Mysore Ghee Stores Expansion Strategy for

Clarified Butter Business

Introduction:

Mysore Ghee Store was founded by K.V. Ramaswamy, who became an

entrepreneur at an early age. His family used to sell milk and ghee to
neighbourhood, so he went to a Hyderabad to expand his business. Now, MGS
is run by the Grandson of the founder who is also the CEO of the Mysore Ghee
Stores.
MGS produced and marketed ghee in the city of Hyderabad in India. Most of
its ghee sales were B2B to businesses like restaurants and sweetmeat makers
that used it for food preparation. Decreasing B2B market margins in
restaurants and sweet shops and increased packed ghee sales to end users
through the retail market prompted Satish Kumar, MGS's current owner, to
enter the B2C market. Their expansion strategy is based on a current
managerial and strategic problem being faced by the organization. He tied up
with More, a national retail chain for supplying packed ghee in October 2013.
MGS's packed ghee was also made available across multiple retail channels
ranging from independent mom and pop stores to regional/local chains' retail
outlets and e-retailers. Their Packed MGS ghee sales through the various retail
channels were somewhat encouraging. Kumar founded that the competition
was tough and consumer retention was a challenge. So, he was looking for a
new strategy to expand his business.

Issues/Challenges:

 The first problem was how to build a strong brand and how to drive
marketing communication to reach the targeted audience as they want to
serve B2C hence it was very important to get in touch with the
customers.

 MGS was facing is Adulteration of Ghee and it is also a very big

problem for whole Indian ghee market as it looks very similar and tasted
same, the price is also very less than that of pure Ghee.
  The other Issue is that they have unskilled labour, as they moving
toward formal organisation structure, the unskilled labour was found to
be difficult to adjust with new system.

 The next Challenge for them was their competitors and Competition in
the market is increasing in a very fast phase.

 Another issue was to rethink the strategic options in front of MGS and
assess the need for and viability of a new strategic direction for the
company.

 What is the right strategy they need to adopt in order to sustain in the
industry for a long run as the competition is rising in the domestic
market?

Analysis of the case:

Strength
 Strong Brand Equity and Brand Awareness - Mgs is one of the most
recognized brands in the domestic market which it operates in and brand
recognition plays a significant role in attracting new customers looking
for solutions in Marketing, Strategy execution.
 Successful Go to Market Track Record-   Mgs has a highly successful
track record of both launching new products in the domestic market but
also catering to the various market based on the insights from local
consumers.
 Wide Product Portfolio – It allow Mgs to expand their customer base
and offset the losses from one product category with benefits obtained
from the other.
 Access to suppliers- Mgs procured most of the butter needed from small
scale cattle owners, as Mgs was bulk buyer, so price fluctuation was less
and they get butter at a lower cost which can improve their business
efficiency.
 High Quality Product- It increases brand loyalty and maintain customer
satisfaction and quality product makes important contribution to long
term revenue and profitability.
  Strong Geographic presence - It determines the business’s reach to the
target market and ensures the easy accessibility.

Weakness
 Project Management is too focused on internal delivery- In MGS it was
not considering all the interest of external stakeholder, and it can lead to
poor public relation and customer backlash.
 Poor inventory management- Based on the details provided in the Mgs
Case study we can say that Mgs was not efficiently managing the
inventory and cash and there was huge scope of improvement in
inventory management. The shortage or excessive inventory can either
result into cash shortage or it can negatively affect the liquidity position
and it can harm the overall business performance.
 Customer Dissatisfaction- Even though the demand for products have
not gone down but there is a sense of dissatisfaction among the
customers of Mgs. It is reflected on the reviews on various on-line
platforms therefore Mgs should focus on areas where it can improve the
customer purchase and post purchase experience.
 Lack of Work force diversity- Mgs was not diverse enough given that
most of its growth so far was in its domestic market this can reduce the
potential of success of Mgs in the international market.

Opportunities
 Growing Market Size - Over the last decade the market size has grown
at faster pace and particularly in the existing or potential customer
segments it is a great opportunity for the Mysore ghee stores to expand
their business. But on the other hand, it has also led to the evolution of
consumer preferences and tastes. 
 E-Commerce and Social Media Oriented Business Models- These
business model can help Mgs to tie up with local suppliers and logistics
provider in international market and Social media growth can help Mgs
to reduce the cost of entering new market and reaching to customers at a
lower marketing budget. 
 Opportunities in International Markets- Globalization has led to
opportunities in the international market and Mgs is in good position to
tap on those opportunities. Growth in international market can also help
Mgs to diversify the risk as it will be less dependent on the domestic
market for revenue.
  Changing customer needs- It can act as an opportunity if the business
organisation has good market knowledge. Mgs has tried to diversify first
using different brands and then by adding various features based on
customer preferences.

Threats
 Changing regulatory framework- It makes compliance with legal
standards more complex and challenging for the business organisation
and Inability to comply with the regulations raises the risk of expensive
law suits.
 Threats of New Entrants- Because of Reducing Costs and Increasing
Efficiencies Mgs can leverage low cost of reaching customers using
social media and e-commerce, and it can also be done by their both local
and international competitors.
 Increasing bargaining power of buyers- Over the years the bargaining
power of customers of Mgs has increased significantly and it is putting
downward pressure on prices, So, there is a need of fundamental
changes to their business model to overcome this.
 Shortage of skilled labour- It can make it difficult for the organisation to
attract talent with the right skills set.
 Rise in inflation- It increases the cost of production and affects the
business profitability.
 International Geo-Political Factors- These factors impact international
business environment and Mgs should closely focus on these events and
they should make them essential to their strategy making.

Solution and Strategies, they can use for their expansion:

Investing in the advertising and promotion of products is one of the best things
to raise the brand awareness among customers by using this strategy the
company can easily disseminate the details about its product, and the various
benefits of consumption to its target market easily and gain good customer
base.

MGS can leverage this trend to reduce the number of offerings in the market
and focus the marketing efforts on only the most successful products.
They can identify each market and target group has distinct characteristics.
This way they can connect better with different target groups in different
markets.

MGS can use the increasing disposable income to build a new business model
where customers start paying progressively for using its products.

Having a good digital media presence of a brand will also help in brand
awareness and this strategy will help and allow the company to communicate
directly with the consumers, and answer their queries and maintain customer
relation.
They can form a partnership with consumer, as it a unique, new and informed
strategic means of communicating with the consumers and engaging them with
the brand. This can be done by making consumer co-producers for the brand.

Educate customers about their product. The company can make use of
widespread marketing campaigns using traditional means as well as means of
social media to increase awareness of their product amongst the target market.

They can also utilize their excess production capacity to offer ghee to small
operators as their ghee making capacity of 3000 kg was underutilized

Conclusion:

Based on the overall analysis for Mysore Ghee Stores Expansion Strategy for
Clarified Butter Business, the company need to take on strategic directions that
can enhance its core competencies and capabilities, as well as reduce its
chances for risks and threats target consumers. This organization can grow if
they start spending money on marketing and advertising strategies another
thing that needs to be done more that they need to expand to other countries
like the Middle East as a domestic market when it reaches the overcrowded
area. The Mysore Ghee store should be on all digital platforms like its "Amul"
competitors. The presence of digital will increase brand awareness among
consumers and they can easily connect to this product.