Production schedule
Sales
Note: Domestic sales are 80% of total sales and export sales are 20%of total sales
Profits are Tax (for last four years)
Studying of the above table lightens the facts that there is a regular increase in sales as well as profit of Haldiram’s i.e. it is heading towards capturing market share of savory snacks industry. Page 3
SWOT ANALYSIS:
STRENGHTS
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QUALITY: The biggest strength of the company is the quality of the products, which is maintained and improved over time.
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MANPOWER: Haldiram has a lot of support from its employ in building up quality and brand image.
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PRICING: The prices of the products compared with the quality being offered to the consumers seem to be quite reasonable.
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LATEST TECHNOLOGY: Company invests a lot of money in technological development, which helps the company to remain in front of the competition.
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PACKAGING: Haldiram is the first Indian company to introduce proper packaging for the product and over the period of time has improved a lot and still it’s the best.
6. TRUST OF THE CONSUMERS: What drives the company is the trust of the consumers, which is a big motivating factor for the company.
WEAKNESSES
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LOW ADVERTISING BUDGET: The Company spends very less in advertising and promotional scheme compared to its competitors.
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TRADITIONAL MANAGEMENT STYLE: The Company is still run by one man and every thing is very centralized thereby resulting in slow decision-making process.
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NOT ALL PROCESSES ARE NOT AUTOMATIC: Since all the manufacturing processes are not automatic it becomes very difficult to maintain consistent quality.
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OPPURTUNITIES
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GROWING FOOD INDUSTRY: As the food industry is growing rapidly there are lots of opportunities for the company to expand its market share in the future.
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CHANGES IN THE CONSUMERS TASTE AND PREFERENCES: Consumers now demand more of convenience food or packed food and snacks is the solution to the changing needs of the consumer
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INCREASE IN THE MONEY INCOME LEVEL OF THE CONSUMER: As the income level of the consumer is increasing, the consumer likes to spend more money on buying packed foodstuff.
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PROSPECTS FOR EXPORT: The export market has been increasing tremendously, which brings more and more opportunities for the company to expand their market globally.
THREATS
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AVAILABLITY OF SUBSTITUTE GOODS: Biscuits, potato chips and other kinds of food items other than namkeen can affect the demand for the namkeen in future.
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HEALTH AWARENESS: As people are becoming more and more aware of being healthy the demand for savory snacks is likely to get affected in the future.
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INCREASING COMPETITION FROM INDIA AND MNC FOOD COMPANIES: With the increase in the competition from the Indian and as well as MNCs the company needs to adopt aggressive marketing and spend more money into advertising and promotional schemes. And at the same time innovate new products.
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THE MARKETING ENVIRONMENT
Haldiram, the leading brand name in Indian Savory snacks, is generally marketed all over India, through distributors covering most of the major cities like Delhi, Rajasthan, Mumbai, Banglore, Madras, Calcutta etc. Even the savory snacks of Haldiram are exported in different parts of other countries as well. The retailing of the products through its own showroom chain is limited only in Delhi.
The house of Haldiram brings you a delectable round of crunches, offerings to pack for a picnic or to enjoy at home at leisure. The products, which are, manufacture or processed under strict quality assurance. The products manufacture by Haldiram includes a variety of Indian Savory Snacks, papad, milk products & sweets.
PEST-G ANALYSIS
Haldiram, being in the business of snacks and food items is very largely affected by changes in Political, economic, social, Technological and Geophysical changes which one way beyond their control.
Political
- Due to working in the competitive environment, the competitor can challenge copyrights, patents and trademarks or these may get expired.
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Sales outside India depend on certain political factors such as trade protection, term difference and other charges imposed. Page 6
Economic
- Inability of suppliers to withstand economic charges in business condition can adversely affect products.
- There can be fluctuation in demand due to ‘business cycle’ recession cause organization to slow growth and investment.
Technological
- Short life cycle of products cause difficulties in management of product portions and inventory levels. It also causes a necessity to constantly develop new products to meet customer demands.
- Competitor developments can surprise the market and adversely affect Haldiram’s Sales.
Social
- Generally the Indian consumer prefer to spend more during the festival season, as a result festivals like diwali, holi, etc has direct impact on the sales recorded by Haldiram.
- Consumer belonging to different religious groups has different tastes in preferences resulting in lot of diversity to be faced by the Haldiram.
Geophysical
The Heritage cities has been recording more demand for the products manufactured by Haldiram as compared to other major cities because of large influence of religion personal background.
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FIVE FORCES MODEL OF THE SAVORY SNACKS INDUSTRY
↓
→ →→ →
↓
.
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MAIN COMPETITIORS
- BRITANNIA: Britannia, having a market share of 15% is the second largest manufacturer in the country. It owns a number of successful brands and has access to its latest technology and product range recently the company has entered into the savory snacks segment. According to the sources the company is not doing well right now. But with a strong strategy for the future, the company is a serious threat.
