CAS Assignment Pooja

8/6/2019 CAS Assignment Pooja

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CUSTOMER SEGMENTATION AND ANALYSIS

Submitter By:

Pooja S- 092517002

Roshni D Singh- 092517012

TABLE OF CONTENTS

INTRODUCTION ............................................................................................................... 3WHY ORGANIC?? ............................................................................................................ 4

INDUSTRY SECTOR ......................................................................................................... 5

TRENDS IN THE INDUSTRY .......................................................................................... 6

MAJOR PLAYERS ............................................................................................................ 7

THE LEADING F&G RETAIL STORES ......................................................................... 7

FAQ’s- CUSTOMER INSIGHTS..................................................................................... 10

MAIN COMPETITOR- NAMDHARI FRESH ............................................................... 12

STRATEGIES ................................................................................................................... 13

HOW AND WHY OUR BRAND “PURE” WILL SUCCEED? .................................. 13

CHALLENGES WE HAVETO OVERCOME ............................................................ 13

THE ORGANIC CUSTOMER ......................................................................................... 14

CUSTOMER SEGMENTS FOR “PURE”- CLUSTERS ................................................ 16

CONCLUSION ................................................................................................................. 17

QUESTIONNAIRE ........................................................................................................... 18

INTRODUCTION

Organic foods are foods that are produced using methods that do not involve modern

synthetic inputs such as pesticides and chemical fertilizers, do not contain genetically, and are

not processed using irradiation, industrial solvents, or chemical food additives.

For the vast majority of human history, agriculture can be described as "organic"; only during

the 20th century was a large supply of new synthetic chemicals introduced to the food supply.

The organic farming movement arose in the 1940s in response to

the industrialization of agriculture known as the Green Revolution.

Organic food production is a heavily regulated industry, distinct from private gardening.

Currently, the European Union, the United States, Canada, Japan and many other countries

require producers to obtain special certification in order to market food as "organic" withintheir borders.

WHY ORGANIC??

Organic is good for you and your planet, is kind to animals and wildlife and allows us make a

big difference - simply through the way we shop. With all these benefits, it‘s easy to see why

organic delivers such good value for money. When you buy organically produced farmproducts, you support farming techniques that improve soil fertility without the use of

petroleum-based synthetic fertilizers. You protect surface and groundwater from exposure to

persistent, toxic pesticides. Organic farmers work with, not against, the balance found in a

healthy eco-system: wildlife is encouraged by including forage crops in rotation and by

retaining fence rows, wetlands and other natural areas where wildlife can thrive.

Better for your planet

Today, substantial amount of greenhouse gas emissions come from food and farming.

Nitrogen fertiliser manufacturing is the worst offender. To produce just one tonne takes one

tonne of oil, seven tonnes of greenhouse gasses and one hundred tonnes of water. Organic

farmers work with nature to feed the soil and control pests. By choosing organic, local and

seasonal - we can significantly reduce our carbon footprint.

Great for You

No food has higher amounts of beneficial minerals, essential amino acids and vitamins thanorganic food. Organic food avoids pesticides and all controversial additives

including aspartame, tartrazine, MSG and hydrogenated fats. Organic food contains higher

levels of vitamin C and minerals like calcium, magnesium, iron and chromium as well as

cancer-fighting antioxidants and Omega 3.

Encourages wildlife

The plant, insect and bird life is substantially greater on organic farms. Organic farming relies

on wildlife to help control natural pests, so wide field edges are left uncultivated for bugs,

birds and bees to flourish. They are also not sprayed away by the fertilisers, chemicals and

pesticides routinely used on non-organic farms. GM free Genetically modified (GM) crops

and ingredients are banned under organic standards.

