ITC - Marketing Management

• 1. Presentation Marketing Management EMBA Semester I (Batch 2011 14) Presented by Shubh, Mahesh, Pushkar, Prabodh, Vikas, Mohammad Ali, Sai Prashanth, Vasanth, Vishnu 3/13/2014 1Group 3 Enduring Value

2. List of Participants 3/13/2014Group 3 2 Name Roll Number Shubh 230-41 Mahesh 230-20 Pushkar 230-30 Vasantha Kumar 230-50 Sai Prashanth 230-37 Prabodh 230-27 Mohammad Ali 230-40 Vishnu 230-48 Vikas 230-52 3. 3/13/2014Group 3 3 Brands & Products Scope of the presentation ITC Ltd Company profile Analysis for ITC Introduction 4 1 2 3 5 Sales & Marketing growth6 Agenda Promotions, Brand Ambassadors, Competition7 Conclusion, Appendix8 4. Our Understanding and Scope India Market scenario Worlds Youngest nation - median age of 29 years Growing Urbanization, increased disposable income Consumer expenditure(1) on Food, Beverage & tobacco is US $ 286.9 M Food Meat consumption 6.6 kg/head Vegetable consumption 94 kg/head Beverage Tea consumption 0.7 kg/head Soft drinks, sales volume 4,941 million liters India Market Value Forecast(2) prediction is US $ 17,468.7 M (increase by 29.5% since 2009) Indian food sector to have volume of 28,668 Million transactions (increase of 31.4% since 3/13/2014Group 3 4 Year 2005- 2009 India Asia Foodservice market CAGR growth rate 7.9% China 14.3% Japan 0.1% Share of foodservice segmentatio n 18.5 % China 38.5% Japan 29.8% NOTE: (1) - As per Economist Intelligent report for India projected for 2009 (2) - Data Monitor reports, by 2014 Market Mix consideration Labor intensive Low Margin with low switching costs Supply chain leads and moderate rivalry 5. ITC Company profile ITC started as Imperial Tobacco Company. 70% of market share with Gold Flake. 100 year old headquartered in Kolkata. 49% of turnover from Cigarettes business Market capitalization of over $33 Billion. Employs over 26,000 people Presence in over 60 locations across India Listed on Forbes 2000 3/13/2014Group 3 5 Hotel Business - ITC Welcomegroup Hotel Chola Cigarettes and Leaf Tobacco business Packaging and Printing Business Paperboards business Indo-Nepal and British joint venture - Surya Nepal Private Limited 1) Acquired Tribeni Tissues Limited Paperboards & Specialty Papers division Agribusines s Division 1) Greeting, Gifts, Stationary 2) Lifestyle Retailing business 3) ITC Infotech India Limited 1) Food business 2) Safety matches Aug 24 1910 20021925 19791975 1985 1990 2000 2005 Fine Fragrance, bat h and body 6. About ITC Ltd 3/13/2014Group 3 6 Vision: Sustain ITCs position as one of India's most valuable corporations through world class performance , creating growing value for the Indian economy and the company's stakeholders Mission: To enhance the wealth generating capability of the enterprise in a globalizing environment, delivering superior and sustainable stakeholder value. Core Values: ITCs core values are aimed at developing a customer focused, high performance organization which creates value for all its stakeholders Trusteeship Customer Focus Respect for people Excellence Innovation Nation Orientation Slogan: Enduring Value 7. Paper board & Packaging ITC Ltd Business & Products HotelsFMCG Agri Business 3/13/2014 7Group 3 Cigarettes & Cigars Foods Lifestyle Retailing Personal Care Education & Stationery Safety Matches Agarbattis e-Choupal Leaf Tobacco, Spices Agri Commodities Paper Boards Packing Education & stationery Classmate , paperkraft, color crew IT 8. Product Mix FMCG Cigarette s & Cigars India Kings Classic Gold Flakes Navy Cut Foods Sun feast Bingo! Aashirva d Mint -o Personal Care Vivel Di Wills Vivel Fiama Di Wills Superia Lifestyle Retailing Wills Lifestyle Wills Signatur e John Players Miss Players Educatio n & Stationer y Classic Paperkraf t Classmat e Notebook Classmat e Pens Safety Matches Aim I Kno Stylites Mangalde ep Agarbatti s Mangalde ep Fragrance of temple 3/13/2014Group 3 8 9. ITC FMCG Products & Market Share 3/13/2014Group 3 9 Cigarettes 70% Safety Matches & Aggarbatis 15% Personal Care 14% Lifestyle Retailing 9% Food 27% Education & Stationery 35% 10. ITC Market Analysis 3/13/2014Group 3 10 Organized retail Market is the new channels for FMCG. Scope to improve the retail market Revenue from FMCG companies through organized retailing Rural India Market is one of the potential growth areas Effective distribution and supplier network: e-Choupal Personal and Household market Less penetration. 