Introduction to ITC

Establishment:

Incorporated on 24 August 1910 as the Imperial Tobacco Company of India Limited, the

company's name was changed to ITC Limited in 1974. Rated among the 'World's Best

Big Companies' by Forbes magazine, ITC ranks third on all major profit parameters

among India's private sector corporations. ITC employs over 20,000 people at more than

60 locations across India. It has a turnover of $3 billion.

Growth and Diversification:

ITC is one of India's foremost private sector companies with a market capitalization of

nearly US $ 18 billion and a turnover of over US $ 4.75 billion. ITC is rated among the

World's Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable

Companies by Forbes magazine, among India's Most Respected Companies by Business

World and among India's Most Valuable Companies by Business Today. ITC also ranks

among India's top 10 `Most Valuable (Company) Brands', in a study conducted by

Brand Finance and published by the Economic Times.

ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers,

Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology,

Branded Apparel, Personal Care, Stationery, Safety

Matches and other FMCG products. While ITC is an outstanding market leader in its

traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it

is rapidly gaining market share even in its nascent businesses of Packaged Foods &

Confectionery, Branded Apparel and Stationery.

As one of India's most valuable and respected corporations, ITC is widely perceived to be

dedicatedly nation-oriented. Chairman Y C Deveshwar calls this source of inspiration "a

commitment beyond the market". In his own words: "ITC believes that its aspiration to

create enduring value for the nation provides the motive force to sustain growing

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shareholder value. ITC practises this philosophy by not only driving each of its

businesses towards international competitiveness but by also consciously contributing to

enhancing the competitiveness of the larger value chain of which it is a part."

ITC's diversified status originates from its corporate strategy aimed at creating multiple

drivers of growth anchored on its time-tested core competencies: unmatched distribution

reach, superior brand-building capabilities, effective supply chain management and

acknowledged service skills in hoteliering. Over time, the strategic forays into new

businesses are expected to garner a significant share of these emerging high-growth

markets in India.

ITC's Agri-Business is one of India's largest exporters of agricultural products. ITC is

one of the country's biggest foreign exchange earners (US $ 2.8 billion in the last

decade). The Company's 'e-Choupal' initiative is enabling Indian agriculture

significantly enhance its competitiveness by empowering Indian farmers through the

power of the Internet. This transformational strategy, which has already become the

subject matter of a case study at Harvard Business School, is expected to progressively

create for ITC a huge rural distribution infrastructure, significantly enhancing the

Company's marketing reach.

ITC's production facilities and hotels have won numerous national and international

awards for quality, productivity, safety and environment management systems. ITC was

the first company in India to voluntarily seek a corporate governance rating.

ITC employs over 21,000 people at more than 60 locations across India. The Company

continuously endeavors to enhance its wealth generating capabilities in a globalizing

environment to consistently reward more than 3, 88,000 shareholders, fulfill the

aspirations of its stakeholders and meet societal expectations. This over-arching vision

of the company is expressively captured in its corporate positioning statement:

"Enduring Value. For the nation. For the Shareholder."

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Mission

&

Vision

3

Mission

To enhance the wealth generating capability of the enterprise in a

globalising environment, delivering superior and sustainable

stakeholder value

Vision

Sustain ITC's position as one of India's most valuable

corporations through world class performance, creating

growing value for the Indian economy and the Company’s

stakeholders

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Key People

Chairman: Y C Deveshwar

Executive Directors: Anup Singh and K Vaidyanath

FMCG Businesses: K N Grant

Hotels & Travel: Nakul Anand

Finance: Rajiv Tandon

R&D, Projects, EH&S: T V Ramaswamy

Non Executive Directors:

1. R K Kaul

2. S H Khan

3. S B Mathur

4. D K Mehrotra

5. H G Powell

6. P B Ramanujam

7. Anthony Ruys

8. Basudeb Sen

9. B Vijayaraghavan

Registered Office

ITC LIMITED

37 J.L.Nehru Road

Kolkata – 700071

India

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INDIAN SNACKS INDUSTRY: An Overview

Snacks are a part of Consumer Convenience/ Packaged Foods segment. Snack is

described as a small quantity of food eaten between meals or in place of a meal. Snack

food generally comprises bakery products, ready-to-eat mixes, chips, namkeen and other

light processed foods According to the ministry of food processing, the snack food

industry is worth Rs 100 billion in value and over 4,00,000 tonnes in terms of volume.

