Case 2 Demand Analysis

Taste and Preference for Biscuits
While doing a demand analysis, it is almost mandatory to study factors like

the consumer’s income, price of the product, price of related goods, etc.
while the taste and preference factor is usually not taken much into account
(mainly because it is difficult to measure). Unless one is able to quantify a
factor, one cannot use it in quantitative analysis. The Indian market till
recently, was a seller’s market where the producer and the marketer
dictated the terms of trade to the consumers. Under such circumstances
accurate information on prices, income and other quantifiable variables
could give an accurate estimation of the demand as the supply side of the
market has always has a more structured database.
Things are not the same today. With open competition, it has become a
buyer’s market, where the sellers are trying to outdo each other in getting
their market share to win over the consumer. Under such circumstances,
besides the price of the product and that of related products, the income of
the consumer and the demographic profile, what is gaining importance is
the psychographic profile of the consumer especially when the product is
food, clothing or cosmetics.
For consumer non-durables like cold drinks, snacks etc., marketers have
realised that the market demand is governed more by the consumer’s
preference more than the price or income and they are not leaving any stone
unturned to climb up the ladder of the consumer’s choice list.
Biscuits are an example of one of the most common and popular snacks.
The organized biscuit industry is controlled by two major players, Britannia
(which holds 40% market share) and Parle (which holds 30% market share).
How do these players maintain their market share? Is it the pricing strategy,
do they target a particular income or age group, or is it the simple fact that
they know the taste and preferences of modern Indians?
Market research shows that rural India, which is becoming an important

buying segment has a distinct snacking habit. People in rural areas like to
traditional salty Indian snacks like samosas, pakoras, etc. while biscuits are
synonymous with a low cost sweet item that is taken with tea.
Britannia Industries, which is witnessing its rural markets contributing to

about 20-22 per cent of overall sales, is eyeing to capture a bigger pie in
these markets. Though it will not reduce efforts to expand presence in urban
markets, it is drawing a strategy to explore larger opportunity to cater to
reach out to its rural customers.
To woo the customers in rural India, the company is also creating price
points that are lower to meet the expectations of the rural markets. Products
had been designed and developed to be offered at even Rs 5 and Rs 10
range. The company which wants to make its cost leadership an entry
barrier for its competitors will also use last-mover strategy in some
segments to understand what happens to the competitors’ products.
Britannia hopes to be the number one brand, surpassing Parle’s (the

current market leader) Parle-G yet another well known low cost glucose
biscuit which currently enjoys 55% market share again mainly from the
rural sector. Parle seems to enjoy a significantly higher market share in the
glucose segment (the glucose segment accounts for 35% of the total biscuit
market) mainly because of easy recognition as a result of its long presence
in the market. Britannia seems determined to steal a march over Parle by
advertising heavily and packaging its product attractively (the red colour
packing represents vigour and strength).
Urban people who too like snacking show a different taste pattern. Their tea
time biscuits are salty, sweet-salty and creamy. Here Britannia’s Snax
(salty), 50-50 (Sweet-salty) and bourbon (chocolate) seem to have an edge
over Parle’s Monaco, Krackjack and the recently launched Hide and Seek.
Some research analysts feel that with the launch of Parle’s latest Hide and
Seek, the company may gain a higher market share than Britannia, a point
well-noted by the rival itself and is reflected in what the management said
recently, “…. We are looking for acquisitions – which does not mean that we
plug any gaps as such in the product portfolio, but is meant to give us a
bigger presence in the sector.
The current market leader’s aim is to convert every third Indian into a
Britannia consumer by making products suit every taste and pocket. The
management nevertheless feels that the company also has to develop a
favourable brand image and adopt an acceptable pricing policy to be a
permanent market leader, while modifying its products to suit tastes. The
company has, therefore, already gone in for Low Unit Packs (LUPs), reducing
the cost packaging considerably. However, the company is fully aware that
the modern consumer 9in the buyer’ market) is loyal to his brand only if he
is ‘excited’ enough to buy the product. In other words, the consumer today
shows a distinct taste and preference for innovative products. The novelty of
a product, excited the consumer enough to spend on it. Britannia believes
that snacking is a leisure activity, hence consumers can relate to it easily if
the company associates itself with popular leisure activities. This has given
rise to three major Britannia promos in recent times: ‘Britannia Khao World
Cup Jao’, Britannia Khao Cricketer ban Jao and linking itself with star
plus’s Kaun Banega Crorepati (Britannia 50-50), the first two being
associated with the nation’s favourite game, cricket and the last being one of
the all-time favourite game shows in the electronic media. All these activities
are pursued at leisure.
The strategy seems to work well as the company is the distinct market
leader, way ahead of other players. With these innovative promos, the
company seem to fit the ‘taste’ of the young, sporty, urban crowd.
Questions for discussion:
1. Do you think taste and preference is an equally important demand

determinant for consumer durable goods ad capital goods as it is for
non-durable consumer goods?
2. What are the other attributes that other than taste and preference the
two market leaders in the biscuit industry are considering?
3. Is there market segmentation as far as taste and preference is
concerned in the biscuit industry?
4. Discuss the ‘Taste and Preference’ of modern Indians. How is
Britannia catering to it? Is Parle at par with its rival while catering to
the taste and preferences of urban consumers?

Case 2 Demand Analysis

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Taste and Preference for Biscuits

While doing a demand analysis, it is almost mandatory to study factors like

Market research shows that rural India, which is becoming an important

Britannia Industries, which is witnessing its rural markets contributing to

Britannia hopes to be the number one brand, surpassing Parle’s (the

1. Do you think taste and preference is an equally important demand

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