MANAGERIAL ECONOMICS

Project

Niraj !u"ar Su#ha$h %ha&ur A#hi$he& P. Singh Mitu '(ayan !u"ar A)i$he& .. Faculty:Pro. Megha jain

AC!NO*LE+GEMEN%
A work is never a work of an individual. We owe a sense of gratitude to the intelligence and cooperation of those people who had been so easy to let us understand what we needed from time to time for completion of this exclusive project. We want to express our gratitude towards ro. !egha "ain# !$ %aculty# "&! &ndore for giving us an opportunity to do this project. 'ast but not the least# we would like to forward our gratitude to our (roup members who always endured us and stood by us and without whom we could not have envisaged the completion of our project.

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PREFACE
)etail study about a particular topic gives an output of better understanding * also predicts the various forces for shaping the real-world business decisions. &t also serves us to develop * strengthen overall analytical skills. +o start any business# the success entirely depends on the marketing research done about the consumer,s attitude towards the product. -ere we have done a research on market structure of confectionery industries and how they operate in the midst of competition and meet consumers demand. We have tried to put our best effort to complete this task on the basis of skill that we have achieved during our studies in the institute. We have tried to put our maximum effort to get the accurate statistical data. -owever we would appreciate if any mistakes are brought to us by the reader.
PE+AGOG,

+his document maintains all of the pedagogical features that have made here a clear analysation. +he features are listed below. $conomic way of thinking /erification of situation in different scenario
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 0hallenges faced in the &ndian biscuit industry

CON%EN%
a. PAR%- -. INTRODUCTION I. II. III. I/. Mar&et Structure Cla$$i.ication o. Mar&et Chart o. Mar&et Structure Merit$ o. Mar&et Structure . ..

#. PAR%- II 0RI%ANNIA IN+'S%RIES L%+. I. II. III. Pro(uct$ . Major Co"1etitor$ . Mar&et Structure ..

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Mar&et Share .. /. Mar&et Potential ... /I. +e"an( an( Su11ly Cur)e

I/.

c. PAR%-III COMPARA0ILI%, COMPE%I%ORS OF 0RI%ANNIA I. II. III. Intro(uction 0ritannia )2$ Parle Analy$i$ /ariou$ Strategie$ un(er Co"1etence .actor .. .

IN%RO+'C%ION
MAR!E% S%R'C%'RE
Market is a place where buyers and sellers meet and exchange goods or services. There are certain conditions which create the structure of a market. Such conditions can be condensed in the following Number of Buyers Number of sellers Buyer ntry Barriers Seller ntry Barriers Si!e of the firm "roduct #ifferentiation$ %omogeneous "roduct Market Share &ompetition

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Classification of Market Structure

There are lot many factors deciding on the market structure in the economy.

'ccording to chart( we conclude the types of market structure ) *. +. -. .. Monopoly ,ligopoly Monopolistic &ompetition "erfect &ompetition

Monopoly )' market structure in which there is only one producer$seller for a product. ntry into such a market is restricted due to high costs or other impediments( which may be economic( social or political. /f we take example from /ndian perspective there is one example we can think of is Indian railway which is the monopoly as there is no other contributor exercising in the same market. Oligopoly /n an oligopoly( there are only a few firms that make up an industry. This select group of firms has control over the price and( like a monopoly( an oligopoly has high barriers to entry. The products that the oligopolistic firms produce are often nearly identical and( therefore( the companies( which are competing for market share( are interdependent as a result of market forces. Crude oil companies are the best example of oligopolistic market.

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Monopolistic Competition /n monopolistic competition( there are many sellers of a particular products but the product of each seller is in some way differentiated in the minds of consumer from the product of every seller. The products produced by the sellers in monopolistic competition are close( but not perfect substitutes of each other. For example, we can take novels which have different stories but the basic motive of it is to provide knowledge and entertainment. Perfect Competition "erfect competition is characteri!ed by many buyers and
sellers( many products that are similar in nature and( as a result( many substitutes. "erfect competition means there are few( if any( barriers to entry for new companies( and prices are determined by supply and demand. Thus( producers in a perfectly competitive market are sub0ect to the prices determined by the market and do not have any leverage. Staple food and vegetables market are the best examples of perfect competition.

