Marketing Management Project

On

ITC Sunfeast

Contents
Introduction ............................................................................................................................................ 3 ITC Sunfeast ............................................................................................................................................ 4 Distribution channel of ITC ..................................................................................................................... 6 Pricing...................................................................................................................................................... 7 Promotion and Advertisements .............................................................................................................. 8 Competitor Analysis ................................................................................................................................ 9 Indian Biscuit Industry ...................................................................................................................... 10 Competitor 1: Britannia .................................................................................................................... 10 Company Profile:........................................................................................................................... 10 Product .......................................................................................................................................... 11 Achievements................................................................................................................................ 11 Competitor 2: PARLE ......................................................................................................................... 12 Company Profile:........................................................................................................................... 12 Achievements................................................................................................................................ 12 Strategies adopted ................................................................................................................................ 13 References ............................................................................................................................................ 15

Introduction

ITC was formed on 24 August 1910 under the name Imperial Tobacco Company of India Limited. Later the name was changed to India Tobacco Company Limited in 1970 and then to I.T.C. Limited in 1974. Finally, the company changed its name to 'ITC Limited' on September 2001. The earlier decades of the company's activities cantered around the tobacco industry. Since 1964 conclusive epidemiological evidence of the deadly effects of tobacco consumption has led to a sharp decline in official support for producers and manufacturers of tobacco, in spite of its large contribution to the agricultural, fiscal, manufacturing and exporting sectors of the economy. Viewing the changes in the business dynamics in the tobacco industry, the company started looking to other sources for earning revenue. In 1970s, it started to enter non-tobacco businesses and in the same period it started reducing the foreign equity holding in the company to 40%. In 1975, the company entered Hotel business with the acquisition of a hotel in Chennai which was rechristened as 'ITC - Welcome group Hotel Chola'. In 1979, ITC entered the Paperboard business by promoting ITC Bhadrachalam Paperboards Limited, which today has become the market leader in India. In 1985, ITC set up Surya Tobacco Co. in Nepal as an Indo-Nepali and British joint venture. Since inception, its shares have been held by ITC, British American Tobacco and various independent shareholders in Nepal. In 2002, Surya Tobacco became a subsidiary of ITC Limited and its name was changed to Surya Nepal Private Limited.

ITC's first rural mall, christened 'Choupal Saagar' was inaugurated in August 2004 at Sehore. On the rural retail front, 24 'Choupal Saagars' are now operational in the 3 states of Madhya Pradesh, Maharashtra and Uttar Pradesh. In 2000, ITC forayed into the Greeting, Gifting and Stationery products business with the launch of Expressions range of greeting cards. A line of premium range of notebooks under brand Paperkraft was launched in 2002. To reach a wider student population, a range of notebooks was launched under brand Classmate in 2003. Classmate over the years has grown to become Indias largest notebook brand. Years 2007 - 2009 saw the launch of Children Books, Slam Books, Geometry Boxes, Pens and Pencils under the Classmate brand.

In 2008, ITC repositioned the business as the Education and Stationery Products Business and launched India's first environment friendly premium business paper under the Paperkraft brand. It offers a diverse portfolio in the premium executive stationery and office consumables segment. ITC also entered the Lifestyle Retailing business with the Wills Sport range of casual wear for men and women in 2000. The Wills Lifestyle chain of exclusive stores later expanded its range to include Wills Classic formal wear (2002) and Wills Clublife evening wear (2003). 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 IT and IT-enabled services area. ITC's foray into the Foods business 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). In 2002, ITC entered Safety Matches business with acquisition of WIMCO Limited. ITC now markets safety matches brands like iKno, Mangaldeep and Aim. ITC's entered Agarbattis (incense sticks) business in 2003. ITC's popular agarbattis brands include Spriha and Mangaldeep. In July 2003, ITC made a foray into the biscuits market by launching the Sunfeast range of biscuits. Since then, Sunfeast biscuits have always stood for quality and are known for offering innovative and wholesome biscuits. Sunfeast connotes happiness, contentment, satisfaction and pleasure. Within a span of 9 years, Sunfeast has established itself in almost all major categories of biscuits. ITC introduced Essenza Di Wills, a range of fragrances and bath & body care products for men and women in July 2005. The company launched 'Fiama Di Wills' range of Shampoos, Shower Gels and Soaps in 2007. The Company also launched the 'Superia' range of Soaps and Shampoos in the mass-market segment in 2007 and Vivel De Wills & Vivel range of soaps and shampoos in 2008.

