Marketing Plan of Saffola cooking oil

"Saffola Swasth ParivaarKe Dil Ki Dhadkan” "Abhi to main jawan hoon" "Aaj se Jeene Ka Andaaz Sudhariye" “Healthy oil for Healthy people” Guidance Prof P. Venugopal

Team Gourav Agarwal 018 Himadri Sankar Singha 019 Manoj Jindal 028 Mrigank Shekhar Adhikari 030 1

In today’s fast life people hardly have time to sit down at ease and have a hearty breakfast, lunch or dinner. Thus depriving them of proper nutrition and leading to various diseases. Heart disease is one of the most dreaded diseases due to improper diet habit. Fortunately people in India especially the urban class consumers have started realizing this fact and have become very careful in what they intake including the cooking oil. This project is about one such brand called Saffola which is claimed to be Heart Friendly oil and prevent heart disease. Saffola...the Healthy Oil.

Saffola satisfying Health Needs:

All Saffola oils come with 'LoSorb Technology'. Food fried in Saffola oils absorbs less oil and thus reduces the consumption of oil in your diet.

Saffolla, The Heart of a Healthy family

Saffola oils fats' are 'Free of trans’ Saffola encourages you to take care of your heart by following a low saturated fat diet with regular exercise. By most of the households, Saffola is being considered as “ Dil Ko Rakhiye Jawan” edible oil. Its main ingredients are Rice Bran Oil and Safflower Oil.

Rice Bran Oil (RBO): Heart healthy nutrients in RBO such as tocopherols, tocotrienols and oryzanol are known for their cholesterol lowering ability.

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Safflower (Kardi) Oil: This has the highest levels of Linoleic acid, an omega-6-polyunsaturated fatty acid, which is well known for reducing cholesterol levels. Safflower oil is a colourless and flavourless edible vegetable oil extracted from the seeds of the safflower. It has a light texture, non-greasy feel, easily absorbed, and is nutritionally similar to sunflower oil. It has a long shelf life when stored in a cool dark place away from light and heat due to the presence of very high amount of vitamin E naturally, about 34%. Health Benefits    



Safflower oil is low in saturated fats and very high in unsaturated fats. Essential fatty acids are the precursors of prostaglandins, which are hormone like substances that have a variety of functions like contraction and relaxation of smooth muscles, control of blood pressure, inflammatory response, etc. in humans and animals. Good source of cis-linoleic acid, the omega-6 fatty acid in safflower oil is responsible for prostaglandin production. Cis-linoleic acid is also responsible for burning the brown fat in the body for heat rather than storing as white fat. Thus, safflower also aids in weight loss and its maintenance. 5. Has a very high content of vitamin E, about 34%, which is an antioxidant that fights against free radicals and preserves the integrity of cell membranes and reduces the risk of heart diseases, cancers and other degenerative diseases. Nutritional Information per Serving: Serving Size

100 g of Safflower oil, oleic acid 70%

% Daily Requirements Total Calories

884

Calories from fat

884

44%

Total fat

100 g

154%

Saturated fat

6.2 g

31%

Palmitic acid

4288 mg

Stearic acid

1915 mg

Monounsaturated fat Oleic acid Polyunsaturated fat Linoleic acid (Ω-6)

74.6 g 74639 mg 14.3 g 14350 mg

Trans fat

0g

Cholesterol

0g

0%

3

Total Omega-3 fatty acids

0 mg

Total Omega-6 fatty acids

14350 mg

Vitamins Vitamin E

34.1 mg

171%

Vitamin K

7.1 mcg

9%

Phytosterols

444 mg

If we go by basic marketing product concept, a company can define tangible and intangible benefits to provide value to the customer. To start with, Marico also defined Saffola, the marketing product at three levels:

Technical Product:

Saffola cooking oil has the internationally proven formula of 80% of Rice

Bran Oil (RBO) and 20% of Safflower oil (Kardi Oil). Saffola Gold oil is made through exclusive protection technology called LoSorb that makes the oil more stable during deep-frying. It is fortified with natural Vitamin-E. Vitamin-E helps to preserve the stability of the oil, and thereby increases the shelf-life.

Functional Product: Widely used by house-holds, restaurants for daily cooking, salad dressing etc. As Saffola is extremely stable, it reduces consumption of cooking oil.

Emotional Product:

Here Saffola essentially satisfies the Health Need of consumers. The

product emphasizes on Heart Protection. It focussed on urging people to adopt a healthy lifestyle. One of the major concerns today is the occurrence of heart disease and every fourth Indian being under threat. And adopting Saffola as your family’s cooking medium is one big step that you can take towards safeguarding of your family.

Edible/Cooking oils could broadly be categorized into vegetable refined oil, hydrogenated oil (vanaspati) and bakery fats. The major edible oils produced and consumed in India were groundnut, sunflower, safflower, soya, castor seed, cottonseed, mustard and sesame seed. While pure groundnut oil could be directly consumed or refined to have higher purity, others had to be refined to make them edible grade. Groundnut oil was the most widely consumed oil in India. But groundnut was a monsoon crop (Kharif), vulnerable to the vagaries of monsoon. Background: Climatic conditions in India favour growing a variety of oilseeds. On the demand side, a growing population and vastly varied dietary habits have ensured a thriving market for edible oil in the country. In fact, there is a substantial demand overhang, which is expected to continue for some years. At present, this is offset by imports that cater to almost half of the total domestic 4

