Parisons: Launching Cake Mix in Consumer Markets

Transcription

1 Parisons: Launching Cake Mix in Consumer Markets Mr Malik, the General Manager at Parisons Group, was sitting with his marketing team in their head office at Calicut, Kerala. The team was discussing the company s strategy to launch their Cake Mix brand Prime, in the consumer markets of India. With the company s majority of the revenue coming from B2B sales, a decision such as this was crucial to the company s future in the B2C market. Parisons Group Since 1982 Parisons is a food processing company with its head office in Kozhikode, Kerala. It started its operations in 1982 as a small retail trading outlet. Today, it is one of the biggest Agri- Business groups in South India with annual turnover exceeding INR 1200 Crore (See exhibit 1) Parisons is the market leader and one of the largest manufacturers of wheat flour (800 MT milling) and edible oil (600 MT refining). It is involved in all aspects of the food supply chain ranging from manufacturing, R&D, services, logistics, trading and retailing. It currently has 16 production units spread out across Kerala for 12 different product lines. Apart from core areas of Specialty Fats, Flour Milling Edible Oils and Vanaspati, Parisons has also diversified into Infrastructure Leasing, Rubber estates and Eco-tourism. With the ever-growing demand for consumer food products in India, in the recent years the company has forayed into the consumer markets with its brand Aditi and Parisons Liberty (which is the B2B brand). Its current consumer portfolio includes Edible Oil, Tea, Wheat Flour and Vanaspati, (Tea and Vanaspathi are yet to be launched) with Cake Mix scheduled to be the next launch. (See Exhibit 2) The company currently has a strong B2B (with 750 traders and distributors primarily in South India) and an emerging B2C distribution network (See exhibit 3 and 4). It has a retail channel of 120 distributors for B2C products limited to Kerala. They cover 24,000 outlets. Parisons has an ambitious mission to provide quality, hygienic and nutritional food products on a nation-wide scale. They have plans to set up a retail distribution network in the adjoining states of Tamil Nadu and Karnataka as part of their mission. Cake Mix Market Scenario The Indian Cake Mix household market stands at 500 MT/month with Betty Crocker which is Pillsbury s retail brand having a dominant 70% of the market share. They are followed by other players like BakersVille and Crust & Crumb, both having 5% share (See Exhibit 5) In the Kerala Cake Mix market, the company has a presence in the B2B segment of 300 MT/month, with its Prime Cake Mix brand (see Exhibit 6). The household market stands at

2 50 MT/month with Betty Crocker dominating with 70% market share and Parisons currently having no presence. Cake Mix is a high-potential and emerging category in the Indian market. The fast-paced life of today s urban consumers and the rising incomes, are contributing factors to the highgrowth of the category. It provides convenience of use to consumers, saves time and reduces the hassle of selecting ingredients. Thus, speeding up the whole baking process (see Exhibit 7). Cake mixes can also be seen as a lifestyle product. By using cake mix a person who is new to baking or a young person aspiring to bake are able to meet their aspiration of baking a tasty cake. Thus, an increase in baking cakes on get-togethers, parties etc. can be seen. Parisons Prime Cake Mix: Parisons currently operates in the Cake Mix category through B2B distribution. It has a range of specialty cake mixes under the brand name Prime and is primarily targeted towards bakeries, offering 5 variants. Given below are the varieties along with their advantages Product Vanilla Chocolate Red velvet Red velvet muffin Vanilla muffin Advantage More volume of cake made with mix when compared with competitor s product Pure chocolate flavour and not artificial flavour Natural colour is used. Majority of the competition using artificial colours Exclusive product in the market. No other company has launched More volume of muffin made with mix Launching Cake Mix in Consumer Markets With respect to the product, the company was in a dilemma on some major issues. Currently planning to launch with 5 variants, what options did they have for the future? The team debated whether an Indian touch could be added. Considering the positioning of Prime Cake Mix as made by healthy and natural ingredients, should this positioning be replicated to the consumer brand or some other behavioural/demographic/psychographic gap which provides a unique baking experience can be thought of. The team was also contemplating the branding strategy of the product launch. The team was divided on the issue of whether to leverage on the consumer products brand Aditi by naming the Cake Mix brand as Aditi Marvel, continue with their B2B cake-mix brand Prime or create a new brand altogether.

