Off the Shelf: The Retail & CPG Blog

Post a big bang acquisition of Cadburys', Kraft is apparently planning to make inroads into Indian confectionary market. In a highly competitive market like that of India, with well entrenched players like Nestle, ITC, Britannia, Parle etc, the task is cut out for Kraft in terms of establishing its presence and getting a piece of the market of future. From a strategic perspective, below mentioned are few points which I feel will be critical in making this venture a success. 

1)      Good relations with government: Any MNC cannot thrive in India or for that matter most of the countries without having cordial relations with the government. The ability to have right connects, right image of the company in the minds of people and government will go a long way in removing hurdles which may be non-existent in other countries but may prove to be an irritant and possibly show stopper in some cases.

2)      Identify target market & have region based product portfolio: India is a DIVERSE country in the literal sense. The choice and affordability of product varies from region to region (north Vs south India), urban to rural, upper class to middle class and so on. So positioning the product as a premium Vs mass market OR for urban Vs rural population is important. Rather than try to sell each and every product across India, have region specific products.

3)      Product size & Packaging: Needs to be attractive, easy-to-use and in sync with the target market. For example, a product targeted for rural India may not be required to have very attractive packaging whereas an urban customer is aspirational and may prefer a savvy packaging for gifting purposes. Also, product size is important. Due to factors like usage and affordability, it may be important to know whether a 100 gm packet OR a 10 g sachet is going to be sell more and in which market.

4)      Marketing: One needs to be clear as to whether a product should be marketed as a premier product or a daily use product..? Mode of marketing like TV, Internet may be good mediums in US but in India modes of marketing need be more elaborate so as to be more effective such as TV, radio, newspaper, posters in kirana shops, add-on sachet (free sachet of Oreos with a pack of Cadburys), and price-point based marketing.

5)      Price point: Pricing properly is so very important in India and mind you it doesn't mean pricing everything cheap. Indians have a variety of customers ranging from being strictly price sensitive to wanting value for money to aspiring something nice and exclusive without worrying over price. Identifying target customers and pricing accordingly will go a long way in making the product successful.

6)      Distribution chain & local manufacturing partners/alliances: In India, besides other things a product needs to be forced into stores so as to catch the eye of customer. Often distributors, for small profits, make a pact with shops so as to put only a certain product on counter thereby denying others visibility. Having right set of distributors and local partners with selective aggressiveness will go a long way in ensuring that product is visible in each and every nook and corner of India. Being a new entrant, one needs to force his product into every kirana shop, food bazaars etc by forging partnerships with distributors and offering them attractive margins.

7)      Sourcing & procurement: To achieve aggressive pricing and yet maintain margins, one needs to reduce costs by looking for right modes of sourcing and procurement. An example of that is ITC who did that by reaching out farmers in the form of e-choupals. Ways to reduce costs need to be figured out.

8)      Acquisitions to fill in product chain: While Kraft products may be very successful elsewhere in the world, one needs to find out if it fits into Indian needs and desires. For example, butter is consumed far more than cheese in India Or coffee is only popular in South India and that tea is more popular than coffee in North India. Does Kraft have the right set of products, can it acquire niche companies/brands to create the right portfolio and then go out in the market.

9)      Understand Indian mindset: It's very important to understand and get into the customer's mind. One of the ways to achieve this by recruiting local and experienced folks. They know how things work in India. They know what hurdles can one face in India and how to surpass them.

10)   Leveraging Cadburys' long presence in Indian market: Last but not the least, this is a given. A lot for the above points can be learnt and improved upon by learning how Cadburys achieved the same. In almost every aspect of business, experience of Cadburys can come handy and prove to be the differentiating factor.

Role of IT in achieving the above:

Business Analytics and Intelligence: The ability to analyze sales, inventory levels, number of distributors in various regions etc is of utmost important. Customized BI tools, reporting capabilities will be very handy to analyze the numbers and re-jig the strategy accordingly.

Customizable distribution system: Right from warehouse management to allocation to e-business, lot of things may be required to do differently in comparison with the rest of the world and have the ability to change it if required. Due to specific nature of Indian market, various companies (Oracle & SAP in particular) have come up with range of business suites specifically for Indian market. One needs to be exploring the effectiveness of such packages and need to procure such systems and capabilities.

Can current systems work and be effective considering resources on ground:  In India, the people on ground and involved in the lowest level of supply chain are generally uneducated and may not be equipped to handle systems. Do we need to do things like automating system entries, have products that make it easy to capture information at all stages. Also, specific training in using the systems need to be in place.