BACKGROUND

.SNACKO FOOD INDUSTRY

The processed snack market in India was us $3 billion & growing at 15 % per

annum. Theorganized market was about 46 % & growing at 25-30 % annually. Potato

chips at about US $1.2billion were contribution close top 80 % of branded snacks category.

Close to 90 % of theproducts were priced at or below US $ 0.22 price point. The market

was dominated by smallsized packs & highly innovative. Mortality rates of new brands

were as high as 70 %.almost 50brands were launched in the first half o 2009 out of which

only 10 % survived.

.SNACKO

Snacko was a local subsidiary of a European food giant. It entered India 15 years

ago but did notmeet with success. Subsequently it acquired a local subsidiary of another

European food giant inother western snack sub categories in India to gain 20 % market

share. It adopted aggressivegrowth strategies aimed to becoming a market leader. It based

its strategies on innovation, packaging, advertisement, promotion & inorganic growth the

M&A’s. It was an innovator inusing trade premium for capturing market share. It had set

up an innovation centre in India tomonitor local formats & tastes. It intended to grow by

increasing the frequency of consumptionin the metro markets & penetrating rural

markets.

DSITRIBUTION NETWORK

The goods were distributed through a multi-level distribution system. CFA ‘s were

the first level who transported merchandise from the factory to the stockiest or distributors
Thestockiest/distributors were assigned definite geographies & maintained sales force to

call onwholesalers & large retailers in urban areas. The wholesalers provided the final link

to the rural& smaller retailers who did not purchase directly from the distributors. The

overall distributioncost worked out to 13-25 % with the breakup at various levels as below

PROBLEM:

Introducing a product variation under the same name as a core brand could have the

potential of weakening the brand equity. Line extension can generally be easily matched by the

competitors. A number of hidden costs can arise due to increased production complexity, more

errors in forecasting and the loss of consumers due to potential out-of-stock situations. For

example, Snacko’s product line had grown, but its overall sales remained flat.

RECOMMENDED SOLUTION:

The solutions that we may suggest to solve the Snacko’s problem is to boost their sales

growth and regain a market. Their problem is flat sales growth. To boost their sales, they must

focus on unorganized market in the rural areas and change their business strategy by diversifying

Snacko products to include popular potato chips. To regain market share, integrated sales

promotion should be use to deliver more focused results. Push and Pull strategy to motivate

retailers and attract customers.

SWOT ANALYSIS

STRENGTH WEAKNESSE OPPORTUNITI THREATS

S S ES
Strong brand image Premium prices for Green business products Price wars by
 one of the most portfolio  With an increased competition
world's most products focus and  Snacko
premium,  has a premium awareness of competes with
well known brand image health and a wide
and most attached, and wellness lifestyles assortment of
famous thus all its by consumers, it firms in the
 brands. products in the is important that local as well
 The portfolio are Snacko as the
organization priced highly. recognizes this as international
has a  This expands a viable business market.
developing overall opportunity.  For instance,
populace of revenues yet  Increased the
steadfast decrease the numbers of organization
clients, affordability of consumers are competes
which adds its items. shifting to the against
to the  This internal green lifestyle of significant
soundness key factor is a consuming premium
of the shortcoming environmentally companies as
business. since it friendly and well as
confines the organic products. against
International organization's  SNACKO INDIA cheaper
distribution share of the LIMITED companies
network overall LEVERAGING that offer
 The industry, TRADE cheap priced
organization particularly in PROMOTIONS items and
has a territories with FOR products.
worldwide generally COMPETITIVE  This external
system of lower ADVANTAGE but important
providers disposable should focus on factor in the
that are earnings the expansion of SWOT
deliberately the product assessment
chosen Imitability portfolio: undermines
dependent  What's more, inclusion of green Snacko
on criteria numerous products and because such
relating to Snacko items environmentally competing
quality, for are imitable. sustainable players can
example, of services are lessen the
raw suggested. organization's
materials as share of the
has been overall
discussed in industry by
the value competing
chain - based on low
primary and prices and
supporting overall low
activities. costs of
production.
 Strengths Weakness
TWOS Matrix
 Leading premium  Major dependence on the market
company that operates as the country of origin market
internationally  Despite being in operation for
 Leading presence decades, has standard procedures
across countries and regulations for all portfolio
 Reasonable control items
over production and  Imitability possible by
distribution due to competition
backward and forward
integration

Opportunities SO strategies WO Strategies

 New South Asian  Expanding into Asia  Increasing more stores outside
and Asia Pacific Pacific region and the country of origin, and in other
regions available stabilizing emerging parts of the world – especially
for expansion – markets by opening emerging markets such as India,
emerging markets new stores and China and Brazil
 Acquisition of developing new
medium-sized products
similar
companies and
shops in
developing
countries

Threats ST strategies WT strategies

 Increased  Improving the  Increase budget for marketing

marketing from ambience of service, communications, and strategic
competing focusing on promotions and pursue a
players, which augmented service moderate expansion strategy
might affect sales levels when providing
negatively products and adapting
 An increasing to local culture.
number of
independent
producers and
marketers
 Increased and
saturating
competition