindo Ashram, Pondicherry.

PERSONAL CARE

ITC forayed into the Personal Care business in July 2005. In the short period since its entry, ITC has already launched an array of brands, each of which offers a unique and superior value proposition to discerning consumers. Anchored on extensive consumer research and product development, ITC's personal care portfolio brings world-class products with clearly differentiated benefits to quality-seeking consumers.

ITC's Personal Care portfolio under the Essenza Di Wills, Fiama Di Wills, Vivel Di Wills, Vivel UltraPro, Vivel and Superia brands has received encouraging consumer response and is being progressively extended nationally.

ITC's state-of-the-art manufacturing facility meets stringent requirements of hygiene and benchmarked manufacturing practices. Contemporary technology and the latest manufacturing processes have combined to produce distinctly superior products which rank high on quality and consumer appeal.

CONFECTIONERY

ITC currently has two brands in the confectionery segment - 'mint-o' and 'Candyman'.

'mint-o' was acquired by ITC from Candico in March 2002. ITC re-launched the compressed mint offering, across all major markets in India, with new and improved product and packaging. It is available in mint flavour with added blue specks to enhance consumer experience. mint-o Cool Blue - a single mint in a pillow-pack was launched In November 2007. 'mint-o' is available in 3 sizes – rolls of 20 and 6 and singles, capturing the international essence of ‘youthful cool’.

ITC re-launched 'mint-o Fresh' in October 2004. Its launch extended the footprint of the 'mint-o' brand in line with the strategy of adding excitement and contributing to the growth of the confectionery category. The target market for the Mint-O Fresh is primarily the urban-young-single-male-smoker who wants to keep his breath fresh and odor free after a cigarette and also impress his colleagues.

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MARKET AND COMPETITION

As part of its strategic initiative to create multiple drivers of growth in the FMCG sector, ITC commenced marketing safety matches sourced from the small-scale sector. The Matches business leverages the core strengths of ITC in marketing and distribution, brand building, supply chain management and paperboard & packaging to offer Indian consumers high quality safety matches.

ITC’s range of Safety matches include popular brands like i Kno, Mangaldeep, Aim, Aim Mega and Aim Metro. With differentiated product features and innovative value additions, these brands effectively address the needs of different consumer segments. The Aim brand is the largest selling brand of Safety Matches in India. ITC also exports regular and premium safety matches brands to markets such as Middle East, Africa and the USA. The successful acquisition of Wimco Ltd. by Russell Credit Ltd., a wholly owned subsidiary of ITC has consolidated the market standing of the Company's Matches business through synergy benefits derived through combined portfolio of offerings, improved servicing of proximal markets and freight optimization. Through its participation, ITC aims to enhance the competitiveness of the small and medium scale sectors through its complementary R&D based product development and marketing strengths, especially the breadth and depth of the Company's trade marketing and distribution.

ITC brands in Safety Matches along with those of Wimco enjoy strong consumer preference. Aim , i Kno, Mangaldeep, Homelites, Vaxlit and Delite have already earned consumer loyalty in the market. Aim is the single largest safety match brand in the country.

ITC’s major competitors’ brands in Safety Matches business are Chavi and Household of ASIA MATCH CO. (P) LTD., hockey of SRI DHAN LAKSHMI WORKS, Panghat Mega of GOPIRAM JAIN & SONS.

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SWOT ANALYSIS

SWOT Analysis is used to estimate the strength of the firm, its shortcomings, its and strengthen the positive ones. The SWOT Analysis of ITC Ltd. is as under:

STRENGHTS

Premium quality of Safety Matches in the market is of ITC. ITC’s Safety Matches are ‘Karborised’ Safety Matches, which leave ‘no

afterglow’. Indian customers are well aware of the brand ITC and rely on it. Attractive packaging of products. In-depth Industry experience and insights. A strong sales and distribution network. It gives considerable amount of commission to retailer.

WEAKNESSES

Packaging of Safety Matches. Black marketing hampers the sale. Difficulty of developing brand awareness to customer. Availability of FMCG products in rural areas is poor. Government policies against the tobacco industry.

OPPURTUNITIES

Participation within a growing industry and expanding the business to rural areas also.

More retailers are ready to stock the ITC’s products. Decreased products cost through economy of scale.

THREATS

With so many product lines, it can hamper the efficient management.

ITC have a number of competitors in Safety Matches industry.

More availability of Competitors’ products.

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People getting environmental cautious, it can hamper the cigarettes industry

and hence to Safety Matches industry.

Now days, maximum number of people are moving towards to use the

lighters for their domestic use rather than using Safety Matches.

