Can a cigarette manufacturer succeed in marketing Biscuits? What do management thinkers say about unrelated diversification? Unrelated diversification will succeed if it is based on the core competency of the firm. So What is the core competency of ITC that is being leveraged when it decided to enter the Foods market. ITC relies on three core competencies 1. The depth of distribution
2. Its brand building capabilities.
3. The ability of Quality outsourcing.
Sunfeast has been a success because of these three competencies of ITC. Sunfeast was launched in 2003 was one of the diversification forays of ITC which wanted to establish itself as a serious FMCG player from its position of Tobacco products leader. ITC had the advantage of the well entrenched distribution setup which is matched only by HLL.
Biscuits and tea in the morning were a routine. So were the key market players and their favourite products. The two major players Britannia and Parle were busy biting of chunks of the national market among themselves, with a host of smaller brands in various regions. While the business was still very competitive, there wasn't anything groundbreaking. In 2003, with ITC foraying into the segment, a lot of that changed. At that time, Britannia and Parle held, between them over 82 per cent of the market in value terms. The rest too was firmly held by smaller players like Priya Gold which had a strong presence in the north. So, in essence, the market already had strong well entrenched players. So how could a late entrant like ITC make its mark? Seven years down the line, however, things have changed a lot. It is a classic story of the “hare and the tortoise”. While it is far from winning the race, slowly and steadily, the tortoise is gaining ground. Today in 2010 , the late entrant is already on the podium in the third place with as much as 10 per cent of the market in terms of value. "ITC made hay when...