INDUSTRY SECTOR

Food and grocery segment constitutes about 62 per cent of the total INR 12000 billion (USD

270 billion) Indian retail market. There are about 12 million retailers in India and 80 per cent

of those are actually mom and pop shops run by family members. The modern organized

retailing is about 3 per cent of the total. In South, however, the modern retailing is said to be

10% of the total. As per IMAGES F&R Research estimates organized food and grocery retail

market was a mere 0.5 per cent of the total in 2004. This organized segment has now grown

to just about 0.8 per cent in 2006 valued at INR 500 billion at 2004-05 prices. The organized

food and grocery retail sector grew at the rate of 35.6 percent in 2005 and at 42.5 per cent in

2006 over the previous year.

Until recently, this segment was dominated by players with regional presence as most of

them had established themselves in local markets only such as Subhiksha in Chennai,

Trinethra in Andhra Pradesh and Margin Free Markets in Kerala. Food World tried to expand

to West India (Pune) but failed. This was primarily attributed to inefficient supply chain

management and lack of investment in establishing effective SCM network in different

regions. But players like Food Bazaar has established a pan-India presence and Subhiksha has

moved towards north India and currently testing the NCR market.

It can be noted that grocery retailing accounts for nearly half of the packaged fast moving

consumer goods (FMCG) sales. ACNielsen study indicates that there will be significant

switch in spending from traditional grocery stores to modern stores in the region. (Source:

India Retail Report 2007: An Images F&R Research)

TRENDS IN THE INDUSTRY

Changing consumer preferences due to increased disposable income. Consumers are

demanding wider range and unique merchandise with consistent quality –‗all under

one roof‘

Gradual increasing cosmopolitization of Indian population due to western influence

and internationalization of palates and lifestyle created the need of wider array of

products and services

New types of packaged and convenience foods such as processed meat and meat

products requiring refrigerated storage and transportation and retail shelf space

As of now the emphasis in food and grocery retailing is on dry groceries. The wet

groceries like fruits, vegetables and meat products account for only 3-5 per cent of the

overall offering of the organized players. However, consumers spending indicate that

about 40% of total consumer spending is on wet groceries. The major challenge

would thus be putting appropriate supply chain management infrastructure for wet

products and those who will be able to do it faster will have a major differentiation

advantage to leverage. The signs of eliminating involvement of middlemen and

backward integration in SCM among Indian retailers are increasingly visible.

MAJOR PLAYERS

Major players in the fray are Big Bazaar ( belonging to Pantaloon), Giant (rechristened as

Spencer‘s), Star India Bazaar (of Tata Group), Landmark (in association with South African

Retail giant Shoprite), Reliance Industries, Rainbow Retail (of Raheja Group), Godrej, Adani,

Trinethra (now under AV Birla Group), Dairy Farm, Jubilant Group among others.

THE LEADING F&G RETAIL STORES

SUBHIKSHA

Chennai based retail chain is the largest discount stores in India with over 315 stores. Started

in 1997 it is the first company to start tie ups with the manufacturers for cost saving. In 2006

it has 315 stores with 60 stores in Bangalore, Mysore and one store in NCR. The turnover of

the company is INR 3.34 billion. They have launched aggressive television campaign to

reach masses. They plan to invest additional INR 1000 million to add 180 more stores in

eight cities of which 100 stores will be in Mumbai city itself. As per plan they would like to

have 600 stores by the year end 2007.

FABMALL

Bangalore based Fabmall operated 12 stores and achieved INR 500 million in sales in 2003-

04. It has been acquired by Trinethra of Hyderabad with 80 outlets in eight cities in Andhra

Pradesh covering retail space of more than 1300000 sqft. Post acquisition, Trinethra had

added five more stores under Fabmall and now operating both the formats. Trinethra super

retail with 172 stores subsequently got acquired by AV Birla Group which acquired 90

percent stake. Balance 10% is still with India Value Fund managed by GW capital, a private

equity fund .By year 2006-07 Trinethra has 198 stores in more than four cities with total areaof 525566 sqft and sales INR 2780 million

FOODWORLD

Dairy Farm International entered Indian market and took over Food World from Spencer as a

route to dilute the shareholding in RPG group. It had a four city presence and 100 stores in

2005-06 as compared to the previous year 79 outlets. Dairy Farm now plans to set up bigger

stores as well as large format stores .As per plan they would like to set up 500 outlets by year

SPENCER’S RETAIL

A RPG group company entered into F&G retail in 2001.In the year 2006-07 they had 68

stores in 17 cities with retail space of 582490 sqft. They have both small (2000sqft) as well as

large( 8000-15000 sqft) format outlets selling both fresh products and durable item under one

roof. Small format outlets sell fresh food, groceries, chilled and frozen foods.