95% by HUL and Dabur Innovation(packaging, pricing & quality) To cover lower pyramid on income group Competition from MNCs Export potential Merger and Acquisition Godrej, Britannia, Lotte India, etc. 11. ITC Strategy Marketing 3/13/2014Group 3 11 India Savory Market is fragmented Nuts & Seeds, popcorn, potato chips, processed snacks India savory snacks Market share: % share by value, 2008 NOTE: Ref Source-Data Monitor PepsiCo, Inc 6.10% ITC Limited 1.40% Haldirams 1.00% Others 91.50% e-Choupal Agricultural commodity traders Direct from farmers Effective SCM ITC packaging business Market reach Advertisemen t strategy Health focus Leverage & Innovatio n Market share - oligopoly Strong CSR, governance mandates Commodity Hedging Differentia tion 12. Strategies When compared to Maggi (Nestle), it is round shaped Longer noodles after cooking because of round shape Non sticky even after losing heat. 16 variants for more penetration. Hilarious approach through commercials. No Confusion, Great Combination! Different shape (Mad Angles - Triangle) Easily recallable & recognisable names. Tedhe Medhe, Live Wires No Brand Ambassador Features naughty boy & cartoon boy as central characters. Irresistible tagline " Kuch Bhi Karega for Candyman " Milk Shake candies with fruit flavours Candyman Natkhat Mango ad featuring Naughty Boy 3/13/2014 12Group 3 13. 3/13/2014 13 Strategies Group 3 14. Brand Ambassadors Sun feast: Shah Rukh Khan, Suriya Classmate: Yuvraj Singh, Soha Ali Khan Wills Lifestyle: Hrithik Roshan Chocolaty candy Maha Choco: MS Dhoni Fiama Di Wills: Deepika Padukone Product Promotions 3/13/2014 14Group 3 15. SWOT Analysis 3/13/2014Group 3 15 Strengths Established Market Reputation Expanding Market Share Increased Financial Performance Focus on New Product Development Diversified Business Portfolio Weaknesses Limited Liquidity Position Lack of Geographical Reach Over Dependence on Cigarettes Division Opportunities Indian Cigarette Market Indian Hospitality Sector Favorable Trends in Rural Market Threats Highly Competitive Market Shortage of Skilled Labor Rising Counterfeit Goods Market 16. PEST Analysis 3/13/2014Group 3 16 Political Huge burden of VAT Excise duty raised by 5 % in the union budget Ban on communication Luxury tax in 10 states Smuggling 100% FDI not allowed Economical Bidee : cigarette ratio -10:1 Profit margin is high Other forms of cheap tobacco intake Social Becoming status symbol Companions mounted by W.H.O. Changing attitudes towards tobacco May 31 is no tobacco day Change in life style Strong Corporate Social Responsibility(CSR) Technological State-of-the-art factories Development of IQMS Adapting other concepts like QC, TQM, 5S, Six sigma 17. Star Question mark DogCash Cow FMCG-Cigarettes FMCG-Foods ITC Infotech Agri Business Hotels Paperboards & Packaging Branded Apparels Packaged foods ITC Ltd on BCG Matrix Low Low High High MARKET SHARE MARKET GROWTH 3/13/2014 17Group 3 18. Porters 5 forces Bargaining power of customer Bargaining power of supplier Threats from new entrants Rivalry Threat from substitutes 3/13/2014 18Group 3 19. 4Ps 3/13/2014Footer Text 19 20. 4Ps ITC Strategy 3/13/2014Footer Text 20 Product Strategy Bingo positioned as chips with Indian twist. Offerings under finger snacks - khakhra inspired Mad Angles Multiple Pricing offerings - Rs 5, Rs 10, Rs20 Varity cream biscuit - Sunfeast and Marie segment, butterscot ch , orange flavored Marie Leveraging Agri business Wheat biscuits Pricing Competitive pricing - Similar priced SKUs. Leverage its SCM: e-Choupal initiative to ensure availability of raw materials Leverage printing & packaging business: Lead to high quality , cost effective and innovative packaging Promotional Strategy Bingo launched in the