A Comparative Study on the Sales Promotion measures and Distribution channels of the

brands Frito lays (Pepsi co) and Bingo (ITC) with reference ITC ltd in Bangalore

INTRODUCTION

The American Marketing Association defines distribution channel as structure of intra company organization

units and extra –company organization units and dealers, wholesalers retailers through which a commodity,

product or service is marketed. It can be further stated as “a pathway composed of Intermediaries, also called

Middleman, who performs such functions as needed to ensure smooth flow of goods and services from the

manufacturing ends to the consuming ends in order achieve marketing objective of a company”.

A marketing channel performs the work of moving goods from producers to consumers. It over comes the times,

and possession gaps that separate goods and services from those who perform a number of ways of functions.

a) Information: The collection and dissemination of current customers, competitors and other factors and forces

in the environment.

b) Promotion: The development and dissemination of persuasive communication designed to attract customers

to the offers.

c) Negotiation: The attempt to reach final agreement on the prices and other terms so that transfer of ownership

or possession can be affected.

This project aims to study about ITC Bingo snacks and its competitor Frito-Lays. The project provides

information about the various procedures followed by ITC with respect to distribution chain function, and client

management.

The project includes a mix of observation, interview and questionnaires with scales. Initially a period of 4

months is dedicated to fieldwork under the guidance of area executives of ITC limited.

INDUSTRY PROFILE

A. Indian Food Processing Industry

Food processing industry in India is a sunrise sector that has gained prominence in the recent years.

Availability of raw materials, changing lifestyles and relaxation in policies has given a considerable push

to the industry’s growth. This sector is among the few that serves as a vital link between the agriculture

and industrial segments of the economy. Strengthening this link is of critical importance to improve the

value of agricultural produce; ensure remunerative prices to farmers and at the same time create

favorable demand for Indian agricultural products in the world market. A thrust to the food processing

sector implies significant development of the agriculture sector and ensures value addition to it.

B. INDIAN SNACKS INDUSTRY: An Overview

According to the ministry of food processing, the snacks food industry is worth Rs 100

billion in value and over 4,00,000 tones in volume.

Almost 1,000 snack items and 300 types of savouries are sold across India. Branded snacks

are sold at least 25% higher than the unbranded products.

The industry has been growing around 10% for the last three years(2008-2011) while the

branded segment is growing around 25% per annum to stand at Rs 5,000-Rs 5,500 crores, due

to various reasons like Multiplex culture, snacking at home while watching TV, pubs and

bars .

Indian Foods market is a monopolistic market. There are many competitors in all the

categories and although they all have similar products available at similar prices, they are

trying to prove themselves different through their marketing and promotional strategies.

Indian snack industry = 5000- 5500 crore. (2011)

Frito Lays = 45%,

Haldirams = 25% market share and

ITC bingo = 16% share.

Rest of the market is dominated by few regional players.

Major Players in the Snack Industry

Frito-Lay Inc.

Bingo

Parle’s

Haldirams

Others

COMPANY PROFILE

ITC is one of the India's foremost private sector companies with a market capitalization of

nearly US $ 15 billion and a turnover of over US $ 4.75 billion. ITC has a diversified

presence in Cigarettes , Hotels , Paperboards & Specialty Papers , Packaging , Agri-

Business , Packaged Foods & Confectionery , Information Technology , Branded

Apparel , Greeting Cards , Safety Matches and other FMCG products .

Activities

FMCG: ITC is the market leader in cigarettes in India. With its wide range of invaluable

brands, it has a leadership position in every segment of the market. ITC made its entry into

the branded & packaged Foods business in August 2001 with the launch of the Kitchens of

India brand. A more broad-based entry has been made since June 2002 with brand launches

in the Confectionery, Staples and Snack Foods segments. ITC 's Lifestyle Retailing Business

Division has established a nationwide retailing presence through its Wills Lifestyle chain of

exclusive specialty stores. ITC is blending its core capabilities to market a growing range of

greeting, gifting & stationery consumer products. As part of ITC 's business strategy of

creating multiple drivers of growth in the FMCG sector , the Company has commenced

marketing safety matches and agarbattis (incense sticks) sourced from small-scale and

cottage units.

PRODUCT PROFILE

Fast Moving Consumer Goods (FMCG)

Products which have a quick turnover, and relatively low cost are known as Fast Moving

Consumer Goods (FMCG). FMCG products are those that get replaced within a year.