Though very large and diverse, the snacks industry is dominated by the unorganized

sector. According to an Apeda survey almost 1,000 snack items and 300 types of

savouries are sold across India. The branded snacks are sold at least 25% higher than the

unbranded products. Savoury snacks have been a part of Indian food habit, since almost

ages. Though there is no particular time for snacks, normally they are consumed at

teatime. The variety is almost mind-boggling with specialties from all regions, which

have gained national acceptance.

The industry has been growing around 10% for the last three years, while the branded

segment is growing around 25% per annum to stand at Rs 5,000-Rs 5,500 crore, due to

various reasons like Multiplex culture, snacking at home while watching TV, pubs and

bars (where they are served free). AC Nielsen's retail audit shows that the large sales

volumes are due to a marked preference for ethnic foods, regional bias towards

indigenous snacks and good value-for-money perception. Of course the branded

segment is much smaller at Rs 2,200 crore, which is what makes it so attractive to food

Companies that are looking at bigger shares. In the branded snacks market, to get down

to basics, Frito Lay commands a share of 45%, followed by Haldiram’s at 27% and ITC

at 16%. The rest is divided between a handful of new entrants, wannabes and many

regional players.

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Of the wide range of snacks available, potato chips constitute a sizeable segment of the

Indian snack food industry, according to India Infoline. The potato chip market is

generally an unorganized industry. Nearly all potato chip snack products are

manufactured and sold locally. There is also no uniform standard for packaging, as there

is in Europe, the United States and other more developed regions. Many snack foods are

sold loose or packaged in poly-pouches, which may only be folded, or in some cases,

stapled closed. As the Indian economy continues to grow, and production standards

improve, many snack food companies are making significant investments into plant

equipment and packaging machinery.

Pepsi Foods Ltd., now known as Frito-Lay India Ltd., produces India's largest snack food

manufacturers brands, including Ruffles, Hostess, Cheetos and Uncle Chips. Frito Lay's

story is an example of how American recipes were adjusted to satisfy local tastes. Procter

& Gamble's Pringles brand of potato crisp was launched in Delhi in 1999. Pringles is also

a baked potato crisp, unlike many other potato based Indian snack foods that are fried.

P&G currently imports the Pringles product and therefore the product has been priced at a

premium and is marketed to a micro-niche.

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Market and Competition

Indian Foods market is a monopolistic market. There are many competitors in all the

categories and although they all have similar products available at similar prices, they are

trying to prove themselves different through their marketing strategies. However, entry to

this business is easy and ITC has utilized this fact very efficiently to their benefit as they

entered into the several categories among this Foods business.

READY TO EAT

ITC entered into the branded and packaged foods business in with the launch of Kitchens

of India brand. In 2004, the company launched KoI brand fruits and spice conserves and

cooking pastes. The fruits and spice conserves, were developed jointly with Karen

Anand, a food expert. Priced at Rs. 70, these were targeted at the premium segment. The

KoI cooking pastes, which were priced at Rs.30 for a 100g pack, also targeted the high-

end market. Multi-purpose cooking pastes were also launched under the Aashirvaad

brand and these were priced at Rs. 10 for 80g pack. The manufacturing of these products

was outsourced to contract manufacturers for saving the operating cost.

ITC entered the branded spices market in 2005 and the Instant Mix segment in 2006, both

under the Aashirvaad Brand. As on April 2006, the total turnover in the Indian ready-to-

eat and ready-to-cook segments was only around Rs. 700 million, but it continued to post

an annual growth of 20%. By early 2006, though ITC had captured a 35% market share in

the ready-to-eat segment, MTR was the clear market leader with close to 60% in market

share. ITC exported 40-50% of KoI brand products (in terms of volumes) to the US,

Canada, the UK, Switzerland, and Australia.

In May 2006, ITC planned to introduce ten more varieties under the KoI brand within a

price range of Rs. 35 to Rs. 98. In 2007, some new products have been launched under

Ready To Eat category like chutneys, curries, conserves, biryanis (Noor Mahal, Bhori

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Biryani and some new range of products under Gharana (Paneer Malai, Keema Mutter).

After launching all these products ITC FOODS is looking to share 50 to 60% of market

by 2008-2009.Following are the major competitors ITC is competing with in Ready to

Eat category:

Brands Description

GitsGits produces the selected range of popular ready to cook and instant foods that cover a range of ethnic Indian cuisine-and where the recipes have "Global pallete acceptance".

HaldiramsOffers packaged Bhel puri chats such as Sev Puri, Chana Masala, Samosa, Pakoras, Alu Tikki, Pao Bhaji, Gol Gappa, Dhokla among others

Ethnic Kitchens

Offers packaged sweets,syrups,namkeens, cookies, pickles, aloo Masala, Bhujia, Bhelpuri, Chana Dal, Kajui Ladoo and many more items.