Merits of Market Structure

Market structure helps us to measure the market share( forces operating in the same market structure( its competitors( and line of products and range of competition. /t helps us in decision making mainly in the field of investment .Thus reduces the risk of investment in company. /t gives a general idea about how demand and supply work in a market place and how consumerism can eat away or benefit our ability to live well.

CHART OF CLASSIFICATIO

OF MAR!"T STR#CT#R"

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0RI%ANNIA In(u$trie$ Li"ite(

An &ndian company based in 1angalore# that is famous for its 1ritannia and +iger brand biscuits# which are highly recogni2ed throughout the country. 1ritannia is one of &ndia,s leading biscuit firms# with an estimated 345 market share. The Company's principal activity is the manufacture and sale of biscuits, bread, rusk, cakes and dairy products. PRO+'C%S0ISC'I%S 16&+A77&A (88) )A9:0ashew# 1utter# ista # 1adam# 0hoco chips and 0hoco nuts;# 7&0$ +&!$ !A6&$ (8') +&($6 16&+A77&A +6$A+:$liachi # 8range# !ango;# !&'< 1&<&= '&++'$ -$A6+= 16&+A77&A 5>-5> =A'+$) 06A0<$6= - =7A?# +&!$ A==

MA3OR COMPE%I%OR 4
1enerally( all organi!ations have competitors in the market. ' particular organi!ation always comprises with other same business and according to market share we clarify the brand of product is giving more challenge to our product. 2e found many products which can be compared with Britannia Biscuit. 's a conclusion we found that particularly in our provided area3 Britannia is really doing well and its performance is on surprising level. #uring the field work and after intensive study( it was found that main competitor of $RITA IA biscuits is PARL" as the market leader.

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2hen we compare with other businesses then we follow the 4uality( price( distribution system( promotional strategy etc. of the competitors. So this is the comparison with other biscuits brands. 'ccording to our findings we found that B5/T'NN/' is the market leader followed by B5/T'NN/' biscuits. These two biscuit companies the lion6s share in the +(+77 crore biscuits industry.

0ritannia /$ Parle
Description
$stablished 7ature of business 7o of manufacturing units !arket share : value; Ads !ajor methods 7ew areas of promotion 14@A ublic ltd 5 own #C>0!D 3C.4>5 0ricket events and players $nvironment

Britannia
1@B@

Parle
%amily run business 4 own units #A> 0!D 31.@C5 0elebrities endorsement -ealth and wellness

Other Co"1etitor$ arle roducts vt. 'td =urya %ood * Agro 'td Anmol 1iscuits 'td

Market structure
/mperfect competition create two different forms of markets( with different number of producers( with different degrees of completion( classified as a% Monopolistic8) Monopolistic is a kind of market where a large number of firms supply differentiated products. The number of sellers is so large that each firm can act independently of other( without its activity being watched and countervailed by others.

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&% Oligopoly8 ) ,ligopoly is an organi!ation structure of an industry in which a small number of firms supply the entire market( each seller having a considerable market share and control over the price. Most industries in our country are oligopolistic.

Britannia in ligopoly market. !herefore, demand curve for their product has high cross"elasticity, but less than infinity, unlike under perfect competition.

Mar&et Share

Britannia is the market leader in value terms ho!ever" Parle has hi#her share in terms of volume
0RI%ANNIA PARLE-G I%C :Sun.ea$t; PRI,A GOL+ ANMOL O%>ERS 56.78 5-.98 7.<8 78 6.=8 -?.<8

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MAR!E% PO%EN%IAL
Market potential of the B5/T'NN/' is much positive in competitive era and will sure cover the maximum market share of biscuit product. "otentiality of any product depends upon the futuristic performance of the product. /t depends that how much retailers have potentiality to be permanent seller of B5/T'NN/'. 9or great potentiality it is necessary to improve those factors which are going to affect retailers. /n my study / found some factors which can help to cover great potentiality. These factors are following8

: Scheme delivery should in perfect determining time. : Some places distributors not able to cover his particular area. That should be improved. : Scheme facility should be regular as much as possible. : Small pack also should be in the market. : 'lways collect the views of retailers. If company is able to improve these all factors then definitely its market share will more increase. #etailers will take more interest to sell Britannia biscuit and customer will also en$oy for it. So potentiality is very high to Britannia biscuit in positive direction.

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S>IF% IN +EMAN+ C'R/E

+o@n@ar( Shi.t in +e"an( Cur)e When the demand for product decreases due to external factors but the price of that particular product remains constant. $.g. - &f the prices of =ubstitute goods like arle and =unfeast decrease the demand for 1ritannia will also fall.

