MARKETING STRATEGIES Analyze a Case

BRITANNIA – THE ENTRY INTO OATS

FMCG major Kellogg’s India has announced its foray in the hot cereal category in India
and has launched the product ‘Heart to Heart Oats”, a product made with wholegrain
oats. Marico has also entered this segment with Saffola Oats which was launched in
Tamil Nadu and select modern retail networks in the country.

With this move, Marico & Kellogs will compete with PepsiCo India's flagship brand
Quaker Oats in the domestic markets. Meanwhile, Nestle India is also gearing up to enter
breakfast cereals segment, including oats, in India. In essence, the Rs 650-crore breakfast
cereal market is set for an intense competition between home-grown and global brands.

Marico CMD Harsh Mariwala said, “We are prototyping Saffola Oats in Tamil Nadu to
start with. We have launched the brand in major modern retail networks in India too.”
Marico had launched Saffola Arise to target health-conscious consumers in select
markets. According to industry analysts, Marico is leveraging the brand equity of Saffola
to foray into new categories.

“Marico has been experimenting with functional foods under the Saffola brand name for
quite some time. The company has diversified into functional foods (atta), salt, snacks as
part of its growth strategy,” said a Mumbai-based analyst.

In the meantime, PepsiCo India, marketer of Quaker Oats, is beefing up its operations to
take on new rivals in this sector. The company's core strategy is to highlight the health
benefits.

Nestle India CMD Antonio Helio Waszyk had said it is planning to expand into
packaged-food items, including breakfast cereals to accelerate its growth in India.

According to industry analysts, the growth of modern retail format will be a major
growth driver for the ‘weight management’ market in India.

The Indian breakfast market assumes significance because of the growing " Health
Consciousness" among the Indian middle class. Breakfast is the most important meal of
the day and it accounts for 1/3 rd of all nutrient need of a person. Although Indian
consumers were not bothered about the nutritional content of their foods, increasingly a
trend is visible in Indian consumers becoming more aware about their nutritional needs.

Taking a lesson from Kellogg's strategies with cornflakes, Quaker launched their Oat
product at a reasonable price range even introducing trial packs for Rs 8. The idea is to
induce the consumer to try the product and then make it a habit. The 400gm pack with a
price of Rs 70 and 200gm for Rs 35 seems attractive compared to other brands. As a sales
promotion campaign, Quaker is selling its 200gm for Rs 25.

The case is not descriptive of actual market conditions or plans from various institutions. It is only narrative of a hypothetical situation
meant to provide students with an opportunity to study, analyze and provide appropriate solutions against the same and learn the
subject objectively.
M P – Management Consultant and Faculty for Management Studies, Mumbai, India
MARKETING STRATEGIES Analyze a Case

All these promotions may cause the existing Oats takers to Quaker but how about our
man who takes Idli, Dosa? That is a million dollar question.

Quaker is launched with a positioning based on Nutrition, Taste and Easy to Cook. The
ad says that it takes only 3 minutes to cook (same as Maggi) but as in the case of Maggi,
that proposition will not work with Indian consumers. Nutrition is an important factor and
regarding the taste, Quaker cleverly came out with Masala and cardamom flavours to
appeal to Indian Palate.

The main question is should the marketer try to break the habit or circumvent it. Maggi
effectively introduced Noodles in to Indian market by not breaking a habit but come
around the habit by targeting kids. Kellogg's is still steadfast in breaking the habit for a
decade now.

Many consumers may not prefer oats for a breakfast because of the perception that it is
not filling. Some may eat it for nutritional purpose but may not substitute the breakfast.
Some may take oats at night after the dinner for health reasons. There is a possibility that
Oats will have a better acceptance as a nutritional component in the Indian consumer's
meal. Let Oats be a part of Idli and Sambhar for complete nutrition. Once you get to the
table then the brand can easily command the Indian consumer's habit. There will be more
takers if this food can be positioned as "any time nutrition" rather than as a breakfast
cereal. As an aggressive marketer, Quaker is head on in competition with the traditional
breakfast foods.

