The effect of advertising on sales volume of an Organization (case study on

Parle, Britannia and Sunfeast)

1. Introduction

Advertising is any paid form of non-personal communication about an organization or its

product to a target audience through a mass/broadcast medium by an identified sponsor.
It should be observed that for any promotional activity to be called advertisement it must
be paid for.
In the real sense, it is the method used by companies for creating awareness of their
products, as well as making new products known to the new and potential consumers.
This thesis however, centers on the impact of advertising on the sales volume of a
product. This work will shed light on how advertising can really affect a consumer’s
buying decisions in a growing economy like that of India and how successful advertising
can keep businesses going even in the midst a tough competition.
More so, advertising as a promotional tool also tends to remind, reassure and influence
the decisions of the consumers because an advertisement itself enlightens, educates, and
persuades consumers on their acceptability of the product offering.
Advertisement in such a media as print (newspaper, magazines, billboards, flyers) or
broadcast (radio, television) typically consist of pictures, headlines, information about the
product and occasionally a response coupon. Broadcast advertisement on the other hand
consists of an audio or video narrative that can range from 15seconds spots to longer
segments known as infomercials, which generally last 30 to 60 minutes. (Busari 2002)

1.1 Background of study

Advertiser’s primary mission is to reach prospective customers and influence their

awareness, attitudes and buying behaviour. They spend a lot of money to keep
individuals (markets) interested in their products. To succeed, they need to understand
what makes potential customers behave the way they do. The advertisers goals is to get
enough relevant market data to develop accurate profiles of buyers-to-find the common
group (and symbols) for communications this involves the study of consumers behaviour:
the mental and emotional processes and the physical activities of people who purchase
and use goods and services to satisfy particular needs and wants. Advertising is any paid
form of non personal presentation and promotion of ideas, goods, or services by an
identified sponsor (Kotler and Armstrong, 2010). There are various forms of advertising
like informative advertising, persuasive advertising, comparison advertising, and
reminder advertising. Informative advertising is used to inform consumers about a new
product, service or future or build primary demand. It describes available products and
services, corrects false impressions and builds the image of the company, (Kotler,
2010).Advertising can be done through print media which includes news papers
,magazines ,brochures ,Audio media for example Radio, and visual media which includes
billboards, and television (Kotler and Armstrong 2010).
Sales performance describes the trend of collections in terms of revenue when comparing
different periods (MC Cathy, 1994). The sales may be in form of offering products or
services to consumers. A service is any activity or benefit that one party can offer to
another that is essentially intangible and does not result in ownership of anything (Kotler
and Armstrong, 2010).Sales volume is the core interest of every organization and is based
on sales and profit .When volume goes up profits rises and management in organizations
is made easier.

1.2 Organization profile

 Parle Products Private Limited

Parle Products Private Limited is an Indian food products company. It owns the famous
biscuit brand Parle-G. As of 2012, it had a 35% dominant share of the Indian biscuit
market As of 2011, as Nielsen, it was the largest selling biscuit brand in the world.

Parle Products company was founded in 1929 in British India by the Chauhan family
of Vile Parle, Mumbai. Parle began manufacturing biscuits in 1939. In 1947, when India
became independent, the company launched an ad campaign, showcasing its Gluco
biscuits as an Indian alternative to the British biscuits. The Parle brand became well
known in India following the success of products such as the Parle-G biscuits and
the Frooti soft drink.
The original Parle company was split into three separate companies, owned by the
different factions of the original Chauhan family, with a majority of it owned by Parle
Agro products.

Parle Products (1950s), led by Vijay, Sharad and Raj Chauhan (owner of the brands
Parle-G, 20-20, Magix, Milkshakti, Melody, Mango Bite, Poppins, Londonderry, Kismi
toffee bar, Monaco and KrackJack)

Parle Agro (1960s), led by Prakash Chauhan and his daughters Schauna, Alisha
and Nadia (owner of the brands such as Frooti and Appy)

Parle Bisleri (1970s), led by Ramesh Chauhan, his wife Zainab Chauhan and their
daughter Jayanti Chauhan

All three companies continue to use the family trademark name "Parle". The original
Parle group was amicably segregated into three non-competing businesses. But a dispute
over the use of "Parle" brand arose, when Parle Agro diversified into the confectionery
business, thus becoming a competitor to Parle Products. In February 2008, Parle Products
sued Parle Agro for using the brand Parle for competing confectionery products. Later,
Parle Agro launched its confectionery products under a new design which did not include
the Parle brand name. In 2009, the Bombay High Court ruled that Parle Agro can sell its
confectionery brands under the brand name "Parle" or "Parle Confi" on condition that it
clearly specifies that its products belong to a separate company, which has no relationship
with Parle Products.

