ACKNOWLEDGEMENT

TABLE OF CONTENTS

➢ Industrial Evolution

➢ Current status

○ Market Share

○ Structure of Industry

○ Major Players

➢ Macro Environmental Factors

 ○ Political factors

○ Economic factors

○ Social factors

○ Technological factors

➢ Swot Analysis

➢ Market Analysis

○ Frito-Lay – 4Ps, STP

○ Haldiram’s – 4Ps

➢ Suggestions

INDUSTRIAL EVOLUTION

Background and Development

The potato chip was born accidentally in 1853, when railroad magnate and naval commodore
Cornelius Vanderbilt was vacationing in a popular East Coast inn. He ordered fried potatoes
but disliked them and returned the fries to the kitchen, complaining that they were "too
thick." The cook, a Native American named George Crumm, reacted with indignation. He
sliced a potato into slivers as thin as he could, fried them, and served them to Vanderbilt.

The newly invented snack gained popularity among other customers, but remained primarily
a restaurant item for several decades. This style of potatoes became known as Saratoga chips,
named after the town in which they were first consumed. In 1895, William Tappenden of
Cleveland began manufacturing potato chips for home consumption. Snack food innovations
included the introduction of ridged potato chips in 1966 and fabricated potato chips in the
1970s.

In 1885 the snack food industry received a boost from the invention of the first popping
machine by a Chicago inventor named Charles Cretors. His machine used oil to pop the corn
and was used for about a century until the development of the hot air popper. In the mid-
1960s, the snack began to be manufactured on a mass scale by Orville Redenbacher, who
then promoted his brand as a gourmet hybrid popcorn. The next major innovation came in
1986, when Pillsbury introduced microwavable popcorn.

The 1990s Industry analysts reported that the snack food industry fared well in the early
1990s, given the economic downturn. In fact, over time the industry developed a reputation
for being recession proof. However, stiff competition required increasingly aggressive
promotions to grab the consumer dollar, so some viewed salty snacks as a no-growth
industry.

Dollar sales of savory snacks—in a broad category including pretzels and snack nuts—grew
from $10.6 billion in 1987 to $13.8 billion in 1992, an increase of 30 percent. Per capita
consumption jumped from 17.49 pounds in 1987 to 20.55 pounds in 1992. The field was
dominated by Frito-Lay, a subsidiary of Pepsi Co., which claimed nearly half of the overall
salty snack food market in 1992. But Americans' appetite for specialty and relatively
"healthy" snacks kept the industry competitive. More than 400 new products were introduced
in both 1991 and 1992, including several varieties of multigrain chips, flavored ready-to-eat
popcorn, and diet cheese puffs.

Profits for salty snack manufacturers were 7.5 percent in 1992, representing a slight drop
from the previous year. These figures included additional snacks, such as pretzels and
packaged nuts, which were made by "full-service" salty snack companies such as Frito-Lay
and Borden. Pre-tax profit margins for this broad category of snacks slipped from 6.8 percent
in 1991 to 4.2 percent in 1992. Domestic dollar sales in 1992 were $9.6 billion—up overall
from 1991 sales. Consumers bought approximately 3.6 billion pounds of salty snacks, or
nearly 18 pounds per capita consumption.

Potato chips led the way in salty snack consumption in 1992, with a retail sales volume of
$4.41 billion. This dollar amount represented the sale of more than 1.66 billion pounds of
potato chips, which claimed 32 percent of the market for all savory snacks—including
popcorn, meat snacks, pretzels, and snack nuts. Steadily increasing throughout the 1990s, by
1998 potato chips had increased 15.1 percent in sales from the previous year, with pound
volume increasing 6.5 percent. The low fat and no fat lines of potato chips were behind the
surge in sales, and by 1999 the category was shrinking at a considerable rate.