Since this market is small the direct competition is increasing for Quaker. Bagerry is the
other brand in the Oats segment. Bagerry is an Indian company which is in the market for
over a decade. They are not aggressive in marketing and are more of a regional player.
Their market share is 12% (2009-10) in the Oats Market

It is going to be a tough and expensive war for Quakers.

Some additional facts on the Market for Breakfast Cereal & Oats

After reviewing 37 human clinical trials, the US FDA has ruled that there was significant
scientific agreement that 3g of soluble fibre daily from oats, in a diet low in saturated fat
and cholesterol, may reduce the risk of heart disease.

Indian Branded Breakfast market is worth around Rs 400 crore. In volume terms it is
165000 tonnes. Oats market is worth around 6000 tonnes.

Though the market of oats is small Rs 150 cr and is surging at 25% yearly. The other
major players in this category include PepsiCo’s Quaker Oats and India-based players
such as Bagrry’s.

The case is not descriptive of actual market conditions or plans from various institutions. It is only narrative of a hypothetical situation
meant to provide students with an opportunity to study, analyze and provide appropriate solutions against the same and learn the
subject objectively.
M P – Management Consultant and Faculty for Management Studies, Mumbai, India
MARKETING STRATEGIES Analyze a Case

Quaker Oats was launched in India in 2006. Brand Quaker is more than 125 years old and
is a world leader in the oatmeal segment. Quaker's launch is significant because it comes
from the Pepsi stable. With the marketing muscle and deep pocket it is still to displace
Idli from the Indian consumer's breakfast table. The market share is 75% (2009-10) in the
Oats Market

The total market worth of the breakfast cereal is Rs 650 crore and it is reported the new
entrant would come in Marico, the fast moving consumer goods company.

Kellogg’s is the dominant player in corn flakes, with an over 70 per cent share. There are
regional players such as Mohan Meakin, with its Mohan brand in the north, and private
retailers such as the Future Group with its Tasty Treat cornflakes.

After the Kellogg's foray in to the breakfast market in 1990 with cornflakes, Quaker is
the only high profile product launch in this segment. Kellogg's grew the market for
Cornflakes from 1000MT to around 3000MT through heavy spent in advertising. Now
Kellogg's is ruling the breakfast market but yet to break even.

All through this decade, Kellogg's has been trying to do that: changing Indian consumer’s
breakfast habit. With high decibel promotion targeted at adults and kids alike, Kellogg's
was able to make a mark in the Crispy Cornflakes category with excellent brand recall
and shelf space. But the breakfast habit still remains the same. It wishes to try again with
Oats.

The margins are around 22% for the players in the Oats Market. More competition in the
market could only exercise pressure on margins and drive to lower levels of around 8-
12%. This would only delay Break even of the firms entering the market and thus could
affect survival of their products indirectly.

The laggard’s story:

Britannia, a Market leader in its own Domain, seems to have just woken to the aggressive activity
in the Breakfast Cereals Market. It could jeopardize its position in the market and could affect
both its share and profitability concerned to its products in the market. Moreover it needs to move
its product portfolio in tandem to the environment and customer preferences. At the same time it
also needs to maintain profitability across all its products which are around 19%. The company is
already into the market indirectly by incorporating Oats in some of its Biscuits.

Please provide a rationale of why and how Britannia should enter the Market. Please elaborate the
Product that it should come up with and the Target market for the same. Describe in detail the
positioning and differentiation it should undertake for the product/ products. Also kindly
assemble the marketing Mix and present a small preview of financial outlay in terms of
Investment, Revenue and Profitability for the Next 3 years for the product/products. Also present
a Marketing campaign for the Year.

You can use other secondary data available on the market for oats or for the company
Britannia and also assume certain factors to analyze the case and prepare a strategy.
The case is not descriptive of actual market conditions or plans from various institutions. It is only narrative of a hypothetical situation
meant to provide students with an opportunity to study, analyze and provide appropriate solutions against the same and learn the
subject objectively.
M P – Management Consultant and Faculty for Management Studies, Mumbai, India