ENTRY STRATEGY FOR BRANDED RICE BUSINESS- ANANYA
By Keerthan G IIM Indore
Market Insights (from the case)
Presence of National brands have been strong in Urban areas
Local players competing by trade relationships and price discounts
Demand – Supply Scenario
- There has been a steady increase in the number of national brands with many companies in the food segment and FMCG category entering this category
- Certain areas have few dominant local players which have relied mostly on their trade relationship to push their products
- The urban consumers who mostly visit modern retailers mostly prefer branded rice
- Slowly branded rice is finding acceptance in Tier 2 and 3 towns
Category Value determinants
1. Price (because of high level of price sensitivity)
2. Quality
3. Availability
Price sensitivity
Segmenting
The food preferences are generally Geography based.
In the 1st year, it is advisable to start with South India as it is has high rice consumption
and provides a direction towards the Pan India launch in the coming years
Region- South India
Cities - With Population > 0.5 million
Segments- Based on Socio Economic classification
Targeting
Customers who mainly visit Hyper Markets, Large retailers or Departmental stores
Who look out for premium quality products which delivers the optimum value
Target- SEC A,SEC B
Positioning
A rice brand which offers the best export quality rice at the best local price
SEC
A & B
Branding Strategy
For a category like Rice brand, a Brand name can be adopted like Ananya and line extensions can be done as and when a new variant needs to be introduced like Ananya Basmati, Ananya Sona Masuri etc.
Points of Difference
The brand has to introduce a container packaging that helps in storing as well as pouring out the rice from the air tight container. This is a true value created for the consumers who can forget the hassles of storing and taking out the rice which no competitor offers
Points of parity
There are a lot of parities with the competitor brand as it is a low differentiated product
Quality
Pricing
Ananya
Customer Value Hierarchy
Augmented Product-
Air Tight Container Packaged Premium
Rice
Expected product- High quality Rice
Basic Product-
Rice
Core benefit- Food
Pricing
Points to be considered while pricing the product
low-involvement category
high level of price sensitivity
So pricing needs to be considered very carefully as it has a high relevance for a consumer
1. Pricing objective: Market entry
2. Demand: High price sensitivity
3. Estimating costs: Production costs + Transportation costs+Marketing costs+Misc.costs
4. Analyzing Competitor: Costs, Prices and Offers
5. Selecting a Pricing method: Going rate pricing i.e. basing the prices on competitors’ prices
Adapting the Price
Prices can differ on the basis of geography, short term promotions and the sales channel
Marketing Channels
As it is a low involvement and highly price sensitive product, channels play a significant role in ensuring
- availability and
- controlling the price
Considering the Segmentation and Target markets as mentioned earlier
2-channel strategy needs to be adopted
1. Modern retail- includes Supermarkets, Hypermarkets and Large retailers
2. Traditional channel – In certain localities for easy availability to customers
in the coming years i.e. 2nd or 3rd year
Trade margins
Trade margins play a significant role in sales as the store keepers tend to push those products.
So a higher margin in comparison to the competitors needs to be given to create the initial push to
the brand
Marketing Communications Mix
1. Sales promotion- To create the initial pull towards the brand by offering short term offers
2. Events and Experiences- Sponsoring a Cookery show on TV grabs eyeballs which provides a highly targeted communication
3. Interactive marketing- Providing innovative recipe ideas using the brand’s rice through its online channel and engaging with its customers
4. Advertising: Cost effective Localized advertising and promotional activities like In-store promotions and visual display aides
These activities should help achieve
Brand name awareness – measured based on recognition, recall and “top of mind”
Brand loyalty – Segmented into non customers, price switchers, passively loyal, fence sitters and committed and moving them to the next higher level
Improvement in Perceived quality
Brand associations
Nov 2013
Brand launch with a few variants
in South
May2014
A few more variants launch after gauging the
response
Oct 2014
Easter n India launch
Apr2015- Traditional channel
operations start
Dec 2015- Western
India launch
Mar 2016-
North India Launch
Timeline of events
Cost Implications
1st year budget allocation (South region- largest region) = Rs. 30 Crores 2nd year budget allocation (South + Eastern region) = Rs. 45 Crores 3rd year budget allocation (Pan India ) = Rs. 25 Crores Total = Rs. 100 Crores Budget reduces from year to year because of the fringe effects carried forward from the previous year
Activity Wise
Pan India Infrastructure including Sales and Supply chain = Rs. 70 Crores Branding activities = Rs. 30 Crores Total = Rs. 100 Crores
This category requires more of below the line activities over above the line
Year wise
Summarizing…
Going for a regional launch and then slowly moving on for a nation wide launch by gauging the response
Launching a few variants initially and then bringing in the other variants in a phased manner
High focus on the modern retail channels along with a small traditional channel to complement it
Trade promotions and discounts are the drivers to sale and less spending on traditional marketing channels like TV and print
i.e. higher emphasis on Below the line activities over above the line as it suits the category under consideration
Thank you