Tortilla chips were the second most consumed salty snack. More than $2.57 billion worth
were sold in 1992—a volume of 1.06 billion pounds. This represented a 20.5 percent market
share by pound volume, or 18.6 percent by dollar sales. Also popular throughout the mid-
1990s, by 1998 tortilla chips were bought over-whelmingly in supermarkets—44.8 percent of
all tortilla sales. Corn chips saw sales of almost $750 million in 1998, with 49 percent of that
going to supermarkets. That year, Dorito's led the way in tortillas with $693 million in sales,
followed by Tostito's with $526 million in sales. Frito's was the corn chip leader with $208
million in sales, followed by Frito's Scoops with $98 million. Manufactures were beginning
to combine sales of tortilla and corn chips with dips and salsa, thus appealing to customers'
desired convenience. Potato chips and tortilla chips combined accounted for about 50 percent
of the savory snack market.

More than 40 percent of all purchases of salty snacks were made in supermarkets—food
stores that reported annual sales of at least $2 million. Grocery stores—food stores with sales
of less than $2 million annually—accounted for between 10 and 20 percent of salty snack
sales in 1992, depending on the product. The remaining salty snacks were sold in
convenience stores, mass merchandisers—large general merchandise stores that also carried
grocery items—warehouse club stores, drug stores, vending machines, and other retail outlets
such as delicatessens, liquor stores, and sports stadiums.
The industry experienced steady sales growth, even during the recession of the early 1990s.
But pound sales volume rose faster than dollar sales volume in both 1991 and 1992 due to the
keen competition that characterized the industry. The decline in price per pound was also
consistent with falling retail grocery prices nationwide. The issues described by snack food
companies as posing the biggest challenges to profitability in the mid-1990s included:
competitive pricing, government mandated nutritional labeling, changing distribution
patterns, and rising supermarket shelf fees. Although sales remained flat in the mid-1990s, by
1997 sales jumped 8.5 percent to $16.8 billion and rose another 7.3 percent in 1998 to reach
$18.2 billion. By the end of the century, sales stood at $19.38 million, a 6.2 percent growth
from the previous year.

Shifting Distribution Patterns. A market research study found that consumers paid an
average price of $2.66 per pound of savory snacks in 1992, down 2.6 percent from $2.73 per
pound the previous year. This was attributed to several factors, including the recession and
the competitive nature of retail products. Another major factor was a shift in distribution
patterns. Large warehouse club stores and mass merchandisers charged lower prices for
snacks in order to attract customers from smaller supermarkets and grocery stores. Although
supermarkets accounted for nearly 50 percent of salty snack sales, sales by dollar volume
rose only about 1 percent. In contrast, warehouse clubs saw an increase of more than 50
percent in savory snack sales, and mass merchandisers also saw double digit growth. Because
these larger outlets charged less per pound for snacks than supermarkets, the increased sales
represented a decline in profitability.

Convenience stores historically charge the highest prices for both potato chips and corn
chips. In 1992, average potato chip prices were $3.06 per pound—the only outlet where
prices passed the $3.00 mark. In contrast, potato chips sold for $2.49 per pound in
supermarkets and $2.44 at mass merchandisers. In that same year, corn chips sold for $2.74
per pound in convenience stores, compared with $2.44 in supermarkets and $2.00 in
warehouse clubs.

Prices began a trend toward equalization in the early 1990s, however. Convenience store
prices of tortilla chips, for instance, were $2.61 per pound in 1992—the highest of any outlet,
although 10 percent lower than the previous year. Supermarkets, grocery stores, mass
merchandisers, and drug stores saw only a modest shift in tortilla chip prices. However, the
price at warehouse clubs jumped almost 30 percent to $2.27 per pound. This trend also
reflected the fierce competition that kept profits low throughout the recession.

Moreover, savory snacks experienced intensely competitive pricing in supermarkets. Full-line

snack companies reported spending 52 cents of each promotional dollar on price reductions.
Another 25 percent of promotional expenses went toward advertising and 16 percent was
used for in-store promotions. On the whole, 72 percent of full-line manufacturers reported
spending more money for advertising and other promotional endeavors in 1992 than in 1991.
In addition, retail shelf space increased in price during the early 1990s. On a per-store basis,
the average cost per section foot paid by salty snack manufacturers leaped from $283.33 in
1991 to $342.86 in 1992.

Health Implications. The salty snack industry adapted to shifting consumer demands and
perceptions throughout the last several decades. During the late 1960s and 1970s, Americans
learned from health experts that they were consuming salt in greater quantities than was
necessary or healthy. The average individual needed about one-third teaspoon of salt per day.
High consumption of salty snacks and other prepared or processed foods resulted in more
than double the recommended intake. What's more, salty snacks rose an average of 93
calories per serving from 1977 to 1996.

