Parle G

1. Based upon secondary data, you are supposed to describe and analyse the existing
STP strategy that has been adopted by your chosen company/brand.
Parle products pvt. Ltd manufactures Parle-G biscuits. It was launched in 1939. It
is the worlds top selling biscuit brand. Parle-G is popular because of its Glucose Strategy
and well known as for its taste, great nutrition content, and quality. Its marketing strategy
makes it undoubtedly the market leader in the biscuit category for decades.
Parle-G segments its customers based on geography. It is consumed by people all
over India irrespective of age and status. It has a big market base in both urban and rural.
It has great emotional connect with Indians. Even though the product mainly targets school
going children, it is preferred by adults as well. It is consumed as a tea time snack in most
Indian households. As it is believed to be a healthy and nutritious food when compared
with other biscuits, people have it for breakfast too. Some people charge themselves with
Parle-G, when they need instant energy. Parle-G follows mass marketing technique, with
which it caters not only a specific group, but the whole market as well.
Parle-G has positioned itself as a special glucose biscuit, with high energy and
nutrition. It is positioned in the minds of people as a biscuit that has value for money. After
keen and deep analysis of Indian consumer behaviour, they have fixed this low price to
make it affordable for everyone. This marketing strategy is their main strength. They have
attained this differentiation by highly tactful economies of scale, which is why it is
difficult for any other rival companies to compete Parle-G in the glucose biscuit category.
It concentrates on the taste and preferences of Indian consumers. This differentiation is
attained by means of packaging (image) and distribution. The product can be immediately
recognized by its white and yellow coloured wax paper wrapper with the picture of a girl
child. The airtight pack keeps the biscuits fresh and crisp for a long time. It has the most

intensive distribution coverage. Parle has almost 13 manufacturing units along with 75
manufacturing units on contract in both rural and urban areas. It has nearly 1,500
wholesalers working all over the world, catering 4, 25,000 retail outlets directly or
indirectly. In addition to field force services, there are 31 depots and C&F agents to supply
goods to the wide distribution network. It is available to consumers even in remote
villages, which have a population of only 1500.
The company uses famous slogans like G maane Genius, Parle-G mera sapna
sach hoga. All its advertisements state about the basic benefits of energy and nutrition. In
1989, Parle-Gs Dadaji commercial became a huge success and was run for a period of 6
years. The brand is always associated with positive values like morality, sharing and
caring. It had also sponsored the tele-serial Shaktimaan, which helped it regain market
share at a greater pace, when other rival brands like Britannia Tiger showed up. This
successful marketing mix and commitment, has helped it to capture 70% market share in
India and also to become the first Indian FMCG brand to cross the Rs 5,000 crore mark in
retail sales.

2. You will then proceed with an Environmental Analysis (PESTLE) vis--vis the chosen
co./brand to identify trends and future outlook for this category/sector. Specific to the
co./brand you can use a 5-Forces model to crystallize your conclusions based upon
PESTLE and competitor analysis.
Macro environment analysis PESTLE
Political/LegalParle started manufacturing Parle-G during World War II, almost a decade after Parle
started its operations. It was one of the limited eatables that could reach the military
people thereby gaining credibility. Governments licensing and excise policy has been
stringent for Parle-G under the Congress government. In order to keep excise duty at bay,
Parle-G has to keep low prices. This was governments policy to ensure Parle- G was
affordable by poor.
SocialParle-G forms an integral part of every household in India as an affordable snack liked by
all ages. With a low cost, it offers value for money, thus appealing to the psyche of Indian
consumers. Parle also came out with Parle-G gold, a premium version of Parle-G aimed at
people in band of people having a higher income as compared to poor. It has a wide reachduring Mumbai floods, Parle-G managed to get biscuits to the victims. Parle-G in a way
symbolizes quality, health and trust. Based on the existing marketing strategy, it can try
and differentiate itself based on lifestyle catering to people who come from different walks
of life eg. Athletes, Engineers working in MNC, etc.
Economic Factors-

Income of the consumer group decides its core expenditure. As parle-G is a low priced
product of Rs.4 per pack, it is consumed by all income groups. Due to its low-price,
consumers with lower and medium income-level mostly prefer Parle-G. Poor buyers buy it
because of its affordability and high glucose-content, to satisfy their hunger, whereas
medium income-level buyers get motivated as it is perceived as a value-for-money
product.
Parle-G once faced the cost pressure and it increased its product price per pack from Rs 4
to Rs 4.50. So, it incurred a loss. 12.5% increase in price caused 30% drop in sales.
Although Parle-G is a brand like Colgate, which holds a monopoly in its respective market
share but then too Parle-G is a supplementary product. Supplementary products are highly
price sensitive. Parle-G largely targets middle and lower income group and so as the price
increased that year, consumer bought the cheaper substitute .In order to increase global
market share Parle-G got the ISO 9000 certification . Keeping this in mind, it can try and
cater to the premium class consumers and shed off its image of being a brand just for low
income consumers.

