Summary –

KCPL was established in 1945 by Mohan Kumar Gupta, in Jaipur, in the Northern Indian
state of Rajasthan, to sell sugar candies under the brand "MKG". Initially from a candy
dealership he set up a production plant in Jaipur. Later on due to stiff competition he had
to shift the plant to nearby state Uttar Pradesh. He expanded his business by establishing
a dealers’ network in the neighboring states of Bihar and Madhya Pradesh (MP). He
appointed three sales representatives to cover the entire state, establish dealerships and
promote “MKG” as a leading brand. He advertised “MKG” in regional (Hindi) newspapers
and on hoardings at major intersections. By 1970, KCPL had emerged as a leader in the
candy business in the region. Mohan Kumar decided to diversify by investing his surplus
cash in manufacturing glucose biscuits and selling them under the brand “MKG”. Mohan
Kumar saw the biscuits venture as an extension of the candy business as sugar was the
common raw material in both of the production processes, he He rented warehouses in
key towns to stock the biscuits and continued to advertise the brand in newspapers and
retail shops. The business was profitable, but the acceleration of production was
constrained by the scarcity of ingredients such as flour, sugar and vegetable oil. He
extended his range and offered cream, salt and Marie biscuits under the MKG brand. In
1980-81, KCPL doubled its capacity from 120 per month to 240 per month. The same
year, its biscuits business had a turnover of INR 20 million, an increase of 15% over 1979-
80. Its net profits were INR 2 million, an increase of 12% over the previous year. In 1983-
84, its sales increased to INR 30 million and its net profits to INR 2.5 million. Later Mohan
introduced 3 of his sons in this business and task between them was decided and
responsibilities was divided amongst them. “MKG” was a popular brand in the Northern
region. MKG biscuits were known for their quality, crispness and affordable price. The
main consumers of “MKG” biscuits were middle-class families in urban and semi-urban
areas. Families in metropolitan cities preferred products by APL or International. Due to
Sevier neck to neck competition in the market and the presence of well-established
national brand It could not withstand the competitive pressure. Hence, between 1983-84
and 1986-87, its sales declined. Its capacity was rendered surplus. It incurred a loss. In
1985, Pearson Health Drinks Limited (Pearson), a multinational company selling a
nourishing health drink called "Good Health," decided to diversify into health biscuits by
building on its goodwill in the health drink market. It also decided that it would not set up
its own manufacturing facility. Instead, it would outsource its supply from small- and
medium- scale units and provide technical support. KCPL saw this as an opportunity to
utilize its surplus capacity. It also hoped to learn new tools of quality management. It did
not see Pearson as a competitor. The agreement was signed at Pearson's corporate
office in Paris in May 1986. The market response to Good Health biscuits was not very
encouraging. They were seen as high-priced biscuits without any additional benefits.
Customers perceived A-One biscuits as healthy and energy-boosting biscuits. Moreover,
the price of A-One biscuits was two-thirds that of "Good Health" biscuits. APL had
stressed in its advertisements that its biscuits contained milk solids, which consumers
perceived as an important benefit. On September 8, 1987, Bharat Shah, Chairman of
APL, mentioned at a meeting of the Confectioneries Manufacturers Association of India
(CMAI) that his company was interested in augmenting its supply capacity by promoting
contract manufacturing units (CMUs) that made biscuits for APL according to its
specifications. He also stated that his company would provide technical guidance to the
CMUs and pay fair conversion charges. APL competed with both national and regional
players in various biscuit segments. It had aspirations of becoming a leader in every
region. It had entered the Northern sector in 1973-74. By 1986-87, it had become a
leading player in the region with a monthly sale of 200 MT.
Alok Kumar(eldest son) presented APL's proposal to his brothers. The proposal had both
advantages and disadvantages. A clear advantage was that it required no marketing,
brand building and distribution expenses on KCPL's part and minimized its business risk.
It would also help them utilize their surplus capacity. The main disadvantage was the
possible loss of independence. The brothers also feared that they might not be able to
focus on strengthening the “MKG” brand, which had been built by two generations over
the years. In fact, the family's name and prestige was tied to the success of the biscuit
line. In KCPL's early years, Mohan Kumar had envisioned that it would emerge as a
leading national brand and compete successfully with APL.