In more recent years, university studies linked low fat diets to reduced rates of cancer and
heart disease. Research showed that low fat diets, typical of those in the Far East, were
associated with low or virtually nonexis-tent incidence of cancer. This was particularly true,
for instance, in breast cancer for women, which was much more prevalent in the United
States and other western nations than it was in China. Moreover, when women of Chinese
descent lived in the United States and adopted the high fat diet typical of Americans, the
incidence of breast cancer jumped to the rate found among Westerners. Consumers were
advised to reduce their fat intake, and many began to do so. Whereas in the 1960s, Americans
typically consumed about one-half of their calories in the form of fat, a healthy diet was said
to be one in which a maximum of 30 percent of calories was consumed through fats.
Thus, manufacturers of salty, high fat foods battled public perception that their products were
unhealthy. Salty snack makers responded to changing consumer tastes by creating potato
chips, corn chips, and tortilla chips that were perceived as healthy—or at least not as harmful.
No-salt potato chips were developed in response to consumer demand, although in 1992 they
accounted for less than 1 percent of potato chip sales. Following the unspectacular success of
no-salt chips, low-salt varieties were introduced and proved more successful, showing double
digit market share growth in the early 1990s.

Low-oil potato chips proved more successful, making up 3.7 percent of chip sales by volume.
From 1991 to 1992 alone, this category of potato chip jumped by 24.3 percent. Other
specialty chips were baked rather than fried, and another manufacturer sold chips that were
cooked in the potato's own juices, resulting in a fat-free chip. Similar innovations were found
in the tortilla chip industry in the early 1990s. Low salt and low oil tortilla chips combined to
make up about 9 percent of overall volume.

Despite manufacturers' responsiveness to consumer demand for healthier products, the desire
to eat foods lower in fat nevertheless affected the salty snack industry. Among industry
products, popcorn consumption virtually exploded in the late 1980s and early 1990s.
Multigrain snacks also showed remarkable growth for the first few years after their
introduction. Other foods that competed with potato chips and similar snacks included
pretzels and snack nuts, both of which gained market share much more rapidly than potato
chips and tortilla chips in the early 1990s. Double-digit growth was observed in both ready-
to-eat popcorn and in pretzels from 1991 to 1992—12 percent and 15.5 percent, respectively.
This was due at least in part to consumer perception of pretzels and nuts as having more
nutritive value than potato chips. Even low oil chips contained more fat than pretzels, for
instance, which were baked rather than fried. Snack nuts contained relatively little salt and oil
and featured nutrients such as protein and minerals not found in potato or tortilla chips.

Flavor Variety. The development of flavored chips and snacks throughout the 1980s and
1990s was generally successful in keeping snack consumption on the rise. Small
manufacturers introduced kettle-style potato chips—cooked in kettles as done previously.
Many larger manufacturers followed suit, either developing their own versions of kettle chips
or buying smaller companies that developed them for regional markets. In 1992, kettle style
chips made up 5.5 percent of pound volume consumed.

Regularly shaped chips made up 46.2 percent of pound volume, and ridged chips of all
flavors accounted for 34.4 percent in 1992. Fabricated chips represented 13.9 percent of the
market for potato chips in that same year. Flavored potato and corn chips also multiplied,
accounting for many of the new product introductions during the late 1980s and early 1990s.
In addition to barbecue flavored potato chips, consumers purchased sour cream and onion,
ranch, and other flavors.

Tortilla chips experienced the most success of any salty snack food with the introduction of
flavor varieties. Regular flavored chips made up 61.4 percent of the tortilla chip market in
1992, whereas cheese flavored tortilla chips accounted for 26.3 percent of the market. The
third most popular flavor that year was ranch, which represented just under 8 percent of the
market. Other varieties included salsa, spicy hot, jalapeno, chili, and oat bran flavors. In
addition, white corn tortilla chips were introduced in the early 1990s and found favor with
consumers.

