ITC ENDURING VALUE

ITC CREATING ENDURING VALUE

BY: - SUMIT AHLUWALIAMALOBIKA BANERJEE ITC LTD PROFILE

History And Evolution of ITC Ltd

ITC was incorporated on August 24, 1910 under the name Imperial Tobacco Company of India Limited

The Company was changed from Imperial Tobacco Company of India Limited to India Tobacco Company Limited in 1970 and then to I.T.C. Limited in 1974

In recognition of the Company's multi-business portfolio encompassing a wide range of businesses - Fast Moving Consumer Goods, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business and Information Technology

ITC's Packaging & Printing Business was set up in 1925

In 1975, the Company launched its Hotels business with the acquisition of a hotel in Chennai which was rechristened 'ITC-Welcomgroup Hotel Chola' (now renamed My Fortune, Chennai).

In 1979, ITC entered the Paperboards business by promoting ITC Bhadrachalam Paperboards Limited

In 1990, leveraging its agri-sourcing competency, ITC set up the Agri Business Division for export of agri-commodities

ITC also entered the Lifestyle Retailing business with the Wills Sport range of international quality relaxed wear for men and women in 2000

ITC launched line of premium range of notebooks under brand Paperkraft in 2002

In 2002, ITC also entered the confectionery and staples segments with the launch of the brands mint-o and Candyman confectionery and Aashirvaad atta (wheat flour)In 2003, ITC witnessed the introduction of Sunfeast as the Company entered the biscuits segment

ITC entered the fast growing branded snacks category with Bingo! in 2007

In 2010, ITC launched Sunfeast Yippee! to enter the Indian instant noodles market

VISION Sustain ITC's position as one of India's most valuable corporation through world class performance, creating growing value for the Indian economy and the Companys stakeholders

MISSION To enhance the wealth generating capability of the enterprise in a globalizing environment, delivering superior and sustainable stakeholder value

CORE VALUES ITC's Core Values are aimed at developing a customer-focused, high-performance organization which creates values for all its stakeholders

business portfolio --- ITC Ltd ITCFMCGHOTELSAGRI BUSINESSPAPER BOARDCIGARETTEPERSONAL CAREPACKEGED FOOD PRODUCTS

Leaf TobaccoAgri-commodtiyPaper PackagingStationeryInformation TechnologyPRODUCT MIX OF ITC LTD (FMCG-Food Sector)

TRIPLE BOTTOM LINE PERFORMANCE (Turnover and profits as on 17TH July 2012 )

Gross Income for the year grew by 14.9% to over Rs. 36,000 crores. Profit before tax increased by 22.4% to over Rs. 8,800 crores while Net Profits grew by 23.6% to over Rs. 6,100 crores.

The non-cigarette segment net revenue growing 12-fold from about Rs. 1,360 crores in 1996 to Rs. 16,150 crores today.

As a result, 57% of net segment revenue of your Company is now from businesses other than cigarettes

Your Company is today acknowledged as one of India's most valuable corporations. Market capitalisation, which stood at Rs. 5,570 crores in 1996, has multiplied over 35 times to touch Rs. 2 lakh crores.

ITC's traditional businesses have touched a turnover of over Rs. 5,500 crores in a relatively short span of time.

The topline from this segment is expected to triple over the next 5 to 7 years to a level of Rs. 15,000 crores,

AchievementsITC is the first Indian company and the second in the world to win the prestigious Development Gateway AwardITC is the first Corporate to receive the Annual FICCI Outstanding Vision Corporate Triple Impact Award in 2007ITC was conferred the World Business and Development Award 2012 at the historic Rio+20 United Nations Summit which concluded recentlyITC has won the Golden Peacock Awards for 'Corporate Social Responsibility (Asia)' in 2007 The Business Today Award for the Best Managed Company in recognition of its outstanding initiatives in the consumer products segment.The only Indian FMCG company to have featured in the Forbes 2000 list.