EnvironmentalIndias geographical and weather conditions ensure that Parle-G can be consumed
throughout the year. As such Parle-G as a product does not pose any threat to the
environment and neither does its raw materials. Owing to its popularity and high demand
in India, Parle-G faced major issues with its production capacity but has now incorporated
modern techniques and innovations to go global and also catering adequately to the
domestic demand. With the latest technologies at hand, ParleG would adequately meet
the growing demands but it can also work on decreasing the broken biscuits.

Technological Parle-G faced lot of issues from the British Government, so machines were developed for
production. Parle-G used newspaper waxing as packaging material. Parle-G survived and
thrived because of its quality and its improvisation from time to time. With the rise in
demand for premium biscuits and there being no option for the consumers, Parle-G
launched premium gold category which gave consumers a richer formulation and a bigger
biscuit (6.7 gm against the standard 4.7 gms).Decade ago Parle-G launched Parle-G Magix
which had chocolate and cashew to take over Britannia but it did not do well. In context
with this, we can say that with improvisation and release of new products there should also
be an improvisation in the marketing strategy to differentiate those new products.

The Porter's Five Forces model is a simple but powerful effective tool to
understand where power lies for any business. It helps to decide how to take advantage of
a situation and avoid making the wrong decisions.

PORTERS MODEL FOR PARLE-G

1. Bargaining power of suppliers: Low

Number of suppliers :
Parle-Gs raw materials are basic commodities like wheat and sugar. There are many
suppliers for these and hence, the suppliers do not have great power to bargain with Parle.
This works in favor of Parle- G.

More diverse distribution channels

Parle-gs biggest strength is its distributive network including wholesalers, depots and a
whopping 6 million retailers. The more diverse distribution channels become the less
bargaining power a single distributor will have. This positively affects Parle-G.

Volume of orders
Parle-Gs suppliers are heavily dependent on the high volumes of their orders which gives
the former leverage to cut volumes and reduce the suppliers profits. This gives the
suppliers lesser scope of bargaining.

Low cost of switching suppliers

Because of the large number of suppliers of Wheat, Sugar, etc. and the ease of availability
of these basic goods, cost of switching to new suppliers that Parle may face is very low;
which further reduces the bargaining power of suppliers.

2. Bargaining Power of Customers: High

Number of customers

In 2012, Parle- G became the worlds largest selling biscuit brand, selling about 100 Crore
packets across every size in a month. Parle-Gs customers are loyal.

Many competitors with similar products

Consumers for such a product are likely to change their preference based on taste and
quality. Many competitors to Parle-G are available in the market (Tiger, Sunfeast, etc.).
This restricts Parle-G to increase prices or compromise on quality.

Price Sensitivity:
The biggest USP of Parle-G is its low cost. This strategy of low price makes the brand
very sensitive to any change in price, increasing the bargaining power of customers.

3. Threat of Substitution : Medium

Performance of substitutes:
Substitutes for biscuits are products like wafers, bun, namkeen, potato chips, etc. Many
customers are also diverging towards bakery-made biscuits and confectionary. Even
though biscuits are meant to be taken as snacks, Parle-G has a loyal consumer base. And
for most, it is a food supplement rather than an evening snack and a healthier option
because of its glucose content.

Cost of change:
The low price of Parle-G ensures that there is no comparable price difference when a
consumer switches to substitutes.

4. Threat of new competitors :Low

Time and Cost of entry:

Because of an already overflowing range of products in this market, and every product is
unique, it is very difficult for a new entrant to enter this market.

Economies of Scale:
With its absolute economies of scale, it becomes difficult for rivals to compete Parle-G in
that category, without their margins getting affected.

Brand Loyalty:

Customers are usually loyal to one brand and only a strong brand name is required to
break this.
5. Already existing Competitors : High
The major players in this sector are Britannia Tiger, Marie, PriyaGold, ITC, etc.
Although there are major competitors of Parle-G, it continues to remain the largest market
share holder.

3. You will then identify the challenges, hence facing the co./brand.

The main challenges that the brand faces are the presence of two big rivals Britannia and
ITC. Both the players have deep pocket to promote their brand and pose a big threat to
parle-G.

Promoting the brand into upper middle class family is a challenge as people have a basic
perception about Parle-G that it is low price product, manufactured especially for the rural.

The market has lots of fake brands, which is again a threat to parle-G.