MTRMTR foods currently comprise twenty-two delicious and completely authentic Indian curries, gravies and rice.

Priyafoods

Priya has a range of popular traditional recipes starting from Dal Makhani, Navaratan Kurma to Palak Paneer, Paneer Butter Masala, Punjabi Chhole and Rajma Masala along with true southern delicacies like Andhra Veg Pulav, Mango Dal, Gongura Dal.

Market Share - Ready To Eat

48%

35%

8%

9%ITC Ltd.

MTR

Kohinoor

Others(Gits, PriyaFoods etc.)

as on June, 2009

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CONFECTIONERY

Confectionary market in India is about Rs.2500 crore. It is loosely divided into seven

categories:

1. Hard boiled candies

2. Toffies

3. Eclairs

4. Chewing gum

5. Bubble gum

6. Mints

7. lozenges

ITC has currently in market with its two brands “Mint-o” and “Candyman”. ITC’s

Mint-O fresh secured a 17% share of Indian cough lozenges market ahead of former

leader Perfetti which only achieved 14.3% with chloromint. The Indian giant marked the

confectionary sector in 2002 and has only two brands “mint-o fresh” and “Candyman”.

But in overall confectionary market they are lagging behind having just 3% market share

as compared to market leader Perfetti with more than 37% market and providing larger

number of brands.

Market Share - Confectionery

3%

37%

11%7%

42%

ITC Ltd.

Perfetti Van Melle

Cadbury

Nestle

Others(Parle,Joyco, HUL etc.)

as on June, 2009

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BISCUITS

Indian biscuit market is estimated to be around 5000 crore. Biscuit industry in India in the

organized sector produces around 60% of the total production, the balance 40% being

contributed by the unorganized bakeries. ITC with its premium product, SUNFEAST, is

acquiring a big share of market. Within few years, they are able to get 12% share of the

market.

Britannia ITC Ltd (Sunfeast)

Parle Priyagold

TigerNutrichoice JuniorGood Day,50 50,TreatPure Magic,Milk Bikis Good Morning.

MarieDream creamMilky MagicFit kitChoco NutButter Nut

Parle-gKrack-JackMonacoKreamsHide and SeekMilk Shakti

Butter BiteClassic CreamButter LiteBig BossMarie LiteMagic Gold

Market Share - Biscuits

12%

10%

38%

32%

8%ITC Ltd.

Priyagold

Britannia

Parle

Others(Bonn,Anmol etc.)

as on June,2009

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BINGO!No Confusion

Great Combination

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About Bingo

The Bingo brand of chips was launched by   ITC on 14th March 2007 with an aim to

capture at least 25 percent market share of the Rs 2000 crore branded snack market

within five yrs. The launch is symbolic of ITC Foods' distinct approach of introducing

innovative and differentiated products in a largely undifferentiated market place. Bingo’s

launch was strategically timed around the World Cup. The idea was to get the consumer

to take that first bite.

This was an extremely ambitious target according to observers as the market was

dominated by the Frito Lay group (owned by Pepsi Co) with a slew of brands like Lays,

Kurkure and Uncle Chipps holding 50 per cent of the market share. The other was the

Haldiram group with 25 percent of the market share. Bingo’s portfolio includes an array

of products in both Potato Chips & Finger Snacks segment. Bingo! is positioned as a

youthful and innovative snack, offering the consumers a choice of flavours that are fast

becoming popular.

Bingo used combination of leveraging synergies, building on consumer insights and high

decibel advertising can win the game. The company leveraged its existing distribution

network and relationship established with farmers. Its earlier foray into categories like

atta and biscuits had already given it access to the supply chain.

Before the Launch

Research: After making the decision to launch Bingo it started by sending a cross-

functional team of eight individuals were sent across the country to research the snacking

habits of the Indian consumer. After travelling to 14 cities and speaking to more than

1,000 people, the team came back with an insight that Indian consumers were looking for

novelty and excitement in existing snacks.

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The team found that while vada pavs and samosas still sell vada pav with cheese and

paneer-filled samosas, or for that matter, tomato-flavored khakra were the ones that

excited the Indian consumer. Based on this information, the company decided to look at

chips with innovative flavors.

Taste: For the recipes, the company went to the chefs in its hotels. The chefs came up

with 16 flavors with innovative twists like bindaas masti chaas, chatkila nimbu achar and

tandoori paneer tikka-flavoured potato chips, chilli and tomato-flavored mad angles —

inspired by khakras — and other snacks.

