McVitie’s Digestive BiscuitsMarketing Management 2

By Group 9-Ankit Goyal-DebPriya De-Nandkishore Sharma-Mayank Arora-Mitul Kathuria -Smridhi Khanna

McVitie’s Digestive BiscuitsMission McVitie’s biscuits have been enjoyed the world over since 1850. Baked to perfection,

McVitie’s biscuits are made with the finest, wholesome ingredients.

VisionThe McVitie’s vision is to drive long-term sustainability in the business.

Core values The Core Values of McVitie’s are 1.Financial: Delivering superior financial returns every year. 2.Environmental: Minimizing the impact on the environment.3.Community: Engaging with the consumers, employees and local communities to improve

and promote health and wellbeing, education, skills development and the support of charities.

Industry AnalysisThe organized and unorganized sector of the biscuit industry is in the proportion of

70%:30% ratio.

70%

30%

Sales

OrganizedUnorganized

Growth Rate over the Years & future estimates

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14 E

2014-15 E

2015-16 E

0

5

10

15

20

Biscuit Industry Growth Rate (%)

Biscuit Industry Growth Rate (%)

Reduction in VAT to 5% Or 0% from 13.5% is expected (As compared to similar food Products)

2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 E

2014-15 E

2015-16 E

0

5000

10000

15000

20000

Biscuit Industry in Crore (Rs.)

Biscuit Industry in Crore (Rs.)

 

3500

3700

4600

1700 500

Sales Figure in Crores

MarieGlucoseCreamOthersDigestive

Market Size = Rs 14000 Crore (2012-13)Market Share Marie – Rs. 3500 CroreGlucose – Rs. 3700 CroreCream Biscuit – Rs. 4600 CroreDigestive – Rs. 500 CroreOthers – Rs. 1700 Crore

The Biscuits Market in India

Major Market Players

38%

40%

12%

5%5%

Market Share Britannia Parle

Sunfeast PriyaGold

McVities Others

Competitive Analysis

• The biscuit market in India is estimated to be Rs 14,000Crore (Year 2012-2013) and the industry is also gearing up to aggressively tap the medium and premium segment within the country over the next couple of years.

• The digestive market constitutes of about 3.5 percent of the total market. (Rs. 500 crores).

• Currently McVities has a 25 % market share in Digestives, with Britannia being the Market leader with 55 percent market share.

McVities Britannia Cremica Parle (Marie) Others 0

10

20

30

40

50

60

Current Market Share in Digestive Biscuits

Current Market Share in Digestive Biscuits

Britannia- Market Leader • Goodwill and Brand name to reckon with.

• Mission- To dominate the food and beverage market of India by making sure that atleast one out of three people consume a Britannia Product.

• Strong distribution network ensuring proper availability of the products even in the remotest of areas

•  Innovative products for health conscious people like oats and porridge, Nutri Choice biscuits for diabetes patients, Vita Marie Gold, etc. Large variety of Health Biscuits to choose from.

• India’s most trusted brand for 160 years with a strong brand recall .

• Excellent promotional and marketing initiatives.

• Priced at Rs 50 for 500 grams, it aims at the premium segment. Clan and smart packing of product in Rectangular paper boxes.

SWOT Analysis of McVitie’s  SWOT analysis can provide a framework for identifying and analysing strengths,

weaknesses, opportunities, and threat. This can also provide an impetus to analyse a situation and develop suitable strategies and tactics, a basis for assessing core capabilities and competences. Moreover, this can provide the evidence for, and cultural key to change and a stimulus to participation in a group experience.

Strength• McVities has a Wide Brand offering with markets in plain digestives, bourbons and

digestive cream biscuits. • It has a strong food hold in Biscuit industry, and high rates of business survival,

with 100% growth against the market rate of 70%. • 20% of digestive biscuits market share is captured by McVitiesWeakness• McVities has a geo-graphical concentration in urban areas only, and doesn’t plan or

intend to focus on the rural areas. In the urban areas, the target audience is the people belonging to niche category.

• Products recalls, low exploitation of the Internet and ICT, lack of R&D and fragmented enterprise support are some of the other weaknesses of McVities digestive biscuits.

SWOT ANALYSIS contd. Opportunities• There is a huge potential in the emerging markets like India, and this is evident

from its growth, which is higher than that of the average market growth since the launch of digestives biscuits.

• There is also a growing demand in the snacks and savoury market, which can be looked over by the firm in future.

• Due to healthy market environment, the firm can also look for diversification& expansion in the already existing variants and new products, respectively.

