Building the Ice Cream Business in India

Building the Ice Cream Business in India-- Unilever By:Ajay SinghBhargab DharDebajyoti GhoshDebnath GangulyKushal GayakwadJoydip PatiManisha BajajMonika RahejaPallab GhoshRajarshi Mitra

History HLL launched its international Walls range of ice creams in India in the mid 1990s. HLL adopted a strategy of acquisitions of ice cream brands and strategic tie ups with Indian groups to evolve its ice cream business. The case deals with various marketing initiatives introduced by HLL to create interest in the segment and expand the market.

Case HISTORYMarketing Strategy of HLL STRATEGIC ALLIANCES Early 1990-Unilever entered food business through BBLIL.BBLIL acquired kissan (UB Group) & Dollops(Cadbury)Mid 1990 Alliance Kwality Ice cream Group.1995- Acquired marketing and distribution rights of Milkfood 100%.1996- BBLIL merged with HLL. All smaller brands were phased out and Kwality Walls emerged as a Mother Brand.

Product portfolioProductPrice (INR)Target SegmentFeast Range15Young generation with an attitude!Cornetto Range20-30Young adultsMax Range0.25-5Solely childrenSundae Range90+Family, take-home, 10pm frozen desserts

Consumer AnalysisConsumption of ice cream per head was very low.Psychological factors.Ice cream eating at home was confined to special occasions.Indian palette restricted to three flavors - Vanilla, Chocolate and Butterscotch.

Competitive AdvantageSeeking Competitive AdvantageTwo types of analysisIndustry Analysis Porters Five Forces ModelComparative Analysis -- Structural and Responsive Advantage

Porters 5 Force AnalysisWithin the Industry:Competition is very intense due to low differentiation. Ice cream industry accounts to around 2000 cr & organized segment is 1000-1100 cr.AmulMother DairyBaskin & RobbinsLocal competitors

Porters 5 Force analysisThreat of new Entrants:High in the industryLiberalization and globalization policies made it easier for foreign player to enter the Indian market e.g.. Haagen Dazs and Baskin Robbins

Porters 5 Force analysisThreat of Substitute:Threat of substitute is very high for ice creams in Indian market due to its culture of traditional sweets and desserts.Some of the substitutes are :Traditional sweetsHome made desserts like Halwa and KheerKulfi or Faludas

Porters 5 Force analysisBargaining Power of Buyer:

Pretty highAvailability of existing substitute products Buyer Price sensitivity

Porters 5 Force analysisBargaining power of Suppliers: Bargaining power of suppliers is pretty low as manufacturer can easily switch to a different supplier at low cost

Competitor Advantage Comparative AnalysisSpecific advantage of competitors within a given market.Two types:Structural advantageResponsive advantage

Comparative AnalysisStructural Advantage Hll being a parent company is a huge advantage to kwality walls Manufacturing units are located across major cities in IndiaResponsive Advantage Strong adaptability to the changing tastes of the consumers (introduction of Foreign Flavors) Unique value

Opportunity & Threat Analysis OpportunitiesIn the early 2000s, the consumption of ice creams per head in India was very low at 250 mlIn 1997 Gov liberalized the rules for the ice cream industry which resulted in a 15-20 % growth per annumHuge number of young population which is prevalent in India

Opportunity & Threat AnalysisThreatsPowerful local players in the market (Top n Town very popular in MP & UP, Cream Bell, Metro).Entry of the foreign brands like BR, McDonalds.Indian Sweets Market.Substitute products has a strong hold in the consumer psyche of tier 2 and tier 3 cities.

4 Phase Strategy by HLLProduct innovation (Take home segment and softy cones) CommunicationActivation & VisibilityDistribution

Softy ConesHLL announced the launch of Softy kiosks for selling softy ice creams in 2000The product was priced at Rs.5 per coneHLL pursued a different business model. The company provided the Equipment, Training, Advertising and Quality standards while the franchisee provided the Place and ManpowerHygienic (No human contact)

Strategic Changes in Softy BizProblem: Higher investments 3 lakhs for machine and a high priced mix. HLL reacted by introducing a softy machine worth Rs.I.5 lakh and products at various price points. Like a plain softy sold at Rs.7, a softy with a sauce topping sold for Rs.12 and an addition of nuts made the price Rs.17

C Communication-Promotional StrategiesKwality walls used some excellent promotional strategies to create its brand in the Indian marketThey promoted Kwality walls as an umbrella brand and developed different brands under it like Cornetto and MaxHad different advertisement and promotion campaigns to cater to its target market

Promotional Campaigns May 2001 - What's on your stick?Valentine's Day (2001)-Cornetto Khao, Jodi Banao March 2002 to May 2002- Ek Din Ka Raja2002- Fridge mein Kwality Walls hai kya2003- Max The lion king, Bano Toonstar with Scooby Doo.2003( Festive Season) Max Rocket and Max Chakri for kids and Cornetto range and Pista Kulfi for Adults.

Results-Resource Based ViewWith superb promotional strategies they were able to create a differentiated product imageEKDR sales touched 1million customers.They were able to create an intangible resource for sustainable Competitive Advantage i.e. Brand name.As tangible resources they had a great distribution network and positive cash flows

Superior DistributionHome delivery systems in Delhi, Chennai, Mumbai and HyderabadStrategic tie ups with Pizza Corners Exclusive parlors & DFOs (now Swirls)Colorful Trikes with Voltas cooling solutions helped HLL to reach 900 towns by 2001 end and a quarter of sales came from them

Competitive Strategy Kwality walls and their main competitor i.e. Amul believes more on a Red Ocean thinking viz. head on competition with each other and attacking on every price points.

Conclusion

Was able to create a brand through some excellent Promotional Strategies.Concentrated on quality of their products to retain their brand value.Were able to create a sustainable cost advantage with low cost freezing units and softy kiosks.Were able to connect with Indian consumer psyche and gain their affection.

RecommendationsThey have to tap the Tier 2 and Tier 3 cities, which has great potential.Can create a new relatively low priced umbrella brand to tap the rural market.Promotional campaigns to fight against their Substitutes like Sweets and chocolates.Can have more Indian flavors in 15- 20 Rs segment.Introduce Falooda Cups.

Thank you