Due to political factors uncertainty in tax rate and increase in excise duties

hamper the market.

Rigid government policies.

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OBJECTIVES OF STUDY

To find out the market share of ITC and its Competitors in Dehradun,

Bulandsahar, Hapur, and Gajrola markets.

To find out the pricing policy, trade schemes and distribution channel of ITC

and its Competitors these markets.

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RESEARCH METHODOLOGY

Research Methodology is a way to systematically solve the research problem. It may be understand as a science of studies how research is done scientifically.

Problem Formulation:

Now days Safety Matches business is a booming business of FMCG sector. Therefore ITC made its entry into Safety Matches business in the year 2002 with the launch of brands like iKno, Mangaldeep, Aim, Aim Mega and Aim Metro to offer Indian consumers high quality safety matches. Aim, i Kno, Mangaldeep, Homelites, Vaxlit and Delite –these brands have already earned consumer loyalty in the market. Aim is the single largest safety match brand in the country. In order to sustain a position of market leader in Safety Matches business ITC want to know the working pattern of its Competitors in terms of pricing policy, trade schemes, and distribution channel in Safety Matches business.

Research Objective:

To find out the market share of ITC and its Competitors in Dehradun, Bulandsahar, Hapur, and Gajrola markets.

To find out the pricing policy, trade schemes and distribution channel of ITC and its Competitors these markets.

Data Collection Method

Primary data – Through schedules (Collected through personal interviews & discussion of Wholesale distributors, retailers and customers).

Secondary Data – Collected through Company Websites and from our

project in charge.

Research Methodology: Descriptive research method

In order to conclude the study in given stipulated time of two months descriptive research method is best way to conclude it.

Research Insrument For Data Collection: Schedules

Sampling Design: Convenient sampling

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Sampling Unit: Provisional and Convenience outlets of Dehradun, Bulandsahar, Hapur, and Gajrola markets

Sample Size – 620 outlets inclusive of both the category of outlets

Dehradun – 500 outlets

Bulandsahar – 40 outlets

Hapur – 40 outlets

Gajrola – 40 outlets

Sampling Area: Dehradun, Bulandsahar, Hapur, and Gajrola

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LIMITATIONS

The limitation of my study can be summarized as follows:

The data collected is on the basis of response given by the retailers’ in

different outlet. Some retailers have given half- hearted response, so data

obtained may distort the accuracy of the result.

Only 620 outlets are being selected for the purpose of the study, which is not

representative of total market size of the aforesaid four areas. Hence the

result can’t be generalized.

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RESEARCH FINDINGS

1. The above competitor brands of HOMELITES are using imitation strategy

and by using this strategy they are cheating the retailers and the consumers

by selling their brands at same price as of HOMELITES i.e. at high prices.

2. In all the four areas some retailers have complains about ITC brands AIM

MEGA and HOMELITES concerning their quality. According to them it

sounds very intense (unpleasant to ear) when these brands are being burnt.

They told about HOMELITES brand, that sometimes its chemical got hit to

the eyes, when it is being burnt. Thus quality improvement in both the

brands is really a matter of concern.

3. Customer loyalty is very good in case of TEKKA of ITC in Gajrola market

because of its premium quality.

4. In Bulandsahar market ITC’s brands lags behind because of their quality

and packaging faults. The packaging of AIM MEGA and HOMELITES of

ITC gives rise to impression on retailers, wholesalers and buyers of

convenience outlets that there are fewer sticks in each match box of each of

these two brands of ITC. Each match box size is too spacious compared to

number of sticks in it.

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ANALYSIS AND INTERPRETATION

(DEHRADUN MARKET)

A.

1. Study of market grip of ITC Vs Competitors at Convenience outlets:

Interpretation:

CHAVI DELUXE of ASIA MATCH CO.(P) LTD. is the

stongest brand in Convenience outlets.

The major brand of ITC is AIM MEGA in Convenience outlets.

HL-1 (HOMELITES- Rs.1) of ITC comprise a very less

precentage at Convenience outlets.

HL-5 (HOMELITES-Rs.5) of ITC is found to be absent at

Convenience outlets.

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2. Breakup of units sold of different brands at Convenience outlets on

the basis of average daily sales of each brands:

Interpretation:

HOUSEHOLD of ASIA MATCH CO. (P) LTD. is

strongest brand in terms of its units sold at Convenience

outlets.

HL-1 (HOMELITES- Rs.1), HL-5 (HOMELITES-

Rs.5) and AIM MEGA – these 3 brands of ITC cover a

total of 20% sale in terms of units sold at Convnience

outlets.

