ENTRY STRATEGY FOR BRANDED RICE BUSINESS- ANANYA

By Keerthan G IIM Indore

Market Insights (from the case)

Presence of National brands have been strong in Urban areas

Local players competing by trade relationships and price discounts

Demand – Supply Scenario

- There has been a steady increase in the number of national brands with many companies in the food segment and FMCG category entering this category

- Certain areas have few dominant local players which have relied mostly on their trade relationship to push their products

- The urban consumers who mostly visit modern retailers mostly prefer branded rice

- Slowly branded rice is finding acceptance in Tier 2 and 3 towns

Category Value determinants

1. Price (because of high level of price sensitivity)

2. Quality

3. Availability

Price sensitivity

Segmenting

The food preferences are generally Geography based.

In the 1st year, it is advisable to start with South India as it is has high rice consumption

and provides a direction towards the Pan India launch in the coming years

Region- South India

Cities - With Population > 0.5 million

Segments- Based on Socio Economic classification

Targeting

Customers who mainly visit Hyper Markets, Large retailers or Departmental stores

Who look out for premium quality products which delivers the optimum value

Target- SEC A,SEC B

Positioning

A rice brand which offers the best export quality rice at the best local price

SEC

A & B

Branding Strategy

For a category like Rice brand, a Brand name can be adopted like Ananya and line extensions can be done as and when a new variant needs to be introduced like Ananya Basmati, Ananya Sona Masuri etc.

Points of Difference

The brand has to introduce a container packaging that helps in storing as well as pouring out the rice from the air tight container. This is a true value created for the consumers who can forget the hassles of storing and taking out the rice which no competitor offers

Points of parity

There are a lot of parities with the competitor brand as it is a low differentiated product

Quality

Pricing

Ananya

Customer Value Hierarchy

Augmented Product-

Air Tight Container Packaged Premium

Rice

Expected product- High quality Rice

Basic Product-

Rice

Core benefit- Food

Pricing

Points to be considered while pricing the product

low-involvement category

high level of price sensitivity

So pricing needs to be considered very carefully as it has a high relevance for a consumer

1. Pricing objective: Market entry

2. Demand: High price sensitivity

3. Estimating costs: Production costs + Transportation costs+Marketing costs+Misc.costs

4. Analyzing Competitor: Costs, Prices and Offers

5. Selecting a Pricing method: Going rate pricing i.e. basing the prices on competitors’ prices

Adapting the Price

Prices can differ on the basis of geography, short term promotions and the sales channel

Marketing Channels

As it is a low involvement and highly price sensitive product, channels play a significant role in ensuring

- availability and

- controlling the price

Considering the Segmentation and Target markets as mentioned earlier

2-channel strategy needs to be adopted

1. Modern retail- includes Supermarkets, Hypermarkets and Large retailers

2. Traditional channel – In certain localities for easy availability to customers

in the coming years i.e. 2nd or 3rd year

Trade margins

Trade margins play a significant role in sales as the store keepers tend to push those products.

So a higher margin in comparison to the competitors needs to be given to create the initial push to

the brand

Marketing Communications Mix

1. Sales promotion- To create the initial pull towards the brand by offering short term offers

2. Events and Experiences- Sponsoring a Cookery show on TV grabs eyeballs which provides a highly targeted communication

3. Interactive marketing- Providing innovative recipe ideas using the brand’s rice through its online channel and engaging with its customers

4. Advertising: Cost effective Localized advertising and promotional activities like In-store promotions and visual display aides

These activities should help achieve

Brand name awareness – measured based on recognition, recall and “top of mind”

Brand loyalty – Segmented into non customers, price switchers, passively loyal, fence sitters and committed and moving them to the next higher level

Improvement in Perceived quality

Brand associations

Nov 2013

Brand launch with a few variants

in South

May2014

A few more variants launch after gauging the

response

Oct 2014

Easter n India launch

Apr2015- Traditional channel

operations start

Dec 2015- Western

India launch

Mar 2016-

North India Launch

Timeline of events

Cost Implications

1st year budget allocation (South region- largest region) = Rs. 30 Crores 2nd year budget allocation (South + Eastern region) = Rs. 45 Crores 3rd year budget allocation (Pan India ) = Rs. 25 Crores Total = Rs. 100 Crores Budget reduces from year to year because of the fringe effects carried forward from the previous year

Activity Wise

Pan India Infrastructure including Sales and Supply chain = Rs. 70 Crores Branding activities = Rs. 30 Crores Total = Rs. 100 Crores

This category requires more of below the line activities over above the line

Year wise

Summarizing…

Going for a regional launch and then slowly moving on for a nation wide launch by gauging the response

Launching a few variants initially and then bringing in the other variants in a phased manner

High focus on the modern retail channels along with a small traditional channel to complement it

Trade promotions and discounts are the drivers to sale and less spending on traditional marketing channels like TV and print

i.e. higher emphasis on Below the line activities over above the line as it suits the category under consideration

Thank you