• With just 5 years of operations in India, and not-so-good R&D, the firm can further look for development in technology

Threats• Global Economic Slowdown & Highly Competitive Environment are some of the

most damaging threats for the firm, which is at a nascent stage in India. • The Strict Government Regulations can also act a barrier to the firm’s future

prospects. • The latest recommendations on saturated fat and added sugar announced by the

respective government agency urge industry to continue on the reformulation quest.• There have been Threats from Indirect Competitors as well

Perceptual Map

McVities Original Digestive Biscuits

Cremica Digestive BiscuitsBritania Nutrichoice Diges-

tive Biscuits

Britania Nutrichoice 5 Grain

Parle Marie

Hig

h on

Tas

te

Low on Nutrition/Health

Hig

h on

Ta

ste

Low on Nutrition/Health

High on Nutriton/Health

Low

on

Tast

e

STP for McVitie’sSegmentation

Demographic•Age (18 years to 55 years)•Gender (Male , Female)•Income (Rs. 4 Lacs per Year or above)•Education (Professionals - Graduates and Post

Graduates)

Geographic•Regions (All over India)

•City (Class I and Class II cities, Metros)

Psychographic •Lifestyle (Health Conscious)

•Personality (Ambitious, Hard Working)

Behavioural •User Status (Potential Customer and First Time

Users)•Loyalty Status (Strong)•Readiness Stage (Interested)•Attutude towards Product (Positive)

Target

McVitie’s targets the :

• High income group in the urban population of India who are concerned about their health.

• Working men and women who remain engaged in work and related activities, thus aiming to

provide them nutrition between tea breaks.

• Health conscious people who consider health and fitness important and mandatory.

• It has introduced its new products including high fibre biscuits, chocolate biscuits which aim

at making it appealing to teenagers who wish to remain healthy, without sacrificing on taste.

Positioning • Worldwide, the brand is positioned based on its "Whole grain" content. Globally, the brand

has the slogan "Whole Wheat at Its Heart". 

• McVitie's positioning in India is based on two attributes: Health (whole grain) and Taste. •The brand has adopted the tagline "Taste Ki Nayi Language" translated to "The new language of taste". The present tagline focuses on to ‘Switch to a healthy habit’. 

Inference:

With Taste being one of the dimensions, it is important to understand that all brands talk about taste at one time or the other. The powerful differentiator for McVities would have been its global image and the quality factor which made it one of the most respected brands in Britain. The brand should project itself as the REAL Digestive biscuit, which invented this product category, instead of being categorized as "The Original".

Future Objectives

Year 1 Year 2 Year 3

Targeted Growth Rate 90% 75% 50%

Targeted Revenue Rs 200 Crore Rs 350 Crore Rs 525Crore

Expected growth rate of digestive biscuits market

60% 40% 30%

Expected size of digestive biscuits market

Rs 800 Crore Rs 1120 Crore Rs 1456 Crore

Targeted Market Share 25% 31% 35%

McVitie’s Digestive Biscuits will have a three-point objective:•To maintain a CAGR well above the industry growth rate over the next five years.  •To achieve a market share of over 60% within the digestive biscuits market in India in the next five years. •To achieve gross sales revenue of over Rs 2300 crores by 2019.

Positioning Statement

“To health conscious customers who look for a tasty yet healthy snack, McVities Digestive Biscuits are a perfect

blend of taste and health, providing 20 % of a day’s fibre in a tasty and crispy manner, making it the most

preferred high nutrition biscuit.” 

-It has positioned itself as a perfect blend between health and taste. It positions itself as a semi- sweet biscuit with 33% wheat, which makes it way healthier than other sweet

biscuits.

4 P’s  Product

McVities Digestive Biscuits are baked with whole wheat flour and the finest wholesome ingredients.

• With high level of dietary fibre, it is considered as one of the best snack in between meals. • Mcvities proves to be a favorite snack with a tossing of cheese, chocolate, jams & butter.• Has all the goodness of wheat .• High fiber content.• Crumbly texture, original flavor and satisfying nature.

Price

• Lower than its immediate competitor- Britannia NutriChoise Digestive Biscuits which sells at Rs. 50 for a 250 grams pack. As the market for digestive biscuits is relatively new

• Has an advantage over Britannia’s Digestive biscuits for consumers trying McVities (due to lower price) before Britannia.  But Britannia's Strong Brand recall, makes it the most preferred brand.

Weight (gm)

Price(INR)

100 18

250 45

500 90

Place• McVities Digestive Biscuits supplies to all Kirana shops and departmental stores like Big

Bazar, MORE etc, thus creating high availability in the market. • Available in more than 250 towns across the country•  Acquires 40 percent of its sale through modern outlets like Big Bazars.

Promotion• Advertising : Its brand ambassador is Bollywood Health Freak- Miss Bipasha Basu who

focuses on health and exercising. Their latest advertisement shows an office scene where colleagues having biscuits other than McVities are shown as having “Maida” and thus gaining weight. The tag line is “What’s in your Biscuit?”

• Social Media : McVities uses Facebook and Twitter campaigns to promote its products. It has a fan following of over 2.3 Lac Indians on Facebook. They organise a number of contests where you can give in your recipes.

• Cross Promotion : Cross promotions with reputed brands such as piggybacking with Kelloggs or HUL's Taaza has also helped increase the brand's visibility.

• Sales Promotion : McVities offered a number of sales promotion techniques including giving out free plastic bowls with its 500 Gram biscuits.

Product Strategy Product Development System

▫ Allowed the firm to come up with new and better products on a consistent basis. ▫ Structured yet afforded enough room for realizing the best product-development

ideas. ▫ The product and development system is based around research and development

(R&D) management.▫ The R&D system of Mc Vitie’s India is not so good, but given the rise in its

demand; popularity & credibility, there is a huge opportunity for the firm to improve upon it.