The organized snacks category is subdivided into the Traditional segment (Bhujia,Chana

etc) dominated by Haldiram. The second category is the Western segment (potato

chips,cheese balls,puffs etc) and the Finger snacks segment which is an adaptation of

traditional snacks to the western format. The latter two categories are dominated by the

Frito Lay group. ITC has launched an aggressive marketing campaign to gain entry into

and capture a sizeable market share in the extremely competitive world of snack foods.

Bingo’s success in the market is backed by ITC’s strong distribution network, which

allows it to stock its products in shops that previously did not sell snack food.

Additionally, ITC Foods provides shopkeepers with plastic molded shelves that allow

local vendors a convenient way to stock their product, and the company benefits by

increased visibility for its brand.

The packaging is very attractive with dominant variant color, crimp border colors and a

pictorial view of the flavor. This property of flavor depiction is very informative for

consumers and a layman can also associate with it. Bingo has a unique musical sound that

is loved by everyone. It is one of the properties that are remembered by everyone and it is

used to recall the brand by every age group.

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Main Competitors:

1. Frito-Lay

Lays

Kurkure

Uncle Chipps

Cheetos

2. Haldiram

3. Regional Players like Balaji

Comparison of Prices:

Product Price (ITC Ltd)

Product Price (Frito Lay)

Product Price (Haldiram)

Bingo Rs. 5 Rs. 10 Rs. 20

Lays Rs. 5 Rs. 10 Rs. 20

Uncle Chipps Rs. 10 Rs. 20

Kurkure Rs. 5 Rs. 10 Rs. 20

Namkeen Rs. 5 Rs. 10 Rs. 20

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Product Portfolio

Bingo provides innovative finger foods like the pakoda inspired Live Wires, Khakra

inspired Mad Angles and time pass snack in the form of Tedhe Medhe. The Potato Chips

offerings include Salted, Masala and Tomato flavours, Chatkila Nimbu Achaar, etc.

Bingo! – International Cream & Onion is the brand’s latest addition to its existing unique

and exciting range.

Value Proposition

Variety & innovation in a largely undifferentiated Variety & innovation in a

largely undifferentiated market.

ITC launched BINGO in 16 flavors to cater to tastes of the country.

Foray into the “Health Snacks” segment by introducing Bingo as baked-chips.

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Strategic Analysis

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Major Strategies Adopted by ITC for Bingo

1 Product - Assortment of flavours and eye catchy packaging.

2. Price - Pricing Strategy

3. Place - Widespread availability at big and small retailers across the country.

4. Promotions - T.V. Advertisements

1. Product 

Bingo! positioned itself with its Indian flavors such as Tandoori Paneer, Tikka, Spice

Paneer etc. For the South Indian market, Bingo! had flavors such as Chatkila Nimbu

Achaar, Achari Masti etc. The segmentation was mainly done on basis of the age of the

people. The primary target for Bingo is 18-30 year old people, who are willing to try out

new flavors more easily than the small kids.

 

The initial offerings from Bingo include an array of products in both Potato Chips &

Finger Snacks segment. The Potato Chips offerings comprise of four innovative variants

inspired by the snacking habits of different parts of the country as well as Masala, Salted

and Tomato flavors. Additionally a dairy option has also been introduced under the

potato chips offering.

The offerings under the Finger Snacks segment are equally unique presentations with

innovative finger foods like the pakoda inspired Live Wires, Khakra inspired Mad Angles

and the specially developed time pass snack in the form of Tedhe Medhe. Each offering

under this segment is available in two variants making it a total of 6 products in the

Finger Snacks portfolio. 

Packaging- ITC has done the packaging such that the product attracts the buyer. Apart

from it has also launched packs with different quantity keeping in mind the specific

consumer demand.

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2. Price 

When ITC launched Bingo, its main challenge was to compete with the players who were

already there. To overcome this challenge, ITC realized that they have to offer products

at a price which is either equal or less than what the competitors are offering. To do this,

they planned to capitalize by leveraging the strength of the group’s other businesses.

ITC’s printing and packaging business provided high-quality, cost-effective, and

innovative packaging. ITC also enjoyed cost advantages over its competitors owing to its

electronic procurement system called e-Choupal. This helped ITC to compete with the

best.

Initial pricing of ITC bingo is a direct frontal attack on Frito Lays with pricing of Rs 5,

10 and 20. Now Frito Lays has launched small packs of Rs 3 each. It needs to be seen

whether ITC can leverage upon its huge distribution network to counter this.