consumption. With cheap imports threatening to cripple the domestic industry, the government is walking a tightrope between filling the demand supply gap and the political need to keep the domestic industry in good health. Unorganized, medium and small players dominate the industry. Hence, quality remains a concern. There is need for better regulatory control to protect consumers. An average Indian's yearly edible oil requirement has gone up from 7.0 kg in 1996-97 to 11.8 kg in 2000-01. Despite the variety of oilseeds grown in India, the country imports a substantial quantity of edible oil, which also works out cheaper. Allied factors contributing to imports are the higher cost of cultivation in India and uneconomic oil extraction systems. India is one of the largest oilseed producers in the world (9.3%). Oilseeds in India account for around 5.0 percent of the Gross National Product (GNP) and 14.0 percent of the country's area under cultivation of crops. Castor, Groundnut, Linseed, Niger, Rapeseed, Mustard, Safflower, Sesame and Sunflower are some of the major oilseeds grown. India produces 10 percent of the world's oilseeds, but has a low productivity of around 850900 kg per hectare (compared to a world average of around 1,100-1,350 kg per hectare). The amount of oil extracted from the seed varies with the type and quality of seed. In many cases, the oil recovery rate is upwards of 30 % with Sesame accounting for a high 45 %. Domestic consumption of edible oils has been growing at 4 - 5 % a year. The consumption in 2001-02 was around 25.75 million tons. Non-packaged oils account for nearly 50 % of consumption in both urban and rural markets. In the remaining 50 % contributed by packaged oils, branded oils constitute a small portion of approximately 10 -15 %.

Major Source of Oilseeds:

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Major Players: Edible Oils

Vanaspathi

National Dairy Development Board (Anand) ITC Agro-Tech (Secunderabad) Marico Industries (Mumbai) Ahmed Mills (Mumbai)

Hindustan Lever (Mumbai) Wipro (Bangalore) Rasoi (Calcutta) Avi Industries (Mumbai)

Market: Industry Structure:      

Highly fragmented industry Over 600 oil extraction units, 166 vanaspati manufacturing units out of which only 10 edible oil units and 8 vanaspati units have national reach Over 50% of the units - sick or underutilised due to surplus capacity Idle capacities among these units due to shortage in feedstock supply Major oil brands - - Sundrop, Dhara, Saffola, Sweekar, Postman Vanaspati brands - Dalda, Rath

Trends in Output:

Market Size:   

Edible oils and vanaspathi markets - 9.6 million MT Oils market growing at 8.7 % CAGR Vanaspathi market stagnating at around 1 million MT 6

Capacities: Installed Capacity and Prodcution Vanaspathi

Edible Oils

Capacity

2,720,000

30,368,000

Production

990,534

6, 250,000

Utilisation

36%

21%

Installed capacities and Production - in MT per year Import:

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Key Inputs Inputs Vanaspathi - Minor (solvent extracted) edible oils - Sunflower oil, Soybean oil, Ricebran oil Edible Oils - Oilseeds such as Groundnut, Sesame, Mustard, Sunflower, Safflower and oil cakes and bran. Raw material Comprises 70% of the production cost Oilseeds - the largest cash crop Poor productivity - 873 Kg/ hectare (global average of 2000 kg/ hectare) Though oilseeds have 14.5% share in gross cropped area, only 25% of it is under assured irrigation. Technology : Refining technology freely available indigenously Characteristics:

    



Oils : primarily a commodity market - Price sensitive Effective distribution chain - through a complex network of C&F agents, wholesalers/stockists & retailers (kirana shops, supermarkets). Oil sold in bulk (tin, HDPE containers) to institutions; In retail packs (PET bottles, cans, jars, pouches) to small customers. Seasonal demand for oils & vanaspathi - September to November (peak season). Regulation : Under the Edible Oils Packaging (Regulation) Order, 1998, edible oils cannot be sold loose’ but can be sold only in `packed’ form . Oil consumption - North is largest market, followed by South, West & East zones.

Key Success Factors:    

Raw material sourcing : focus on improving yields, getting better quality oilseeds , ensuring regular supplies - through symbiotic relationship with farmer Branding essential for success (Vanaspathi - Dalda, Oils – Saffola, Sundrop) Better distribution network to improve reach Efficiency in operation - to become price competent and withstand overseas competition.

Business Concerns:     

Free imports, low import duties and slump in global prices - lead to `dumping’. Domestic industries of edible oils and vanaspathi affected - low realisation and idle capacities in oil and vanaspathi industries. Production slippages have also forced imports. Excessive (cheap) imports of oilseeds - led to unremunerative prices, locally Hence, farmers have shifted to other cash crops.

Increasing health awareness - impact of oils and vanaspati usage on individual’s cholesterol levels. Growth: The industry is a high volume, medium growth sector characterized by excess/idle capacities owing to in efficient operations. Imports have been influencing prospects, leading to domestic industry crisis. 8

Threats of New Entry The proliferation of regional brands has been one of the key threats to the national players in the branded edible oil market over the past couple of years. With the domestic supply of oilseeds dwindling, operating integrated oilseed processing facilities no longer makes economic sense. Even Agro-Tech Foods, which has made substantial investments in its integrated oil processing complex at Mantralayam (in Karnataka) over the years, has now cut back on production at the unit and is reportedly scouting for refining capacities near port towns where it can cost-effectively import and package oil. This has significantly lowered the entry barriers in the edible oils business, leading to a mushrooming of local and regional brands. On the one hand, players such as Kaleesuwari Refineries (of the Gold Winner brand), Adani Exports (Fortune) and Ahmednagar Mills (Postman, Til Raj) have been in a position to firmly establish their brands and actually glean away market share from the larger players. These brands use a combination of active regional advertising and aggressive pricing (Gold Winner, for instance, adjusts its selling prices at intervals of a week or less) to woo consumers. On the other hand, international trading houses such as Cargill Foods (Nature Fresh) have also made a foray into the market and have been actively looking to set up refining capacities within the country. These brands appear to have whittled the market share of the national brands. For instance, in 2001-02, Gold Winner, a regional brand, clocked a growth of well over 40 per cent, even as leading brands Sundrop, Saffola and Sweekar reported de-growth in volumes.

Bargaining power of Buyers The bargaining power of customers determines how much customers can impose pressure on margins and volumes. In edible oil market, bargaining power of the buyers is likely to be high because of the following reasons.