time of World cup to cash in on the popularity of snacks among cricket lovers. ITC booked 10-15 spots per channel per day, 20 spots on radio stations supported by 1000s of hoardings Digital media: Bingo national Gaming championship across 4 cities Indian classical CDs given away with Kitchens of India to target western market. Place Rural & Urban Market e-Choupal fresh Leverage its well established Cigarette distributing network Enabling retailers by providing 4 lakhs racks for POS Lifestyle products Alliances: Future group - Big bazaar Cafes , local betel shop 21. ITC Competitors 3/13/2014Group 3 21 HUL Godrej Amul Indias largest FMCG company According to Brand Equity, HUL has one of the largest no of brands in most trusted brands list Family Business Model Effective Management of Godrej Group namely: Godrej & Boyce and Godrej Industries Limited (FMCG) One of the largest milk producers in the world Effective supply chain management system Diversified in non- Tobacco & operating purely in FMCG Major emphasis on low-cost products Annual sales in excess of US $ 1.7 billion HR practices of the Godrej group are considered amongst best in the country Indigenous R&D and Technology Development Effective Network of Cooperatives and Unions 22. FMCG- Achievements Aashirvad Atta is now #1 selling. Sunfeast Biscuits is ranked #3. Bingo, launched in August 2007 - 16% market share. November 2007 - Mint-o overtook its competitor Chlormint Classmate brand - Most widely distributed stationary brand Kitchens of India has about 48% market share in India. Its Ready to Eat food Market is estimated to be Rs.700m Safety Matches market at Rs. 1250 crores p.a. for 24 billion match boxes which is targeted by ITCs iKno, Aim, Aim Mega, Aim Metro Successful acquisition of 94% of WIMCO Ltd. i.e. Homelites, Ship Mangaldeep serves the nations 900cr incense sticks market3/13/2014 22Group 3 23. Conclusion 3/13/2014Group 3 23 Better position considering the fragmentation in the market Huge potential to capture the market share from the current level Stronger control on SCM e-Choupal, retail network Leverage its diversified business portfolio into positive advantage, Brand value (Market position) Effective strategies to mitigate the threats Inorganic growth To secure long-term growth by synergizing and blending the diverse pool of competencies The Companys institutional strengths deep understanding of the Indian consumer, strong trademarks, deep and wide distribution network, agri-sourcing skills, packaging know-how and cuisine expertise 24. Thank you! 3/13/2014Group 3 24 25. Questions? 3/13/2014Group 3 25 26. References http://www.itcportal.com Reports Data Monitor, Economists Intelligent report, Internet EBSCO 3/13/2014Group 3 26 27. References India cost foodservice sector volume forecast: million transactions, 2009- 14 3/13/2014Group 3 27 Source: Datamonitor D A T A M O N I T O R 28. References 3/13/2014Group 3 28 This section was originally published on February 1st 2005 1998a 1999a 2000a 2001a 2002a 2003b Consumer expenditure Food, beverages & tobacco (US$ m) 142,498 145,827 136,566 143,992 142,552 168,050 Food, beverages & tobacco (% of household spending) 52.6 50.0 45.9 46.0 43.4b 43.3 Food Meat consumption (kg per head) 4.8 4.8 5.0 5.1 5.2 5.4 Milk consumption (liters per head) 64 65 65 63 63 64 Fruit consumption (kg per head) 39 39 38 38 38 41 Vegetable consumption (kg per head) 61 66 66 70 69 76 Confectionery, sales volume (000 tonnes) 88 94 101 111 119 127 Beverages Coffee consumption (liters per head) 0.0 0.0 0.1 0.1 0.1 0.1 Tea consumption (liters per head) 0.6 0.7 0.6 0.7 0.6 0.7 Alcoholic drinks, sales volume (m liters) 81 61 53 49 51 57 Soft drinks, sales volume (m liters) 1,271 1,416 1,591 1,827 2,143 2,484 Tobacco Cigarettes, sales volume (m units) 95,279 91,702 95,900 86,000 85,400 88,208a a Actual. b Economist Intelligence Unit estimates. Source: Economist Intelligence Unit. 29. ITCs Distribution channel COMPANY HUB FACTORY Retailer Small wholesale dealer Wholesale dealer Carried and forward agent consumer 3/13/2014 29Group 3