Product Line• Diversified Product Line• Nine variants including oats, cookies, fruit- based cookies, bourbon, marie and cream

biscuits.• Flagship brand: Digestives• Hobnobs:

▫ Another line with the goodness of natural honey, oats and whole-wheat. ▫ Positive public perception

• The cream biscuits are also very appreciated by those who are cream biscuit buffs and also looking for a healthy option.

Pricing Strategy • Our product is catering to high income market segment consumers who want a balance between health and taste

• Set the price of the product between the Price Ceiling (competitor’s) and Price Floor (breakeven price)

• Going-rate Pricing Method wherein price of a product is based upon competitor’s prices Final price

Rs 18 for 100gm, Rs 45 for 250gm Rs 90 for 500gm.

• Going forward, once we establish a better brand name and acquire considerable market share, we can increase the prices and bring them to the level of competitor

Distribution Strategy The distribution network of McVitie’s Digestive Biscuits will have three tiers as listed below:• Manufacturing Units: There will be a manufacturing unit with an adjoining storage depot in each

of the major geographical zones, north, south, east and west, preferably near Delhi, Chennai, Mumbai and Kolkata to supply the distributers in the respective zones. 

• Wholesalers/Distributers: There will be 4 wholesalers in every tier 1 city and 1 wholesaler in every tier 2 city.

• Retailers: McVitie’s products are available in around 80000 stores across the country. Our objective will be to take the number up to around 150,000, with greater focus on tier 1 and tier 2 cities.

Manufacturing Unit

Wholesaler/Distributor(2-5%)

Retailer(15% margin)

Customer

Distribution Strategy(Contd..) Tier 1 Cities Tier 2 Cities Tier 3 Total

Manufacturing Units Planned 4 0 0 0

No. of Distributers/Wholesalers targeted

32 60 0 92

Number of Retailers planned 60000 60000 30000 150000

Promotional Strategy

Objective : To create awareness of the McVities digestive biscuits, among the consumers and to position them in the minds of the premium segment people, who are looking for enjoying the biscuits, with health and nutrition as the primary motive of purchase.

Present Communication Design• United Biscuits integrating all the marketing communication channels such as, events &

experiences, TV, print, social media and the PR.• Doubled marketing spends for 2013.• Use of print & electronic media along with several on ground activities to reach out to

its target audience.▫ Television Advertisements ▫ Leveraging social media like Youtube, Facebook etc. ▫ Promoting through events and experiences to create brand related interactions with

customers.

Proposed Communication Design

• Setting up kiosks in the premium segment malls• Promotion at kiosks through contests.

-Goodies-Giving away the sample product for taste-Generate press release for the product

 • Discussions to be initiated by the company itself on their various social media pages and

accounts. 

• Focus more on presenting the factual information about the advantages of McVitie’s digestives over the digestives of other brands. These advertisements can be aired on entertainment; sports channels and news channels. 

• PR management -Online product reviews and recommendations. -High level of credibility

Promotional Strategy(Contd..)

Communication Mix• After analyzing the promotion strategy we can now decide upon prioritization of

the communication channels so as to increase the maximum consumer reach. Out of the total budget of advertising and promotion the following breakup can be devised

27%

40%

10%

23%

Communication mix

PRTV Social mediaEvents

Sales Force Strategy • McVitie’s have a sales force of approximately 200 employees and a marketing

group of 40 employees in India. • It is available in more than 250 towns across the country.• Each sales force works with a sales support staff responsible for establishing trade

channel and customer management strategies. • They generally sell their products on an order-by-order basis and do not enter into

long-term contracts to supply the products.

Sales Force Structure

• Their sales force consisted of few teams which consistently focus on the primary product i.e. McVities Digestives and dedicated to support the major customers of the brand.

• They have a field sales operation responsible for supporting wholesalers and their customers at a local level.

• They also have a brand management team responsible for developing brand strategies, new products and product-line extensions and for marketing activities, such as advertising, sponsorship programs and consumer public relations.

27

Profit & Loss Statement (In Rs. Crore)2014 2015 2016

IncomeSales Turnover 200.00 350.00 525.00Excise Duty 3.00 5.25 7.88Net Sales 197.00 344.75 517.12Other Income 1.95 3.4 5.11Total Income 199.31 348.79 523.19ExpenditureRaw Materials 124.25 217.43 326.15

Power & Fuel Cost 1.83 3.21 4.81

Employee Cost 5.04 8.81 13.22Other Manufacturing Expenses

17.70 31 46.45

Selling and Admin Expenses

Miscellaneous Expenses 35.60 62.3 93.44

Total Expenses 184.42 322.74 484PBDIT 14.89 26.05 68.33Interest 1.32 2.31 6PBDT 13.56 23.73 62.3Depreciation 2.00 3.50 9.2Profit Before Tax 11.56 20.23 53.1

Extra-ordinary items 0.10 0.17 0.46

PBT (Post Extra-ord Items) 11.66 20.40 53.56

Tax 3.45 6.03 15.85

Reported Net Profit 8.21 14.36 37.70

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