Parle-G Case Study|
Is it a straight forward pricing decision or complex strategic decision?| |
SRIRAAM Anirudh Subramanya|
Parle-G is an established company globally, but it currently faces a huge problem. This is caused due to the increase in prices of raw materials, resulting in falling profit margins. The problem that the General Manager, Pravin Kulkarnii faces is the decision involving the potential price increase of the flagship glucose biscuit brand. Over the past 18 months, the manufacturing costs have increased resulting in decreased profit margins to 10%. There is substantial pressure to reinstate the margins back to 15% but it involves analysis of various constraints through logistics and reasoning. The company has many strengths and weaknesses. It is a market leader for the established product Parle-G. It also has the largest distribution network. Nevertheless, Parle-G has no brand loyalty. It is a very price sensitive market owing to the Value for Money (VFM). These being the weaknesses hold competition as its main weakness. It could further lead to profit erosion and entry of unbranded players into the market. Notwithstanding these threats, the company beholds many opportunities such as exports and affluence. The growing affluence shows the rise in purchasing power of the consumers. Parle-G has been strongly associated with offering the Value for Money, a marketplace perception that had remained unfaltering for more than 60 years. Based on the SWOT analysis, we can deduce the issues and constraints. There are many competitors who are waiting for Parle-G’s market share; be it branded competitors like Britannia, Nestle, or unbranded competitors who benefit in the rural areas. The market share is highest with Parle-G because of the Value for Money it awards to its consumers. The company’s niche product is Parle-G, and its expansion towards the affluent consumers’ product is low. And due to this,...