ITC Sunfeast

"Sunfeast"-- with the Brand Essence "Spread the Smile" connotes happiness, contentment, satisfaction and pleasure one would derive from great tasting and high quality biscuits. The brand positioning and imagery is reinforced by the Sun mascot conveying the emotional and gratifying aspects of the product. Before entering the segment, ITC dug into market research. Research revealed that the category had gaps which ITC could settle into. Findings revealed that consumers wished to taste new and innovative products. That was precisely what the competition had not done in a big way. In 2003, ITC launched Sunfeast with six ranges. But it was a calculated risk. ITC stuck to category favourites like Glucose, Marie and Bourbon cream. Along with that, it also launched innovations such as orange-flavoured Marie, Marie light and butterscotch-flavoured cream biscuits. In 2004, Sunfeast followed this up with the launch of Sunfeast Milky Magic. More recently, it also has launched the Sunfeast Snacky and Sunfeast Golden Bakes. Analysts believe that just because Sunfeast was a new brand, helped matters. Says a consultant, "The biscuits industry had not witnessed any major product innovation in years. Consumers were just waiting for something new, something fresh, when Sunfeast happened." Even the competition had not made things better. Between 2000 and 2005 neither Parle nor Britannia launched any major new product. Yes, Britannia did re-launch its Tiger brand in 2005. But Britannia claims that it is looking at more than just products. Richa Arora, general manager and head of marketing and innovations, Britannia Industries, says, "We are not just looking at new products, but tapping newer opportunities -- such as different occasions as well as out-of-home consumptions." In 2005, before Diwali, Britannia launched Occasions -- boxes of assorted biscuits priced between Rs 50 and Rs 200 -- which the company claims has been very successful. In 2006, however, the industry has seen a flurry of innovations from the big two. Digestive Marie -- was launched by Parle in early February 2006. Britannia launched its new doubleflavoured Mariegold and 50-50 Chakkar. And Parle is all set to launch at least two new products before the end of this year.

In 2003, ITC forayed into the Biscuits market with the Sunfeast range of Glucose, Marie and Cream Biscuits. Sunfeasts brand essence, "Spread the Smile" connotes happiness, contentment, satisfaction, and pleasure. The mascot sunny reinforces the emotional aspects of the brand. In span of 6 year sunfeast has launched many new variants and has its presence in almost all types of biscuit categories. Sunfeast immediately established itself as a provider of innovative and distinctive products Sunfeast Marie was launched in an innovative orange flavour and the 'Sunfeast Dream Cream range includes new flavours as well as flavour enhancers. The Sunfeast Dream Cream range is currently available in 8 variants. The Company has also introduced Sunfeast Dark Fantasy', a dark chocolate and vanilla cream offering for the premium segment in select markets. Riding on the success of its initial offering, ITC also entered the milk biscuit category with Sunfeast milk magic biscuit. Apart from milk which helps mental growth, these biscuit also contain the finest quality wheat adding physical growth. In the last two years, the Sunfeast biscuits portfolio has been enhanced to include salted crackers and cookies. The 'Sun feast Snack' salted crackers are available in 2 unique variants Chilli Flakes and Classic Salted. Sunfeast's latest offering, 'Sunfeast Special biscuits are also available in select markets. The Sunfeast Special range currently includes cookies in two variants Butter and Cashew, as well as cream biscuits in two variants Choco and Orange. The sunfeast product portfolio has been further expanded to include healthy snacks option. Sunfeast pasta treat is whole wheat based instant pasta for children After a tremendous success of the 4 initial flavours, the instant pasta range has been expended with two new exciting flavours pizza, and chicken. The pasta segment was further expanded with the launch of sunfeast benne vita in 4 innovative variants.

Distribution channel of ITC

ITC provides products and services of superior quality and value by sourcing its technologies, equipment and inputs from reputed international and Indian manufacturers and suppliers. Common values, relating to human rights performance, are shared across the entire supply chain because ITC is committed to the importance of a socially responsible and accountable supply chain.

