Analyzing Business Markets

Brand to brand:

• Earlier, Quaker Oats was importing raw material from Australia. However, in 2008, it tied up with farmers in Punjab, MP, Karnataka, Rajasthan, Jharkhand, Maharashtra, West Bengal, for growing oats rather than exporting it. Thus, covering about 50000-60000 acres, involving around 40,000 farmers in 10 states of the country including those mentioned above.

•  The company is associated with Indian Grassland and Fodder Research Institute (IGFRI) in Jhansi, under the administrative control of ICAR and is mandated to conduct basic, strategic, applied and adaptive research development and training in forage production and it's utilization.

• It has a manufacturing plant spread over about 7.5 acres in Channo, Patiala where it is producing other snacks under PepsiCo.

• Currently, the majority of our packaging is made with recycled materials. So far this practice has enabled the reuse of over 9,500 tons of recycled paper per year.

• The retailers for the same are online stores and stores spread all over India in the major cities, at the major locations within the cities.

• The supply chain is improved by looking at the consumer database at a particular location.

Brand to Consumer:

Analyzing Consumer Markets:

• Quaker oats lies in the category of food; therefore, it lies in the physiological need which means that it meets your basic needs. 

• It is produced on a mass-scale.

• Since it directs "health" of the consumer, it somewhere fits in "need to belong" category in order to say, stay slim and healthy.

Sales Management

• Giving discounts on buying quantities in bulk.

• Giving out the offers. For example:- 3 packets of Oats of Rs 10 each would cost Rs 30 altogether but the offer could be to buy 3 packets of oats for just Rs 27. Thus, selling more of your product in bundles and making sure that saving on the price bundle must be enough to induce the customers to buy it.

• Provides a mechanism for free online health check-ups from time to time.

• They first aimed at creating the habit of consuming oats regularly of the existing customers rather than tapping a new market.

• Easy availability to the customer that is by avoiding delay right from the beginning of the chain i.e. for instance, delivering to the distributor must be quick.

• CRM application is used to determine profitable customers, potential sales opportunities, customer interaction and relations.

Holistic or Sustainable Marketing

PepsiCo focuses on sustainability of several domains:

• Talent sustainability (includes employment sustainability) by creating appropriate employment opportunities and being open to diverse workplace.

• Human sustainability by managing the nutrition needs; they joined with International Food & Beverage Alliance (IFBA), a Swiss-based NGO, comprising multinational food and beverage manufacturers, to promote only healthy products for children below 12 years of age.

• Environmental sustainability by  taking care of the natural resources and being careful about the harm caused to the environment. 

• Food safety sustainability by using the bioengineered crops which offer various economic and productive benefits like resistance to weeds, pests and diseases,reducing the need for agronomic chemicals, resistance to climatic stress and so on.

• Water Sustainability: In 2009, PepsiCo India achieved a significant milestone, by becoming the first business to achieve ‘Positive Water Balance’, verified by Deloitte. 

• Farmer Sustainability: In 2006, PepsiCo India developed a Direct Seeding Machine for paddy which can sow the seeds uniformly at a specified gap and at a uniform depth. Using this seeder, direct seeding was carried out in the fields of 12-farmers, covering about 20-acres. PepsiCo also studied the advantage of sowing the seeds, followed by herbicide treatment and thereafter irrigation. Pre-treatment with an herbicide helped reduce de-weeding labour from five times to two times in direct seeding compared to flood irrigation.

Thus, it ensures healthy living of people throughout the world and also ensures that the earth's resources aren't depleted and utilized optimally.

Branding

Brand Building is the key!

• Pepsico had just launched a campaign called the "Quaker Smart Heart Challenge" on TV, radio, cinema, digital, and new media to build awareness of the product.

• They are also doing massive sampling (both wet and dry) in retail, corporate, hospitals, etc. to introduce customers to the benefits of the oats.

• In order to build customer relationship, several ways to meet customer service goals are: Increasing online customer service and interaction.

• Provide answers to problems online.

• Become reliable and gain consumer trust.

• Start conversation and engage consumers by giving them health tips.

• Creating health awareness through polls and quizzes.

• Giving nutritional value of complementary foods along with oats.