4. Perform now a SWOT analysis

STRENGTH:
Powerful Advertising by wellknown celebrity
Brand Value (very high customer
loyalty for PARLE)
Comparatively low price
Largest distribution System
Mass marketing
Good understanding of consumer
psyche

WEAKNESS :
Quite tough competition (many
competitors are there)
No uniqueness
Improper Packing (Breakage of
biscuits)
Low share in premium market
High dependence on retailers

Opportunities :
Estimated growth rate of 15 %
(YOY)
Opportunities to associate with
various government initiatives such as
Mid-day meal scheme
As Young generation is the main
target, the population of the consumer
base always has positive growth
Low per-capita consumption

Threat :
Tough competition from powerful
advertised brand like Britannia
Effective substitute such as wafers
and bakery products .
Increase in sale of cheap bakery
product
High cost of production due to
increase in raw material cost

5. Identify issues that marketing needs to take up and resolve

There are always certain challenges that a product faces, no matter what the market share
is. In the case of Parle-G too, there are a few issues that marketing needs to resolve:
Threat of fake brands
Parle-G has a mass appeal in the rural areas. Fake brands like Parel-G, Parle Jee take
advantage of this consumer base and their lack of brand recognition. They have packaging
similar to that of Parle-G which can confuse the customers to buy them instead of Parle-G.
This causes significant loss in revenue and might adversely affect the reputation of ParleG, especially if these substitutes end up having a bad quality. Parle-G is known as biscuit
ka pooda in rural areas, which again reflects the lack of brand recognition. Marketing
could create more awareness in terms of brand recognition.
Mass Marketing v/s Differentiated marketing
A major chunk of Parle-Gs revenue is from the Tier-1 and Tier-2 cities. However, no
differentiated marketing strategies are implemented for this segment of consumers. ParleGs advertising and marketing campaigns are always at a national level. They mostly
target children, but not other segment of people who can use Parle-G as a source of energy
or a quick snack.
They could venture into differentiated marketing by projecting Parle-G as not only as a
low-cost brand of biscuit but also as a health food and complete nutrition package.
No share in the premium category
Parle-G tried to enter the premium biscuit category with Parle-G Gold in 2012, but could
not gain the popularity that they aspired for. Having a premium biscuit brand named after
Parle-G was counter intuitive for the consumers, who would easily switch to other more
popular brands like Sunfeast and Hide n Seek.
They could have specifically come up with strategies to target segments that consume such
biscuits and try to negate the image of low cost that Parle-G carries along with it.

Relevance in coming decades

Nowadays other substitutes for glucose biscuits are coming up in the market every day
like oat and ragi cookies- that are preferred by the youth today. With the increasing per
capita income, Parle-G cannot hold on to marketing itself as a low-cost biscuit.
With this in mind, Parle came up with its new campaign Kal ke genius- the first
initiative in the decade. However, marketing team needs to come up with more innovative
ways to attract consumers from the youth category.
Competition
Biggest competitors for Parle-G are Britannia and ITC. They have rigorous marketing and
advertising campaigns. So, Parle-G came up with a new campaign which was its first
move in this decade. The product has to concentrate in different advertising techniques, to
face the intense competition.

6. Choose a growth path (Intensive; Integrative; Diversification), giving justification for

your choice. This could be largely based upon possibilities in identifying new segments;
new positioning; new target markets that may help your co./brand to grow further.

Parle-G has been a market leader in the glucose biscuit industry for a few decades now.
We believe that the growth strategy that Parle-G must apply should be Intensive. To be
specific it should adopt market penetration strategy.

The focus of the market penetration strategy must be on Rural Markets as they are the
main consumers. The Rural market penetration is 50 -65% and there is still a substantial
portion, which can be targeted. The company already has an extensive distribution
network, which would play a crucial role in this strategy.
The most effective way would be to target the young generation as they would grasp
faster and also help in spreading positive word about the biscuit.
Some of the activities would be to associate with government initiatives such as National
Rural health mission centres, mid-day meals for school children etc. This would not only
build a liking for the product among children but also create strong credibility of the
product being a healthy, beneficial and a complete nutrition package. It could also
organize fairs in villages where the village elders can be explained in their own regional
dialects the useful health advantages of Parle-G so that they can promote it among other
villagers, the fairs could also have fun activities for kids with prizes as Parle-G biscuits to
develop a sense of attachment for it among the children.

Parle-G has been given a stiff competition from Britannias Tiger Biscuit but due to its
market domination over many years and the milky taste of Parle-G it continues to
remain the market leader. In the past though the cost of the ingredients increased and
Parle-G increased its cost by 50 paise, it lost a huge market share to Tiger biscuit. We
would suggest that in future if the prices of the ingredients were to increase again then the
extra costs could be bared by the higher end biscuits of Parle products such as Hide n
Seek, Milano etc. since the consumers would not mind spending a rupee or two more for
these biscuits.
Parle-G could also focus on removing fake brands from the market such as Parle Jee,
Parel-G etc. which can easily confuse the rural population and hence cause a lot of loss in
revenue.
Glucose Biscuit has a healthy image perception among customers. Parle can increase sales
and profits by developing new product of potential interest to its current markets with a
product development strategy to grow intensively. They could grow by introducing new
parle-G (Parle-G nutria) with more nutrients and glucose at the same price to target health
conscious customers.

References:

http://www.lawteacher.net/free-law-essays/international-law/segmentation-reveals-onlythe-firms-opportunities-in-ville-parle-international-law-essay.php
http://articles.economictimes.indiatimes.com/2013-02-13/news/37079254_1_parle-gparle-products-glucose-biscuit-brand
http://parlegcompany.blogspot.in/