  

Customers buy a large volume, so there is a concentration of buyers. Customers are price sensitive and can switch to other substitutes. Substitutes are available in numbers.

Bargaining power of Suppliers The term 'suppliers' comprises all sources for inputs that are needed in order to provide goods or services. In edible oil market, bargaining power of suppliers is likely to be moderate to low due to following reasons.

  

Domestic oil seed market is dominated by many (fragmented) suppliers rather than few large suppliers. Customers’ suppliers are not too many, so buyers’ bargaining power is moderate. Switching cost from one supplier to another is easy.

Threat of Substitute A threat from substitutes exists if there are alternative products with lower prices of better performance parameters for the same purpose. They could potentially attract a significant 9

proportion of market volume and hence reduce the potential sales volume for existing players. Threat of Substitute in Edible oil market is significantly high.

  

Huge portion of customer is not still Brand Loyal Switching cost is high. Customers are highly price sensitive.

Competitive Rivalry This force describes the intensity of competition between existing players (companies) in an industry. High competitive pressure results in pressure on prices, margins, and hence, on profitability for every single company in the industry. In this industry, competition between existing player is likely to be high because of the following reasons.

   

Except few, all players have the similar strategy. Customers are not still Brand Loyal. Products are not much differentiated. Switching cost is not high.

Parameter

Environment Stimulus

Political

Overall, India had a stable government with Trade policies favourable to growth of Industries.

Political

Socio Cultural

60% of the safflower seeds were imported, The input costs depends heavily on Governments import policies and duties. (In March 2001 the import duty on crude vegetable oil was increased from 35% to 75% as a result the input cost soared) A large part of the population lived in rural areas and belonged to the low income group. Even the urban population had lots of other options and Saffola was expensive for them as well. With effect from 1st April, 2008, the customs duty on crude and refined forms Soyabean Oil, Mustard Oil, Sunflower Oil, Safflower Oil, Groundnut Oil, Coconut Oil etc. reduced to zero percent and 7.5% respectively People in general are not health conscious.

Socio Cultural Socio

Taste is given more priority than Health National Vegetable Oil Development

Economic

Economic

Economic

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Opportunity Threat Opportunity

Threat

Response of Marico Industries Aggressive marketing strategies complemented with expanded product range to target various segments. Launched blended low priced variants. Even during period of shortages of safflower seeds Marico made sure the consumer can buy other variants.

Threat

Targeted population.

Threat

Launched blended low priced variants

Opportunity

Launched various low price products and increased the market penetration activities

Threat Opportunity

Launched various initiatives to educate the people about heart diseases. Saffola tasty blend was introduced. Participated in Program and

Threat Opportunity

the

urban

Cultural

Techno logical Legal

Board of India has a demand Developmental Programmes, Promotion of Oil seed Cultivation, Seed Production and Strengthening of Seed Farm, Mechanization & Processing. Other producers had superior technology to offer better quality, colourless, odourless refined oil. Poor Public Transport System. Focussed Govt initiatives to extend infrastructure in Rural and Semi-urban areas.

more focused the advertising on educating the public.

Threat

Opportunity

Acquired vegetable oil refinery, equipped with latest technology. Scaled up production (set-up 2nd Plant at Gurgaon) to meet demand from newer markets. This helped establishing leadership position.

Marico Industries, a well-known Indian Fast Moving Consumer Goods (FMCG) company, offers unique and ethnic Indian products. Marico was famous for its ‘Parachute’ and ‘Saffola’ brands. In a survey carried out by ‘Brand Equity’ of The Economic Times in early 2003, for India’s 100 most trusted brands, Saffola ranked 75th and Parachute ranked 29th. Marico’s brands had shown resilience against competition and maintained their market shares over the years.

MARICO: Market Share (1998-2003)

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Product Feature Mix Recent medical studies recommend diets high in monounsaturated and low in saturated to help reduce heart disease. Monounsaturates are also preferred for superior cooking performance. Saffola is the only leading cooking oil grown without pesticides. The following analysis shows the levels of saturation and cholesterol in various oils used for cooking.

Cholesterol (mg/tbsp)

Saturated

Monounsaturated Polyunsaturated

Canola Oil

0

6

Safflower Oil

0

9

Sunflower Oil

0

11

Corn Oil

0

13

Peanut Oil

0

13

Olive Oil

0

14

Soybean Oil

0

15

Margarine

0

Vegetable Shortening

0

26

Cottonseed Oil

0

27

Chicken Fat

11

Lard

12

Animal Fat Shortening

9

Beef Fat

14

51

Palm Oil

0

51

Butter

33

Coconut Oil

0

Other

62

31

12

78 20

69 25

62 49

33

5

77

9

24

61

18

48 43 19

30

29

5

25

6

54 47

41

22 47

44

12 47

5 44

4

39

54

30 77

12

10 4 6

12 15

Brand Objectives    

Achieve volume objectives Set up a distribution network Build a dealer franchise Build equity with customer

Strategic Objectives     

To achieve leadership in the refined oils market Set up state-of-the-art manufacturing facilities in the heart of the oil belt Enter through a range of multibrand oils offerings Ensure the best in quality, packaging, pricing and focused distribution Growth Strategy o Expansion through concentration o Expansion through integration o Expansion through diversification o Expansion through cooperation

Marketing Mix Product Cholesterol is a soft, waxy substance which is an important nutrient for the brain,nerves, muscles and heart. However if too much cholesterol circulated in the blood, it can build up inside the artery walls. It can slow the flow of blood and eventually damage the heart. The body typically supplies or produces all the cholesterol it needs; therefore none is needed in the diet. Saffola oil is a superior oil.it is excellent for frying. Due to its mild flavor, it is an all purpose oil. It has no off-flavors when cooking and frying. "Grown without pesticides" means that no pesticides are used on the farm to grow the crop. In addition, pesticides are not used throughout harvesting, processing, and storage of the seed or oil. Saffola's farming methods do not pollute the crop, soil, underground water or the air. In addition, farm workers are not exposed to any pesticides while working with Saffola "grown without pesticides" crops. Price