3. Breakup of sales revenue of different brands at Convenience outlets

on the basis of average daily sales of each brands:

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Interpretation:

HOUSEHOLD of ASIA MATCH CO. (P) LTD. is

strongest brand in terms of sales volume at Convenience

outlets.

AIM MEGA of ITC is only contributes 9% of total sales

quantity at Convenience outlets.

HL-1 (HOMELITES- Rs.1) of ITC contributes 8% of

total sales volume at Convenience outlets.

HL-5 (HOMELITES- Rs.5) of ITC contributes 0% of

total sales volume at Convenience outlets.

B.

1. Study of market grip of ITC Vs Competitors at Grocery outlets:

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Interpretation:

HL-1 (HOMELITES- Rs.1) of ITC is the strongest player

in Grocery outlets.

CHAVI DELUXE of ASIA MATCH CO.(P) LTD. stands

at 3rd position followed by AIM MEGA amongst the major

players in Grocery outlets.

HL-5 (HOMELITES- Rs.5) of ITC is found to be present

in a very less percentage at Grocery outlets.

2. Breakup of units sold of different brands at Grocery outlets on the

basis of average daily sales of each brands:

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Interpretation:

HOUSEHOLD of ASIA MATCH CO. (P) LTD. is

strongest brand in terms of its units sold at Convenience as

well as Grocery outlets.

AIM MEGA of ITC is only contributes 11% of total sales

quantity at grocery outlets.

HL-1 (HOMELITES- Rs.1) of ITC contributes 8% of

total sales quantity at grocery outlets.

HL-5 of ITC contributes not absolute 0%, but it tends to

zero percentage of total sales qunatity at grocery outlets.

3. Breakup of sales revenue of different brands at Grocery outlets on the

basis of average daily sales of each brands:

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Interpretation:

HOUSEHOLD of ASIA MATCH CO. (P) LTD. is

strongest brand in terms of sales volume at Grocery outlets.

AIM MEGA of ITC only contributes 11% of total sales

volume at Grocery outlets.

HL-1 (HOMELITES- Rs.1) of ITC contributes 6% of

total sales volume at grocery outlets.

HL-5 of ITC contributes not absolute 0%, but it tends to

zero percentage of total sales volume at grocery outlets.

A. Study of distribution channel of ITC Vs Competitors at Grocery outlets:

1. Breakup of wholesale market as a Source Of Supply (SOS) of ITC Vs

Competitors

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Interpretation:

Retailers, who are selling brands like SMILELITES,

HOUSEMAKES, and HOUSEHOLD, are mostly buying these

brands from the wholesale market.

Retailers, who are selling brands of ITC i.e. AIM MEGA, HL-

1 (HOMELITES- Rs.1), and HL-5 (HOMELITES- Rs.5), are

using wholesale market as SOS in a very less percentage.

2. Breakup of Distributor’s Salesman (DS) as a Source Of Supply (SOS)

of ITC Vs Competitors

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Interpretation:

Retailers, who are selling brands like SHAKTI, FLAME, 27, are

mostly buying these brands from the Distributor’s Salesman

(DS).

Retailers, who are selling brands of ITC i.e. AIM MEGA, HL-1

(HOMELITES- Rs.1), and HL-5 (HOMELITES- Rs.5), are

mostly buying these brands from the Distributor’s Salesman

(DS).

3. Breakup of Private Hawker as a Source Of Supply (SOS) of ITC Vs

Competitors:

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Interpretation:

Retailers, who are selling brands like SARVOTTAM,

HOMELIKES, HOUSEFULL, HOUSELITES, and CHAVI

DELUXE, are mostly buying these brands from the Private

Hawker.

Retailers, who are selling brands of ITC i.e. AIM MEGA, HL-1

(HOMELITES- Rs.1), and HL-5 (HOMELITES- Rs.5), are

using Private Hawker as their SOS, in a very less percentage.

B. Study of distribution channel of ITC Vs Competitors at Convenience

outlets:

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1. Breakup of Wholesale Market as a Source Of Supply (SOS) of ITC Vs

Competitors:

Interpretation:

Buyers of Convenience outlets, who are selling brands like

HOUSEMAKES, FLAME and HOUSEMADES, are mostly

buying these brands from the wholesale market.

Among Buyers of Convenience outlets, who are selling HL-1

(HOMELITES- Rs.1) of ITC, 50% of them are buying this

brand from wholesale market.