3 Deciding on the branding strategy would just be the first step. The team also had to chalk out the strategy for creating awareness and build customer engagement. They knew TV advertising was not feasible considering their limited presence and niche and specialized nature of the product. They were wondering whether to opt for traditional methods such as demonstrations in supermarkets, point-of-sale displays, sponsoring cooking events or venture into the digital engagement medium which the team found to be the most costeffective. Parisons currently has a brand ambassador - Mr Fahadh Faasil, a Malayalam film industry celebrity. He endorses the Aditi brand of products (see Exhibit 8) Did Cake Mix leverage the celebrity image or did it want to have its own campaign? With respect to pricing, the manager was of the opinion for a 10% discounted pricing (Rs 350/kg) when compared to the market leader, since Parisons was a new entrant and needed to gain acceptance. But, he also thought of the risks of being perceived as a cheaper, lowquality substitute to Pillsbury (priced at Rs 400/kg) and whether price discount was enough to make people switch brands. A tricky point during their discussion was on the issue of distribution. Parisons has a distribution network for its consumer products line of Aditi primarily in the state of Kerala where they serve 400 Modern Trade outlets such as supermarkets (Cake Mix will also be sold through modern trade). If they decide to launch the Cake Mix in a city outside the state, they were still debating whether to set-up a new offline network or consider availability on e-commerce websites like Amazon. A current lack of online presence is attributed to a yet to be established brand and generic products portfolio which can easily be purchased through traditional outlets. Cake Mix being a specialized product, can break these barriers. The present situation Mr Malik returned to the present and made a note of all the decisions to be taken before the much-awaited launch. They had to narrow down an entry market from the alternatives presented by the market research team - Bangalore, Chennai, Cochin and Hyderabad. To determine the branding and positioning, they first had to understand the different customer segments, their behaviour and subsequently decide whom to target. Then, they would have to come up with a final plan including the 4Ps Product, Price, Place and Promotion. The Marketing Manager was thinking of the meeting with the senior leadership in the coming month where he would have to present his 3-year Plan along-with Revenue and Marketing Cost projections (for this he was allowed a 10% marketing spend on Sales figures per year) to demonstrate the feasibility of the plan. (see Exhibit 9)

4 Additional Information Exhibit 1: About Parisons Year Details 1982 Established as small trading outlet (growth of sales history) 1992 First flour mill manufacturing unit in Calicut (institutional sales B2B) 1997 Parisons Food Private Limited Incroporated (how much oil going where, wholesalers spread where region, no. of vehicles, percentage of sales, where does cake mix go and how much, where is it mixed factory, logic behind minimum volume required 2014 Parisons Agrotech registered to provide Cookies, Biscuits, Confectionery and Bakery products 2015 Venture into eco-tourism: Parisons Plantation Experiences in Waynad (acres) Exhibit 2: Parisons Consumer Products Portfolio

5 Visit for more details : Exhibit 3: B2B supply chain Exhibit 4: B2C supply chain Factory Factory Depot Depo Traders + ditributors Distributos wholsale shops wholsale shops Retail shops Modern trade Hotels Stand alone supermarkets Bakeries Chain supermarkets e.g. LuLu, reliance fresh, Bismi Manufacturing units e.g. noodle factory Goverment retail shope and supermarkets like Supplyco etc

6 Exhibit 5: Competition Products Visit for more details: Exhibit 6: Cake Mix Product Details USP of Parisons cake mix No artificial colours are used. Only natural and natural identical colours are used. Primary ingredients are wheat flour and sugar Shelf life 3 months Common B2B SKU 2kg Common B2C SKU 500gm Visit for more details :

7 Exhibit 7: Cake Mix process Exhibit 8: Promotion Campaign Visit for more details: Exhibit 9: Financial Projections Sales Volume Projections: Year 1 Year 2 Year 3 36 MT/annum 50 MT/annum 60 MT/annum Online/Social Media Budget: Year 1 INR 4,20,000 Year 2 INR 5,40,000 Year 3 INR 6,00,000