As a large and multi-product enterprise whose products are benchmarked nationally and internationally, ITC's main supply chains can be grouped as follows: 1. For all its operations, technology, machinery and equipment are sourced from reputed and globally benchmarked suppliers/vendors who are expected to follow internationally accepted norms and standards on human rights. 2. ITC's major businesses are vertically integrated across several Divisions. A substantial part of the supply chain is therefore internal through strategic backward linkages. Common values relating to human rights performance are shared across this supply chain. 3. Being a major agric-based company, the agriculture sector is a major supplier of inputs for its operations. The bulk of agricultural commodities are procured from state controlled trading platforms and the open market. A very small proportion of ITC's business consists of supply chains comprising local vendors and suppliers. The policy framework for such entities is enunciated separately in 'Policy to Ensure Respect for Human Rights across the Supply Chain.

Other factors: The company used its existing network of convenience stores: the companys name for the hole-in-the-wall pan-beedi shops for Sunfeast. The company also looked at grocery stores and other retail formats. The company says the brand is now available in nearly 1.8 million outlets. 14 manufacturing units The company has extended its manufacturing capacity by setting up three new biscuit plants in UP and West Bengal to focus on supply chain management strategy to enhance product freshness, market servicing and margins

Pricing

The pricing of the ITC food division depends upon the Customers demand schedule, the cost function and the competitors price.

The pricing of the company is such that it caters to the need of all income groups of people but special provision has been kept for Low and middle income group, and their pricing are competitive with respect to other players like Britannia and Parle.

The company follows the Going rate pricing that is the price of the product depends upon the competitors price. The firm chooses pricing more or less the same as Market leader.

Sunfeast look at a two prolonged strategy: High margin :High margins in cream variants High volumes: High volumes from the Marie and Glucose segments.

Promotion and Advertisements

The entire range of 'Sunfeast Biscuits' is packed in vibrant colours, distinctive graphics and fonts identifying sub categories and at the same time, maintaining a consistent look of Sunfeast. The brand is supported with Television campaigns across National and Vernacular media beginning August 2003 that is distinct, highlighting the product attributes, quality and the new first time in the market offerings from Sunfeast. During the launch phase, Consumer promotions were conducted across retail outlets for every purchase of Sunfeast Marie & Sunfeast Cream Biscuits 75gms of Glucose Biscuits free. Encyclopedia Networks created an interesting idea, which shows the biscuit pack literally taking off from the hoarding - what holds it down is a rope that attaches the end of the pack to the hoarding. The biscuit pack has been designed as a 3D pack. Well differentiated advertisements, some which showed a complete cream world with cream rivers, cream mountains and cream trees, were targeted at kids watching cartoon channels.

The animated Sun this is a symbol of contentment, Satisfaction and Pleasure. This was also received by the consumers and the ad campaigns are catchy and full of colours and excitement. The product is also of very high quality. Thus Sunfeast has manged to get all the winning combinations in the right mix.

At the same time, on general entertainment channels, mothers received information on the importance of glucose, the wholeness of wheat and so on. Also, the company tied up with Bey-Blades, the popular television series that was a rage among children, to promote itself.

Sunfeast tagline Spread the Smile was being endorsed By Sharukh khan. Sharukh khan use made sense as he was popular among Children and moreover he is among the favourites about 60% of Indians and moreover his persona is energetic which corresponds to the mascot of the brand. The various advertisements and promotional shows featured Sharukh Khan and showed that even Sharukh Khan is also a fan and enjoy Sunfeast Biscuits. So it created an impression among the audience that their favourite actor is following this commodity so they should follow the same way. ITC Foods has tied up with New York-based Company 'House of Spices' to launch its biscuit brand Sunfeast across the US and that was again done by Sharukh Khan since he is a global icon.

In the same year, as the official sponsor of the WTA tennis championship -- titled the Sunfeast Open -- the company had Sania Mirza and Mahesh Bhupathi campaigning for it. But that's not all. For promotions in southern states, Sunfeast has signed Tamil super star Surya as a brand ambassador.

Analysts say that ITC's deep pockets have helped Sunfeast in many ways. The company claims that it has been spending 35-40 per cent of its turnover from the biscuits segment on advertising and promotions. Going by that number, ITCs annual marketing spends are estimated to be in the region of about Rs 115-120 crore (Rs billion).