3. Place 

ITC has adopted a Market Challenger strategy with the launch of Bingo! and has chosen

a combination of flank and frontal attack against the market leader Frito Lay’s. The

Company has distributed more than 4 lakh large racks, to display the brand at all points

of sale. The racks created so much impact that even competitors like market leader Frito-

Lays introduced its own version of wafer racks. Within six months of the launch, Bingo

was available in more than 2,50,000 retailers across the country. 

ITC has made a strategic alliance with Future group according to which all retail stores of

Future group like Food Bazaar, Big Bazaar, and Kishore Biyani’s Fair Price etc will stock

only ITC’s Bingo. HORECA (hotels, restaurants and cafes), entire cigarette distribution

network including betel shops are being used to distribute the product to a wide range of

consumers. Initially Bingo sponsored many Bingo Remix nights in various clubs as well.

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4. Promotion 

T.V. AD Campaign: Bingo’s launch was strategically timed around the World Cup to

cash in on the tremendous popularity that such leisure and cocktail snacks would find

among cricket lovers in the country. The idea was to get the consumer to take that first

bite. Not only the flavours but also the advertising was supposed to have an Indian touch.

Within a month of the launch of the initial advertisements, 70% of the viewers could

recall the brand thus capturing a share of the mind of the consumers. Brand recall along

with 16 flavors in three SKUs helped ITC to capture 16% of market share in just 18

months.

The advertising strategy used humour to sell Bingo. Bingo!’s advertising follows the

AIDA model (Attention, Interest, Desire, Action). The clutter-breaking ads with their

slapstick humour and irrelevant themes garnered enough eyeballs to create awareness of

the product and generate an interest towards the product in the minds of consumers. The

ads are simply insane & nonsensical to the point of being bizarre & utter crap. And that is

why they are so funny. This resulted in high product trials.

What’s interesting is the fact that Lays uses a brand ambassador approach with the

celebrities having mass appeal such as Saif Ali Khan, Juhi Chawla & M S Dhoni whereas

Bingo has managed to do well without one. It still doesn't have an ambassador.

Bingo! Mad Angles Twister is a crazy application with which can turn the status

messages upside down on facebook which can make the users and viewers go crazy

trying to figure out your secret of that twisted message. So this was another kind of

strategy being used for promotional purposes apart from advertisements , ringtones

and videos promoting the same.

On television, the company booked 10 to 15 spots per channel per day on youth channels

such as MTV and Star World, mass Hindi channels like Zee and Star TV, and news

channels. It also had around 20 spots on a variety of radio channels and advertised in

most leading national dailies. In the top-30 cities, over 1,000 outdoor hoardings

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advertised the product. According to industry estimates, ITC spent close to Rs 100 crore

on marketing.

Bingo has managed to do a dent in Lays market share. Is the fact that ITC spend close to

3 years researching, finding and analyzing the Finger snack segment to come up with its

own indigenous variety responsible for Bingo's success

The 'insanity' in Bingo's promotion is a carefully knitted strategy that was instrumental in

Bingo's instant success. Marketing Guru's call it "Disruptive Advetisement" This is one

those cases where advertisement/promotion has been the biggest factor in the success of a

brand. The fact that ITC has a well established distribution network has also helped it

increase consumer interaction points.

The adverts which were full of humor, cheesy & non-sense jokes, and relevancy with the

brand helped in establishing the brand Bingo. While I agree the theme of the adverts were

irrelevant from the product point of view, they were relevant and totally associated with

the brand image (which was also present in its tagline - No confusion, only great

combinations).

With the help of all the above strategies, ITC finally tasted success in Bingo in 2008

when it became a profitable business for the first time since its launch in 2007.

Major Hurdles faced by Bingo

Brand Loyalty of Lays customer is posing threat to Bingo

Stagnant Market Share

Unawareness of the variety of flavours introduced by Bingo

Threats of local players

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MARKET WARFARE

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FIRTOLAY (PEPSICO) AND BINGO (ITC)

Currently, the size of the snack food market is estimated to be Rs 4,500-5,000

crore of which branded players account for Rs 2,000 crore. The snack food

market is growing at 30 per cent annually and foods and beverage giant Pepsico’s

Frito Lays is the dominant market leader with a market share in excess of 80 per

cent.

Lays has revamped its branding strategy with new promotions featuring actress

like Juhi Chawla, Kareena Kapoor etc. About 35 AC BEST buses in Mumbai and

metro in Kolkata are now branded by Kurkure.