Brands:-

Biscuits:-
Parle-G, 20-20, Magix, KrackJack, Monaco, Golden Arcs, Parle Marie, Milk Shakti,
Parle Hide & Seek Bourbon, Parle Hide & Seek Fab, Top, Parle Gold Star, Happy
Happy, simply good, Namkeen coconut, cheeselings, Parle-G Gold

Sweet confectionery:-

Melody, Mango Bite, Londonderry, Poppins, 2 in 1 Eclairs, Mazelo, Kismi Toffee Bar,
Kaccha Mango Bite

Snacks:-

Mexitos Nachos, Parle's Wafers, Full Toss, Parle Namkeens, Parle Rusk, Parle Cake are
famous products

Since they have been entered at the food competition of Monde Selection in 1971, the
brands have received consistently gold and silver Quality Awards at the World Quality
Selections.

Staff:-

Parle Private Limited has a staff of 1 lakh employees

 Britannia Private Limited

Britannia Industries Limited is an Indian food-products corporation. Founded in 1892 and

headquartered in Kolkata, it is one of India's oldest existing companies. It is now part of
the Wadia Group headed by Nusli Wadia. The company sells
its Britannia and Tiger brands of biscuits, breads and dairy products throughout India and
in more than 60 countries across the world. Beginning with the circumstances of its
takeover by the Wadia group in the early 1990s, the company has been mired in several
controversies connected to its management. However, it enjoys a large market share and
is exceedingly profitable. Products of Britannia are Bakery products, including biscuits,
bread, cakes and rusk, and dairy products, including milk, butter, cheese, ghee and dahi.

Biscuits account for 90% of Britannia's annual revenue. The company's factories have an
annual capacity of 433,000 tonnes. The brand names of Britannia's biscuits
include VitaMarieGold, Tiger, Nutrichoice, Good day, 50 50, Treat, Pure Magic, Milk
Bikis, Bourbon, Nice Time and Little Hearts among others.

In 2006, Tiger, the mass market brand, realised $150.75 million in sales, including
exports to the U.S. and Australia. This amounts to 20% of Britannia revenues for that
year.
Dairy products contribute close to 10% to Britannia's revenue. The company not only
markets dairy products to the public but also trades dairy commodities business-to-
business. Its dairy portfolio grew to 47% in 2000-01 and by 30% in 2001-02. Its main
competitors are Nestlé India, the National Dairy Development Board (NDDB),
and Amul (GCMMF).

Britannia holds an equity stake in Dynamix Dairy and outsources the bulk of its dairy
products from its associate.

Between 1998 and 2001, the company's sales grew at a compound annual rate of 16%
against the market, and operating profits reached 18%. More recently, the company has
been growing at 27% a year, compared to the industry's growth rate of 20%. At present,
90% of Britannia's annual revenue of Rs22 billion comes from biscuits. Bhavya chugh
became a millionaire at that time. And the changes were worth waiting. Britannia is one
of India's 100 Most Trusted brands listed in The Brand Trust Report. Britannia has an
estimated market share of 38%.

Vision:-

To dominate the food and beverage market in India with a distinctive range of “Tasty Yet
Healthy” Britannia brands.

Mission:-

To dominate the food and beverage market in India through profitable range of “Tasty
Yet Healthy” products by making every Indian a Britannia consumer. “We want to be
part of our consumer-at home ,out of home, a natural part of his life.”

Staff:-
The number of employees are 3,206 in Britannia Private Limited.

 Sunfeast ITC Limited

ITC Limited is an Indian multinational conglomerate company headquartered in Kolkata,

West Bengal. Established in 1910 as the 'Imperial Tobacco Company of India Limited',
the company was renamed as the 'India Tobacco Company Limited' in 1970 and later
to 'I.T.C. Limited' in 1974. The dots in the name were removed in September 2001 for the
company to be renamed as 'ITC Limited' where 'ITC' would no longer be an initialism.
The company completed 100 years in 2010 and as of 2012–13, had an annual turnover of
US$8.31 billion and a market capitalization of US$50 billion. It employs over 30,000
people at more than 60 locations across India and is part of Forbes 2000 list.

July 2003, ITC made a foray into the biscuits market by launching the Sunfeast range of
biscuits. Since then, Sunfeast biscuits have always stood for quality and are known for
offering innovative and wholesome biscuits. Sunfeast connotes happiness, contentment,
satisfaction and pleasure.

Sunfeast is a manufacturer and supplier of nutritional biscuits.