Examples of FMCG generally include a wide range of frequently purchased consumer

products such as toiletries, soaps, cosmetics, tooth cleaning products, shaving products and

detergents, as well as other non-durables such as glassware, bulbs, batteries, paper products,

and plastic goods. FMCG may also include pharmaceuticals, consumer electronics, packaged

food products, soft drinks, tissue paper, and chocolate bars.

THE TOP 10 COMPANIES IN FMCG SECTOR

S. NO. Companies

1. Hindustan Unilever Ltd.

2. ITC (Indian Tobacco Company)

3. Nestlé India

4. GCMMF (AMUL)

5. Dabur India

6. Asian Paints (India)

7. Cadbury India

8. Britannia Industries

9. Procter & Gamble

10. Marico Industries

“BINGO!”

Bingo is ITC’s launched ready to eat snacks that hit Bangalore on 14 th May 2007. In mid march ITC

announced its foray into the Rs. 2000 crore (Rs. 20 billion) fast moving branded snacks market that has one

major competitor- Frito Lay. After biscuits and pasta, the company has now targeted snacks segment, which is

growing at 30% per year.

The launch of Bingo represents ITC Foods’ fifth major line of business after the highly successful staples,

biscuits, ready-to-eat and confectionery products, Introduced in the market in March 2007. The initial offerings

from Bingo include an array of products in both Potato Chips & Finger Snacks segment. The Potato Chips

offerings comprise of different innovative variants inspired by the snacking habits of different parts of the

country.

.

FRITO LAYS

Frito-Lays is the world's largest manufacturer and distributor of snack foods and is a wholly owned

subsidiary of PepsiCo. Since its entry in India in 1989, PepsiCo’s snack foods division Frito Lays India (FLI)

has become the clear leader in branded salty snack segment with popular brands like lay’s, Kurkure, Uncle

Chipps Cheetos and Lehar Namkeens.

Frito Lays India produces its snacks at its state-of-the-art plants in Channo (Punjab), Pune (Maharashtra) and

Sankrail (West Bengal). The company operates over 40 distribution centers that serve more than 2,500 active

stockists, reaching approximately 1 million retail outlets that in turn make the product available at an arms

length.

Frito-Lay India Ltd. produces India's largest snack food manufacturer’s brands, including Ruffles, Hostess,

Cheetos and Uncle Chips. Frito Lay's story is an example of how American recipes were adjusted to satisfy

local tastes.

STATEMENT OF THE PROBLEM

It is important to recognize why and how retailers or stockists make their buying decisions, so that the

marketer can make better strategic marketing decisions. Companies need information when, where and why

a customer buys, and how the technological and social changes affects the consumers in their buying

behavior and what are all the things which influences consumers and to have an in-depth insight into

understanding the supply chain and Marketing of such a vast Company like ITC.

This study is mainly to find out Sales Promotion measures and Distribution channel of the brands Frito lays

(Pepsi co) and Bingo (ITC) with reference ITC ltd in Bangalore.

a) What percentage of the population in B’lore likes to eat snacks ?

b) Which flavour of Bingo is most preferred ?

c) What are the reason for the popularity of the most preferred snack ?

d) What is the satisfaction level of people who eat Bingo ?

e) How much people spend on snacks weekly ?

f) How are the preferences of people for different brands ?

OBJECTIVES OF THE STUDY

To do comparative study of Bingo and lays and analyze their prices, sales and method of marketing and distribution

To check and achieve visibility, availability and quality distribution across the identified target outlet and the response of retailer about the product.

LITERATURE REVIEW

1-A study of factors responsible for brand preference in fmcg sector”

The purpose of this paper is the study of factors responsible for brand preference in fmcg

products, increasing competition, more due to globalization ,is motivating many companies to

base their strategies almost entirely on building brands. Brand preference means to compare

the different brands and opt for the most preferred brand.This brand preference is influenced

by various factors.

According to this study many factors were find out for preferring a brand like

brand persona

brand constancy

brand loftiness

brand value.

In the identification of factors affecting the brand preference,it was concluded that brand

persona is the most effective factor that affects the brand preference.this brand persona deals

with the personality aspects or the external attributes of brand ,thus it can be said that

consumer prefer any brand by looking at the external attributes of a brand

2-Colour and flavour rule consumer preferences: Study

A study done by DANONE it was found that The intensity of colour and the flavour are the

key drivers behind consumer acceptance of beverages, says a new study involving Danone.