• Create a user-centric experience policy Offer rules, tips and ways to get involved with Social, Service Media Team.

•  Listen to consumers' needs and problems Respond quickly and efficiently.

Segmentation, Targeting and Positioning

Segmentation:

Geographic Segmentation: Their aim is to grow in the nutrition space globally. They have increased the sales in UK and have a firm foothold of positioning itself as a breakfast cereal in China and India followed by Russia.

Demographic Segmentation: People between 10-45 years of age can consume it. Both the genders have a need to stay fit and healthy, several packs of oats are available ranging from Rs 10 pack of 28 gm to 1 kg pack of Rs 165 thus, mostly targeting middle class people with an average income who can consume it on daily basis. Those people whose occupation is that of working in companies (who get less time to workout), housewives and students. No religion/race/nationality bar set. It's a product that can be consumed by almost everyone and anyone.

Psychographic segmentation: Social class:- mainly middle class, lifestyle:- people with hectic lives, personality:- health conscious.

Behavioral segmentation: Occasions:- It is a cereal to be consumed daily in order to stay fit and healthy(benefits), customers are happy with the availability of different flavours thus, are loyal.

Targeting:

Primary: Middle class families (with hectic schedules), women, mothers, students, professionals, Patients with high cholestrol problem.

Secondary: Kids, old people.

Middle class families: The customers in this category are usually the mothers.

Mothers: They purchase by looking at the factors like convenience, health benefits, easy availability, family perspective, health safety, easy and quick to cook, in budget.

Students: Consume it by looking at factors like health benefits, taste, convenience (late night lectures, assignments), quick to cook, easy availability, sustainability, filling.

Professionals: Mostly those who  working, less work out, need to stay healthy and fit, quick and easily available.

Positioning: 

• Quaker Oats is positioned as "any time nutrition" cereal rather than just as "breakfast cereal". Since they help in weight management, leveraging on other benefits that it has to offer, will help provide variety to the communication.

• It has positioned itself to the "health conscious" market since it has fiber, no cholestrol and can be consumed for breakfast.

• It has also positioned itself as "easy and quick to cook" cereal.

• It is easily available at any kirana store, grocery store, food mart and so on. Thus, an easily available product that wants to reach out to maximum people.

Promotion (Integrated Marketing Communication)

Quaker Oats had close to four years to establish its presence before other big players stepped into the breakfast oats space. It did this with traditional TV and print ads, as well as online. 

• In 2008, Fritolay India, the snack foods division of PepsiCo, entered into a deal with the Indian Medical Association (IMA) whereby the IMA would endorse Quaker Oats. It was made to promote the product as healthy, promote the sales and influence consumer behavior.

• In 2009, apart from the usual social media presence, the company also created "Good Morning Heart" campaign, and it suddenly made an announcement for the office-goers  that by 2010 around 46.9 million heart disease cases would be reported in India. With this data, the company urged people to change their eating habits and move to a healthier lifestyle. It then started the “mission to make India heart healthy” in collaboration with Apollo Hospitals, Chennai police and some corporate houses, where it offered an online health diagnostics, healthy cooking and fitness tips, personalized advice from nutrition specialists and dietitians.

• A new campaign includes a TV ad that shows people dozing off on buses, at work and at home; it then encourages consumers to fight the "human energy crisis" with the "good energy of Quaker" and its array of oatmeal-based products, from bars to hot cereal. 

 

• Quaker is now promoting the use of oats in Indian dishes such as dosas, uttapams and idlis, which is quite an interesting direction. Consumers who have used these recipes appear to be loving them. Several positive comments regarding the experiments done by consumers can be read on the website from time to time. Discounts, coupons and prices are available on the website of Quaker Oats along with free Quaker recipes. 

• Other websites like http://bigbasket.com/ also promote the sales by giving discounts.

Distribution

A typical supply chain for imported food products such as oats consist of:

Overseas exporter of oats 

↓

Indian importer in bulk and Packing in retail packs with Brand names 

↓

Distributor

↓

Supermarket/Food stores

↓

Consumers

Earlier, Quaker Oats was importing raw material from Australia. However, in 2008, it tied up with farmers in Punjab, MP, Karnataka, Rajasthan, for growing oats rather than exporting it.