Buyers of Convenience outlets, who are selling AIM MEGA of

ITC are using wholesale market as their SOS in a very less

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percentage, and in case of HL-5 (HOMELITES- Rs.5) of ITC

this channel is absent in fact.

2. Breakup of Distributor’s Salesman (DS) as a Source Of Supply (SOS)

of ITC Vs Competitors:

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Interpretation:

Among Buyers of Convenience outlets, who are selling AIM

MEGA of ITC, 45% of them are buying this brand from

Distributor’ Salesman.

Among Buyers of Convenience outlets, who are selling HL-1

(HOMELITES- Rs.1) of ITC, 50% of them are buying this

brand from Distributor’ Salesman.

Since market demand of HL-5 (HOMELITES- Rs.5) of ITC is

bit weak, its supply also tends to zero percentage.

3. Breakup of Private Hawker as a Source Of Supply (SOS) of ITC Vs

Competitors:

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Interpretation:

Buyers of Convenience outlets, who are selling brands

HOMELIKES, HOUSEFULL, SMILELITES, SHAKTI,

HOUSELITES, CHAVI DELUXE, and 27 are mostly buying

these brands from Private Hawker.

Among Buyers of Convenience outlets, who are selling AIM

MEGA of ITC, 46% of them are buying this brand from

Distributor’ Salesman.

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Since market demand of HL-1 (HOMELITES- Rs.1) and HL-5

(HOMELITES- Rs.5) of ITC is bit low at Convenience outlets,

their supply is also weak at these outlets.

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C. Pricing policy of ITC Vs Competitors:

Interpretation:

The prices of ITC’ brands i.e. HL-1 (HOMELITES- Rs.1),

HL-5 (HOMELITES- Rs.5), and AIM MEGA are at higher

prices than the prices of ITC’ Competitors.

HL-1 (HOMELITES- Rs.1) of ITC is the premium brand

amongst all the brands.

The major Competitors of ITC are CHAVI DELUXE and

HOUSEHOLD of ASIA MATCH CO. (P) LTD., which are

priced at just below the prices of ITC’ brands.

D. Trading schemes of ITC Vs Competitors:

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1. In HL-1 (HOMELITES- Rs.1) of ITC there is 9.08 off on each bundle

(CFC).

2. In HL-5 (HOMELITES- Rs.5) of ITC, there is 2.08 off on each bundle

(CFC).

3. In AIM MEGA of ITC, there is 9.94 off on each bundle (CFC).

4. In FLAME of ROSE MATCHES (P) LTD., there is 3.75 off on each

bundle (CFC).

5. In rest of the brands, there is no scheme.

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BULANDSAHAR MARKET

A. Study of market grip of ITC Vs Competitors at Convenience outlets:

Interpretation:

HOCKEY of SRI DHAN LAKSHMI WORKS is a very strong

player in Convenience outlets.

AIM MEGA of ITC stands at 2nd major player in Convenience

outlets.

The local brands like SURYA and THE CROCODILE can be

confronted at Convenience outlets.

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B. Study of market grip of ITC Vs Competitors at Grocery outlets:

Interpretation:

HOCKEY of SRI DHAN LAKSHMI WORKS is a very strong

player in Convenience as well as Grocery outlets.

AIM MEGA of ITC stands at 2nd major player in each type of the

outlets.

Premium brand HOMELITES (i.e.HL-1 and HL-5) of ITC can be

seen in Grocery outlets but at a very less percentage.

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GAJROLA MARKET

A. Study of market grip of ITC Vs Competitors at Convenience outlets:

Interpretation:

TEKKA of ITC is a strong player in Convenience outlets.

AIM MEGA of ITC stands as a 2nd major player in Convenience

outlets.

In competitors’ brands CAMEL of PALANIVEL MATCH

INDUSTRIES, and AAJ TAK of THILAGARATHNAM

MATCH WORKS can be seen as major players in Convenience

outlets.

B. Study of market grip of ITC Vs Competitors at Grocery outlets:

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Interpretation:

The TEKKA of ITC is a strong player in Convenience as well as

Grocery outlets.

AIM MEGA of ITC stands as a 2nd major player in Grocery outlets.

In competitors’ brands CAMEL of PALANIVEL MATCH

INDUSTRIES is a major player in Grocery outlets.

HAPUR MARKET

A. Study of market grip of ITC Vs Competitors at Grocery outlets:

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Interpretation:

The PANGHAT MEGA of GOPIRAM JAIN & SONS is a strong

brand in Grocery outlets.

2nd major brand Grocery outlet is CAMEL of PALANIVEL

MATCH INDUSTRIES.

AIM MEGA of ITC covers only 25% of Grocery outlets.