Sunfeast's headquarters is located in Bangalore, Karnataka. Sunfeast generates $272.1K
in revenue per employee Sunfeast's top competitor is Parle Products, led by Raj K.
Chauhan, who is their Managing Director.

As on March 2018, food business contributed 19.7 per cent of gross turnover at ₹8,668
crore. Earlier in the day, Malik launched four new variants of ready-to-drink milk-based
beverages under 'Sunfeast Wonderz Milk' range of products for the Tamil Nadu and
Karnataka markets.

Employees:-

As per the Annual report of the company, it had 25,963 employees as on 31 March 2013,
out of which 3,043 were women. It spent Rs. 2,145 crores on Employee benefits during
the FY 2012-13. During the same year, its attrition rate was 12%.
ITC's Chairman Y C Deveshwar has won renowned awards and recognition
including Padma Bhushan from Govt. of India 2005-09, by Boston Consulting Group and
seventh-best-performing CEO in the world by Harvard Business Review.
Meera Shankar, Indian ambassador to the USA between 2009 and 2011, in 2012 joined
the board of ITC Limited as the first woman director in its history. She is an additional
non-executive director of the company.

Vision:-

Sustain ITC's position as one of India’s most valuable corporation through world class
performance, creating growing value for the Indian economy and the company’s
stakeholders.

Mission:-

To enhance the wealth generating capability of the enterprise in a globalizing

environment delivering Superior and sustainable stakeholder value.

1.3 Definition of related aspects

 Advertising:-

This is any paid form of non-personal presentation of idea, goods or services by an

identified sponsor.

 Advertising agency:-

These are usually independent business organizations comprised of creative and business
personnel, who develop, prepare and place adverts for organizations so as to attract and
influence consumers’ behaviour towards a product or service.

 Consumer:-
This is the person(s) to which the advertisement and products/services are directed. Here
they are also known as buyers of a company’s product.

 Outdoor Media:-

These cover the use of billboards, sign posts, posters, handbills, etc. in communicating
the advertising message to the consumers.

 Electronic media:-

These include radio, television, the internet, etc and can be either local or international.

 Market:-

This is usually the strategic location or place where the company’s consumer/buyers are
situated or where they go to buy the products/services of their choice. The market place
offers different products/services to different consumers.

 Producer:-

This is the organization or firm that provides a product or that delivers services for
consumer consumption.

 Sales volume:-

This is used to measure the amount, usually in cartoons/crates, etc, of the product being
sold at a given point in time. This is commonly used as well with products but it could be
as used within a service company.

 Product:-

This can represent anything a consumer acquires or might acquire to meet a perceived
need. The need not necessarily need to be satisfactory. Some product might not satisfy
their needs.

 Sales:-
This is a process of selling something such as a product, ideas or services. It also covers
the number of goods or services sold at a given point in time.

1.4 Characteristics of Advertising

1. Tools for market promotion:-

There are various tools used for market communication, such as advertising, sales
promotion, personal selling, and publicity. Advertising is a powerful, expensive, and
popular element of promotion mix.

2. Non-personal:-
Advertising is a type of non-personal or mass communication with the target audience. A
large number of people are addressed at time. It is called as non-personal salesmanship.

3. Paid Form:-
Advertising is not free of costs. Advertiser, called as sponsor, has to spend money for
preparing message, buying media, and monitoring advertising efforts. It is the costliest
option of market promotion. Company has to prepare its advertising budget to
appropriate advertising costs.

4. Wide Applicability:-
Advertising is a popular and widely used means for communicating with the target
market. It is not used only for business and profession, but is widely used by museums,
charitable trusts, government agencies, educational institutions, and others to inform and
attract various target publics.

5. Varied Objectives:-
Advertising is aimed at achieving various objectives. It is targeted to increase sales,
create and improve brand image, face competition, build relations with publics, or to
educate people.

6. Forms of Advertising:-
Advertising message can be expressed in written, oral, audible, or visual forms. Mostly,
message is expressed in a joint form, such as oral-visual, audio-visual, etc.
7. Use of Media:-
Advertiser can use any of the several advertising media to convey the message. Widely
used media are print media (newspapers, magazines, pamphlets, booklets, letters, etc.),
outdoor media (hoardings, sign boards, wall-printing, vehicle, banners, etc.), audio-visual
media (radio, television, film, Internet, etc.), or any other to address the target audience.

8. Advertising as an Art:-
Today’s advertising task is much complicated. Message creation and presentation require
a good deal of knowledge, creativity, skills, and experience. So, advertising can be said
as an art. It is an artful activity.