SWOT ANALYSISStrengthStrong Financial Performance Products PortfolioDistribution NetworkEnvironmental FriendlyResearch & DevelopmentSocially ResponsibilityBrand Equity

WeaknessDependency on the tobacco businessNot present in many important sectorsLocal Company

OpportunitiesLeveraging its brand equity Right size at the right time The unique reach and distribution network of E-choupal: Synergies across businesses and leveraging domain expertise for growth in other sectors

ThreatsCompetitionPressure groups and Government PolicyGeneral threats

SUNFEAST- AN OVERVIEW

Sun"mascot - The brand ambassador reinforcing the positioning of the brand with an essence Spread theSmile"Sunfeast" - The umbrella brand name introduced in the Glucose, Marie and Cream segments

Sunfeast - To be launched nationally in phases in over one million retail outlets across the country.Sunfeast" range of biscuits is competitively priced and would include two new product innovations - Orange flavored Marie and Butterscotch flavored Cream biscuits Product innovation

SUNFEAST RANGE OF BISCUITS CONTD

Pricing strategy OF ITC LTD (FOOD DIVISION)The pricing of the ITC food division depends upon the Customers demand schedule, the cost function and the competitors price.

The pricing of the company is such that it caters to the need of all income groups of people but special provision has been kept for Low and middle income group, and their pricing are competitive with respect to other players like Britannia, Parle and Briskfarm.

The company follows the Going rate pricing that is the price of the product depends upon the competitors price. The firm chooses pricing more or less the same as Market leader.

PRICING STRATEGY FOR SUNFEAST

Sunfeast looks at a two prolonged strategy:-High margin (High margins in cream variants)

High volumes (High volumes from the Marie and Glucose segments)

Examplessunfeast glucose (200 gm): 20/-sunfeast marie light (130gm : 10/- Sunfeast dream cream (82): 10/-

DISTRIBUTION OF FOODS PRODUCTS DISTRIBUTION NETWORK FOR SUNFEASTThe company used its existing network of convenience stores: the companys name for the hole-in-the-wall pan-beedi shops for Sunfeast.The company also looked at grocery stores and other retail formats.The company says the brand is now available in nearly 1.8 million outlets.14 manufacturing unitsThe company has extended its manufacturing capacity by setting up three new biscuit plants in UP and West Bengal to focus on supply chain management strategy to enhance product freshness, market servicing and margins

Sunfeast school programme: covers 1000 schools across country, to familiarize children with sunfeast brand name and sunfeast mascot

Brand ambassador: shahrukh khan & surya (south actor)

Official sponsor of WTA tennis championship-sunfeast open

Launch of Sachins Fit Kit, the first product co-created with brand ambassador

Other activities:-On buses, print media , hoardings, TV and radio advertisements

PROMOTIONAL STRATEGY

Indian Biscuit industry Indian Biscuits Industry came into limelight after 20th century when the urbanized society called for ready made food products at a tenable cost.

It is assumed as sick-man's diet in earlier days .

Bread and biscuits is the two major product of the bakery industry and covers around 80% of the total bakery market, out of which Industry size is about 14500 crore

biscuit covers up to 70% of the total production

The organized and unorganized sector of the biscuit industry is in the proportion of 65% : 35%

Industry consists ofMajor PlayersMinor PlayersEmerging PlayersForeign Niche PlayersUnited Biscuits(Bitain)Danone (French food giant) NubiscoUnibic (tied up with Food Bazaar launched Tasty Treat ParleBritanniaITCSurya Biscuits Pvt LtdpriyaGoldAnmolKrafts Cadbury OreoPepsiCo : "protein-rich Aliva launched 2009BRITANIA INDUSTRIES LIMITEDPARLE PRODUCTS PVT LIMITEDSURYA FOOD AND AGRO LIMITEDMajor competitorsEstablished in 189690% of Britannias annual revenue of Rs2,200 crore comes from biscuitsKEY PRODUCTS: TIGER, GOODDAY, BORBON, 50-50, MARIE GOLD, TIME PASSEstablished in 1929the largest selling brand of biscuits in the world 70% market share in India in the glucose biscuit category KEY PRODUCTS: Parle-G, Hide and Seek, Krack Jack, Monaco, Parle Marie, Milk Shakti, Parle 20-20.Incorporated 1992Manufacturing and selling of biscuit under brand PRIYAGOLD in octoer1993. Key products: Classic Cream, Butter Bite, Bourbon, Marie Lite, Magic Gold, CNC , Sanack, zig zag,

Strategic comparison

BCG Matrix: ObjectivesBCG matrix is a tool to determine the future strategic plan for each SBU SBU can be a company division, a product line or even individual brands

Companies have multiple products and businesses under their umbrella

While preparing the marketing strategy companies need to decide about adding new products or identify products should no longer be retained.

