Distribution dilemma

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The war currently is between Frito Lay’s new launches & ITC’s network. Who’ll win?

It came, it saw, it... is yet to conquer. But the chances look good. Wonder whom we’re refering to here? Well, Bingo from the stable of ITC has already cornered 16% of the Rs.20 billion branded snacks market in its debut year, sending across a loud word of caution to Frito Lay (with its Kurkure). And what’s the secret behind this? Surely, ITC’s astute marketing policies & a strong distribution network that offers retailers a substantial 4-5% higher margin than Frito Lay takes the credit.

And the latest twist in the story is how Frito Lay is currently ramping up its act for a galactic attack on Bingo. As per company sources, “The Frito Lay team is leaving no stone unturned to sustain its market share and the year 2008 will see Kurkure revealing several marketing initiatives.” And the latest limited edition variant ‘Xtreme’ from Frito Lay completes the food tale.Not to forget, there’s the latest TVC too which adds to its marketing efforts where the oomph of their brand ambassador Juhi Chawla was cleverly blended with Rajasthani culture. So, while Bingo is using loud advertising campaigns to increase its penetration, Frito Lay’s new strategy is to get personal with consumers across India with an array of new launches as confirmed by the company official, “We are coming out with various products suiting different taste and we also plan to re-structure our supply chain.”

But then, wider product portfolio is not simply the easy formula for success in case of a low involvement product like FMCG. Experts too feel that the more important thing is to be able to connect such products with their consumers; something which Bingo did well through its initial ad-campaigns. Currently, Bingo too is mulling out its own aggressive strategies. Another regard in which ITC possesses a clear upperhand is its distribution network, which is arguably the strongest in the market. Conclusively, Frito Lay surely has some work to do before it can consider its 50% market share safe.

Edit bureau: Angshuman Paul

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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