In order to add further zing to its product portfolio, in January 2008, the company

launched Kurkure Xtreme, a limited edition variant in two flavors—Risky Chilli

and Electric Nimbu (lime). This was perhaps a move to outdo competition from

ITC’s snack brand Bingo, which was launched in March 2007, in Indianized

flavors like Tandoori Paneer Tikka (spiced cottage cheese) and Chatkila Nimbu

Achaar (tangy lime pickle).

Since Bingo was a youth brand, digital media was used heavily for promotions.

The Bingo National Gaming Championship was one such example. The event was

held in four cities and saw participation from 25,000 contenders. Bingo Remix

Nights were held in clubs across the country.

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Value Chain&

Porter’s 5 Forces Model

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Value Chain Analysis Of Bingo Chips

The value chain is a systematic approach to examining the development of competitive

advantage. It was created by M. E. Porter in his book, Competitive Advantage (1980).

The chain consists of a series of activities that create and build value. They culminate in

the total value delivered by an organisation. The 'margin' depicted in the diagram is the

same as added value. The organisation is split into 'primary activities' and 'support

activities.'

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Primary Activities

Inbound Logistics.

Here goods are received from a company's suppliers. They are stored until they are

needed on the production/assembly line. Goods are moved around the organisation.

Bingo receives its raw materials from potato vendors from the plantation area. Bingo has

its own vehicles for carrying the goods which reduces its cost of transportation.

Operations

This is where goods are manufactured or assembled. Bingo chips has a big factory unit at

Gurgaon where FritoLays also has a factory. Since the factory is located in National

Capital Region which itself is a big market for snack lovers.

Outbound Logistics

The goods are now finished, and they need to be sent along the supply chain to

wholesalers, retailers or the final consumer.

Marketing and Sales

Bingo promoted its products through many promotional events,it has tie ups with many

retailers , opened many outlets and mass media campaign through actors ,heavy

advertisements done during the cricket world cup 2007.Bingo also went online and

opened their own website. Bingo also launched many online games to spread their

product to people who were below 25 years. ITC spent around 50 lakhs for advertsing

Bingo chips through web.

Service

Bingo has varied flavours which caters to the needs to all the types of customers in the

country. ITC has started the campaign for providing education to the school children.

Support Activities

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Procurement.

This function is responsible for all purchasing of goods, services and materials. The aim

is to secure the lowest possible price for purchases of the highest possible quality. They

will be responsible for outsourcing (components or operations that would normally be

done in-house are done by other organisations), and ePurchasing (using IT and web-

based technologies to achieve procurement aims).Bingo uses poly bags which contain the

chips.

ITC’s procurement and manufacturing synergies across divisions have helped it to reduce

costs for Bingo as well. Its e-choupal model for direct procurement is also well known,

under which ITC partners with over 100,000 farmers for spices and wheat procurement.

This kind of rural pedigree is hard to beat.

Technology Development

Technology is an important source of competitive advantage. Companies need to

innovate to reduce costs and to protect and sustain competitive advantage. This could

include production technology, Internet marketing activities, lean manufacturing,

Customer Relationship Management (CRM), and many other technological

developments.

Human Resource Management (HRM)

ITC build business leaders who create value. Who believe that the future belongs to

those who are able to create it.

Which is why it values integrity, creativity, passion, a 'will do' attitude and the will to

succeed above all else.

Together, these empower the prople to take risks, to experiment, to set their own goals

and win in the market place. In turn, ITC encourage those who are eager to take the

initiative to continuously learn and experiment. These are the qualities which will help us

remain contemporary and relevant at all times. The management believe that the most

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enduring way to retain talent is to enable the people to continuously add value to

themselves.

At ITC we believe that our mission to enhance value creation for the stakeholder can only

be achieved through the quality and commitment of our people. Towards this end, we

continuously strive to unleash the potential of each individual.

We leverage human capital for competitiveness by nurturing knowledge,

entrepreneurship and creativity. We believe it is these strengths that will help us

successfully compete in a globalised environment and exploit emerging opportunities.

We reward the will to succeed and the desire to compete with the best in the world. We

stimulate the drive to be the best and take immense pride in being Indian.

We take an integrated view of structures, competencies, tasks and processes and link all

these to our long-term goals. Our performance management systems focus on

performance, meritocracy, equity and the upholding of company values. We keep our

work environment simple, informal and flexible with a strong emphasis on human values.

We value ideas and give people the space to execute them.

We keep our people intellectually stimulated and give them the freedom to take their own

decisions. And the responsibility to make ITC grow through innovation and

experimentation.