Extruded Snacks. Extruded snacks is the industry term for cheese puffs, corn puffs, and
onion rings. The largest segment of this snack category—about 96 percent—was controlled
by cheese-flavored products. Sales of extruded snacks remained flat relative to other salty
snacks from 1987 to 1992. Dollar volume was $694.3 million in 1987 and $774 in 1992,
having dropped from its peak of $813 million in 1991. Like other savory snacks, extruded
snacks were characterized by the introduction in the late 1980s and early 1990s of many
flavor varieties. A diet company even introduced individual-serving size, low-calorie cheese
curls. But the new varieties failed to bring as much growth as expected to the industry
overall. By 1998 extruded snacks had sales of $810 million, up just 1.4 percent from 1997.
The leaders for this category were Cheetos with $228 million in sales, followed by private-
label brands with $45 million. Extruded snack manufacturers continued to try to pump up the
segment, experimenting with urban and ethnic lines. The top flavors for extruded snacks were
cheese and spicy hot.
Extruded cheese snacks, although no higher in fat content than potato chips and corn chips,
suffered from a consumer perception that they were highly processed and not as healthful as
related snack foods. Throughout the 1990s, consumers showed a preference for more natural,
less processed foods—including snack foods. Although consumers wanted convenience,
there was nevertheless a trend toward the use of whole foods rather than refined foods, which
might have implications for the extruded snack industry.

Reduced Fat and Fat-Free Products. When Frito-Lay introduced Wow! fat-free potato
chips, they were well received and the industry recognized the fat-free line as the best selling
new product in 1998. That year sales of Wow! chips were $350 million, and some analysts
predicted future sales of about $500 million a year. However, by 1999 the company said it
expected only about $250 million in annual sales from the fat-free line. Although the fat-free
line of potato chips had been heavily anticipated, by the time Frito-Lay got them to the
market, interest in fat-free snacks, cakes, and cookies had dropped considerably among
consumers. Nutrition experts hurt sales when they appealed to the Food and Drug
Administration (FDA) for labels on the products warning consumers of possible
gastrointestinal side effects of the fat substitute olean and that the chips had been fortified
with vitamins A, D, E, and K because olean prevented their absorption.

Supermarkets sold only 18 percent of pork rinds in 1992, and grocery stores—the smaller
volume of the two types—saw 27 percent of the snack's sales. Convenience stores, which
charged the highest price for pork rinds—$6.12 per pound—accounted for 18 percent of
sales. Boosting this snack's popularity was the introduction of microwavable brands in 1992.
The new product offered a 60 to 70 percent reduction in fat—undoubtedly a source of appeal
to consumers. In addition, pork rinds, like other salty snacks, appeared in flavor varieties
including Cajun, jalapeno, barbecue, and chili.

Multigrain Chips. Of all the salty snacks manufactured and sold in the early 1990s, the type
that demonstrated the greatest growth was the multigrain chip. Although only a $198-million
industry in 1992, this sales volume represented a growth of 76.5 percent from the previous
year. The first-year sales of Frito-Lay's multigrain product, Sunchips, totaled $115 million.
Introduced in 1990 by Frito-Lay, multigrain chips grew quickly enough that industry
observers expected the product to become a substantial segment of the salty snack industry.
Two competitors introduced their own versions of multigrain chips, but Frito-Lay still
cornered the market in 1992 with $192 million in sales—nearly all of the product's volume.
The success of multigrain chips was attributed to the perceived health value of the snack,
which was made of grains and was relatively low in salt and oil.

By contrast, the decline in sales for four straight years signaled a maturing market for corn
chips. In 1987, the corn chip industry saw $560 million in sales, but by 1992 that figure had
grown to only $598 million. The introduction of flavor varieties did not boost sales—which
peaked in 1989 at $668 million and slid each year thereafter. Efforts by Frito-Lay to bolster
sales through redesigned packaging and new marketing campaigns met with consumer
apathy. Nevertheless, corn chips represented 4.3 percent of the overall snack market.

CURRENT STATUS

Market Share

The market leader is Frito-lay with a 45 % market share. Haldiram's has a 27% market share.
The market is far from stable: recently ITC, an IT/cigarette company making huge inroad in
the CPG market, has managed to get a market share of 11% with its potato chip "Bingo" in
just 6 month. Also a dairy manufacturer (Amul) just announced to move into the snack
market. Key weapon in this war for the Indian snack market are the Indian flavours.
Structure of Industry

Though very large and diverse, the snacks industry is dominated by the unorganized sector.
According to an Apeda survey, almost 1000 snack items and 300 types of savouries are sold
across India. The branded snacks are sold at least 25% higher than the unbranded products.