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This increase in market share is despite the fact that Saffola is available at a higher price point to Sundrop. Saffola is priced at Rs 80-Rs 140 for various stock keeping units. Sundrop, on the other hand, comes at Rs 65, going up to Rs 120. With upbeat demand on fresh buying owing to marriage and festive season in India, edible oil prices are expected to stay firm with imports playing a key role in keeping a check on the prices. The crop estimation from rabi oil seed cultivation suggest a marginal drop against the previous year. At the moment, there is a fierce battle for market share in the super-premium-refined-edible-oil category. A C Nielsen data for the month of December ’09 shows that Saffola had a lead over Sundrop in terms of volume share. It stood at 54 per cent for Saffola and 46 per cent for Sundrop respectively. Place Marico already had a very large existing distribution network. They used that network only for the distribution and tried to place Saffola initially in High value outlets and gradually after moving to different price categories they increased the reach of the product to general stores. But most of the rural area is still untapped. Supply Chain

RDC

6 RDCs (regional distribution centres)

Secondary Sales

Primary Sales Raw Material Vendors

Plants

Depots

Direct Distributors

Retailer

30 depots

Super Distributors

Stockists

Total > 1100 Promotion The Saffola cooking oil, for instance, plugged the need for a product that was simply, ‘healthy for the heart’. Advertising over the years (since the early 1990s, to be precise) dwelt on what regular edible oils did to the vital organ - build cholesterol that is - eventually damaging the heart.  Used the health platform by showing testimonials from doctors in advertisements 14



Advertisements focused on creating a strong franchise among consumers having heart, blood pressure and health problems.  Focused on reduction of cholesterol  To win the faith of high income groups they showed Saffola as a Branded oil This clever appropriation of the space with communication that played on the agony of almost losing a loved one to a heart attack did the trick. Saffola today is synonymous with preventive heart care in the country. As Harish Bijoor, chief executive officer, Harish Bijoor Consults, says, “Saffola means heart. That is the positioning in the minds of people. Ironically, allied marketers could have played up this virtue. They did not. Saffola did.”

Profits Marico’s second flagship brand, Saffola, is positioned strongly on the ‘good for the heart’ platform and rides the trend in increasing concern around health and heart health in India. With this increasing awareness several households have begun using Saffola, as part of their adoption of a healthier lifestyle. The super-premium niche of the branded refined edible oils market thus continues to expand. During Q1 FY11, Saffola refined oils recorded a strong volume growth of 17.5% over Q1 FY10 and continued to maintains its leadership position. The higher volumes are expected to increase the customer base for Saffola as the brand has a high retention rate. Saugata Gupta, CEO-Consumer Products, commented, “We are encouraged by the expansion in franchise across all major segments – especially premium refined edible oil. This sets us up to deliver strong volume growth during the year as planned.” Saffola: An increase in the market share with a reasonable pricing premium over the other edible oils and the promotion of the brand on the health and wellness platform would ensure Saffola achieves above 13% volume growth in the coming years. However, due to the recent price reductions and promotional add-ons on the key variants, the overall value growth of Saffola would remain subdued in Q1FY2011 and Q2FY2011.

Value Chain Concept: The value chain categorizes the generic value adding activities of an organization. The "primary activities" include: inbound logistics, operations (production), marketing and sales (demand), and services (maintenance). The "support activities" include: administrative infrastructure management, human resource management, technology (R&D), and procurement. The costs and value drivers are identified for each value activity.

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Support activities

Administrative Infrastructure Management Human Resource Management Technology (R&D) Profit

Profit margin

Procurement Margin

Inbound

Operation Outbound

logistics

logistics

marketing

services

& sales

Primary activities Primary activities: Inbound logistics: These are the activities concerned with receiving the materials from suppliers, storing these externally sourced materials, and handling them within the firm. 

Here goods are received from a company's suppliers.



They are stored until they are needed on the production/assembly line. Goods are moved around the organization.



They purchase their raw material from all around the world.



In order to maximize their availability of raw material they maintain good relationship with their suppliers.



They use JIT (Just in Time) approach for handling of raw material.

Operations: These are the activities related to the production of products and services. They are known for their reliability which comes from efficient operations.

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Outbound logistics: These are all the activities concerned with distributing the final product and/or service to the customers. They manage their Distributor and Super Distributor in different rural and urban area. They make their product easily assessable.

Factory + Subcontractor

Depot

Distributor

Retailer Marketing and sales: This functional area essentially analyses the needs and wants of customers and is responsible for creating awareness among the target audience of the company about the firm’s products and services. Companies make use of marketing communications tools like advertising, sales promotions etc. to attract customers to their products. MARICO focuses more on TV ads and magazine for marketing. This area focuses strongly upon marketing communications and the promotions mix. Service: There is often a need to provide services like pre-installation or after sales service before or after the sale of the product or service. This includes all areas of service such as final checking, after-sales service Like quality, quantity, packaging, weight etc.. MARICO values their customers. Support activities: Procurement: This function is responsible for purchasing the materials that are necessary for the company’s operations. An efficient procurement department should be able to obtain the highest quality goods at the lowest prices. They aim to secure the lowest possible price for purchases of the highest possible quality. MARICO will be responsible for outsourcing and e-Purchasing (using IT and webbased technologies to achieve procurement aims). 17

