Journey Of Parle G Started In 1939 Marketing Essay

Introduction

Journey of Parle-G started in 1939, when Parle Product Pvt. Ltd launched its first biscuit brand in India. A cream-coloured, yellow-stripped, wax-paper wrapper with a photo of a cute young girl, containing 10-12 biscuit with the company’s logo on it and you would know these are Parle-G biscuits. Over the years, many varieties of biscuit came and went but nothing much has changed with this biscuit, except for packs. Even after 70 years of its birth, it is still known for its superior quality and taste across the length and depth of the country.

Parle-G, being the world’s largest selling biscuit brand, accounts for more than half of the total revenue of the company (Business Standard, 2009). Although past few years, there has been a consistent decline in its sales growth, it still maintains the superior position in the biscuit market. This essay tries to analyze its current situation and position in the biscuit market, particularly in glucose-biscuit market segment. Entire essay is structured into five sections. The next section puts some light on Indian biscuit industry along with glucose-biscuit market segment; whereas third section analyzes the behavior of Parle-G’s consumers. Situation and positioning of Parle-G together is studied in the fourth section; finally essay is concluded with summary of issues in fifth section.

Biscuit industry overview

Indian biscuit industry:-

Indian biscuit industry, worth Rs.82bn, has been growing steadily in past ten years. In 2008-09, industry grew by 15% in current-value terms and is expected to grow by 9% constant value CAGR in 2009-10 (GMID, 2009a). Despite of being moderately attractive industry (Appendix-1), there has been a significant growth in numbers of domestic and international biscuit companies in the industry. Current top biscuit manufacturers in the industry are Britania, Parle and ITC, with Britania is leading with 35% of total biscuit market (Fig.1). All these companies have range of biscuit varieties in their biscuit-portfolio.

Glucose-biscuit market segment:-

Broadly, biscuits can be categorized into Glucose, Cream, Crackers, Cookie and Marie (fig.2). Glucose-biscuit segment accounts for more than half the size of total biscuit market. Parle-G overwhelmingly leading the front with 61% share of total glucose-biscuit market segment and its rivals Tiger Glucose and Sunfeast Glucose have been steadily growing in last few years, through aggressive marketing and product innovations. Fig.2 shows the position of top biscuit brands in glucose-biscuit segment.

Analysis of Parle-G and its consumers

SWOT analysis:-

Parle-G, widely recognized as ‘Common Man’s Biscuit’, is the flagship biscuit-brand of Parle’s biscuit-portfolio (Appendix.2). Current situation of Parle-G with respect to its external and inetrnal environment can be analyzed using SWOT analysis (fig.3).

Consumer analysis:-

Consumers of Parle-G belong to all classes of society and income, rural and city areas, and age-groups. Some of them consume it as part of breakfast; while others have it as a part of their meal. Being a consumable product, purchase of Parle-G is not much influenced by cultural factors. Its consumers’ bahviour tend to get affected by social, indvidual and pshycological factors (fig.4).

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Because of its milky and sweetish taste, people, perticularly young children, easily get influenced by friends, family-members or relatives etc. (i.e. primary-reference group-members), when they see others eating Parle-G. Families, in India, usually prefer to take Parle-G along with tea, coffee or milk, and also offer it to guests as a part of snacks. Secondary-refernce group-members, such as health and medical-practitoner, advice people to consume Parle-G as it is halthy, nutritious and source of quick energy. For this reason, there is a practice in India to distribute Parle-G in the activities related to sports or blood donation, to the participants. Age-group wise, its consumption is high mainly in old-age group (50-60 years) and kids group (3-12 years). Kids, who have habit of eating Parle-G at their young age, continue to eat it during their growing age.

Due to its low-price, consumers with lower and medium income-level mostly prefer Parle-G. Poor buyers (i.e. laborers) buy it because of its affordabilty and high glucose-content, to satisfy their hunger; where as medium income-level buyers get motivated because of their perception about Parle-G, as value-for-money product. Consumers, with higer income-level and status (i.e. mangers, executives, business men etc.), are less inclined towards Parle-G as they can affoard to buy more expensive biscuits or snacks. Therefore, in comparision to rival biscuits, consumption of Parle-G is more in rural areas and by lower and medium-class societies.

Marketing Mix (4P’s)

Product

Parle-G is one of the most popular, oldest and largest selling brands in India. Over the years, this brand has been a symbol of health, quality and taste. On the similar lines of Britania’s Tiger, which already has its five different variants; Parle-G followed line-extension branding strategy to introduce recently two of its variants, Parle-G Milk Shakti and Parle-G Magix, distinguished basically on flavours (Appendix-3).

Product Life Cycle:-

Launched in 1939, Parle-G enjoyed huge success for next sixty years by capturing almost all parts of Indian markets. It has now reached to its maturity stage and highly competitive environment has been causing consistent slowdown in its sales growth for past few years. It has been facing tough competition not only from all biscuit categories but also bakery products. Its major competitors, Tiger and Sunfeast have been able to grab buyers’ attention and gain significant sales growth past five years. Introduced in 1998, Parle’s own Hide&Seek (cream) biscuit, Parle-G’s biggest internal competitor, has been seeing substantial sales improvement and rapid market acceptance.

