SNACKO INDIA LTD:

Leveraging Trade Promotions

For Competitive Advantage

MM FE-UI + Class F121 + GROUP 3

UNIVERSITAS INDONESIA

ABDUL hadie + ADITYA laksmana + BIMA rudityaESTIE nurina + ETGAR equator + HANIF widyanto

SNACKSin our daily life

• Branded Snacks is about 46% of total market

SNACKS INDUSTRY: INDIA

Processed Snack Food in India is worth around US$ 30 Billion

Retail Structure is dominated byunorganized retailers

overview of current market

• 3 Million retailers• 2/3 located in rural areas

• Majority of total snack industry

Competition is extremelyintense• Mortality Rate of new brands up to 70%

Major Players• Pepsico, Haldiram, ITC Foods, Snacko

THIS IS INDIA!

CASE STUDY: SNACKO INDIA LTD company profile

Entered India market circa 1995

By 2010, SNACKO is in TOP 4 of Indian snack food industry

Growth Strategy: Based on Innovation

Products Packaging Advertising

Promotion Inorganic Growth

through M&ASNACKO’s Distribution

Channel

CFA Distributors

RetailersWholesalers Consumers

Factory

MAIN ISSUE: FLAT SALES GROWTH

Sales of Major Players

current condition

Company2008 2009

Sales GrowthSales Market

Share Sales Market Share

Pepsico 660 56% 866 56% 24%

Haldiram 266 23% 388 25% 31%

ITC Foods 130 11% 173 11% 25%

Snacko 120 10% 122 8% 2%Total 1176 1549 24%

2008 20090

100

200

300

400

500

600

700

800

900

1000

660

866

266

388

130173

120 122

Sales of Major Player

Pepsi Haldiram ITC Snacko

Main Issues as of Nov ‘10: Sales Growth is marginal

o Only 2% growth against industry average of 24% Market Share is decreasing

Down from 10% in 2008 to 8% in 2009

WHAT HAVE SNACKO DONE?

The PROMOTION MIX approach:

the promotion mix

ADVERTISINGprint, radio, TV media, internet and mobile

1

PERSONAL SELLINGBelow-the-line (BTL) activities, Sales Representatives, experiential marketing

2

SALES PROMOTIONConsumer and Trade Promotions

3

PUBLIC RELATIONSFun Race, brand associations through Indian Cricket Tournament

4

CONSUMER PROMOTION

TRADE PROMOTION

WHAT HAVE SNACKO DONE?

Snacko’s Trade Promotion schemes:

trade promotion schemes

Attached gift to the packages of brand of snack

1• Gifts could easily be seen by

retailers• Gifts incentivize retailers to

sell the products

( + )

• Gifts could get lost or damaged

• Irrelevant and insignificant to retailers

( - )

Flexibility to distributors in managing rewards/gifts to retailers

2

• Ditributors can give favorable rewards to retailers based on conditions

• Distributors could make fake reimbursement

Extra discounts to SRs to focus on high-margin brands & products

3

• Motivate SRs to sell Snacko’s products more aggressively

• Less profit margin in sales revenue

• Low-margin brands & products become less preferable to sell

WHAT HAVE SNACKO DONE? trade promotion schemes

Jhatpat Tez Brand Offer4

• Helps to reduce inventory of slow moving products

• Flexibilty for retailers to choose favorable promotional items

• Strengthen Jhatpat Tez Brand Image

( + )

• Makes other Snacko products less favorable

( - )

Tambola Scheme5

• Stimulate retailers to display Snacko’s variety of products with prizes

• Insignificant incentives to retailers

• Too many items to be fulfilled by retailers

Cramm Brand Winner Extravaganza

6• Flexibilty for retailer to choose

favorable promotional items• Strengthen Cramm Brand

Image

• Makes other Snacko products less favorable

• Most costly scheme compared to the others (TV ads, prizes and efforts)

Remarks: Most of the trade promotion schemes offered to retailers are irrelevant and insignificant

QUESTION OF THE DAY the dilemma

The National Sales Manager wanted to know:

WHY SALES GROWTH WAS FLAT

in the last couple of years?

?

What should they DO to

boost sales growth

regain market share

REFERENCES AND ANALYSIS tackling the issues

Problem identification: FLAT SALES GROWTH

2% sales growth last year against industry average of 24%

A strategic issue: couldn’t be solved with marketing strategy only

THEORY 1

Strategy Development The three levels of strategy

1) Corporate-level Strategy2) Business-level Strategy3) Marketing-level Strategy

Cocentric Diversification

Product Improvements

Product-LineExtensions

New products for same market

REFERENCES AND ANALYSIS tackling the issues

Business-level Strategy

FACTS 1

Organized market for potato chips:• 5,000 tons• Valued at $1.2 Billion• 80% of branded snacks category

Opportunity to gain market share in snack industry

FACTS 2

Retail structure is dominated by unorganized stores• 2/3 of total stores in rural areas• Majority of sales in snack industry

Trade Promotion with focus on rural areas

Marketing-level Strategynew product: potato chips

REFERENCES AND ANALYSIS tackling the issues

THEORY 2

Marketing MixThe 4Ps

4Ps

Comparable with competitors (non-issue)

Utilize suitable Sales Promotion

Improve distribution channel to the rural areas

Conduct market research and launch “chips” product

Price

Promotion

Place

Product

REFERENCES AND ANALYSIS tackling the issues

THEORY 3

Promotion MixCommunication Toolkit

Promotion Mix

Optimizing printed ads targeted specially to rural areas (down-to-earth contents)

Preparing Sales Kits which are easily understandable for mostly low-income people

Integrated Sales Promotion with push and pull strategy

Charitable events, events at local schools and communities

Advertising

Personal Selling

Sales Promotion

Public Relations

INTEGRATED SALES PROMOTION our proposal

PushStrategy

Trade Promotion

Distribution Channel• Reward for distribution channel members for achieving

certain targets (e.g. discount, paid vacation, etc.)

Retailers• Implementing schemes allowing retailers to obtain

higher margins by achieving certain sales targets

PullStrategy

Consumer Promotion

Bundling Products to Attract Consumers• With attractive gifts or other snacko products

Cramm Winner Extravaganza• Lucky draw contest with lots of gifts to attract

consumers and promote it through TV ad and printed media

IN-FOCUS: RETAILERS the ultimate push strategy

Incentives to Increase Reseller Purchases and Inventories

Slotting Allowance

Quantity Discount

There are some incentives for Motivating Retailers:

1

Free Goods

2Incentives to Increase Local Promotional Effort

Cooperative Ad Program

Promotional Allowance

Off Invoice Discount

3Incentives to Increase Personal Selling Effort Reward from Sales Contest

Higher Margins for Retailers

Sales Target Achievement Benefit

1) Corporate-level Strategy2) Business-level Strategy3) Marketing-level Strategy

4Ps

Price

Promotion

Place

Product

Advertising

Personal Selling

Sales Promotion

Public Relations

PushStrategy

Trade Promotion

PullStrategyConsumer Promotion

Retailers

Strategy Development

SNACKO CASE STUDY ANALYSIS the strategic roadmap

RECOMMENDATIONS things to do

Focus on unorganized market in the rural areas

Change business strategy by diversifying SNACKO products to include the more popular potato chips

Boost Sales

Regain Market Share

Integrated Sales Promotion used to deliver more focused results

Push and Pull strategy to motivate retailers and attract consumers