Human Resource Management: This is a function concerned with recruiting, training, motivating and rewarding the workforce of the company. Human resources are increasingly becoming an important way of attaining sustainable competitive advantage. Employees are an expensive and vital resource. MARICO manage recruitment and selection, training and development, and rewards and remuneration. MARICO consider their employees as HUMAN CAPITAL. Equal support comes from our HRD team, which expends its energies, formulating and building strategies to build a stable and high - talent organisation. The innovations and the quest for excellence at Marico continue unabated. Even as the success stories continue, the focus from the consumer never shifts. Technology Development: This is an area that is concerned with technological innovation, training and knowledge that is crucial for most companies today in order to survive. They believe that technology is an important source of competitive advantage and try to innovate to reduce costs and to protect and sustain competitive advantage. MARICO implemented production technology, Internet marketing activities, lean manufacturing, Customer Relationship Management (CRM), and many other technological developments. Firm Infrastructure: This includes planning and control systems, such as finance, accounting, and corporate strategy etc. This activity includes and is driven by corporate or strategic planning. MARICO implemented Management Information System (MIS) and other mechanisms for planning and control in different departments. Environment Conscious: Saffola has taken further steps with their packaging to provide an environmentally responsible product. Saffola purchases plastic packaging from plastics suppliers that are taking part in voluntary recycling programs. All of Saffola's plastic packaging carries the triangular arrow recycling symbol on the bottom of each bottle. The new retail-size bottles are made of PET plastic and take up less shelf space, and require less packaging in their shipping cartons. Differential Advantage for Marico over competitors in terms of Ability to design new products:  In house production – no outsourcing – high reliability suppliers – superior quality assurance. 

India and foreign production location – spread benefit.



Plant location as per raw materials availability

Ability to deliver the service:  big distribution channel Ability to Market:  Various Products, Domestic and Foreign market gainer  Wide variety of product  Low company image  Low promotion 

Fixed price

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Ability to finance:  High cost capital, reserves & surplus  Cash management 

Centralized payment



Decentralized collection

Ability to manage:  Human resources high calibre.  Quality management & personnel par with competition  Good personnel system  Good industrial relation with other company

Expected future strategies 

 

Brand Extension: During Q4 FY10, Saffola Arise was launched across key Saffola markets, at invitational pricing and has been supported by insightful advertising. The initial performance has been encouraging with indications that repeat purchases are taking place. With its health positioning, the company hopes to create a sizable franchise for itself, in the rapidly growing Rs. 400 Cr packaged rice market, over the next two to three years. In line with its strategy to launch foods under Saffola, the company introduced Saffola Oats in the month of June 2010. The product is being prototyped primarily in the Modern Trade format, in select cities across India International Business: The Company launched the Saffola brand of edible oil in international market recently and hopes to post strong revenue growth and improved profitability. Marico is confident of achieving around 20-25% growth in its international business. Insight: Health more universal than initially defined by Saffola. Now they have started focusing on overall a. Maintenance of health b. Family health

Problem Recognition In early nineties, there was low brand specification at the time of purchase, meaning many consumers simply asked for a “Cooking Oil” and did not specify a particular brand. There was no awareness among people regarding the effect of cooking oil on their health. By the name cooking oil customer only means that he needs oil in which he can cook. The Saffola cooking oil, for instance, plugged the need for a product that was simply, ‘healthy for the heart’. Advertising over the years (since the early 1990s, to be precise) dwelt on what regular edible oils did to the vital organ - build cholesterol that is - eventually damaging the heart.

Alternate Generation During this era the consideration set primarily comprised of its key competitors such as SUNDROP, DHARA, FORTUNE etc. Moving from Consideration appropriateness Set to uniqueness

Later on Saffola came out with different products to cater to different segments. Saffola GOLD - Saffola Gold has the unique composition of 80% Rice bran Oil and 20% Safflower Oil. Saffola Tasty - Saffola Tasty was the first Saffola blend. This oil 19

blend provides the benefits of two oils, thereby giving added value to the consumer. It provides the high PUFA from Safflower (Kardi) oil and the taste of Corn oil. Saffola Active - Saffola Active provides Omega 3 and Oryzanol, two important compounds known for promoting heart health. This comes to you without odour. To get these benefits Saffola Active is made with Rice Bran Oil and Soya bean oil. Saffola Active also contains Vitamin E. New Saffola - New Saffola comes with new ingredients. New Saffola, a blend consisting of Safflower (Kardi) Oil (60%) & Rice Bran Oil (40%), contains Vitamin E. Vitamin E is a well-known and potent antioxidant.

Information search

Technical and Functional Info

From 2005-06, SAFFOLA has become renowned for its expertise in Heart Care, thanks to the consistent introduction of innovative product like heart healthy cooking oil and foods. Saffola's products are the first in line of defense against heart diseases. During this era its image changed from a mere Cooking Oil to a responsible brand whose philosophy is to help people get the most out of life, Saffola always promotes the adoption of a healthier lifestyle for heart.

Evaluation Attributes

There are many players in the market and consumers had little experience and expectations. People are basically evaluating these products based on price.

Purchase Decision

Place utility

High – Main source of the purchase of Cooking Oil for people is Kirana stores in earlier days and now a days lot of urban consumers buy it from retail stores like Reliance Fresh, Big Bazaar, More stores etc.

Time utility

Moderate – Earlier the time utility was low but in later on the time utility picked up due to increasing rush in busy urban life.

Form utility

Medium – There were 2 variant available in the Cooking Oil. Can of 5/10/15 Litres and 1 Litre plastic pouch. This was standard for most of the competitors.

Quality

Over the years, the brand Saffola has become renowned for its expertise in Heart Care, thanks to the consistent introduction of innovative product like heart healthy cooking oil and foods. Saffola's products are the first in line of defences against heart diseases, making transition to a healthier lifestyle a lot easier. This is a clear advantage against its competitors.

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Buying Behaviour During this era of health conscious people, there is a natural inclination towards taking less cholesterol and so taking good quality of oil, but this is a case of urban India, for rural India this is still a challenge to educate the people about the health effects due to consumption of Oil. Saffola has taken lot of initiatives to do it. Lot of advertisements and campaigning to educate people about the effects of cooking oil on heart. Their all the advertisement are focused towards the health aspect. For example their tagline is “Jeene ka andaaz sudhariye”. (Improve your style of living).