But packaging and labelling are not as important for winning over consumers, according to

findings published in the journal Food Quality and Preference, The study involved consumers

at different stages of development and highlights the importance of adopting a “sensory

marketing approach,” said the researchers from French research organisation Adriant, the

University of Rennes 1, Danone R&D, and Institut Paul Bocuse.

“Companies need to continuously innovate to maintain market leadership,” wrote the

researchers. “When the market is overloaded the challenge consists in creating innovative

products able to attract and satisfy consumers.” “This experiment showed the feasibility of

the proposed multi-sensory design method based on mixed qualitative and quantitative

approaches.” The study also demonstrates the importance of flavour and colour selection for

new products.

The global flavours market was been valued at some US$18bn in 2010 (Business Insights).

Meanwhile, the value of the international colourings market was estimated at around $1.15bn

in 2010 (€731m), up 2.5 per cent from $1.07bn (680m) in 2009, according to Leatherhead

Food International (LFI). Natural colours now make up 31 per cent of the colourings market,

compared with 40 per cent for synthetics, according to LFI.

3- Taste or health: A study on consumer acceptance of corn chips

This study examined the relative contributions of taste and health considerations on consumer

liking and purchase intent of corn chips. Eight types of commercial corn chips were evaluated

by 305 adult consumers who also completed a brief questionnaire on food habits. Data were

analysed using factor analysis. Results revealed that purchase intent of corn chips was

strongly related to degree of liking and to several key sensory attributes including saltiness,

corn flavor and greasiness. These variables emerged as the first factor in the analysis,

suggesting that consumers perceive these characteristics as being most important in their

choice of corn chips. Factor 2 described a health dimension and was related to respondents'

attitudes toward fat in the diet. Factor 3 comprised two remaining sensory attributes (color

and crunchiness), which apparently were of minor importance to the respondents. These data

suggest that in spite of current concern about reducing dietary fat, health remains secondary

to taste in the selection of corn chips for consumers in this population.

.

4- PAIRED PREFERENCE TESTS USING PLACEBO PAIRS AND DIFFERENT RESPONSE OPTIONS FOR CHIPS, ORANGE JUICES AND COOKIES

Preference tests were performed for varieties of potato chips, orange juices and chocolate

chip cookies using three response protocols: the traditional paired preference test with the "no

preference" option, a 9-point hedonic scale and a 6-point hybrid hedonic/purchase intent

scale. The different stimuli to be assessed were presented in pairs, but putatively identical

stimuli were also presented as a "placebo" pair. Performance on the placebo pair with

identical stimuli provided a measure of the hidden demand characteristics of the test protocol.

The presentation of the different pairs provided a measure of preference accompanied by

such hidden demand effects. Comparison between the two allowed a better measure of

preference per se. The order of presentation of the identical and different pairs did show

occasional slight evidence of contrast effects. For the placebo "identical" pairs, a majority of

consumers reported false preferences. Liking questions with the hedonic and hybrid scales

elicited fewer false preferences than preference questions with the paired preference protocol.

Yet, the effects tended to be slight. The 6-point hedonic/purchase intent scale exhibited the

fewest false preferences in the placebo condition, and this was because of its fewer categories

rather than any cognitive strategy change elicited by its different labels.

5-“consumer awareness and consumption pattern of food products”

This paper aims to investigate the degree of brand awareness of various food products in

relation to background and education of the household, the consumption pattern of various

food products consumed by respondents in the light of their areas, income levels and

education. A sample of 200 respondents comprising 100 form rural area and 100 from urban

area were taken. Data are analysed with the help of mean. SD, co –efficient of variance, t-test

and f-test.

The findings of this study reveals that there is low degree of brand awareness in rural

areas ,whereas there is a moderate degree of brand awareness in urban India.the highly

educated rural and urban respondents have high degree of brand awareness for many food

products, and the less educated rural and urban respondents have low degree of brand

awareness for many food products.

