Written By

Sanjeev Kumar (School of petroleum management 2014)

Pushpraj Singh (School of petroleum management 2014)

VivekMehta(School of petroleum management 2014)

Under the complete Guidance of

Dr. Ravi Gor

Director -Dr.BabasahebAmbedkar

Open University

Ahmedabad, Gujarat.

February 13

2015

It is a case study about the supply chain problem of ITC Bingo brand which was successful in capturing the market very rapidly on the basis of innovative taste offering but failed to meet the customer Demand.

Case Study : Bingo! How it can be brought back with a Bang.

Company overviewITC Limited (ITC) is engaged in diversified businesses including cigarettes, hotels, paperboards and specialty papers, packaging, agri-business, packaged foods and confectionery, branded apparel, greeting cards and other fast moving consumer good products. The company primarily operates in India. It is headquartered in Kolkata, India and employs about 20,000 people.The company recorded revenues of INR1, 95,050.5 million (approximately $4,492 million) during the fiscal year ended March 2007, an increase of 20.2% over 2006. .The operating profit of the company was INR39, 267 million (approximately $904.3 million) during fiscal year 2007, an increase of 20.1% over 2006. The net profit was INR26, 999.7 million (approximately $621.8 million) in fiscal year 2007, an increase of 20.8% over 2006.

ITC Bingo

The Indian snacks market is estimated to be worth Rs. 2000 crore and growing at a whopping rate of 30 percent.

There are few organized players in the market and a large untapped unorganized market. Hence, it provides a

glaring opportunity to grow and thrive in such an environment. Eyeing this opportunity, ITC launched Bingo

Brand in the potato chips market. With extensive research behind it and with an aggressive promotion

campaign, Bingo was launched to fight head on competition with established market leader Frito Lays.Bingo!

was launched in March 2007 with a wide range of exciting packaged salted snacks. The range includes multiple

flavor variants of Potato Chips & Finger Snacks. The brand is associated with youth, fun and excitement. It

fulfils the consumers need for variety and novelty in snacks. At present Bingo! has 4 sub-brands in its portfolio,

each of which have unique values based on consumer need differentiation. The launch of Bingo represents ITC

Foods’ fifth major line of business after the highly successful staples, biscuits, ready-to-eat and confectionery

products. In just over six months (introduced in the market in March 2007) Bingo had become a case study for

FMCG product launches. It demolishes many myths. With this launch, ITC Foods ended up blowing 30-40% of

its media budget on new media campaigns—something unheard of in a market where the Internet is used mainly

for lead generation and rarely, if ever, for brand-building . Right from an advertisement campaign that generated

responses from ‘One of the best campaigns to be floated in recent times’ to ‘Was that even an advertisement!’,

to taking on the only national player having a decade-long supremacy, in the low-cost branded potato chips

market, Pepsi Co, by the horns, Bingo was up against the odds. But just as the very World Cup campaign that it

was banking on (ITC was an associate sponsor for the Cricket World Cup 2007) to provide it an initial thrust in

the Indian markets, went awry, Bingo hit a green patch in the Indian markets. Within ten months of launching,

the wafer snack brand went on to capture 16 per cent market share branded snack market. The company

leveraged its existing distribution network and easy access to the supply chain (farmers), to attain such rapid

growth in such a short time.

Product Availability:

Within the initial phase bingo was able to cover 16% of the market share but later on started facing problem on fulfilling the demand of the end consumer. By providing pack sizes of Rs5 ,Rs 10,and Rs.20 and almost 16 flavours of its snacks, Bingo had a large number of SKUs to maintain. This resulted in problem of forecasting and stocking, thereby causing more anxiety regarding what to produce and what not to. The distributors and retailers would had to take small quantities of all varieties, and some high selling flavours might stock out, while sales of the low selling ones would leave huge stockpiles. This sometime becomes a reason where the demand of the product cannot be fulfilled. This also creates an inventory problem for the company, retailer and distributer. The consumer also had to taste 16 different flavours, and if she doesn’t like the first flavour, she might not taste other flavours. Lays also has large number of SKUs, but Lays has been tested over time and hence has established its brand already. Bingo on the other hand had flooded the market rather than bringing them gradually.

Table 1. Packet size of Major Players of Snacks Segment.

The company had completely new unit to manufacture Bingo, at its existing facility in Haridwar. As there was only one manufacturing facility , company was facing problem of meeting the demand of customer of Pan India as the supply base was limited in size and experience. Due to this constrain the company was losing its brand value as it was not able to fulfil the expectation of customer which was created by the Advertisement.Though Bingo was launched in 2007 the work on the brand began about three years ago.

Grey area of Bingo

ITC has a diversified business portfolio where it provides various products. ITC tobacco distribution network which has reach across a country with its 2 million outlets. The ITC has cigarette brand are available at almost all the pan shop across the country. So the company

should have to improve the supply chain so that it can provide bingo at every place in different packaging.

.Brand awareness for Bingo is less in comparison to lays which reduces the sale of bingo. Selling of lays is higher because it is a preferred brand and because of perception of people that lays is a brand but not bingo.

The company has to strengthen it availability of product by providing the product at small scale and large scale.

The advertisement was not so good which capture the market. A lot of reaction to the Bingo advertisement has been very negative. The advertisements are sometime classified as irritatingly humorous and some consumer does not like the adverts. Though the objective of the advertisement is to create a immediate brand recognition for an impulse buy product, the negative response of the advertisement could also shun potential customer.

Questions:

1) Discuss the implication of Raw material availability ,Manufacturing facility ,Manufacturing planning and adequate supply responsiveness of brand like Bingo.

2) Suggest a suitable supply chain for the Bingo Brand based on type of product and the stage of product life cycle.

3)) Devise a market strategy to manage the 16 flavours of Bingo with varied pack size.