Themes: Marketing Mix
Period : 1990-2003
Organization : Haldiram Group
Pub Date : 2003
Countries : India
Industry : Ready to Eat Snack Foods
Haldiram's offered a wide range of products to its customers. The product range included namkeens, sweets, sharbats5, bakery items, dairy products, papad6 and ice-creams (See Exhibit I for details of product range). However, namkeens remained the main focus area for the group contributing close to 60% of its total revenues. By specializing in the manufacturing of namkeens, the company seemed to have created a niche market.
Haldiram's sought to customize its products to suit the tastes and preferences of customers from different parts of India. It launched products, which catered to the tastes of people belonging to specific regions. For example, it launched 'Murukkus,' a South Indian snack, and 'Chennai Mixture' for south Indian customers.
Haldiram's offered its products at competitive prices in order to penetrate the huge unorganized market of namkeens and sweets. The company's pricing strategy took into consideration the price conscious nature of consumers in India.
Haldiram's launched namkeens in small packets of 30 grams, priced as low as Rs.5. The company also launched namkeens in five different packs with prices varying according to their weights (Refer Table I). The prices also varied on the basis of the type of namkeens and the raw materials used to manufacture it. The cost of metallized packing7 also had an impact on the price, especially in the case of snack foods. The company revised the prices of its products upwards only when there was a steep increase in the raw material costs or additional taxes were imposed.
Haldiram's developed a strong distribution network to ensure the widest possible reach for its products in India as well as overseas. From the manufacturing unit, the company's finished goods were passed on to carrying and forwarding (C&F) agents. C&F agents passed on the products to distributors, who shipped them to retail outlets. While the Delhi unit of Haldiram's had 25 C&F agents and 700 distributors in India, the Nagpur unit had 25 C&F agents and 375 distributors.
Haldiram's also had 35 sole distributors in the international market. The Delhi and Nagpur units together catered to 0.6 million retail outlets in India. C&F agents received a commission of around 5%, while distributors earned margins ranging from 8% to 10%. The retail outlets earned margins ranging from 14% to 30%. At the retail outlet level, margins varied according to the weight of packs sold.
Retailers earned more margins ranging from 25% to 30% by selling 30 gms pouches (priced at Rs.5) compared to the packs of higher weights. Apart from the exclusive showrooms owned by Haldiram's, the company offered its products through retail outlets such as supermarkets, sweet shops, provision stores, bakeries and ice cream parlors. The products were also available in public places such as railway stations and bus stations that accounted for a sizeable amount of its sales.
5] Juice concentrates offered in different flavors.
6] A flat, thin, dried roll of kneaded floor mixed with spicy ingredients. It has a reasonably long shelf life, can be toasted or fried in oil and served as a snack or taken along with food.
7] Packing where in Aluminum was used which helps in preserving the freshness of the products being packed.