The industry has been growing around 10% for the last three years, while the branded
segment is growing around 25% per annum to stand at Rs 5000- Rs 5500 crore, due to
various reasons like Multiplex culture, snacking at home etc.

Many snack foods are sold loose or packaged in poly-pouches, which many only be folded,
or in some cases, stapled closed. As the Indian economy continues to grow, and production
standards improve, many snack food companies are making significant investments into plant
equipment and packaging machinery.

Major Players

The major players in the snack industry are Frito-Lay India Ltd., Haldiram’s and ITC. Frito-
Lay produces India’s largest snack food manufacturers brands. There are newer entrants like
Amul’s Munch Time and Parle’s Hippo which are scrambling for a share of the snack pie.

MACRO ENVIRONMENTAL FACTORS

Macro environmental factors play an important role in the value creation opportunities of a strategy. The
political, economic, social and technological factors affecting the snack industry can be analysed as follows.

Political factors

Environmental regulations and protection, Tax policies, international trade regulations and restrictions,
Contract enforcement law, consumer protection, employment laws, Government organization /
attitude, Competition regulation, Political Stability, Safety regulations.

Economic factors

Economic growth, interest rates and monetary policies, government spending, unemployment
policy, taxation, exchange rates, inflation rates, stage of the business cycle, consumer
confidence

Social factors

Income distribution, demographics, age distribution, lifestyle changes, work/career and

leisure attitudes, education, health consciousness and welfare, feelings on safety, living
conditions

Technological factors

Government research spending, industry focus on technological effort, new inventions and
development, rate of technology transfer, life cycle and speed of technological obsolescence,
energy use and costs, changes in internet and mobile technology.

SWOT ANALYSIS

Strengths
– Abundant availability of raw material

– Vast network of manufacturing facilities all over the country

– Vast domestic market

– Urbanisation

Weaknesses

– Low availability of adequate infrastructural facilities

– Lack of adequate quality control and testing methods as per international standards

– Inefficient supply chain due to a large number of intermediaries

– High requirement of working capital

Opportunities

– Rising income levels and changing consumption patterns

– Favourable demographic profile and changing lifestyles

– Integration of development in contemporary technologies such as electronics, material

science, bio-technology etc., offer vast scope for rapid improvement and progress

– Opening of global markets

Threats
– Affordability and cultural preferences of fresh food

– High inventory carrying cost

– High taxation

– High packaging cost

– Competition between national and regional player

MARKET ANALYSIS

FRITO-LAY

Product

Aside from selling a wide variety of corn chips, potato chips and snack foods, Frito Lay also
markets and sells several varieties of salsas, dips, crackers, nuts and seeds. These are
generally under the food on the go category which could be also considered as convenience
foods. Most famous brands include Lay’s, Fritos, Doritos, Cheetos, Tostitos, Kurkure and
Ruffles.

In 1965, Frito-Lay merged with the Pepsi Cola company to form PepsiCo, Inc and a barbeque
version of the chips appeared on grocery shelves. A new formulation of chip was introduced
in 1991 that was crispier and kept fresher longer. Shortly thereafter, the company introduced
the “wavy lays” products to grocery shelves. In the mid to late 1990s, Lay’s modified its
barbeque chips formula and rebranded it as “K.C. Masterpiece,” named after a popular sauce,
and introduced a lower calorie baked version and a variety that was completely fat-free
(Lay’s WOW chips containing the fat substitute olestra).

In the 2000s, kettle cooked brands appeared as did a processed version called Lay’s Stax that
was intended to compete with Pringles, and the company began introducing a variety of
additional flavour variations.

Another flavour sold primarily in southern Asia is called “Magic Masala”. This flavour is
very popular in India, Pakistan, and Bangladesh.

Price
Prices of these products are comparable to competition and are generally inexpensive. Frito
Lays also devotes it R&D to innovating wide range of chips to meet every budget. The goal
is to consider the variety-seeking behaviour of the target markets hence providing good
quality snack at fair prices. Frito Lay utilises some time and promotional pricing
methodologies.