So the first step is to identify the various Strategic Business Units (SBUs) in a company portfolio.

ITC BCG MATRIXHIGH GROWTHLOW GROWTHHIGH MARKET SHARELOW MARKET SHARE sun feast BCG MATRIXHIGH GROWTHLOW GROWTHHIGH MARKET SHARELOW MARKET SHAREBakery Items, Fast foods, Ready-to-eatBritannia, ParleOreo, PepsiCoInflation in sugar & wheat pricesPremium products are increasing in marketPorters Five Forces sun feastOF SUNFEASTBiscuitSegmentingTargetingPricingSunfeastglucosebiscuitNatural goodness ofwheatChildren betweenthe age group 4-14 yrs100gms -Rs. 4, 75gms -Rs 3, 19gms -Rs. 1SunfeastorangemarieA very differentiateofferingHousewives 200gms -Rs. 13SunfeastmarielightTight and CrispyChildren betweenthe age group 4-14 yrs200gms -Rs. 13, 400gms-Rs.24SunfeastorangecreamSmooth and yummyCreamChildren betweenthe age group 4-14 yrs100gms -Rs.11SunfeastButterscothCreamSmooth and yummyCreamChildren betweenthe age group 4-14 yrs100gms -Rs. 11SunfeastbourboncreamSmooth and yummyCreamChildren betweenthe age group 4-14 yrs100gms -Rs12 OF SUNFEASTBiscuitSegmentingTargetingPricingSunfeastglucosebiscuitNatural goodness ofwheatChildren betweenthe age group 4-14 yrs100gms -Rs. 4, 75gms -Rs 3, 19gms -Rs. 1SunfeastorangemarieA very differentiateofferingHousewives 200gms -Rs. 13SunfeastmarielightTight and CrispyChildren betweenthe age group 4-14 yrs200gms -Rs. 13, 400gms-Rs.24SunfeastorangecreamSmooth and yummyCreamChildren betweenthe age group 4-14 yrs100gms -Rs.11SunfeastButterscothCreamSmooth and yummyCreamChildren betweenthe age group 4-14 yrs100gms -Rs. 11SunfeastbourboncreamSmooth and yummyCreamChildren betweenthe age group 4-14 yrs100gms -Rs12 STP OF SUNFEASTBiscuitSegmentingTargetingPositioningAge

Sunfeast orange MarieSunfeast marielightSunfeast orange creamSunfeast Butterscotch CreamSunfeast bourbon creamA very differentiate offering

Children between the age group 4-14 yrChildren between the age group 4-14 yrChildren between the age group 4-14 yrChildren between the age group 4-14 yrsHousewivesChildren between the age group 4-14 yrsSmooth and yummy CreamSmooth and yummy CreamSmooth and yummy creamNatural goodness ofwheatTight and CrispyIncome

Education

DemographicGeographic

Sunfeast glucose biscuitLifestyle

PRODUCT FOCUS high quality great tasting biscuits With Different Segments Brand Essence "Spread the Smile" DIVERSIFICATION Indian rural and agri. market is 70% to other resources in India ,but only 30 % of GDP is from agriculture sector .FMCG being the fourth largest sector in the field which is expanding at a very fast pace and it has huge potential , along with the benefit that it can be accrued by organizing the existing fragmented market accrued by market leading to concept of one stop shop.Further India being one of the largest economies with the benefit of its vast market ,it attracted ITC to the expand its operation in various areas of hospitality, FMCG ,Greeting cards Branded Apparels etc.PRICING STRATEGYEssentially, Parle plays a high volume, low margin game. But Sunfeast looks at a two-pronged strategy, High margins in cream variants and volumes from the Marie and Glucose segments. For instance, cream biscuits from both Sunfeast cost Rs10 for 100 grams. Parle, however, only charges Rs 5 forits cream variants.Except for Hide & Seek, all of Parle 'products lie in the price range between Rs 4 and Rs 6for 100 gram packs.There is Two method of PricingLow MarginTwo-Pronged Strategy

Suggestions and recommendationSunfeast has to give attention towards Advertisement.Sunfeast has to maintain its status by providing more and more facilities.Sunfeast has to develop more variety of biscuit so that the customer could not return in case of lack of choice.The company should also give emphasis on other gift and/or discount schemes.ITC must cater more funds to their FMCG-Food sector as it has been showing growth of 20.9 % from FY 2011-12 to 2012-13.THANK YOU