In Pune, RamNaresh Enterprises is the leading exporter & wholesaler of oats who also claim their oats to provide features like enhanced shelf life, no adulteration, great taste and healthy. The  wholesaler are located at Keshavnagar Mundhwa in Pune.

Similarly, several wholesale outlets, retailing outlets, grocery stores, health markets, convenient stores, and so on are present in other states as well.

Pricing

Selecting the pricing objective:

• While there are several factors for setting the pricing, Quaker Oats under Pepsico follows "maximum market share" scheme. They believe a higher sales volume will lead to lower unit costs and higher long-run profit. They set the lowest price, assuming the market is price sensitive and a low price stimulates market growth.

• Production and distribution costs fall with accumulated production experience and a low price discourages actual potential competition.

• Quaker Oats is a 100% wholegrain and natural source of carbohydrates and dietary fibre. It has strong heart health benefits and has a soluble fibre called βeta Glucan, which is scientifically proven to help reduce cholesterol.

•  It regulates sugar and weight control; easy to digest; filling and energizing (product features that appeal to people).

• Lately, it came up with Masala, Chocolate chip, Cinnamon and Cardamom flavours which are appealing to Indian Palate (more choices). 

• Oats are prepared by mixing with boiling water and stirring, hence being referred to as "instant"; once mixed, the oatmeal is ready within a minute. It can also be prepared by adding up to 2/3 cup of water and microwaving for 30-60 seconds (ease and convenience).

• They have maintained their prices during the stages of development and growth in product life cycle (consistency in price).

• It's competitors like saffola oats sells a 40gm pack for Rs 15 and Horlicks sells a 26gm pack for Rs10 unlike Quaker Oats which sells 28gm for Rs 10 (with all the flavours at the same price) (perceived value).

• It's available at almost every kirana store at the same price as that in a general store or a mart (easy availability).

Product Mix

Hierarchy:

Need Family: The core need that underlies the existence of product family. In the case of Quaker Oats, its personal health care.

Product family: All the product classes that can satisfy a core need with reasonable effectiveness. Need to stay healthy and fit. Reduce cholestrol levels and maintain a healthy heart.

Product class: Food (Easy and quick to cook)

Product Line: Quaker Oats

Product Type: Quaker Oats- Kesar flavour with Kishmish, Quaker Oats- Strawberry flavour with Apple, Quaker Oats- Homestyle Masala, Quaker Oats-Lemony Veggie Mix, Quaker Oats-Mild Pepper and Dal, etc.

Item: SKU- Stock Keeping Unit- 26gm packets for 10Rs each, 200gm  packets for Rs 41 each, 400gm packets for Rs 68 each, 600gm packets for Rs 85 each, 1Kg for Rs 165 each.

Customer Value Hierarchy:

Levels:

• Core Benefit: This section is linked with customer because the customer is able to get wholesome nutrition as its a digestive cereal. Thus, the services and benefits that its providing to the customers are being taken into consideration.

• Basic Product: The company claims to have helped people reduce cholestrol levels and lose weight in several weeks. It has low carbohydrate content and is easy to cook. This helps itself to stand out from the other available options in the market thus, increasing the competition for the other products.

• Expected Product: Since India is a land of spices, it expects Quaker Oats to come in several flavors such that it satisfies the taste of customers residing in all parts of the country. They could want more oats at cheaper rate. Thus, matching the set of attributes and conditions of the "buyers".

• Augmented Product: Quaker Oats being released in several flavors lately along with the appropriate spices and dried vegetable pieces inside such that it just needs to be boiled for 2-3 minutes and its ready to be eaten. Pepsico urges its customers to use its Quaker Oats to make idlis, dosas and upmas. Thus, standing out from the other oat packets in the market and giving a tough competition to others.

• Potential Product: It has the potential to leap three-fold by 2015. At first, it became popular because of its health benefits where as now, its becoming popular because of its taste. Brands are also investing in developing and customizing oats to the Indian palate. It has a great potential to tap the people of lower classes if gone by the custom and culture of consumption of oats in India.