Product classification and levels:-

Parle-G can be classified as low-end, non-durable, and consumable mass product on the basis of price, durability and quantity respectively. Based on utility, it can be classified at convenience, impulse good. Fig.6 shows five levels of customer-perceived-value (cpv) benefits of Parle-G. Being a basic product as biscuit, its core-benefit is to satisfy the consumer’s hunger (i.e. personal need). It gives expected milky and sweetish taste with rich nutrition, along with quick energy from augmented glucose-content. It is now available in two flavours (i.e. choco and cashew) and expected to come in more flavours in near future.

Packaging:-

For decades, consumers recognize Parle-G instantly by its packs, which used to consist of yellow wax-paper wrapper with a baby face on the front, along with its brand name and company’s red-coloured logo ‘Parle’. Many regional biscuit-makers duplicated the pack style and colour and sold their low quality biscuits. In order to avoid such duplication and keep the cost down, Parle-G now comes in low-cost plastic covering. Using the automatic packaging and printing facilities, its manufacturing unit now produces 160 packets/minute (Doctor, 2009).

Parle-G is the only biscuit brand, available in the market in nine different sizes. Its size ranges from 16.5gm to 825gm with prices range of Rs.1/- to Rs.50/- (fig.7). Ctchy and distinctive packaging with informative labelling gives it an added advantage over its rival brands.

Price

Pricing strategy:-

Parle, in order to create large potential market, employs mass marketing for Parle-G. Mass- production, mass-distribution and mass-promotion allows Parle to maintain low-price for Parle-G, while targeting all segments of the market (i.e. masses) (fig.8). Due to Parle-G’s rich-nutrition and value-for-money positioning, it is able to generate large volume-sales. Other biscuits, such as Tiger and Sunfeast, also employ the mass marketing; where as Hide&Seek and Horlics employ niche marketing for their premium biscuits.

Parle employs penetrative (market penetration) strategy for matured glucose-biscuit market. It provides low-price and high-quality Parle-G to its price-sensitive customers, using value pricing method. Hide&Seek, being a premium chocolate-cream biscuit, follows market premium strategy and charges high price for its high innovative and quality biscuits.

As shown in fig-9, Parle, through its range of different biscuits, has been serving many market segments. Its flagship glucose-biscuit, Parle-G is meant for all markets whereas other premium sweet-savoury biscuits, such as Monaco and Hide & Seek, are targeted at specific markets and market segments (i.e. price-insensitive high-income class etc.).

Cost:-

Price of 100gm Parle-G has been maintained at 4Rs/- for last 25 years, which was raised from 3.75Rs/- in 1994. In 2003 Parle-G tried to change its price from 4Rs/- to 4.50Rs/- for a small brief period; but since customers of glucose-biscuits are very price-sensitive, it caused a big dip in its sales (TaxGuru, 2009). Therefore, Parle-G had to change its pricing strategy back, although by then it allowed Tiger to gain significant glucose-market share. Since then, there has been reductions in the pack size (e.g. from 100gm to 82.5gm) without any price change. For Parle-G biscuits, raw-material costs 60% and packaging costs 20-25% of the total cost. It charges prices from 1, 2, 4 to 50Rs/- depending upon the pack size (fig.7).

Place

Parle-G has a very wide market reach due to its widespread distribution network strength. It is available to customers from big metropolitan cities to remotest and smallest of villages. However compared to its competitors, it has more focus and penetration in rural and sub-urban areas than city areas. Major reason is the strategic location of its manufacturing units, which are closer to rural and sub-urban areas. Through five-level of distribution channel, it has been able to meet its high nationwide demands. Its distribution channel consists of 14 manufacturing units, 31 depots and C&F agents, close to 1,500 wholesalers, 425,000 retailers and 2.5 million outlets (Doctor, 2009). Now days, it also has been able to reach the end customers through three-level distribution channel (fig.10).

Parle-G along with Hide&Seek employs two-channel marketing system to reach customers as they use two distribution channels (i.e. five-level and three-level); whereas Tiger and Sunfeast uses multi-channel marketing system as they are distributed through three-level, four-level and five-level distribution channels.

Motivation:-

Parle-G understands the importance of relationship and therefore, it motivates distributors and retailers by offering good margins, 8.5% and 12.5% respectively. Although, Tiger and Sunfeast offer more margins to distributors (10-12%) and retailers, but because of high demand and volume-sales of Parle-G, it is preferred more (Doctor, 2009). Time to time Parle-G employs trade schemes to boost sales temporarily, by increasing 2% of retailer’s margin.

Perceptual Mapping:-

Parle-G along with its major rival brands can be mapped on the positioning map based on quality and brand equity (Quality-Brand), and price and distribution (Price-Distribution) parameters, as shown in below perceptual mapping (fig.11).