- FRITO LAYS LEHAR NAMKEEN: Frito lay, is snack Food Company under the Pepsi group. Frito lay has three brands-lays, cheetos and Lehar. Sources claim that the company has a 65% market share in the branded potato chips market while lehar has a market share of 2.50% in the branded savory market
- BIKAJI: Established in 1985, the company concentrates on Rajasthan, which is the main market for savory snack. The price of their products is lower than others, which helps them to become more prices competitive. Even then their market share is below haldiram, mainly because it is more focused on one particular state only.
4. BIKANO: Bikano is a very small company established in Delhi since 1980. The company has recently entered into savory snacks market. The quality of the product is average.
5. OTHRES: The rest of the organized market is shared by hundreds and of very small manufacturers spread all over the country like Priya Gold, Kakaji, and Uncle Chips etc.
The competitors in the unorganized sector have no brand image and therefore there is not enough information available about them.
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MARKET SHARE-INDIAN SAVORY INDUSTRY
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MARKET SHARE
The savory snacks market is divided into organized sector and an organized sector. Currently, about 45% of the market is being served by the organized sector and the balance 55% is served by the unorganized sector.
Among, the major players haldiram is undoubtedly the market leader with around 17% of the market share (of the organized sector or about 5% as whole) followed by its main competitors such as bikaji, lehar (owned by Pepsi’s Frito-lay), bikano and others.
TARGET MARKETS
The main decision maker for buying savory snacks is the housewife. Because mostly she goes out to buy food and other day to day items. It has been noticed that the middle-aged people between 30-60 years are the main consumers of savory snacks market.
The company’s products fall into the category of upper and middle-income class society.
The range of the income is around Rs.10000 per month and above.
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SEGMENTATION
The industry divides or segments the market on the following basis:
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INCOME AND CLASS: The company falls into the category of middle and upper class. And the average income of the consumers is Rs.10000 and above.
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AGE: The main consumer’s of the savory snacks are between the age group of 30-60 years.
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LOCATION: The Company prevails over the whole of north India. Also the company exports its products to various countries in EUROPE and USA, etc.
TARGETING
The company’s target market is the middle class, upper-middle class and the upper class. For this the company makes products according to customer’s portfolio. Foe example its namkeens are available is different sizes of packs. Also the company has launched new products for the younger generation like taka-tak, 3-d snacks, etc.
POSITIONING
PRICE HIGH LOW
QUALITY
HIGH
LOW
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MARKETING MIX
PRODUCT
Currently the company is producing around 50 different kinds of savory snacks and sweets. But with the changing demand of the other kinds of food products the company plans to manufacture milk based products. Following are some of the products (including the new ones) that will be manufactured and marketed.
- POTATO SAVORY SNACK AND POTATO CHIPS
- BIKANERI SAVORY SNACK
- POTATO STICKS WITH ALMONDS AND CASHEW NUTS
- SWEETS MADE FROM MILK
- OTHER PRODUCT MADE FROM MILK
THE PRODUCT PORTFOLIO
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PRICE
The price range of savory snacks would be between Rs.25-120.
PLACE
The company would market its products through its current channels of distribution but in the future it plans to open company depots in big cities so that the cost of distribution could be reduced.
CHANNELS OF DISTRIBUTION
MANUFACTURING UNIT→C&F AGENT→DISTRIBUTORS→RETAILERS→CONSUMERS
As far as profit margins are concerned the company gives around 4% commission to the C&F (consignee and forwarding) agent, 7% margin to the distributor and 15 to 20% margin to the retailer.
Presently haldiram can sell their products only in the following states/union territories. This is because of a legal contract in the family:
- DELHI
- PUNJAB
- HIMACHAL PRADESH
- JAMMU & KASHMIR
- UTTAR PRADESH
- BIHAR
- ASSAM
-
MIZORAM page 14
In order to overcome the limitation of the distribution area the company plans to market its product throughout the country with a new brand name promoted by the company.
PROMOTION
Presently the budget for advertising and other promotions is about 0.50% of the annual turnover. And since it is proposed to launch the products with a new brand name the strategy would be duly backed up with adequate advertisements and publicity campaigns. For this purpose the company plans to increase the sales promotion budget from 0.50% to 2% of the sales turnover.
The main thrust of advertisement and publicity would be to introduce and establish the new brand name as a product from the house of alderman, which is contemporary to its existing products.
