Q 1).
What are the industry’s dominant economic features?
Ans: India is second largest biscuit manufacturer in the World after USA and has a turnover of around 8000 crores. Our product is Parle-G. The main economic features are – * It is a very price sensitive industry. Relatively low pricing products * The Industry is now facing problems from increase in raw material prices. With the Governments introduction of VAT at 12.5%, margins have had pressure. * Access to distribution channels. Most firms have a strong relationship with the major grocery store chains and a new firm in the biscuit industry may have difficulty in finding a place to sell the product Q 2).
What kinds of competitive forces are industry members facing? Ans: The BIG 4’s of the biscuit industry in India are Britannia , Parle, PriyaGold & ITC. Besides these, there are around 150 medium to small biscuit factory in India today. 65% of the industry is playing in organized sector and 35% in unorganized sector. The major competitive forces playing are :
* Steep Hike in cost of production, price hike of petrol/diesel * Economies of scale. The most efficient level of production in an industry is at the point in which the average total costs are at a minimum. * Competitive pricing
* High bargaining power of buyer.
* Low bargaining power of supplier.
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* Threat of new entrants are low
* Parle –G is a market leader and enjoys strong brand loyalty. So it is tough on the part of competitors to topple the leader and develop the brand equity as is shared by Parle G but threat from competitors is always there as Britannia is not lagging behind much. * The industry is expected to grow at 15% so great competition is there to grab a share of the growth.
Q 3).
What factors are driving industry changes and what impacts will they have? Ans: The factors driving industry changes are –
•R& D and continuous product innovation
•Age, lifestyle and perception of people and growing per capita consumption of biscuit •Impact of central Excise duty on the biscuit industry affecting its pricing and other activities. •Biscuit major’s like Parle–G and Britannia are overhauling there brand with new formulations and ad campaigns •Input costs and inflation have led to higher prices of commodities like milk and wheat flour. This has forced major brands like Parle and Britannia to reduce grammage while maintaining price points.
Q 4).
What market positions do rivals occupy- who is strongly positioned and who is not? Ans: Parle G is the World’s largest selling biscuit brand and has 40-45% of the market share in India. Going by the data for the year 2009-10, the volume sales of Parle-G is bigger than the fourth largest biscuit consuming country – China. Other Competitors are –
Britannia| 38%|
ITC| 7-8%|
PriyaGold| 4-5%|
Here, we see that Parle –G enjoys a very descent position of a market leader and as such any change in the competitor policy isn’t going to affect it much. Q 5).
What strategic moves are rivals likely to make next?
Ans : There are various strategic moves likely to be made next by rivals 1. Introducing lower range glucose biscuits to target lower segment users 2. Increasing distribution channels in rural market to counter sales figures of Parle G 3. Introducing similar healthy and energy biscuits. This can be done by launching variety of new options from oats and ragi cookies to Digestive and milky biscuits. 4. Increasing advertising campaigns through social media to penetrate the market 5. Coming with lookalike biscuits in glucose segment
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Q 6).
What are the key factors for future competitive success? Ans: Maintaining a competitive edge is vital to the long-term success of any business. While there are a wide range of factors that determine the success or failure of any company, there are number of key components to competitive success in glucose biscuit industry. These components are: 1. Customer Loyalty: Customer loyalty towards PARLE G biscuits is quite high. Consumers range from small kids to old age people. Economically, customers also range from a poor family to upper middle class family. Its quality and price has led to high brand loyalty. 2. Brand Name: Consumers prefer PARLE G over other biscuits because of its brand name.
3. Global Appeal: To succeed in the marketplace of the future, focus on services that appeal to a group of people who share common interests, obligations or hobbies rather than those who share the same location. As part of the efforts towards a larger share of the global market, Parle has initiated the process of getting ISO 9000 certification. Currently, Parle-G is the ‘World’s Largest Selling Biscuit’. 4. Product Attribute: Hygiene is the precursor to every process at Parle. From husking the wheat and melting the sugar to delivering the final products to supermarkets and store shelves nationwide, care is taken at every step to ensure the best product of long-lasting freshness. 5. Marketing: A steady marketing presence is vital to competitive success in business. 6. Strong distribution network
7. CSR Activities: Parle Centre of Excellence, as an institution, is dedicated to enriching the lives of people by conducting various cultural programs across all regions to facilitate the all-round development of children. My Green Planet is an initiative that takes definitive steps towards conserving our eco-system. Parle Products is contributing in its own way by taking up various initiatives like planting more trees around India, conserving water, power and recycling waste.
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Q 7).
Does the outlook for the industry present an attractive opportunity? Ans: This involves assessing whether the industry and competitive environment is attractive or unattractive for earning good profits. Factors to consider in assessing Industry Attractiveness are: 1. Industry’s market size and growth potential – With a 40% share of the total biscuit market and a 15% share of the total confectionary market in India, Parle has grown to become a multi-million dollar company. 2. Whether the market forces are conducive to rising/falling industry profitability – Market forces of PARLE G are conducive to raising the industry profitability. 3. Degree of risk and uncertainty in industry’s future – PARLE G has very low risk, in terms of its future in the biscuit industry. 4. Firm’s Competitive position in industry – Currently, Parle-G is the ‘World’s Largest Selling Biscuit’. Definitely, it need not worry about its position.
References
* http://www.parleproducts.com/about_parle/overview.php
* http://faculty.philau.edu/lermackh/industry_analysis.htm