FOOD BAZAR

Food Bazaar, the Pantaloon grou p‘s F&G chain , has in all 45 outlets across more than 20

cities and is located within the group‘s value retail format Big Bazaar. Food Bazaar‘s value

proposition – selling below MRP – helped in high stock turn over. It has launched private

label brands of tea, salt, sugar, spice and processed foods. The turnover for the year 2003-04

was INR 1.5 billion which is expected to go up to INR 32.5 billion by year 2010.The

company plans to have 110 outlets in 2007 and 250 outlets in 2010. They have over 10000

TRUMART

Launched by Piramal group and managed by Mumbai based Crossroads. First outlet was

opened in Pune in upscale Bhandarkar Road of 6000 sqft size. They have 12 oulets in five

cities in 2005-06 although started initially in Pune and Mumbai. Now they have 42 outlets (

2006-07) in 14 cities with plan to have 150 outlets in the year 2010.They plan to have 82

outlets in 2007.The theme of their stores is AUOR (All under one roof).

NILGIRI’S

It has pioneered the organized retail operation in the country – started as early as 1905 in

Bangalore. In 2004-05 it has about 140000 sqft retail space which has now gone up to200000 sqft. They have mainly franchisees and a few company owned format outlets. They

have pioneered franchisee model in India in F&G retail.

ARAMBAG FOODMART

It belongs to the Arambag Hatcheries and is a household name in Kolkata. Spread over

Kolkata and other cities in West Bengal company operates 24 stores with an average area of

600-1000 sqft of retail space. It deals in groceries, confectioneries, toiletries, frozen foods

and of course its products Arambag Chicken (dressed chicken). The unique features of these

stores is below MRP price, good quality and convenient location.There has been gradual

increase in sales from INR 181 million in 2004-05 to INR 212 million in 2005-06 to the

current to INR 260 million now.

NAMDHARI’S FRESH

Namdgari‘s Fresh (NF) a sister concern of Namdhari Seeds Pvt. Ltd, a leading Seed company

was started four years back with a vision to be the leader in Quality Fresh Produce following

Integrated Pest Management Practices with eco friendly bio- agents. Currently they have 13

outlets in Bangalore and 3 more in New Delhi

RELIANCE FRESH

Reliance entered the F&G sector recently with its Reliance Fresh outlets foraying through the

Hyderabad stores. First set of roll out included 11 stores all located in the same city. First day

turnover was INR 2.2 million. The company is targeting at least 35 outlets in major cities.

Expansion is planned and is in progress to cover immediately Delhi, Mumbai and nearby

areas in the first phase. They are planning 70 cities and 784 urban towns and 6000 odd rural

mandi towns to cover 100 million sqft of retail space backed by about 68 strong distribution

network by year 2011.The company expects to get sales approximately of INR 1000 billion.

FAQ’s- CUSTOMER INSIGHTS

What is organic?

Organic refers to the way agricultural products — food and fiber — are grown and processed.

Organic food production is based on a system of farming that maintains and replenishes soilfertility without the use of toxic and persistent pesticides and fertilizers. Organic foods are

minimally processed without artificial ingredients, preservatives, or irradiation to maintain

the integrity of the food.

What does "Certified Organic" mean?

