Thursday, February 28, 2019
Parle G The following case study is from the Richard Ivey School of Business. It is about the exploitation of a leading Indian biscuit manufacturer, called Parle Products Pvt. Ltd. Company overview The company was bring in 1929 as a candy manufacturer and started producing biscuits in 1939. At this time just now few processed and ready-to-eat food items were available. Parle G be glucose biscuits and the companys flag brand. It became the largest switching biscuit brand by volume in 2002.The company was using a mass commercialize system which is wherefore the price of the Parle G biscuits has brinytained 1$ per kilogram since 1990. In 2009 the company had 74% of the market sh bes of the Indian glucose biscuit category. The biscuits were ex variegate in 2. 5 million outlets. Other brands of Parle Products Pvt. Ltd. are Marie in the afternoon tea time category and Hide n Seek and five otherwise brands in the premium category. In 2008/2009 the company recorded sales revenues of INR35 billion. 68 percent came from Parle G. The company is known all over India for offering full(prenominal) value for a low price (value for m whizzy).The products are available in India, Bangladesh and South Africa because the company had adopted a follow the costumer outline in order to maintain low marketing cost. The two main target groups are 5-14 year old children and their mothers next to institutions. Until 1992 there was only little competition in the sector when Surya Food & Agro Limited entered the market. From 1999 on several companies such as Britannia Industries Ltd. and Hindustan Unilever Ltd. also entered the market because of the in high spirits potential in the premium category due to the change of income in Indian households.Problem statement Since 2004 the company had to kettle of fish with rising costs of the two main raw materials sugar and wheat. In 2004 the company tried to raise the prices of its or so popular product the 100g packet by 12. 5% . Within 6 month the sales dropped by more(prenominal) than 40%. In 2008 the raw material prices raised again. The management decided to do a hole-and-corner(a) raise in price by reducing the weight of the 100g big money slowly to 82. 5g without losing high sales. In 2009 the margin from Parle G had fallen from 15 to 10% of the revenue within the last 18 years, which is why Parle G of necessity a new strategy.The consumers perception was rooted so powerfully in the low price that it was undermining other product attributes such as quality and taste. This made it impossible to raise the price. The company tried to deal with this problem by changing to a cheaper packaging material and dealing directly with the raw material deliverers. Alternatives There are several liftes to recover the margins to minimum 15% of the revenues again. To evaluate the different strategies two criteria engender been selected costs and time.One approach would be repositioning the brand as a qualitat ively high and tasty product for which the costumers do not mind expense more money on. This strategy would be cost intensive and would head at to the lowest degree 12 18 month to see the source results. The brand also exists since 1939 which is why it would be very difficult to change peoples prescription of the brand. Therefore it is not the trounce strategy at this moment. The second strategy could be introducing product variations like for utilisation with different flavours which can be sold for 20 25% more expensive than the normal Parle G.The costs for this would be high because of the different researches that have to be conducted, the increasing production costs and the upcoming marketing costs. It would move 6 12 month to introduce a new product. This is why this strategy is also not ideal. The third strategy is offering one more brand in the premium category because of the increasing beseech in this sector. The fact that Parle Products Pvt. Ltd. already offers 6 brands in the premium category, as well as the high costs of research, production and marketing are the reason to dismiss this idea.It would also again take 6 12 month to introduce the new product which is why a breach strategy needs to be found. Plan of Action Another approach would be offering only 4 or 5 or else of 12 different price categories to safe packaging costs. The costs for this military action would be very low compared to the other strategies. The time this strategy needs would also be short which is why this a very correct short term approach. In order to also find a long term strategy the idea of exporting into more than 2 countries should be reconsidered. A brand can only grow to a certain point f it does not become an international brand. Parle G is at the point where it is no longer enough to only sell within India, Bangladesh and South Africa. The company has to expand in countries with a high amount of Indian citizens, low competition and an increasing dem and in biscuits. Therefore several researches have to be conducted because this measure is very costly and also very time intensive. But it is necessary for Parle Products Pvt. Ltd. to become a global player in order to restore the margins to minimum 15% of the revenues again and to secure company growth within the next 15 20 years.Therefore both criteria time and money can be neglected. The best course of action is changing the offers from 12 to 4 price categories jump within the next 10 14 days as a short term plan. The long term plan is exporting Parle G into at least 3 different countries within the next 15 month and 10 countries within the next 3 years. The company should fork up to conquer the institutional sectors first by offering at least 5-7% discount on bulk purchases at the beginning and create a demand within the rest of the population (pull-concept).