Marketing Mix

Quaker Oats plays on the principle of 5Ps (People, Price, Product, Place, Promotion) & 3C's (Customer, Company, Competition).

• It targets People as its audience which includes all the age groups. The Indian breakfast market assumes significance because of growing “health consciousness”, especially among the Indian middle-classes in excess of 330 million.

• It introduced trial packs for Rs 8. The 1Kg pack for Rs 165, 600 gm pack for 85, 400gm pack for Rs 68 and 200gm pack for Rs 41 and the 26gm packs for Rs 10 each. Sometimes, Pepsico's jumbo offering includes a 1.5Kg pack at the cost of 1Kg pack of Oats. Thus, making Price as its second principle.

• Branded oats are far healthier and much convenient breakfast cereal. Thus, giving weightage to the Product. The worth of Indian Branded market is about Rs 300 crore which id about 1,40,000 tonnes in terms of volume in which oats market is about 4000 tonnes. Oats constitute 30% of the Indian market in terms of volume for breakfast foods next only to Cornflakes and 18% in value terms.

• The reason why Place is considered to be one of the major 5 principles is due to the availability and accessibility of the product to the customer. Its about how to get the products to the customer and includes the design of your retail space. Your customers may want a quick delivery turnaround. In this case, every grocery and departmental store was taken into consideration.

• Last, but not the least is the Promotion area, wherein its important to know how to promote the product and continue to maintain the image using appropriate medium. It has tied up with Apollo hospitals for free heart check ups of its consumers.

Product Life Cycle (ILC & PLC)

Quaker Oats has been selling since 1877. Pepsico acquired Quaker Oats in the year 2000. It was launched nationally in India in the year 2006 and launched new products with different flavours under the oats category, by 2012.

ILC is the summation of all the product life cycles of various products in various categories in that particular industry. Brand life cycle, on the other hand, traces a trajectory of the brand when it jumps across categories.

Considering Quaker Oats, the 5 main components of product life cycle are:

• Product Development: Quaker Oats initially began in the 19th century but was taken over by Pepsico in 2001.

• Introduction: Quaker Oats was introduced in India in 2006 but its around 135 years old and is a world leader in the oatmeal segment. 

• Growth: In 2009, Quaker oats started a campaign "Make India Heart Healthy". It took up the mission of spreading awareness about the risk of heart diseases and educate the public about healthy living. It also launched http://www.goodmorningheart.com where individuals could do an online heart check.

• Maturity: Quaker Oats still continues to be in its growth phase of variety of flavours as after establishing itself, it continues to experiment with new flavours and faces competition with existing and upcoming brands that are producing oats. In spite of that, it has the largest market share and is now in a position to experiment with the products. There is a list of variants that Quaker offers: Oat & Yogurt Sandwich Biscuits, Soft Baked Oatmeal Cookies, Crispy Oatmeal Cookies, Breakfast Cookies, Oat Bars (Original with golden syrup or Mixed berry flavors), Strawberry flavour with Apple Oats, Kesar flavour with Kishmish Oats, Homestyle Masala Oats, Lemony Veggie Mix, etc.

• Decline: It's no where close to this phase till now.

Competition

While Quaker Oats can try being a part of every other breakfast meal one can think of say Idli, sambhar, parathaa, poha in order to provide complete nutrition, it still faces indirect competition with idli sambhar, poha, parathas, oats biscuits, oats noodles and direct competition with Bagrrys oats (marketed by Bagrrys Oats Ltd. New Delhi), Saffola oats (which claim to have taste bhi health bhi in its refined oil), Kellogg's oats, Britannia Oats, Horlicks Oats,etc.

Year in which Oats Products were launched in Indian Market:

2008 – Quaker Oats (PepsiCo)

2010 – Saffola Oats (Marico)

2010 – Kellogg’s Oats (Kellogg’s)

2011 – Horlicks Oats (GSK Consumer’s)

2012 – Britannia Oats (Britannia Industries)

Market Share of Oats Brands in India:

Following are the approx market share of the top 5 brands of Oats in the Indian market. These are estimated data based on the research of the top research institute documents.