"Certified Organic" means the item has been grown according to strict uniform standards that

are verified by independent state or private organizations. Certification includes inspections

of farm fields and processing facilities, detailed record keeping, and periodic testing of soil

and water to ensure that growers and handlers are meeting the standards, which have been

set. Certified Organic is the only way to guarantee that the product is organic. Producers

cannot use the term ‗Organic‘ legally without certification. To bypass this legal requirement

for certification, various alternative approaches, using currently undefined terms like

"natural" instead of "organic", are emerging.

Who regulates the certified organic claims?

In India, APEDA regulates the certification of organic products as per National Standards for

Organic Production. "The NPOP standards for production and accreditation system have been

recognized by European Commission and Switzerland as equivalent to their country

standards. Similarly, USDA has recognized NPOP conformity assessment procedures of

accreditation as equivalent to that of US. With these recognitions, Indian organic products

duly certified by the accredited certification bodies of India are accepted by the importing

countries

Are all organic products completely free of pesticide residues?

Certified organic products have been grown and handled according to strict standards without

toxic and persistent chemical inputs.

Is organic food better for you?

There is mounting evidence at this time to suggest that organically produced foods may be

more nutritious. Furthermore, organic foods and fiber are spared the application of toxic and

persistent insecticides, herbicides, fungicides and fertilizers. In the long run, organic farming

techniques provide a safer, more sustainable environment for everyone.

Why does organic food sometimes cost more?

Prices for organic foods reflect many of the same costs as conventional items in terms of

growing, harvesting, transportation and storage. Organically produced foods must meet

stricter regulations governing all of these steps, so the process is often more labor- and

management-intensive, and farming tends to be on a smaller scale. There is also mounting

evidence that if all the indirect costs of conventional food production — cleanup of polluted

water, replacement of eroded soils, costs of health care for farmers and their workers — were

factored into the price of food, organic foods would cost the same or, more likely, be cheaper.

MAIN COMPETITOR- NAMDHARI FRESH

Namdhari's Fresh (NF), a unit of Namdhari Seeds started in 2000 at Bangalore - 'The Garden

City of India', with a view to export fresh vegetables and provide a premium quality produce

to domestic customers. Namdhari Seeds is a market leader in Indian Vegetable Seed Industry

and a leading Exporter of Vegetables and Flower Seeds.Presently, more than 40 different

vegetables and fruits are being cultivated by Namdhari's Fresh at various productions centers

across the country.

Namdhari's Fresh is also involved in natural farming to produce and supply Organic

Vegetables and Fruits in the International market with the blessings of His Holiness Shri

Satguru Ji, who himself is a strong believer of organic farming.

The natural gift of suitable climate, availability of sufficient infrastructure, technical

manpower and the applications of advanced technology in Production, Processing, Grading,

Packing, storage, Transportation, Communication and with dedicated skilled laborers enables

this company to produce and sell one of the best quality vegetables and fruits for Fresh

Market to meet the International Standards.

To ensure the freshness of the vegetables till it reaches the consumer, the company is having

a continuous cold chain network right from the produce is harvested. The harvested

vegetables are transported in refrigerated trucks, which also helps in the removal of field heat.

From the refrigerated trucks, the vegetables are transferred to the pre-cooling room.

Then the vegetables are transferred to the grading hall, which is also air conditioned and

packed under cool climate. The packed vegetables are stored in the cold rooms before being

air lifted to the destinations and during the transit in the air also, the product is stored in

reduced temperature. Thus the uninterrupted cold chain network makes Namdhari's Fresh to

deliver the quality vegetables with optimum freshness. The good number of Flights per week

to Europe guaranties a regular supply of produce

Namdhari's Fresh is a certified ORGANIC PRODUCER. It has become India's first

vegetables growing and exporting firm, which has received EUREP-GAP Certificate. The

pack house is under implementation of BRC and HACCP, however all the norms, essential

for the same are practiced. Ethical trading is their corporate philosophy and implementation

of SA 8000 is part of their commitment.

STRATEGIES

HOW AND WHY OUR BRAND “PURE” WILL SUCCEED?