According to me they should not join the hands or accept the proposal of APL. APL being
the well-established company was slowly becoming dependent on CMU for reducing the
majour manufacturing cost, and by this they would also expand their business and stay
on top of the market. KCPL was a brand which people already knew, people have
experience of its products which it offered and it also had a defined customer based which
consisted mainly of middle class families. If KPCL will join hands with APL its existence
in market would be risk. And it merely will serve as a manufacturer for APL, and the
decision-making power would also be taken away along with the pride of their own brand.
So KCPL should relaunch its biscuits with something innovative and new or come up with
a new flavor which will help it to expand its existing market that is from west and east
region of India and to expand its MKG brand in new markets. It should revitalize the
product with association with Pearsons drinks, as this will be beneficial for both the
companies, for KCPL it will be an opportunity to do or offer something new to its customer
and show its presence in the untapped markets of India where APL leads.
The majour problem with KCPL was that it was not a national brand and its main
competition was with a national brand and the product offered by them was nearly the
same, so it was nearly impossible to surpass a well established national brand which
make a similar product in market, this could only be possible by KCPL by bringing new
innovation, taste and better distribution process in the market.
SWOT of the decision of joining hands with APL.
Strengths -
 it required no marketing, brand building and distribution expenses on KCPL's part
and minimized its business risk.
 A contract for three years with APL.
 It would also help them utilize their surplus capacity.
 Will help them to survive in the market by working for them.
 Give them a feeling of prestige to be the part of a bell recognized brand.
Weakness –
 the possible loss of independence.
 Downfall of brand MKG, by which family name and pride was attached.
 Diversion of the KPCL’s vision planned by Mohan Kumar during the start of
business to be the leading national brand and compete successfully with APL.
 No power to control.
 Lots of restriction imposed.
 Some cost have to incurred by the company.
 Be dependent on APL
 Follow set rules and guidelines by APL only.

Opportunities –
 Better understanding of the customers, distribution network, marketing, production
plan, operations, and other important process which KCPL can use in their own
internal organization to help its MKG brand grow in the market .
 Open gates to new ideas and different approach or new product lines.
Threats –
 No sure existence in competitive market.
 Change in consumer taste, technology, preference.
 Emergence of some international player which will capture market share of APL
hence effecting the business of the company as it is also associated with APL now.
Suggestions - for KCPL in the present situation, and in the stiff
competition when it has refused to join hands with APL.
 KCPL should at this time, plan an line extension in the market, and at same time
a brand extension for different target market like upper class.
 KCPL as it is established in rural area should expand its roots deep in those areas
and strengthen its network over their so that in those areas it would be the only
player and will also generate revenues for the company.
 It should instead of competing with APL focus on how it is different with APL, and
should convey the same with the customers, by conveying its USP (unique selling
proportion).
 It should devise a new pricing strategy.
 It should introduce packaging of new and not yet offered size in the market which
could be either very small or large one or both.
 MKG brand name should be used for the launch of new product or range, or the
new range should be associated with MKG brand as it is recognized by the people
and is not new to them which will make it easy to accept.
 Product innovation
 Packaging focused to target market.
 Use of skimming pricing technique to show the premium nature in the market and
differ oneself from competition.
 Customer driven and consumer focused advertisements.
 Pricing the product so that it justifies the value it provides to the consumers.
 Us of brand elements and brand association to create a whole new image of the
brand in the market.
 Marketing the product with emotions associated with it, as it is very effective
marketing tactics.

Submitted by – Yash Gupta

Yashgupta18.yg@gmail.com
700607117, 9589171073