We have remained a vibrant company for nearly ten decades now because of our ability

to manage change proactively and to reinvent ourselves continuously without

compromising the ideals and values that have sustained us over the years.

Firm Infrastructure.

Since bingo is a product of ITC which contains the huge varied products in its factory ,

The snack can be organised in a well fashioned way. ITC has one of the best

infrastructure in the world for food products. Hence the manufacturers can produce Bingo

chips in large numbers.

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Porter’s 5 forces model for Bingo chips

Threat of new entry:

Since snack products is a growing market , ITC may face new threat from Parle,Britannia

who have tried their hand in selling Biscuits. Also the cost of chips of various companies

like FritoLays are similar to bingo. The new entrant may penetrate the market by

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reducing the price. ITC has not yet conquered the market and hence there are chances

that the new entrant may enter in to the scene.

Bargaining power of supplier:

The bargainign power of the supplier refers to the ability of the suppliers to raise input

prices, or to raise the costs of the industry in other ways. Bingo is weak in providing the

supplies to the retailer or the wholesaler. It cannot bargain the price to the consumers

since it has not achieved the significant percent of market share in the snack industry.

Bargaining power of buyer:

Since bingo chips has 13 percent market share , it is keen to provide good service to the

customers and increase its market share. It has increased its content by 50 percent to

create a new taste among the customers. Since the snack market has a demand from the

customers through out the year, the bargaining power of the buyer will be

Competitive rivalry:

Frito Lays has started a website(www.kurkure.co.in) to engage people to participate in

public forum and online games . This is an attempt to indirectly drag the customers

towards the product.

But Bingo has tough competition from Parle which is now eying a 25 per cent market

share through an aggressive marketing and distribution strategy. Mayank Shah, Group

Product Manager, Parle Products, says, “We have witnessed good demand for our snacks.

More people are trying our products and we will continue doing activities to generate

more trials.” Parle has increased the volume of Musst in west, east and north and is now

in the process of replicating it in the south.

But Parle and Frito Lay can hardly afford to under-estimate Bingo. Dar says the company

has several other surprises up its sleeve, which are at various stages of development and

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completion. Though he refuses to give details, analysts say Bingo, which is already worth

Rs 400 crore, has the ability to shake up the market.

Since variety is the core of a snacks brand to retain consumers’ interest, the company

asked the chefs at its hotels to suggest 16 flavours with twists like bindaas masti chaas,

chatkila nimbu achar and tandoori paneer tikka-flavoured potato chips, chilli and tomato-

flavoured mad angles - inspired by khakras - and other snacks.

The second part of the variety came through irreverent and fun campaigns. Consumers

were asked to design the ads for Bingo using the angular shape of the chips as the central

theme. Marketers call this ‘crowd sourcing’, which serves two purposes — it engages the

end-consumer and the campaign is done at the lowest possible cost.

Bingo also ensured that it reached its audience through every possible medium. It first

created a website www.bingeonbingo.com with offers, online games, downloads and

even mobile games. The site was advertised with banners on websites such as Yahoo!,

Rediff and Sify.

Analysts believe the Bingo story is also about well-leveraged distribution. The company,

for example, distributed more than 400,000 large racks, to display the brand at all points

of sale. The racks created a huge impact.

The importance of Bingo is evident from the fact that potato-based snacks are the largest

product segment (85 per cent share) in the Indian snacks market, followed by snack nuts,

chickpeas and other pulse-based savoury snacks.

Threat of substitution:

Kurkure may be considered as a substitution product for bingo. With TV ads and online

forums , Kurkure has advertised heavily to attract customers. Bingo has not penetrated in

to the market and there is a chance of being substituted by the other products. Also the

various flavours

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SWOT&

PEST Analysis

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SWOT ANALYSIS

ITC, the brand owner of Bingo, and various other brands, primarily the Tobacco industry,

is strong enough to compete with global players. This as an added advantage can prove

ITC to be an Indian Multinational company though. The diversified presence in various

industries viz., Tobacco, Stationaries, food processing etc makes the base of the company

stronger, and this invariably adds as a biggest strength to the BINGO brand. Moreover

the distribution centers of this age old company is available with experience that can

easily absorb the current trend in the market and the taste of the customer can be

annotated without much negotiation. The strengths of the Brand is readily overshadowing

the weaknesses, so does the opportunities to threats. But, the company should not

conclude on this cold base to enjoy the benefits in the hand, rather a focus on the minor

weaknesses and threats should lead to a path that paves way for the possibilities of being

a brand leader, overcoming stiff competitions from Multinationals like FritoLays and

Pringles, National competitors and the local products.