 

                                  30-32% – Quaker Oats

                               

                                    16-18% – Saffola Oats

                                

                                    13-15% – Horlicks Oats

                            10-11% – Kellogg’s Oats

                                

                                      5-6% – Britannia Oats

Quaker Oats should not try to break the Indian habit anymore as they have learnt it from Maggi and Kellogs' efforts in the past. They might as well be a part of the existing food habits of the Indians. They can also position themselves as "any time available" or "easy to cook" or "healthy nutrition in 2 min" kind of food which might compel more people to consume this product.

Buying Decision Making Process

• The reason people should consume oats is to keep a conscious check on their diet and health.

• Breakfast is apparently the most important meal of the day and one must try to consume maximum of the nutrients during that time of the day.

• Quaker oats provides nutrition, taste, is easy to cook and is easy to afford.

• With all its campaigns about "mission to make India heart healthy" and its continuous efforts to introduce new flavours from time to time to match the Indian taste, it does create an impact on the customer regarding the efforts that are being made to match their taste.

• The problem with the Indian market lies in the fact that some believe that Oats aren't quite filling. Although some may eat it for nutritional purpose while some may not substitute the breakfast and some may consume it at night for health reasons.

• It faces indirect competition from the usual breakfast of Indians which consists of idli, dosa, parathas, bread butter, poha, oats noodles and so on, whereas its direct competitors are the other brands in the same segment, for example, saffola oats, horlicks oats and so on.

• Quaker is trying to position itself everywhere possible in this segment. With the largest market share, it's proved that people are finding it appropriate to consume.

• People have tried oats for days and found themselves to have lost weight and thus, wanting to buy quaker oats again.

Customer Perceived Value

• Customer perceived value is the difference between the prospective customer's evaluation of all benefits and all the costs of an offering and the perceived alternatives. Total Customer Benefit is the perceived monetary value of the bundle of economic, functional and psychological benefits customers expect from a given market offering because of the product, service, people and image. Total Customer Cost is the perceived bundle of costs customers expect to incur in evaluating, obtaining, using and disposing of the given market offering including monetary, time, psychological and energy costs.

• Quaker Oats has been trying to reduce the cholesterol level of anyone who consumes it. India is the world's coronary ailment and diabetic capital. Quaker Oats provides nutrition and is easy to cook (product benefit). Its also filling. After having studied how Kellogs established itself to be a part of the breakfast meal among the Indians, Quaker is the only high profile product launch in this segment (image benefit).

• A large section of Indian market has been tapped by talking about health news, info graphics on heart health, several recipes with combination of oats, live coverage of those who transformed their lives by consuming Quaker oats.

The 1Kg pack is sold for Rs 165, 600 gm pack for 85, 400gm pack for Rs 68 and 200gm pack for Rs 41 and 26gm packs for Rs 10 each. Sometimes, Pepsico's jumbo offering includes a 1.5Kg pack at the cost of 1Kg pack of Oats. It is available at a very reasonable price (low monetary cost). It's available easily at most of the general stores (no time and energy cost).

Introduction to the Product & Marketing

What's Marketing?

Marketing, is the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. It identifies unfulfilled needs and desires. It defines, measures and quantifies the size of the identified market and the profit potential. It pinpoints which segments the company is capable of serving best and it designs and promotes the appropriate products and services.

Marketing’s key processes are: 

• Opportunity identification
• New product development
• Customer attraction
• Customer retention and loyalty building
• Order fulfillment

Introduction to the product

Name of the product:  Quaker Oats

Features: 

• Quaker Oats is a 100% wholegrain and natural source of carbohydrates and dietary fibre. It has strong heart health benefits, which is scientifically proven to help reduce cholesterol. The key features of product are: Nutritious, Affordable, Simple, Delicious

• A health claim is any statement that characterizes the relationship between a food or a substance in a food with a disease or health-related condition. Such a claim explains that a food or food component may reduce the risk of a disease or a health-related condition. It must contain the elements of a substance and a disease or health-related condition. Further, they are limited to claims about disease risk reduction, and not regarding the claims about the diagnosis, cure, mitigation, or treatment of disease.

• All types of people buy Quaker Oats as it's a healthy product. The product targets all age groups.