6- Snacks and Namkeen - Comprehencsive Study

Indian snack food industry comprises of many Indian as well as MNCs. The Indian snack

market reached a value of $307.7 million in 2001. The Indian snacks food market is of the

order of 400,000 tones. This wide range of products are categorized under Potato / Banana

Chips, Namkeens & Fun-Foods. The organized market for chips is estimated to be 6500 tons

valued at Rs.2 bn. The market for branded chips has been growing at a fast pace of around

20-25%annually.

Since the majority of MNC's entered their venture in Ready-To-Eat Snacks & Namkeens.

The project was conducted to study the overall industry for Ready-To-Eat Snacks &

Namkeens. The research was conducted to study the actual buying behavior of the consumers

and their preference for such a category of food. Research methodology being exploratory

research Questionnaire method to interview consumers as well as retailers was adopted.

Retailers were surveyed to know the actual market behavior, whereas the consumers were

surveyed to know their preference and factors affecting their purchase. Secondary data on

industry is collected through Internet, magazines & by visiting the people in the industry.The

Research was a good experience & the final conclusion is that the consumers generally

associate Ready-To-Eat Snacks & Namkeens with Time Pass. Majority of them prefers

wafers to be their first choice with Fraiams being the second preference. Namkeens on other

hand are usually preferred as hunger quencher and are eaten whenever the consumers are

hungry.Ready-To-Eat Snacks & Namkeens are generally considered as take away food and

hence the consumers generally buy 1-2 packs and does not store them. Through the research

it was concluded that the consumers want even POPCORN to be included in this category

which is also an opportunity for the manufacturers to launch a new product and extend their

product width. Overall the industry is grooming and has vast opportunity to be cashed for the

manufacturers.

PURPOSE/ IMPORTANCE OF THE STUDY The study was undertaken to understand the working practices of Frito-Lays (The Leader)

With special regard to motives and to take an insight into how this Snacks giant company works. The

purpose of this project is to study the practice being at present in Frito-Lay Company so as to identify

the strengths and weakness.

The purpose of this project is to study:

a) The Product Range of Lays

b) Its Pricing Structure,

c) Its Distribution Channel,

d) Its Merchandising Practice,

e) Schemes,

f) Sales Promotional Activities,

g) Customer Behavior, and

In order to recommend the same for BINGO of ITC. It has given me an in-depth insight into

understanding the supply chain and Marketing of such a vast Companies. I have tried to identify the

weakness of BINGO if any and accordingly I have tried my best to recommend ways to eliminate the

weakness thus identified, in order to make the system more effective.

For this purpose a primary research was conducted in Bangalore. The research required me to get

questionnaires across customers of different age groups. The survey was also conduct among various outlet,

hypermarkets and big retailers.

SCOPE OF THE STUDY

This study will help the company to understand the sales promotion and distribution channel of ITC product

Frito Lays. So, the study will help the company to improve their services. This study will also reveal

the customer’s view about the company. This study is concerned and limited to Bangalore Region only.

RESEARCH METHODOLOGY

It includes the response of Bingo Snacks from retailers and customer at retail outlets and in Modern trade with respect to it competitors.

It also includes the responses of competitor Frito-Lays from various sources.

Reference Period

This study will be conducted for the period of 4 months starting from 15th of Feb 2012.

Work at retail outlets:

1) To check the availability of products.2) To check visibility of products.3) SWOT analysis of products.4) To check how old the product is.5) To trace the complaints regarding the product.

6) Identifying what would the factor to increase sale.

Type of Research:

EXPLORATORY RESEARCH: The study will be conducted to ascertain viability of

Snacks productrs in Indian markets. Also the study will be conducted to ascertain major

competitors in snack product market and consumer preference.

Sampling Plan: -

Research Question

Consumer preferences for Bingo & Frito Lays

Sampling Method Convenience sampling

Sample Size : 250 prospects

Samplings Frame : Bangalore

Primary Data Responses through questionnaires

:

Conducted personal interviews with the

respondents .

Secondary Data : Websites .

News papers

Tools and techniques of Analysis:

Simple statistical tools and techniques like average, frequency, ratios, tables and graphs, Chi

square tests, Friedman test will be used.

CHAPTER SCHEME:

The outcome of this study is presented in the following chapters.

Chapter I Introduction and subject matter of study

Chapter II Research Design

ChapterIII Company Profile

Chapter IV Introduction to Project topic

ChapterV Data Analysis and Interpretation

Chapter VI Findings and Conclusions

Chapter VII Suggestions and Recommendation

Bibilography

Annexure