Segmentation Type of Segment

State of being

Suitable Product

Geographical: Urban India (Metro cities)

Need satisfaction Health Consciousness

Rural India (Small towns & villages)

Need Satisfaction

Saffola Tasty

Healthy oil was preferred by educated Housewives and not by uneducated rural women

Demographic

Behavioural Segmentation

Saffola Gold, New Saffola, Saffola Active, Saffola Tasty

Saffola Gold, New Saffola, Saffola Active, Saffola Tasty

To compete with different brands available in market, Saffola launched 4 Saffola Gold, New Saffola, different variants with different prices. Saffola Active, Saffola Tasty

Price

Targeting Targeted Segment Urban India: Indian Upper Middle Class

Evaluation Parameters

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Twenty percent of the country’s population lived in urban areas or large cities and consume11.2 Kgs of edible oil per year while the vast remainder lived in rural areas, villages, and small towns. Saffola focused mainly on Urban population because of its high quality product and benefits are very difficult to explain to the rural India. Healthy oil category was undifferentiated in the minds of rural India

Rural market was very unattractive because of following reasons:  

Per capita consumption is quite low Poor rural infrastructure & consumption habits were very different from the urban people and were two major obstacles to enter rural markets. 21

 Age group- All

Affordability is a great factor for the reluctant of rural people buying Saffola which is a high premium brand. India’s most of the people are influenced by the western culture so they had a good potential for healthy eating habits. Keeping in mind about the health conscious people which are present in all age group, Saffola has kept its uniqueness of providing a healthy oil which is less on cholesterol and hence good for heart.

Lower Income group

Lower income group was more or less not entertained by Saffola due to quality product and cost cutting is not easy for them.

Educated Youth

Saffola created awareness in youth towards the health implications of cooking oil and launched ads to educate youth which they named as Saffola Cholesterol Management.

Positioning Product

Saffola Gold

Type of positioning Perceived Quality

Saffola Tasty

Perceived Taste and Quality

Saffola New

Perceived Quality

Saffola Active Health based

Strategy

Position it as a premium brand for health conscious people. A right combination of Safflower Oil and Rice Bran Oil is more effective in reducing cholesterol than each of the oils singly. Saffola Gold has the unique composition of 80% Rice bran Oil and 20% Safflower Oil. Saffola Tasty was the first Saffola blend. This oil blend provides the benefits of two oils, thereby giving added value to the consumer. It provides the high PUFA from Safflower (Kardi) oil and the taste of Corn oil. New Saffola comes with new ingredients. New Saffola , a blend consisting of Safflower (Kardi) Oil (60%) & Rice Bran Oil (40%), contains Vitamin E. Vitamin E is a well-known and potent antioxidant Saffola Active provides Omega 3 and Oryzanol, two important compounds known for promoting heart health. This comes to you without odour. To get these benefits Saffola Active is made with Rice Bran Oil and Soyabean oil. Saffola Active also contains Vitamin E.

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Demand Drivers     

Macroeconomic factors : Population growth, per capita income, purchasing power, oilseeds crop Other factors : Prices - domestic/ international, Availability - oil, oilseeds Influence of branded products - `health’ message Growing preference for convenience foods. With steady growth in population and personal income, Indian per capita consumption of edible oil has been growing steadily.

Key Success Factors     

Raw material sourcing : focus on improving yields, getting better quality oilseeds , ensuring regular supplies - through symbiotic relationship with farmer Branding essential for success (Vanaspati - Dalda, Oils - Sundrop) Better distribution network to improve reach Efficiency in operation - to become price competent and withstand overseas competition Proposed Future trading in edible oils will help curtail price volatility and lend knowledge - based assistance to farmers of eliminate unofficial markets.

Future 

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In the next 5 years, the market for o Edible oils will grow by 8% to 12.65 million MT o Vanaspati will grow to 1.5 million MT Free imports, low import duties and slump in global prices - lead to `dumping’ Domestic industries of edible oils and vanaspati affected - low realisation and idle capacities in oil and vanaspati industries Currently, India accounts for 7.0% of world oilseeds output; 7.0% of world oil meal production; 6.0% of world oil meal export; 6.0% of world veg. oil production; 14% of world veg. oil import; and 10 % of the world edible oil consumption The demand for edible oils is expected to increase from Oil Year 2004-05 levels of 10.9 MT to 12.3 MT by 2006-07 (two years). This assumes a per capita consumption increase of 4% and a population growth of 1.9% which translates to an overall growth in demand @ 6% p.a. Based on the above assumptions, edible oil demand in the year 2015 is expected to be 21.3 million tonnes.

Business Concerns    

Production slippages have also forced imports Excessive (cheap) imports of oilseeds - led to unremunerated prices, locally Hence, farmers have shifted to other cash crops Increasing health awareness - impact of oils and vanaspati usage on individual’s cholesterol levels.

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Be More – Everyday. The Purpose of Marico is its reason to exist beyond making profit. “To transform, in a sustainable manner, the lives of all those we touch, by nurturing and empowering them to maximize their true potential.” Marico sustained its profitable growth, by attempting to maximize the potential of the multiple stakeholders in each sphere of their business, in India and overseas - be it farmers whose communities they sustain - or consumers whose lives they have endeavored to transform through wellness and beauty solutions. “Turning fallow land into a profitable business. We pressed the right buttons.” Marico continuously benefit safflower farmers by implementing various initiatives for them. They made contracts with the farmers to grow safflower – a hardy non-seasonal crop that grows in harsh conditions. Marico helped them maximize the potential of their unused land, turning their losses into thriving profitable business. “By forging win-win partnerships across every link of the supply chain, we have increased the growth and sustainability of our business, yielding winning results time after time, year after year.”