Place
Frito Lay products are basically sold everywhere including subway stations, gas stations,
universities, groceries, supermarkets, convenience stores, amusement parks, movie houses
and even universities.

FritoLay India produces its snacks at its state-of-the-art plants in Channo (Punjab), Pune
(Maharashtra) and Sankrail (West Bengal). The company's strong stockiest distribution
network has proven highly effective at reaching vast numbers of retail outlets. The company
operates 38 distribution centers that serve more than 2,500 active stockiest, reaching
approximately 845,000 retail outlets that in turn makes the product available at an arms
length.

Promotion
Through its integrated messages, Frito Lay are promoted to target the snack-loving people.
Sporting events are the primary promotional tactic for Frito Lay including the Superbowl and
NBA. Usually, Frito Lay requires spokesperson for the brand and also sponsors events of
various causes. While Frito Lay employs contests, the unit also commits to tie-ins with parent
company PepsiCo Inc and other companies and movie outfits. Using humor is part of the
advertisements also.

Further, in -store promotions are also emphasised wherein share of space is a crucial strategy.
More than 50% of salty snack isles are Frito Lay products. Frito Lay involves itself in the
design of the retail store thus eye-catching displays are one of the strategies apart from
displays before check-out line.

In 1944, it became the first snack food manufacturer to purchase airtime for commercials
using a mnemonic called Oscar the happy potato. In 1963, the company started using another
slogan “Betcha Can’t Eat just One”. In 1965, comedian Bert Lahr began appearing in ads in
which he attempted-always unsuccessfully- to eat just one Lay’s chip. Annual revenues for
Frito-Lay exceeded $180 million by 1965, when the company had more than 8000 employees
and 46 manufacturing plants. 1969 saw the brand go national. During the 1970s, the Lay’s
brand was challenged not only by more aggressive regional brands but also by such
newfangled chips as Pringles and Chipos.

In 1991, Lay’s chips were reformulated to cater to the taste buds of the age, which preferred
less salty chips. The sodium content was reduced. Promotions for this new version of the
country’s favourite chip were backed by the line “Too good to eat just one!” in 1998 Frito-
Lay began selling its “Wow!” line of low-fat and no-fat versions of Lay’s and other brands of
chips under it. They also had intermittent changes in its taglines like “Lay’s. Want some?”. In
2009, Lay’s is planning to promote Lay’s internatioannly under the tagline “Happiness is
Simple” and “Simply Made. Simply Good”. In India, the brand is being marketed by Saif Ali
Khan and Mahendra Singh Dhoni. Other like actors like Preity Zinta ans Rahul Khanna were
also used from time to time. The slogan the Indian arm uses is “Be A Little Dillogical”. This
is in keeping with Lay’s efforts to blend with the local market it caters to, be it in Greece,
China, India or Lithuaina. The flavours of the brand are also tweaked to suit the local palate.
Segmentation

Frito Lay products are generally marketed to the Hispanics prior to targeting the
general market. Frito Lay has Mexican roots which explain why the Hispanic market was the
initial market segment. The attractiveness of the market is evident on the strong needs for
snacks among all segments. Nevertheless, the focus of segmentation is on penetrating the
teen segment. As such, while the Hispanic population likes bold and spicy flavored snack,
there is high influence on kids in making snack purchase decisions, emerging Y generation
has purchase power and busy lifestyles demand food on the go.

Further, Frito Lay is a leader in the dip market but since there are many competitors in
the market the company decided to penetrate the vegetable dip segment. This is in addition to
chip dips segment particularly the shelf-stable sour cream based dip and other chip dips
which are already in the mature stage of its lifecycle.

Targeting
Targeting is the identification of audience to which a product will be marketed. As
already noted, the Hispanic population is the initial target market but now also includes the
generations X and Y. Teenagers make up a considerable percentage in the marketing
activities of frito lay especially since they are very particular with value of money.

Positioning
Positioning refers to the creation of image in the minds of the target market. Frito Lay
indulgence that offers extreme taste, crunch and flavor is the value proposition. The brand
has consistently played up ‘irresistible’ taste through its ‘control nahi hota’ ad pitch.

