Parle-G

Case Analysis

Identification of problem

To increase the profit margin of Parle-G to 15% and sales revenue of Parle-G more

than 68%.

Definition of problem

Parle-G Mission statement: “VALUE FOR MONEY”

Parle-G is one of the leading glucose biscuit brands in India, having market

share of 74% in glucose category 2009.

Of that, Rs 4 pack biscuits has 50% of sales revenue to parle-G. In recent

years due to increase in price of major raw materials like sugar & wheat, parle-G

price margin has come down to below 10%, and they are not able to revise the price

of their biscuits to increase their sales revenue, they have already undergone the

same problem that increase in price lead to decrease in sales revenue. People also

have a perception that glucose biscuits price should not cost more than Rs 4 or 5.

Parle-G was making profit after reducing in the grams of their biscuits packets, and it

reduced the number of biscuits count from 16 to 15, consumers noticed these

changes, so parle-G were not able go for further reduction in grams or number of

biscuits anymore.

In 1996 BIL and in 2003 ITC both entered into Glucose biscuits category, they

were not able to acquire major market share in Glucose category as parle-G, due to

this competition if slight change in price of parle-G tends consumer to move to other

brands, or they would buy cream biscuits which were available for Rs 5 (10 pieces).

Consumers believed glucose biscuits category as a commodity which gives energy

or can be used as tea snacks, consumers don’t have strong insights about glucose

biscuits brands, due to this parle-G faced problem in increasing its price, and parle-G

was not able to reduce their cost of major raw materials like sugar and wheat, which

were controlled by government, if they import this raw materials it will cost them

more than what they buying here. Parle-G had contract manufacturing unit in

Bangladesh and in South Africa, they concentrating on only Indian customers who

already aware of this brand and they have only 5% of market share in outside India.

Solution objective

Complex Decision making Pyramid

Strategy

Tactical

Operation

Pricing decision falls in tactical decision making.

Analysis of problem

SWOT analysis:

S - strength

Parle-G is the market leader of glucose biscuits

Their distribution in terms of supply chain is doing good

Parle and parle-G as a biscuit producer is well established in india and getting

gradually promoted in bangadesh and south africa

W - Weakness

68% revenue comes from a single brand / single SKU

VFM(value for money) being a price sensitive market

O - Opportunity

Export markets are open (Bangladesh and South Africa)

More the disposable income of people better and upward the trend

demographically

T - Threats

The major threats are the competitors

Organised and Unorganised

Organised are companies like ITC Ltd, Britannia Industries Ltd and Hindustan

Unilever Ltd

Unorganised competitors are those who are producing biscuits as small scale

productions with no brand names who are meant to be the major threat for

Parle-G

Evaluate alternatives

In case of rising the price of the biscuit then there must be a fact concentrated that it

must be price per gram. 300 calories must be there and the price and gram weight

age must be compromised on that basis. Incase we increase the price the

competitors may attack us mainly the unorganised competitors.

Instead of giving the whole money of Rs.4.50 to the company the push strategy can

be used and they can be paid a minimal amount from the total price to promote the

sales.

The positioning of the biscuits is as for mothers and children, also mentioned that it

had a equal supplement as that of a meal because of its calories content.

Of the total sales value 55% is going towards the cost, so the packaging cost , raw

material cost and labour cost are part in them. Parle-G can concentrate on reducing

the packaging costs.

The gap between the profit margin and variable cost being the fixed cost as

mentioned above.

Parle-G already has three contract manufacturing units in Bangladesh and in South

Africa, which are developing countries where parle-G can find potential customers.

Through proper advertisement and distribution channel parle-G can increase their

market share.

Selection of best alternative

My suggestion would be that instead of giving the whole money of Rs.4.50 to the

company, the push strategy can be used and they can be paid a minimal amount

from the total price to promote the sales.

What is push strategy?

Push strategy

Meaning of the push strategy in marketing can be found in the communication

between seller and buyer. In dependence of the used medium, the communication

can be either interactive or non-interactive.

Applied to that portion of the supply chain where demand uncertainty is

relatively small

Production & distribution decisions are based on long term forecasts

Inability to meet changing demand patterns

Large and variable production batches

Unacceptable service levels

Implementation of selected alternative

The marketing people can be given the incentive basis for the adoption of the push

statergy to promote the sale of the Parle-G biscuits in market. The positioning of the

biscuits is as for mothers and children, also mentioned that it had an equal

supplement as that of a meal because of its calories content. It could be marketed

into as a product for children for instant energy and supplement instead of meal due

to it sufficient calorie content.

Contingency plan

Parle G which already has three contract manufacturing units in Bangladesh and

South Africa, which are developing countries where parle-G can find potential

customers. Through proper advertisement and distribution channels parle-G can

increase their market share there and in india too. For that it needs proper

promotional ideas adopted.