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EVALUATION OF THE COMPANY’S STRATEGIES AND TACTICS
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EVALUATION OF COMPANY’S CURRENT POSITION
Haldiram does not spend much on advertisement. Even then the company has been able to garner its share in the market. Credit for this goes to mainly to the consumers who have spread the name of the company just by ‘word of mouth’ and to the company’s distribution channels- consignee and forwarding agents (C & F), distributors and retailers. The Company at present has a network of eight consignee agents and approximately two hundred distributors across Northern India, catering to thousands of retail outlets. Presently the company can sell only in Northern Eastern India because of a legal contract in the family.
EVIDENCE FOR COMPANY’S SUCCESS
At haldiram quality is an obsession, which is what that the traditional Indian sweet industry and savory snacks maker to become a full-fledged processing industry and taking its wares beyond the domestic frontiers to the western world. The company has bagged the following prestigious awards: -
- INTERNATIONAL AWARD FOR FOOD AND BREVRAGES from trade leaders club in Barcelona, Spain in 1994.
- THE KASHALKAR MEMORIAL AWARD presented by all India food preservers association in 1996.
- Hind pattan award in 1997 given by NRI WELFARE SOCIETY of India, MUSCAT for excellence in respective fields of operation,
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- BRAND EQUITY AWARD 1998 of the PHD chamber of commerce & industries.
And many more.
Also, if we take a look at the past two years performance of the company as far as sales & profits are concerned, we can notice that even with the increasing competition it has been able to increase its market share in the organized sector of savory industry by 2.5% per annum.
FUTURE MARKETING STRATERY
As the competition is growing rapidly, the company needs to come out of the traditional marketing traditional techniques and adopt itself to the new ways of marketing. It cannot depend only on pricing and quality of the product. Marketing is equally important for growth.
Following are the marketing objectives of the new company:
- Increase brand awareness.
- Increase market share from 5% to 15% overall in 5 years
- Improve the efficiency in 5 years
- Improve consumer service
- Awareness of the brand name
- Educate and encourage consumers who are not aware of the product
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CONCLUSION
FUTURE OF THE SNACK INDUSTRY (with emphasis on the savory snack industry)
The food processing industry is a star sector and is expected to rise considerably in the coming times. Out of the various sub-sectors of the food processing industry, packaged/convenience food sector consisting of industries like the savory snacks and the biscuits are the most important ones and are rapidly gaining pace. The reasons for this growth of about 20% p.a. are:
- Growing urbanization
- Change in food habits
- 300 million strong middle class which forms the main savory snacks consuming segment
- Rise in the income level of the consumers
Considering the above points and also looking at the technological developments in this sector, it is expected that the snack food industry is a booming industry and will continue to grow at an increasing rate.
But there is other side of the coin also. The major threat of the company is not from the traditional manufacturers or the unorganized sector but it is from the giant newcomers. They might not be able to manufacture the same quality product but they can divert the taste of the consumer by introducing a new variety of savory snack.
In this case what the company needs to do is not to just rely on its traditional products but develop new products so that it is not left behind and is able to manage the change in the consumer’s taste.
Also the company cannot focus only on quality and price of the product but also on the marketing. It needs to adopt aggressive marketing before it is swept away by others.
BIBILIOGRAPHY
Apart from using my own understanding and knowledge there are various sources from which I have gathered information and build up this management report.
Following are the sources from where I got the information:
- Haldiram marketing & manufacturing co. ltd
- P.R.Kumar & co.
- Ministry of food and agriculture
- Business times
- The Indian high value food market
- K.K.GOYAL - sales manager (corporate office)
- ASHISH AGARWAL-M.D. (haldiram)
Websites
APPENDICES
1998 -2005 – Supernormal Growth Phase
Four manufacturing units set up
- Entry into new segments
- Expansion into global markets – Presence
in 4 continents and 25 countries
- Employs over 2500 people
- Became a household name for snacks in
India
- Market Leader in Organized Snacks foods
Industry in India
PORTER’S FIVE FORCES MODEL
•Bargaining Power of Suppliers
–Commodity Products
–Huge no of suppliers available
•Bargaining Power of Customers
–Not too many players in the organized market
–Value of Haldiram’s Brand is well entrenched
•Threat of New Entrants
–The Industry is in a boom phase
–Initial capital required is reasonably low
•Threat of Substitutes
–Substitutes for Sweets and Namkeens
•Extremely Difficult
•Well Entrenched
•Competitive Rivalry Within Industry
–Increased competition from local players and MNCs
•Pepsi
•Priya Gold
•ITC
HOW IS THE PIE DIVIDED?
Penetrated Snacks and Savories Market in India = $ 600 Million
Potential Snacks and Savories Market in India = $ 2 Billion
FUTURE SRATEGY IN GREATER DETAIL…
•Diversification into foods
•Diversify into Ready to Eat Segment
•Expansion of target customer base
•Increased focus on technology
•Streamlined Business Processes
•Greater focus on globalizing the “Haldirams” brand
•In advance talks with Carrefour and Tesco