HALDIRAM’S

Product
In the mid 1990s, Haldiram’s added bakery items, dairy products, sharbats and ice creams to
its portfolio. To add potato products to its existing product portfolio, machinery was imported
from the US. Haldiram’s maintained high quality standards at every stage of the production
process. All its food items were prepared and packaged in a very hygienic environment.

Haldiram’s offered a wide range of products to its customers. The product range included
namkeens, sweets, sharbats, bakery items, dairy products, papad and ice creams. However,
namkeens remained the main focus area for the group contributing close to 60% of its total
revenues.

Haldiram’s sought to customize its products to suit the tastes and preferences of customers
from different parts of India. It launched products which catered to the tastes of people
belonging to specific regions. For example, it launched ‘Murukkus’, a South Indian snack,
and ‘Chennai Mixture’ for south Indian customers.

Pricing

Haldiram’s offered its products at competitive prices in order to penetrate the huge
unorganized market of namkeens and sweets. The company’s pricing strategy took into
consideration the price conscious nature of customers in India. Haldiram’s launched
namkeens in small packets of 30grams, priced as low as Rs.5. The company also launched
namkeens in five different packs with prices varying according to their weights.

Place

Haldiram’s developed a strong distribution network to ensure the widest possible reach for its
products in India as well as overseas. From the manufacturing unit, the company’s finished
goods were passed on to carrying and forwarding agents. C&F agents passed on the products
to distributors, who shipped them to retail outlets. While the Delhi unit of Haldiram’s had 25
C&F agents and 700 distributors in India, the Nagpur unit had 25 C&F agents and 375
distributors.
Haldiram’s also had 35 sole distributors in the international market. The Delhi and Nagpur
units together catered to 0.6 million retail outlets in India.

Retailers earned more margins ranging from 25% to 30% by selling 30 gms pouches (priced
at Rs.5) compared to the packs of higher weights. Apart from the exclusive showrooms
owned by Haldiram’s , the company offered its products through retail outlets such as railway
stations that accounted for a sizeable amount of its sales.

Promotion

Haldiram’s product promotion had been low key until competition intensified in the snack
foods market. The company tied with ‘Profile Advertising’ for promoting its products.
Consequently, attractive posters, brochures and mailers were designed to enhance the
visibility of the Haldiram’s brand. Different varieties of posters were designed to appeal to
the masses.

To increase the visibility of Haldiram’s brand, the company placed its hoardings in high
traffic areas such as train stations and bus stations. Posters were designed for display on
public transport vehicles such as buses, and hoardings focussed on individual products were
developed. Captions such as ‘yeh corn hain’ (this is corn), ‘chota samosa – big mazaa’ (small
samosa – big enterainment) were used.

Packaging was an important aspect of Haldiram’s product promotion. Since namkeens were
impulse purchase items. Attractive packaging in different colors influenced purchases.
Haldiram’s used the latest technology (food items were nitrogen filled pouches) to increase
the shelf life if its products. While the normal shelf life of similar products was under a week
the shelf life of Haldiram’s products was about six months. The company projected the shelf
life of its products as its unique selling proposition. Posters highlighting the shelf life of its
products carried the caption ‘six months on the shelf and six seconds in your mouth.’ During
festival season, Haldiram’s products were sold in attractive looking special gift packs.
Haldiram’s restaurants in Delhi also used innovative ways to attract customers. The
restaurant located at Mathura road had special play area for children. To cater to NRI’s and
foreign tourists, who hesitated to consume snack foods sold by the roadside vendors since it
was not oreoared in a hygienic manner, the Haldiram’s restaurant located in South Delhi used
specially purified water to make snack foods including pani puri and chat papri. These
promotional strategies helped Haldiram’s to compete effectively with local restaurant chains
such as Nathus, Bikanerwala and Agarwals and with western fast food chains such as
McDonalds and Pizza Hut.

Haldiram’s products are known for their uncompromising quality, hygiene and longer shelf
life. Because of its unbeatable taste and variety, it is known as the ‘Taste of Tradition’.

SUGGESTIONS

• Diversifying into new innovative products

• Increase the number of outlets

• Better promotion strategies

• Home delivery

• Explore the possibility of opening the outlets in foreign market