Competitor Analysis

Indian Biscuit Industry

Indian Biscuits Industry came into limelight after 20th century when the urbanized society called for ready-made food products at a tenable cost. It was assumed as sick-man's diet in earlier days. Bread and biscuits is the two major product of the bakery industry and covers around 80% of the total bakery market, out of which industry size is about 14500 crores. Biscuit covers up to 70% of the total production The organized and unorganized sector of the biscuit industry is in the proportion of 65:35 respectively.
Back in 2003, nobody thought Sunfeast would have consumers eating out of its hands. Importantly, industry barometer AC Nielsen has indicated that both Parle and Britannia are losing market shares. Even Priya Gold has seen a minor dip from 6.4 per cent to 5 per cent. ITC's Sunfeast has been a big gainer with its share increasing from 2.7 to 6.7 per cent. In terms of value, Britannia leads the market with 37 per cent market share, followed by Parle's 31.3 per cent and ITC's 6.3 per cent. Nevertheless, the gap is still wide. Sunfeast still has a long way to go. A potential after-effect could be that Sunfeast too may have to drop its prices to be in the reckoning and this will squeeze its margin even lower. While the full game is yet to be played out, for the moment the sun seems to be shining on Sunfeast.

Competitor 1: Britannia
Company Profile: The Company enjoys a share of 32% in the market in terms of volume.

Started way back in 1892 with an investment of Rs. 295, biscuits were manufactured in a small house in central Kolkata. Later, the business was acquired by the Gupta brothers and operated under the name of V.S. Brothers. In 1918, C H Holmes, an English businessman in Kolkata was taken as a partner and The Britannia Biscuit Company Limited (B. B. Co.) was launched. The Mumbai factory was setup in 1924. Biscuits were in big demand during World War II, which gave a fillip to the companys sales. BBCo celebrated its golden jubilee in 1968 and the company name was changed to the current Britannia Industries Limited in 1979. In 1982 Nabisco Brands Inc., USA became a major foreign shareholder. Ten years later in 1992, Britannia Industries Limited celebrated its platinum jubilee. The following year, the

Wadia Group acquired a stake in ABIL, UK and became an equal partner with Grope Danone in Britannia Industries Limited.

Product

Britannia has restructured its portfolio of products at regular intervals. This strategy has enabled it to serve the key needs of the Indian consumer across age groups and diverse consumption situations, through an optimum range of brands. The success of this strategy enabled Britannia to reduce the number of focus-brands from 24 in 1998, to nine in 2001. All its product offerings derive their premium qualities from the principles of health and taste. This key premise has led to the evolution of a lifetime menu where a Britannia product exists for every stage in a persons life. The highest consumption group for biscuits are children; here Britannia offers Milk Bikis with all the goodness of milk required by younger kids, while the Tiger brand is aimed at 7-14 year olds and provides them with the exuberant health required by winners of tomorrow. Another offering for children Treat, a range of delicious cream biscuits is meant as a treat for children during fun times. A particularly notable success has been Little Hearts, meant for teenagers and kids, to target group which did not snack on sweet biscuits. The company moved into the mass market for biscuits introducing low priced varieties under the umbrella, Tiger.

Achievements

Britannia is synonymous with the rise and growth of the biscuit industry in India. It brought the health dimension to an industry that was traditionally driven by taste alone. This is reflected in Britannias brand slogan, introduced in 1997 that exhorted consumers to Eat Healthy, Think Better. This was quickly embraced by the entire industry to come up with similar promotional campaigns showing biscuits to be an epitome of a healthy, happy diet. Britannias products retail in over 2 million outlets selling approximately 200 m illion packs a month. With millions of happy consumers every month, Britannia is considered to be one of the most trusted food brands in India. Britannia has also successively made the Forbes List of 200 Best Small Companies in the world for the years 1999, 2000 and 2002.

The four metros account for 65% of the sales of Britannia. Britannia industries has acquired 49% stake in Kwality Biscuits.

Competitor 2: PARLE
Company Profile: Parle enjoys a 43% share of the total biscuit market. A long time ago,

when the British ruled India, a small factory was set up in the suburbs of Mumbai city, to manufacture sweets and toffees. Despite the odds and unequal competition, this company called Parle Products, survived and succeeded, by adhering to high quality and improvising from time to time. A decade later, in 1939, Parle Products began manufacturing biscuits, in addition to sweets and toffees. Having already established a reputation for quality, the Parle brand name grew in strength with this diversification. Parle Glucose and Parle Monaco were the first brands of biscuits to be introduced, which later went on to become leading names for great taste and quality. Parle is the second largest producer of biscuits in the organized sector. In the popular brands segment, its Parle-G remains a popular brand in the glucose biscuit segment and is worlds largest selling brand of biscuit. In the premium segment, its HIDE & SEEK is attracting competition due to the sway it holds in the market place. In the salty biscuits category, Monaco has been quite popular.