“The net sales have grown by 13% to Rs 790.15 crore. This was led by volume growth across categories. Volume growth was at 16%. Saffola refined oils recorded a strong volume growth of 17.5%” The input prices lowered by 22% with respect to previous year. Brand passed on a part of this to consumers using a strategic mix of promotions and price reductions across select packs during the year to keep the premium over other branded refined edible oils at sustainable levels. This was supported by a media campaign and other marketing efforts. Higher volumes are expected to increase the customer base of Saffola as the brand has a high retention rate. Households buying Saffola have steadily increased with the number of households estimated to have gone up by over 12% during FY10. The Saffola refined oil franchise continues to hold its market leadership position in the super premium ROCP (Refined Oil in Consumer Packs) segment. In the longer term, Saffola would like to establish itself as a leading healthy lifestyle brand. It has commenced its journey in the functional foods space and plans to have a basket of offerings that provides healthy food options throughout the day to individuals conscious about heart health. During Q4 FY09, Saffola’s key markets at an invitational price and has been supported by insightful advertising. The initial performance has been in line with expectations. With its health positioning, the company hopes to create a sizable niche for itself over the next two to three years. Saffola is encouraged by the expansion in franchise across premium refined edible oil. This sets us them to deliver strong volume growth during the year as planned. Marico's international business has had a satisfying journey over the last few years. It feels confident that it will continue to find and leverage the right growth drivers, in their quest to build a sustainable business that contributes meaningfully to the Marico Group's strategic objectives.

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Customer Targets Saffola is targeting busy and health conscious cooking oil consumers. Saffola is leveraging the current leaning towards the health trend, the wellness concept in an innovative manner. The busy executives and professionals who come across stresses in both professional and personal life are very much health conscious (especially heart related issues) and they prefer to use cooking oil like Saffola. Wives of professionals who are very much conscious of heart and cholesterol content of their husbands shall also prefer to use Saffola. Low absorb technology (LoSorb) used by Marico helps Saffola Cooking oil to be stable during deepfrying. Food fried in Saffola oils absorbs less oil and thus reduces the consumption of oil in diet. So, normal household wives who very much cost sensitive shall prefer Saffola as their cooking oil. Saffola is still considered as a premium product. Its price is fixed at a very higher level than its competitors. So there is already a gap for medium price ranged product from Saffola. Also Saffola doesn’t emphasize in taste attribute. Bettering taste along with its health image can substantially increase its market share. Saffola has already launched Saffola Tasty brand but it is still to gain popularity.

Competitor Targets Its competitors are targeting mainly the lower income segment of consumers as the premium charged for Saffola is high. Also competitor, like Sundrop, emphasizes on Taste of cooking oil.

Core Strategy Value proposition It provides certain advantages that look after one’s health condition as well as the consumption amount of cooking oil: 

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It focuses on urging people to adopt a healthy lifestyle. One of the major concerns today is the occurrence of heart disease and every fourth Indian being under threat. And adopting Saffola as your family’s cooking medium is one big step that you can take towards safeguarding of your family. Heart healthy nutrients in RBO such as tocopherols, tocotrienols and oryzanol are known for their cholesterol lowering ability. This has the highest levels of Linoleic acid, an omega-6-polyunsaturated fatty acid, which is well known for reducing cholesterol levels. All Saffola oils come with 'LoSorb Technology'. Food fried in Saffola oils absorbs less oil and thus reduces the consumption of oil in your diet.

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Product Positioning Demographic Segmentation: Basis of segmentation is income, occupation and age as follows; Income High Income Groups Middle Income Groups

Occupation Housewives Working Professionals

Age 21-40 years of people Above 40 years of people

Targeting: On the basis of the above matrix, Saffola will be targeted at the following segments; Segments Key Features Middle/High Income Saffola serves the purpose of cooking oil which takes care of Heart disease. Group Saffola tasty serves Middle income group also. Less consumption goes well with Middle income group. Housewives Takes care of husbands’ health. Working Professionals Working professionals who go through a stressful ambience in office are conscious about health and especially heart. Saffola is a wise choice. Age above 40 years This group of people are more vulnerable to Heart Disease. So Saffola is a definite choice.

Perceptual MAP for SVS HIGH Saffola Health Conscious Image

Gold Drop

LOW

Sweeker

Sundrop Saffola Tasty

Gold Winner

Fortun e

Price

HIGH

Dhara

Dalda

Low The above figure shows the perceptual map for Saffola cooking oil. SVS is to be positioned based on two parameters – Health Conscious Image and Price. It is to be rated high in health conscious image and low in price because of the following reasons:  Competition is less in this particular attribute.  It develops a Credence attribute. 26

Integrated Marketing Communications Programs In 1993, after a thorough analysis of heart disease patients, Marico decided to position Saffola as Good for your heart and the slogan Healthy Oil for Healthy People. Marico first created fear in the minds of people about the incidence of heart attacks and then presented Saffola as a preventive. Saffola was also prescribed by doctors, as it was low on cholesterol. Saffola was awarded the ‘Brand of the year’ in 1993 by the Advertising Club of Bombay.

In the same year, Marico launched the Saffola Healthy Hearts Foundation (SHHF), to educate consumers about heart care and healthcare. The Foundation provided easy-to-read-and understand consumer information booklets and useful reference material like emergency directories. It also conducted free heart check-up camps that provided ECG, cholesterol, sugar, blood pressure testing besides advice from eminent cardiologists.

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The Foundation also arranged for free counselling and diet guidance from dieticians. It actively participated on important days like World Health Day, World Heart Day and Doctor's Day to spread awareness about preventive health care. Integrated Marketing Communication Program used all 4 P’s of marketing together;

Pricing strategy of Saffola Saffola has different products to suit different customers. Marico's reasoning is that since Saffola oil commands a premium of 10 to 15 per cent over other edible oil brands, the company should be able to cater to the demand of the all the customer from different purchasing power groups. The company wants to leverage the Saffola brand equity through brand extension.

