SWOT ANALYSIS OF PARLE

STRENGTH WEAKNESS
 Parle Brand name  Reducing margins in Parle-G brand
 74% market share in the glucose which is the driver of major revenue
biscuit for the company
 Catering to mass  Low market share in premium
 Diversified product range category
 Extensive distribution network
 Cost of INR4(not 5 or 4.5) for Parle-G
SKU
OPPORTUNITIES THREAT
 Growth rate of 20% in premium  Hike in cost of production due to
category increase in price of wheat and sugar
 Increasing per-capita income of the and other raw materials
people  Local products
 Low per capita consumption of  Entry of various entrants
biscuit presently  Counterfeit products in rural areas
 Increase in market for fiber biscuits

What differentiates Parle-G from other categories of biscuits? The pricing of rupees 4. It sells
because it is available for 4 rupees not 4.5 or 5 rupees. If a customer is willing to spend 5
rupees on a pack of biscuit (s)he would rather buy biscuits in other category which are
available in the market at a price of rupees 5. So at the price of INR 5 Parle-G will have to
compete with huge variety of products sitting there at that price tag. It would lead to
reduced market share of Parle-G as well as cannibalization of other product offerings of
Parle in the market. The category contains cream biscuits (Parle cream, Priyagold, Anmol,
Brittania ), salty biscuits (Monaco, Krack-jack and similar product from rivals).

Company comprises of 74% market share in the glucose biscuit category, way ahead of rivals
Britannia and ITC. In past when company rose the price by 50 paisa for the INR 4 SKU there
was 40% reduction in the sales. At that time the per-capita income was lower than what it is
now. Now per capita income of people has increased. Considering Parle-G as inferior
product (economic sense) and other biscuits at the price tag of 5 rupees as superior product,
applying the income effect from economics, as the income level of the individual increases
his behavior becomes more elastic towards inferior product and less elastic towards
superior product. As the price of inferior product increases the consumer shifts more
towards superior product.
What Kulkarni should do:

 Focus towards premium segment as it is increasing at a rate of 20% annually and

getting a good market share in this segment in initial growth stage. Capturing market
in initial stage will help them leverage the brand name in later stage.

 Further reduction in weight of the biscuit seems to be the only way out for Parle-G
category.

 Tinkering with price of SKU’s of higher price can provide some cushion.

Cost benefit analysis for premium segment:

By 2015 deprived category will go down to 74.0m from 101.3m while in the aspirer
and seeker category the number will increase to 106.1m from 91.3m and 55.1m
from 10.9m respectively.

Biscuit category Out of this assuming 40% premium segment =0.4X63.9m= 25.56m

Applying growth rate of 20% till 2015= 25.56*1.2^6= 76.32m

Taking conservative value to be 60m.

Other that glucose = 178.8m - 114.9m= 63.9m (2009)

If Parle is able to acquire 40% share of this segment, then it will be serving 24m customers.
With the inelastic demand in premium segment and high margins in this market Parle’s
profitability will increase tremendously.