Achievements

Be it a big city or a remote village of India, the Parle name symbolizes quality, health and great taste. This reputation has been built by constantly innovating and catering to new tastes. This can be seen by the success of its products such as Hide & Seek. In this way, by concentrating on consumer tastes and preferences and emphasizing Research & Development, the Parle brand grows from strength to strength. It has an extensive distribution network, even for the most remote places and in the smallest of villages with a population of just 500. Parle has nearly 1,500 wholesalers, catering to 4, 25,000 retail outlets directly or indirectly. A two hundred strong dedicated field force services these wholesalers

& retailers. Additionally, there are 31 depots supplying goods to the wide distribution network. They are dedicated to designing products that provide nutrition & fun to the common man. Most Parle offerings are in the low & mid-range price segments. This is based on our cultivated understanding of the Indian consumer psyche. The value-for-money positioning helps generate large sales volumes for the products. Parle-G sells the most because it is the cheapest biscuit in the branded category. Most Parle offerings, unlike Britannia, are mass brands in the low and mid-range price segments. As it has been around for over 60 years, it has a loyal consumer base. However, Parle Products also manufactures a variety of premium products for the up-market, urban consumers. And in this way, caters a range of products to a variety of consumers.

Strategies adopted
ITC's Sunfeast is a brand driven by innovative product development at ITC's state-of-the-art food technology centre in Bengaluru. Every Sunfeast product is made with utmost care, ensuring world class standards of hygiene. Sunfeast symbolises ITC's commitment to create brands that enrich the quality of life for every Indian as it believes that our people and our country deserves the best. The product Sunfeast was launched in the midst when the biscuit market in India was estimated to be about a value of Rs 45 billion and out of that Britannia and Parle held more than 80% of the organized sector in value terms. ITC therefore decided to enter the branded biscuits market with products that would reinforce the gratifying aspects of the brand as well as offer great taste and quality to customers. The core competencies on which ITC relies are the depth of distribution, brand building capability and ability of quality outsourcing. This is a major contributor to its success. Sunfeast, which was launched in 2003, was one of ITCs diversified arrays. ITC has a well developed system of distribution which can only be compared only to HLL. As ITC was one

company who has its presence in all major fields, thus Sunfeast is established well in India and abroad. The biscuit market is to be estimated about 4500-5000 crore with Parle and Britannia being the major players. The biscuit market has now moved from core glucose to value added biscuits. While the rural market prefers Glucose biscuits, the urban market is fond of cream biscuits. The establishment of brand was never easy as the market was already having big biscuit companies which were satisfying the needs of people well. Sunfeast monitored the market demand and carefully handled promotion and brand building which made the brand to gain market share. The product was made exciting by launching a series of convenience goods, new tastes and flavours which lead to an interest in the brand. The company continued a series of launching of products like Milky magic, coconut, strawberry, pineapple, butterscotch and cream and it also entered the premium biscuit category with Dark Fantasy. Moreover market research revealed that consumers were looking for innovation, variety, and fun in all the biscuits categories. A mascot, Sunny, was chosen to convey these aspects of ITCs biscuit brands. Initial offerings included the Sunfeast Glucose biscuits, targeting children and their mothers; Sunfeast Orange Marie, targeting housewives and families; and Sunfeast Orange cream, Butterscotch cream and Bourbon Cream, targeting children in the age group between 4 and 14 years. Over the last few years, the Sunfeast range has expanded with the introduction of the Sunfeast Dark Fantasy range in the premium segment; the Sunfeast Milky Magic in the milk biscuit category; the Snacky in salted crackers and cookies category.

References
1. http://www.itcportal.com/brands-microsite/packaged-foods/sunfeast.asp 2. http://en.wikipedia.org/wiki/ITC_Limited 3. http://timesofindia.indiatimes.com/business/india-business/ITCs-Sunfeast-creamsBritannia/articleshow/26815204.cms

4. http://sunfeastworld.com/aboutitc.html 5. http://www.rediff.com/money/2006/jun/28spec.htm 6. http://www.business-standard.com/article/management/sunfeast-targets-the-creamylayer-113031000300_1.html