Parle g assignment- group 5
- 2. A flagship brand should be generating a margin of 15 to 20 per cent of revenue. A margin of less than 10 per cent is unacceptable for Parle-G. I have to bite the bullet at some time on pricing. The concerns are several. Mr. Kulkarnii wants to balance the rise in raw material prices by changing pricing of product Parle-G. There are 2 ways, either to increase rate per package or reduce costs. The 100-g packet is Parle’s best-selling SKU, contributing to 50 per cent of brand revenues every year. Company tried to balance the raw material price increase by increasing cost of this SKU, however this reduced the sales of this SKU owing to its VFM image. Eventually company rolled back its price increment.ItreduceditscostsbychangingpackagingandreducingquantityperSKU. Suchchangesare not goingtoserve companyinlong-runasconsumerswouldeventuallyshifttocompetitors,giventhatITCandBritanniahave deeppockets. Should I make tactical moves like launching new SKUs and new price points? Parle shouldavoidmodifying100 gm SKU. Instead,company should start promoting larger SKUs aggressively. Market for such 1000 gm and 500gm is more organized compared to 100gm market. These are institutional buyers such as canteens and hotels. Parle could promote its larger SKUs as monthlynutritional package,whichwillcompelurbanbuyers to buy larger SKUs for monthly consumption. Larger SKUs wouldprovidecompanybettersavings,ascostof production, packagingand distributionwouldbe lower.One more factis that income level of globals consumer category is going to increase by 300% by 2025, hence pricing of product can be modified without consumers getting away from product. Should I continue to tinker with the grammage? Howerver,the companymust alwayskeepin mindthe R3 and R4 consumersin rural segment.Theyconstitute 28.6 and 19.2 percentdemandof Parle-Gbiscuits. The SKU’scanbe packedforrural marketsas INR2 andINR 4 withgrammage of 38.5 and 82.5 can be used respectively.Company has 15 million retail outlets spread across country, which can be used as promotion channels for bigger SKUs. It should be understood that R3 and R4 wll be higly price sensitive and an SKU above 5 and below 10 will be unattractive to this segment. Is there a Strategy? Outsourcingisone of the waystoreduce prices,ifcompanyinvitesthe manufacturersforbiddingwiththeirrawmaterials and machinery. This will also help company tap the unorganized market, which prefers fresh baked biscuits. Most importantly, the brand shouldtrytomove awayfromitsVFMtag and promote itself asanecessarybreakfastitem,which will compel consumers to buy in bulk volumes. Marketing strategy includes segmentation, targeting and positioning.In segmentingthe SECclass C, D, E2, R2, R3, R4 and inthat segmentchildrentillteenagers shouldbe targeted. Thiswill also generate loyal customer base for Parle G. The positioning of the products must be changed from VFMto healthy food, this is important way to deal with price sensitiveness.