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Their Main strategy for price discrimination is to make customer aware that the different price are associated with different products which are suitable for different needs.

Channel Strategy

Saffola is using wholesale distributors, Big Malls, Grocery stores etc. as their distribution channels to result in meeting the customer needs effectively and efficiently.

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Saffola was using their key strength which was showing the oil as the healthy oil for people, this is their USP for selling the oil at even premium over the competitors. Even Saffola has gone to the extent of launching the website especially for the health care for the consumers. www.saffolalife.com On the brand’s homepage, the site’s colour scheme is reminiscent of the brand’s bright yellow packaging that stands out in grocery stores. Sticking to its objective, the site has all the necessary tools to effectively characterize Saffola as a “health-conscious” brand. The Eating Right section educates the reader about nutrition myths, beverages, health benefits from particular plants and other pertinent health topics The Healthy Heart link on the homepage transports the web user to a section that outlines the initiatives the brand has taken in the community. The company has organized several outreach programs, and details on such events are available online. Corporate social responsibility is an important facet of any brand today, and Saffola does an admirable job describing these initiatives on its site. Saffola had always focused on the heart. The brand’s image had suffered a setback in the early 2000s with the ambulance commercial, which portrayed that one had to rush to the hospital if he did not use Saffola. Later, Marico changed Saffola’s positioning, focusing on the health of the entire family with its Sehat se jeena hai campaign. Since the overall health positioning did not yield results, Saffola was moved from the family health positioning, once again to the original heart care positioning in 2004. In February 2004, Marico launched a fresh advertising campaign for Saffola, after a gap of two years. The campaign by Grey Worldwide had a new tagline, Aaj se jeene ka andaaz sudhariye (Improve your lifestyle today), urging every Indian to take up a healthy lifestyle. The TV Commercial focused on a little girl approaching various groups of people to pass on the message of heart care. The new campaign was based on research done by SHHF. Almost one-fourth of the country's population was vulnerable to a heart related ailment and a majority was unaware of the risks related with heart problems. In September 1999, Marico launched a website to provide information on heart care through dietary intervention. Targeted at health-conscious consumers, the website offered a personalized diet plan. The site also offered general information on heart care and healthy food habits. In 2000, SHHF launched a multi-level awareness campaign, where a select group of housewives distributed literature on heart care to friends. The friends in turn spread the initiative to their friends and so on. The motive was to convert each consumer into an agent for spreading ‘Easy to follow tips for a healthy heart’, to strengthen the association between Saffola and heart care.

Research Marico’s Research & Development center, continuously work towards incorporating the latest technological advances in all their products. This ensures that any product, which comes out from Saffola, incorporates the latest learning in the field of heart care. According to Dr. Sudhakar Mhaskar from Marico’s Research & Development Center, “We continuously strive to innovate products to improve the healthy living of the people. To achieve this target we put lot of emphasis on R & D which leads to enhance the oil’s ability to maintain a healthy level of total, LDL & HDL cholesterol in the body.” Every product from Saffola is made through an exclusive protection technology called Losorb that makes the oil more stable during deep-frying. No other oil or blend of oil in the country has this technology. When food is fried in Saffola gold, there is lesser of the unhealthy degraded compounds formed. This kind of health initiatives is the core of Saffola’s strategy and they spend a handsome amount of money in R & D to keep their product superior.

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Financial Budgets Marico uses the following techniques for allocating funds for promotion. 

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Percentage of sales method – Marico is currently using this method. In this approach the budget is determined by taking a fixed percentage of the sales. Marico’s expenditure on advertising and sales promotion is 13.2% of sales in 2009-2010 as compared to 10.2% in the year 2008-2009. Out of the allocated budget the ratio of advertising to sales promotion expenditure is 40:60 and out of the 60% allocated to sales promotion, 40% is spent on consumer promotion, 50% on trade promotion and 10% on sales-force promotion. Unit of Sales method - This method is used for highly priced goods or consumer durables wherein a promotion budget is arrived by multiplying the units of goods sold with a fixed amount. Competitive parity method – In this method the budget is decided by what others are offering in the market. This method is to use as the only information required is about the amount of money spent by the competitors. All-You-Can-Afford Method – In this approach to budget allocation, the amount that is left over after all relevant allocation have been earmarked for sales promotion. This approach is generally taken by small companies with small budget. Objective-and-Task Method – In this method the promotion manager starts by making thorough study of the market, the product, and competition and consumer behaviour in order to set appropriate promotion objectives. The next step is to decide how much money will be required to achieve the objectives. If the cost happens to be more than the money available, then either the promotion objectives are adjusted or more funds are made available from the contingency reserve or by reducing the budget from other promotional activities.

Marketing Metrics Sl. No 1

2

3

Metric(Value) Construction Revenue Market Sales revenue as Share (24%) a percentage of market sales revenue Unit Market Share Unit sales as a (54%) percentage of Market Unit sales Relative Market Brand market Share(54/46=1.173) share divided by the largest competitors market share

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Considerations Purpose Scope of market Measure of definition competitiveness

Scope of market Measure of definition competitveness Can use either unit or revenue shares.

Assesses comparative market strength.

Set up a team that would monitor operations so that problems are revealed much earlier and we can be proactive rather than reactive. This team would monitor market place and financial results as well as the implications of any other changes (like govt. policies, legal obligations, consumer behaviour) and other aspects that have been identified as threats in the SWOT analysis. We should go for a periodic review and analysis of our corporate strategies, market strategies, pricing philosophy, positioning philosophy etc. This would just give an insight when to launch a contingency plan. At present we are in a very good position in the market and enjoying a virtual market leader position in premium health edible oil category. However if in near future some competitor arises, we will have to revisit our strategies to either develop the market barriers or to come up with the superior products to regain our supremacy.

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