Ability of the companies to achieve economies of scale and supply chain integration

leading to cost reduction , improved stock turnover and better credit terms from

vendor

Building scalable model that is replicable across regions and extending models to

smaller cities and towns

Passing on benefits of lower costs to consumers offering better value proposition than

what neighbourhood stores offer.

Home delivery to match the customer convenience offered by the unorganized

segment

Better shopping environment benchmarked to international standard

Focus on private label particularly for staple foods

Extend into other categories for private label brands

Health and physical fitness are current trends that might be combined with organic

Organic food in combination with regionality shows a promising market potential.

To attract new consumers interested in, for example, chilled or functional food, the

organic product range should be enlarged by innovative and imaginative products.

The organic product policy should focus on high-quality products to strengthen the

quality image.

More communication activities are needed to increase consumers' brand and product

knowledge.

Organic products should be placed among their conventional equivalents rather than

in separate blocks, in order to be noticed by occasional buyers.

CHALLENGES WE HAVETO OVERCOME

Efficiency related issues in supply chain management areas for significant cost

reduction

Food and grocery is still a localized affair. People are unwilling to travel far off

distances for grocery shopping when options are available nearby. Finding solution to

this issue is thus a big challenge.

also indicate the depth of desire for organic foods; a dedicated group of consumers interested

in organics will take whatever is available.

If organics are not available consumers look for other product attributes as well as organic.

Sixty percent of those surveyed are also interested in products with no artificial ingredients,

55 percent are interested in no preservatives, and 11 percent are interested in buying products

from firms that give a percentage of their profits to charity. In the livestock industries, how

animals are treated is an important consideration for some consumers. There are other ways

to appeal to health and socially conscious consumers besides going organic. This could be

especially important for dairy and livestock producers and processors who are having

difficulty obtaining organic feed.

Women are somewhat more likely to purchase organic foods as are people aged between 18and 24. The level of income and region of the country where the consumer lives appears to

have less impact in determining organic purchases.

CUSTOMER SEGMENTS FOR “PURE”- CLUSTERS

1. True Naturals

2. New Green Mainstream

3. Affluent Healers

4. Young Recyclers

True Naturals

The True Naturals (roughly 7-11percent) hold the strongest views on environment.

Consumers in this segment tend to act on their beliefs. They regularly purchase organic food

and earth-friendly products and are willing to pay premium prices.

New Green Mainstream

The New Green Mainstream consumers are concerned about the environment, in particular

the impact of chemical fertilizers and pesticides. While they may have purchased organic

foods in the past, this group has found barriers for further purchasing to be availability, price

and other criteria. However, given the maturing of the industry (i.e. increased availability,

selection, etc.), the new green mainstream consumer is likely to grow.

Affluent Healers

The last two segments are well named. Affluent healers are wealthy, older people interested

mainly in their health - the nutritional aspect of organic food is more important to them than

the environmental aspects.

Young Recyclers

Young recyclers are young, single individuals who, although they claim to be

environmentally sensitive, do not follow through unless it is very easy to do (e.g. recycling).

With the exception of the True Naturals, these other segments of the population must meet

their own core purchasing criteria before they purchase organic. These criteria include taste,

convenience, price, nutrition, health and ease of preparation. The importance of some of these

factors will be seen a little later. However, all things being equal, the environmental aspect of

a product may be the tie-breaker in terms of purchasing.

CONCLUSION

The organic food market is in the process of being split into two groups. The first and largest

is the market for organic foods that are considered by consumers to be healthy. The needs of

this group of consumers are increasingly being met by large scale producers, processors and

retailers of organic food. These consumers also tend to be somewhat price sensitive. In order

to supply this market being a low cost producer is very important. This market is in the

process of becoming a commodity market. Many large food processors and retailers are

increasingly becoming involved in this market segment.