Promotion

Parle-G understands human psyche well and hence it focuses more on children. Children, not only are major biscuit consumers but also have major influence on their parent’s decisions. Therefore, Parle-G strategically has placed brand closer to the children. In comparison, rival biscuit brands such as Tiger, Sunfeast, Hide&Seek spend a lot of effort and money over promotion activities. Unlike Parle-G, most of them have high-profile celebrities as their brand-ambassador. Basically, Parle-G employs integrated mass communication and uses non-personal communication channels, such as media, public relation, events and sales promotions.

Advertising:-

Parle-G currently uses many innovative advertisements, which mainly involve young children. All these advertisements use a new punch-line “G for Genius”, which is pretty popular and led parents believe that Parle-G would do wonders to their kids (Kashyup, 2009). While rivals are signing on celebrities for the advertisements; Parle-G manages to be in leading position even without using high-profile celebrities.

Historically, it has always used advertisements, through print media, billboard, and television-radio channels, to create brand awareness among people by connecting it with their emotions. Table.1 shows some of the examples of television-advertisements, it has used so far.

Public Relations and Publicity:-

In the past Parle-G has sponsored a tele-serial ‘Shaktiman’ (similar to Superman), which became very popular among children. Using the personality of ‘Shaktiman’, it succeeded in communicating its benefits effectively, this gave huge boost to its sale. It also earned significantly by merchandising ‘Shaktiman’. It also used successful ‘Mera sapna sach hoga’ promo for brief period, which was basically to fulfil the dreams of children. Parle-G fulfilled the wishes, ranging from foreign tours, scholarships to meeting with high-profile celebrities C&F. In the form of CSR, Parle-G has always extended its help to Government and NGOs during natural calamities or disasters, by providing free biscuits to victims.

Sales Promotions:-

In order to give momentary sales boost-up during festival seasons, it often tends to offer seasonal discounts. For example, increase the size of the packs but sell it at the same price (i.e. 10% extra free on 82.5gm at 4Rs/-).

Events:-

It sponsors big events very rarely compare to its rivals. However, it does organize fun and game contests such as, ‘Parle Saraswati Vandana’, in many schools, where the winners are given free packs of Parle-G biscuit (Parle, 2009g). In order to save Navaratri celebration event from fading away, Parle-G also organizes novel promotion every year, known as ‘Parle Golu Galata’ contest (Parle, 2009b).

Conclusion

This 70 year old biscuit has been an iconic brand in the biscuit industry and widely recognized for its superior quality and taste. Parle has been able to maintain low price for Parle-G because of to its strength in raw material procurement, transport and distribution channels. However, it has been losing the grip over its customer’s brand loyalty, especially in city areas, which it managed to maintain for so many years. Its slight price hiking strategy few years back caused many price-sensitive customers to move away to its competitors (i.e. Tiger) and opened the opportunity door for them. Since then, there has been a consistent decline in its sales growth. Increasing urbanization and changing lifestyles due to rising nation’s per capita income has also been inflencing consumer’s attitude towards it.

Parle believes that Parle-G does not need much promotion to increase its sales, as there is always an ongoing demand for it. Increasing input and distribution cost has been lowering profit-margin, resulting into reduction in promotion expenditure. Unlike Parle-G, competitors are aggressively marketing their brands; whereas Parle does not pay much attention to its flagship brand and spend good money on marketing its other premium biscuits (i.e. Hide&Seek and Parle 20-20 cookie), using revenues generated by cash-cow Parle-G. However, year 2008 saw some increment in promotional activities for Parle-G.

In order to maintain its hold over biscuit market, Parle-G needs more innovations without losing its successful old taste and product quality. This along with more marketing efforts will not only help it in penetrating the fading customer-base in city areas but also taping more rural market opportunities.

Appendices

Appendix-1 – Industry biscuit industry analysis (Five Forces):-

Threat of New Entry:

There is a consistent government support & incentives for biscuit companies. Government has also given exemption from central excise duty on biscuits with MRP up to Rs.100/per kg (IBMA, 2009b). Requirement of investment capital is also not huge to set up biscuit manufacturing unit, though penetrating the market, in presence of competitive incumbents, is tough. There is huge scope for biscuit in India as per capita consumption is only 1.8kg in comparison to 2.5-5.5Kg in western countries (GMID, 2009a). Therefore, threat of new entry is low.

Substitutes Products:

Overall demand for biscuit is huge. However, there are many substitutes available to customers in the form of bakery products, homemade and packed snacks, bread and junk foods etc. Hence threat of substitutes is high.

Buyer’s power:

Availability of many options, within biscuits and their substitutes, makes buyer’s power high, despite of the high biscuit consumption.

Supplier’s power:

Ingredients of biscuits, such as milk, sugar, wheat etc., are basic commodities and easily available. Supplier firms are basically small in size and many in numbers. Hence supplier power is low.

Competition:

Competition among incumbent biscuit companies is fierce and hence competition rivalry is high.

Five forces analysis of biscuits industry suggests that the attractiveness of this industry is moderate.

Appendix-2 – Biscuit portfolio of Parle:-

Appendix-3 – Major glucose-biscuit manufacturers:-

Appendix-3 – Rising input cost for glucose-biscuits:-