HL-1 (HOMELITES- Rs.1) of ITC covers only 14 % of Grocery

outlets.

HL-5 (HOMELITES- Rs.5) of ITC covers 6% of Grocery outlets.

B. Study of market grip of ITC Vs Competitors at Convenience outlets:

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Interpretation:

The PANGHAT MEGA of GOPIRAM JAIN & SONS, which is a

strong brand in Grocery outlet, is a weak brand in Convenience

outlets.

AIM MEGA of ITC is a strongest brand in Convenience outlets.

CHAVI DELUXE of ASIA MATCH CO. (P) LTD. is a 2nd major

brand in Convenience outlets.

SUGGESTIONS

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1. Packaging of HOMELITES and AIM MEGA should be improved in order

to overcome the customer psychology of having less sticks in one match box

of both of the brands of ITC.

2. The quality of HOMELITES and AIM MEGA should be improved in

order to avoid their ill effects on eyes and to avoid the intense sound, having

come out when these brands are being burnt by consumer.

3. The prices of HOMELITES should be decreased by using economy of

scale in order to attract many of the retailers.

4. In order to increase the market availability of Safety Matches brands of

ITC, it need to tab many of the Private Hawker also as their medium of

supply, apart from having Distributor’ Salesman.

5. There should be scheme in a form of coupons in every bundle (CFC) of

HOMELITES and AIM MEGA, in order to attract maximum number of

retailers.

6. The ITC’s distributors must motivate enough their salesmen so that these

salesmen push the retailers to stock more products of ITC.

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CONCLUSION

5. In Dehradun market, HOMELITES of ITC is a strong brand at Grocery

outlets because of Grocery outlets are quality concerned outlets and

HOMELITES is a premium quality brand.

6. The most of the competitors are in cut throat competition to create the same

image as of HOMELITES. Thus brands like HOUSE MADES,

HOUSEHOLD, HOUSELITES, HOUSEMAKES, HOUSEFULL, and

HOMELIKES are positioning their brands in the market through brand

imitation of HOMELITES i.e. competitors are using same style of printing

of their brand logo as of HOMELITES.

7. In Dehradun market, CHAVI DELUXE of ASIA MATCH CO. (P) LTD.

is a strong brand in Convenience outlets, because this brand is using Private

Hawker as its distribution medium. This brand is cheaper than ITC’ brands,

therefore it is very economical for Private hawker to purchase CHAVI

DELUXE. Private Hawker is very fast channel to these outlets, because

there supply is almost daily to every outlet. That is why CHAVI DELUXE

is approaching faster than ITC’ brands at Convenience outlets.

8. TEKKA of ITC is a strong brand in Gajrola because of its market grip from

a long time since Gajrola was a monopoly market.

9. The study of all the four areas gives rise to result that-

HL-1 (HOMELITES- Rs.1) of ITC is a strong brand in Grocery

outlets in Dehradun market.

CHAVI DELUXE of ASIA MATCH CO. (P) LTD. is a strong

brand in Convenience outlets in Dehradun market

HOCKEY of SRI DHAN LAKSHMI WORKS is a strong brand in

both the category of outlets in Bulandsahar market.

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TEKKA of ITC is a strong player in Convenience as well as Grocery

outlets in Gajrola market.

PANGHAT MEGA of GOPIRAM JAIN & SONS is a strong brand

in Grocery outlets in Hapur market.

AIM MEGA of ITC is a strong brand in Grocery outlets in Hapur

market.

As can be seen from the above results that there are different market

leader in different areas. The reason for this changing trend of market

leader in different areas is that the Safety Matches Industry is very

fragmented market. It’s a small scale industry; any brand can enter

and exit this industry easily.

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BIBLIOGRAPHY

Kothari C.R, 1998, “Research Methodology”, 2nd Edition, Vishwa

Prakashan, New Delhi.

Sharma D.D, 1995, “Marketing Research”, 3rd Edition, Sultan Chand &

Sons, New Delhi.

Kotler Philip, 2006, “Marketing Management”, 12th Edition, Person

Education, Singapore.

WEB SITES:

http://www.itcportal.com

http://www.itcportal.com/itc_leadership/

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ANNEXURE

SCHEDULE FOR RETAILERS

BRANDS

PRICE OF ONE MATCH

BOXPRICE OF 1

PACK PRICE OF STOCK DAILY SALES

SOURCE OF

SUPPLY

FREQ. OF SUPPLY

TRADE SCHEME

C.P S.P C.P S.P 1 OUTER 1 CFCC.P S.P C.P

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