STRENGTHS:

Availability of Raw materials

Availability of Manufacturing facilities

Domestic markets

Urbanization

Catering the market distribution

WEAKNESSES:

Insufficient infrastructure

In-prominence in quality control, unable to meet the international standards

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High working capital

Lack in innovation on variants

Large number of intermediaries thus causing a slog in distribution

OPPORTUNITIES:

Change in consumer patterns

Rise in income level of customers

Change in lifestyle and demographies

Opening of new international markets

Integration of new technologies

THREATS

Prevalence of cultural taste brands

High taxation

Inventory cost

Stiff competition with regional players

Close competing Multinational brands

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PEST ANALYSIS

PEST analysis is one, that is merely a framework that categorizes environmental

influences as political, economic, social and technological forces. Sometimes two

additional factors, environmental and legal, will be added to make a PESTEL analysis,

but these themes can easily be subsumed in the others. The analysis examines the impact

of each of these factors (and their interplay with each other) on the business. The results

can then be used to take advantage of opportunities and to make contingency plans for

threats when preparing business and strategic plans.

PEST analysis is a useful strategic tool for understanding market growth or decline,

business position, potential and direction for operations. The headings of PEST are a

framework for reviewing a situation, and can in addition to SWOT and Porter’s Five

Forces models, be applied by companies to review a strategic directions, including

marketing proposition. The use of PEST analysis can be seen effective for business and

strategic planning, marketing planning, business and product development and research

reports. PEST also ensures that company’s performance is aligned positively with the

powerful forces of change that are affecting business environment. PEST is useful when a

company decides to enter its business operations into new markets and new countries.

The use of PEST, in this case, helps to break free of unconscious assumptions, and help

to effectively adapt to the realities of the new environment.

POLITICAL

The ITC brand is a house hold brand in India. The political scenario in India is such that

the open invitation to the MNCs to be a part of Indian Snack Industry and on the other

hand the government is conservative in Indian brands too.

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ECONOMICAL

ITC rightly introduced Bingo in the market when there was less or no supply for Lay's in

the market for a prolonged time. With this way, they developed this product,the

advertisements were gived a keen focus. The same worked when the Mom-and-Pop

stores across the country agreed for the trendy display of Bingo.

SOCIAL

To cater the Indian demography is a herculean task with taste spread all over the country.

Thus to satisfy the customers in their taste and demography, Bingo offers sixteen

variants, each specially made for the respective demography. The product profile, in

longer run may be truncated by keeping those products that doesn't market well.

TECHNOLOGICAL

The close competitor of Lay's which banks on the sentiment of being trendy and cool,

though with a larger market share of 45%, is running behind Bingo in Innovation they

incorporate with the product. Bingo has special variant which is baked and non fried

variety of chips that can prove to be against trans fat in its covers. This in turn will not

fail to attract those people who consider themselves to be strict against the usage of oily

snacks.

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Conclusion&

Recommendation

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Conclusion

Although Frito Lays is the most popular brand Bingo has carved a niche for itself. Bingo

is in the growth stage of its life cycle. Given more time it is capable of capturing a larger

market share and giving tough competition to other brands. Its focus is more on product

innovation and distribution and invests heavily in promotion. In the coming years it will

become a dominant player in the domestic market.

Recommendation

Brand Packaging:

Bingo can come up with different shapes of packaging. Different packaging

always attracts consumers. Usage of different colors for packaging will be helpful

as the customers will be able to differentiate among various products.

Brand promotions:

Company can opt for seasonal promotions. Gift packs or combos with 4-5

flavours can be introduced. Can tie up with beverages like Coca Cola during

festive season or can sponsor events like cricket tournaments etc.

Advertising:

The existing advertisements have been successful in creating brand awareness.

Now its time to focus more on taste and variety of flavours, tempting the

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consumers to purchase the product. An animated character can be used to describe

the flavour.

Flavours:

Having too many flavours is causing some problem because the customers are not

able to differentiate between different variants. Even though it’s a good strategy

as people are forced to try each flavour, the ones which are not going good in the

market should be removed from the company’s portfolio. This would reduce the

problem of confusion amongst the consumers.

Contests

The company should launch a contest like “Send in your Bingo recipe” which can

help the company to increase its market share.

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ANNEXURE

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Bibliography:

1. www.itcportal.com

2. www.allbusiness.com

3. http://www.financialexpress.com/news/Just-munch-it/271873/0

4. www.wikipedia.org

5. www.moneycontrol.com

6. www.economictimes.indiatimes.com

7. www.bingeonbingo.com

8. www.google.com

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