The second market is the market for organics as a social choice. In additional to being

perceived as a healthier option, these consumers buy organic because they believe buying

organics is good for the environment, support sustainable farming systems, support humane

treatment of livestock, and support alternative retailers. For many of these consumers locally

grown food is an important product attribute. While this market is smaller than the first

market, it has the potential for high profit margins and it creates opportunities for smaller

producers and processors who may have higher production costs. Direct marketing through

farmers markets or by other means also has potential for local producers. This market

segment still presents opportunities for smaller producers and processors interested in

providing products with attributes above and beyond organic.

The market for organics continues to grow in all food categories. Perhaps because it is the

most established the market is fruits and vegetables, it may be somewhat more difficult to get

established in this market. Perhaps the markets that show the most potential are dairy and

meat, the primary difficulty in becoming established in this market is the lack of organic feed.

The demand for all organic food products remains strong, this includes the market for

processed foods and prepared organic meals. The potential for profits in the organic food

sector exists for all industries along the supply chain. This is especially true for products in

the social choice market segment.

QUESTIONNAIRE

Dear friend,

Kindly spend a few minutes on filling the below questions organic and natural food. We really appreciate this

kind gesture.

1. According to your which colour comes to your mind with name ―organic‖?

Blue Yellow Green Red Orange Brown White Purple Black

2. What is the first word that comes to my mind when I say Organic?

........................................................................

3. What do you know about Organic products?

......................................................................................................................................................................

4. If some offers me Organic vegetables or fruits my first reaction would be

................................................................................................................................................5. Statements Strongly

Somewhat

Neither agree

nor disagree

Somewhat

disagree

Strongly

disagree

I feel Organic refers only to Vegetables &

Fruits.

It interests me to know more about Organic

products.

Organic products are expensive

According to me all Organic outlets sell

pretty much the same things

When I see a new organic brand/store, I‘m

not afraid of giving it a try

In general I am the last in my friends circle

to know the name of the stores that have

opened recently

6. Organic Vegetables/Products are ( rank in order of preference, 1being highest and 5 being lowest)

.......Wholesome

.......Healthy

.......Reliable

.......Upper class

.......Tasty

7. To me, ORGANIC is........

1 2 3 4 5

Important Unimportant

Expensive Cheap

Relevant Irrelevant

Meaningful Meaningless

Healthy Unhealthy

Yummy Tasteless

Appealing Unappealing

Interesting Boring

8. Have you heard of the Namdhari chain of outlets? Yes No

9. NAMDHARI is.............

Expensive 1 2 3 4 5 Not Expensive

Accessible 1 2 3 4 5 Difficult to locate

Extensive stock 1 2 3 4 5 Out of stock

Knowledgeable staff 1 2 3 4 5 Not informed staff

Interesting Ambience 1 2 3 4 5 Boring Ambience

Irresistible 1 2 3 4 5 Uninteresting

10. Which of the following describes the chance that you will buy from the Pure/Namdhari outlet?

..........I will definitely buy things from here

..........I will probably buy something

..........I am uncertain whether I will buy something

..........I probably will not buy anything

..........I will definitely not buy anything.

11. Kindly tick on the appropriate column.

Statements Always Often Sometimes Rarely Never

I feel emotionally attached to my cooking

I take good care of my family

I trust my friends when it comes to advice on buying

food products

I go overboard while shopping and get excited with

the variety of vegetables in a retail store

12. Tick the statements that suit you the best, when it comes to purchasing Organic products.

StatementsStrongly

Somewhat

Neither agree

nor disagree

Somewhat

disagree

Strongly

disagreeAssurance that my family & I will have a healthy

living

Knowing that I eat fresh and chemical free

vegetables

The Good Packaging makes me want to buy it.

The adequate pricing fits in my budget and

provides value for my money

I have more variety to choose from.

I get stuff which is not easily available

everywhere.

It sorts me apart from the crowd.

Dealers have something for my kitchen garden.

Not having to go too far, the outlets are in my

reach.

At organic outlets it‘s even possible to try the

Purchasing makes me stand out and I also have

an opportunity to show off.

I feel I am in safe hands and trust that the items

are chemical free.

I can live without it, but I‘d rather not.

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