Why are they trying to market this product as a meal time snack and what is the percentage of people having salty snack along with their meals and how do you increase this number? How do people relish their lunch and dinner in south and what should pepsi do diffent than what the south manufacturers are doing to retain their market share?
1. What are the elements of a store? How would you go about starting your own exclusive store of potato chips using innovative techniques of display, promotions and selling?
2. What are the functions of a Merchandising Manager?
3. Case Study: PepsiCo lays its chips on the hyperlocal highway
The company finesses the regional game for Lay’s and Kurkure, acquires local taste and habits to beat back competition from homegrown snackmakers.
With southern markets on its radar, PepsiCo India is drilling down into local tastes and food habits to develop local and hyperlocal variants while rethinking its positioning tactics. It has just launched a variant for Lay’s that seeks to replace the traditional papad (rice and lentil crispies) as a meal time snack for southern market. Lay’s Wafer Style comes close on the heel of its launch of another product aimed at the same market, Kurkure Masala Munch with gingelly (sesame seeds) oil, a taste earlier catered to only by hyperlocal labels.
What makes PepsiCo focus so keenly on south and its regionalisation the way to counter the growing power of the local brands such as Haldiram’s, Bikanerwala, Balaji and numerous startup labels promising healthy snacks?
Dilen Gandhi, senior director, Marketing- Foods category, PepsiCo says that the company has always sought to develop new snacking habits in India, with the objective of catering to the different palates. ” Every region is important to us and we’ve always tried to connect to all our consumers by providing them with relevant flavours and textures that are tailor-made for their personal tastes and preferences” said Gandhi.
The launch of the new Lay’s Wafer Style is in line with the company’s regionalisation strategy and the south is an important market, the company said. Experts say that the new launches reflect a nuanced development of the company’s regionalisation agenda. Initiated a few years back the company started out adding spicy variants of its products and finding local stars to endorse the products.
Now the launches are better attuned to the local tastes and the positioning reflects an understanding of meal-time habits, said experts. Repositioning wafer chips to become a meal accompaniment is a good step, since this increases occasions of consumptions, said Natasha Kumat, India Food and Drink Analyst with market research firm Mintel. According to a report that they recently released, India is the second largest market for snack food after China in terms of volume and third in terms of value ($5.11 billion) after China ($73.31 billion) and Japan ($7.76 billion). While the gap is huge the potential is too, say market research agencies.
The Indian snack food retail market grew around 17.3 percent in terms of value in 2018 according to Mintel. And 38 percent of Indians have salty snacks alongside of their meal; the number jumps to 44 percent consumers from the south, added Kumat.
In south PepsiCo finds itself battling the unorganised unbranded products as well as regional brands that have developed a deep understanding of the customer. To take on these brands, it is tapping into local tastes and following local distribution patterns. According to consumer research reports, in the South 35 percent of consumers are buying unbranded and 20 percent branded, traditional snacks, mostly from neighbourhood stores, PepsiCo will also therefore need to tap into local sweet shops and such stores to grab attention and a share of the wallet.
“We have received great response on our region specific offerings” said Gandhi. The advertising is also being tailored around local consumer insights. It shows a young boy relishing what is otherwise considered to be a staple but uninteresting meal (sambhar rice) with a wafer-style chip as an accompaniment. In south people eat their rice with papads or some crispy snacks.
According to Kumat, around 40 percent of branded packaged traditional snackers say that their purchase is influenced by flavour. Hence the introduction of local oils and spices into Kurkure, which the company said, has been at the forefront of its regionalisation strategy. The efforts have paid off this far, as South India has emerged as one of the fastest growing markets for Kurkure over the last six months.
However, catering to specific local tastes is not the only challenge. With increasing health consciousness among consumers, brands have to walk the line between taste and wellness with care. The Mintel study shows that some brands address this by introducing healthy ingredients into their recipes, while some offer snacks with high fibre content. It depends on the insights the brands are playing with and given the market potential, the global brands are all ramping up their ambitions and efforts to think and act local.
a. Pepsi is trying to cater to the southern market by trying to change the habits of the consumers with its two new launches. Will this strategy succeed? Why is south so important market for pepsi. Why do you need local stars to endorse your brand?
b. Why are they trying to market this product as a meal time snack and what is the percentage of people having salty snack along with their meals and how do you increase this number? How do people relish their lunch and dinner in south and what should pepsi do diffent than what the south manufacturers are doing to retain their market share?
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