9. Element of Truth:-
It is difficult to say that advertising message always reveals the truth. In many cases,
exaggerated facts are advertised. However, due to certain legal provisions, the element of
truth can be fairly assured. But, there is no guarantee that the claim made in
advertisement is completely true. Most advertisements are erotic, materialistic,
misleading, and producer-centered.

10. One-way Communication:-

Advertising involves the one-way communication. Message moves from company to
customers, from sponsor to audience. Message from consumers to marketer is not
possible. Marketer cannot know how far the advertisement has influenced the audience.

1.5

Reports have emerged that the staple biscuits category like Parle-G has slowed down in
rural demand, although similar pains are not visible in the premium category yet.

An intriguing question is whether this slowdown is a warning bell for the home foods
category, or just a blip following a drop rural income.
On the surface of it, it seems to be more of a blip as GST (Good and Services Tax) of 18
percent on a Rs 5 staple biscuits pack is too steep for the bottom of pyramid customer,
especially when rural incomes have shrunk.

The Rs 35,000 crore biscuit industry has several players, the topmost being the Britannia
and Parle, which accounts for 70 percent of the industry’s volume and revenues.

Moneycontrol spoke to FMCG analysts to know why Britannia has managed to stay
afloat while Parle had to bear the brunt of GST.

Recently, Parle Products, India's largest biscuit maker, said it may be forced to lay off up
to 10,000 workers if the slowdown in consumption persists.

Parle, founded in 1929, employs about 100,000 people, including direct and contract
workers across 10 company-owned facilities and 125 contract manufacturing plants.

Mayank Shah, Category Head of Parle Products, had recently said that the company had
to raise prices due to an increase in input costs, and a hike in Goods & Services Tax to 18
percent, up from 12 percent.

While premium biscuits also fall in the same tax slab, he explained the move hurt
demand, especially in the rural market, for its largest selling biscuit brand: Parle G.

Analysts tracking the biscuit maker Parle closely said the bulk of Parle’s portfolio is at
lower-end, which has taken a bigger hit because of the rural slowdown.

Founded in 1892, Britannia is headquartered in Kolkata, owned by the Wadia Group and
headed by Nusli Wadia.

Parle, popular for its Parle-G and Marie brand of biscuits, is not the only food product
company to have flagged slowing demand.
Earlier this month, biscuits maker Britannia Industries Managing Director Varun Berry
had said consumers were "thinking twice" about buying products worth just Rs 5.

But FMCG analysts believe that Britannia’s position is better off than Parle as 65 percent
of Britannia’s portfolio is in the premium segment.

Though Parle has the Milano Brand under its premium segment, these centre-
filled biscuits are more in competition with brownie's cakes category, so that leaves the
field wide open in the pure crispy chocolate cookies flavor premium category, wherein
Mondelez's Oreo and Britannia Bourbon have occupied shelves.

The fact that Britannia has launched many premium category cookies like Sandwich
biscuit “Treat Stars” and center-filled biscuit “Treat Burst”; and Parle having launched
Krackjack Butter Masala and Monaco Pizza, reflects the changing consumer pattern in
rural areas.

Consumers across geographies aspire to move up the consumption curve, which is

something that FMCG companies need to keep in mind to provide quality at the right
price.(moneycontrol.com)
 2. Research Methodology

2.1 Objective of the study

1. To understand the importance of advertising.

2. To analyse the link between advertising and sales volume.

3. To highlight advertising is the key aspect for sales.

4. To analyse product quality and competitors in the market

2.2 Research questions

1. What are the forms of advertising used by the company?

2. What is the level of sale performance of the company?

3. What is the relationship between advertising and sales performance of the company?

4. Does the use of advertisement increase the sales of the company?

5. Are the messages used by the company for it’s advertising are effective?

2.3 Scope of the study

The study covered advertising as the independent variable and sales performance as the
dependent variable.

The study was centered at the Parle, Britannia and Sunfeast industries because they are
one of the leading FMCG(Fastest Moving Consumer Goods) companies in India where
marketing plans are carried out and it has large sales volume.
2.4 Significance of study

The study will help firms understand the importance of advertising. It will also enable
them structure their adverts and brands to make them more appealing in order to improve
sales and lead to better performance. As this study gives a clear insight into how
advertisement can influence consumer behaviour, many firms will be encouraged into
using adverts to market their products. When firms start making more sales and profits as
a result of advertising, the economy of Ghana will be boosted, as more income from tax
will be accrued to the government of Ghana. The findings and recommendations of this
study will go a long way in helping firms to adopt good advertising strategies, and
appealing brand designs to help get more consumers for their products and services.