'1@ar( Shi.t in +e"an( Cur)e +he change in Euantity demanded due to change in other factors with price remaining constant of that particular product. $g. &f the prices of =ubstitute goods like arle and =unfeast increase# the demand for 1ritannia will also increase.

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S>IF% IN S'PPL, C'R/E

&n simple words the shift in the supply curve refers to the change in Euantity supplied due to the other factors other than price. +o@n@ar( $hi.t :shift to right; and u1@ar( $hi.t:shift to left; are the two shifts in the supply curve. +o@n@ar( $hi.t:$hi.t to right;: When the supplier is able to supply more products without a change in price it is called as downward shift or shift to right. $.g. )ue to introduction of new cost-effective technology# the production of 1ritannia ackets will increase.

+o@n@ar( $hi.t:$hi.t to right;: When the supplier is able to supply more products without a change in price it is called as downward shift or shift to right. $.g. )ue to introduction of new cost-effective technology# the production of 1ritannia ackets will increase.

'1@ar( Shi.t :Shi.t to Le.t;: When the supplier is able to supply less without changing the price of the product is called as upward shift or shift to left.

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$.g. if in any year the agricultural production of crops get damaged due to bad weather then there will be less supply of products at same price and same with 1ritannia

08! A6A1&'&+9 08! $+&+86= 8% 16&+A77&A

&ntroduction
1iscuits being an extremely price-sensitive segment #it has become tougher to protect and grow market share for the %!0( biggies such as 7estle# -D' and 1ritannia# given the intensifying competition from the new domestic as well as international entrants. !ost of these companies have chosen to keep product prices stable. Another strategy adopted by them is introducing new products to maintain their market share. 0ompanies have been targeting volumes and aggressively pushing biscuits priced at 6s 5 and 6s 1> to counter inflationary pressures and prevent consumers from switching to cheaper brands.

A spokesperson of 1ritannia# maker of (ood )ay and +iger brands# said the company constantly reviews input costs and modify its pricing appropriately. 1ritannia# too# has increased the prices of its digestive cookies.

0RI%ANNIA )2$ PARLE - ANAL,SIS

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+he largest piece of this big and growing cookie now belongs to arle roducts. +he !umbai-based# 6s 5#>>>-crore company has close to C55 share of the biscuits market while 7usli WadiaFs 1ritannia &ndustries has about 345 share. For years, the two largest cookie makers were neck-and-neck with about 3 ! share each in the market. arle roducts has played a better volumes game# backed by stronger distribution# especially in rural markets# and more competitive pricing. -istorically# arle has had stronger distribution and has the ability to reach consumers faster at lower distribution costs. +hey have also converted single pack si2e consumption into snacking options. %he )ariou$ $trategie$ (one #y #oth co"1anie$ )arie( @ith Auality an( ta$te an( al$o the 1re.erre( #ran( #y con$u"er$: 1ritannia managed to hold on to its overall market share# the cookie seems to be crumbling for one of its bigger brands# (ood)ay. &ts dominance in the sweet cookies segment is under threat. +he challenge is led by arle B>-B>. 1ritannia had taken up pricing about three Euarters ago# which had led to its volume growth shrinking to low single digits 1ritannia (ood-)ayFs share dropped from 31.A5 in B>>@-1> to BG.45 in the April-=eptember period# while arle B>-B>Fs share increased from 11.35 to 1G.@5 during the same period. arle also managed to push its share in the 6s 3#31B-crore glucose biscuit segment where arle ( now accounts for more than three-fourths of the category. &n salted crackers# 1ritannia +ime ass is the only major brand that lost share# to 1>.A5 in the first half of current fiscal from 11.35 in the whole of last year. While arleFs !onaco led with a BG5 share# smaller players like riyagold HigHag and &+0 =nacky too gained in the last six months. 1ritanniaFs decision to increase prices before competition when high sugar and milk prices hurt biscuit makers may also have affected its growth rate. A low-margin business# price hikes in the category are rare because even a marginal increase negatively impacts consumer off take. $lucose is the lar#est%sellin# &iscuit se#ment" follo!ed &y cookies and cream'

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+he advantage which arle has had is its better distribution in the rural market along with competitive pricing. )efinitely B measures which give it competitive advantage. 8n the other hand# 1ritannia increased its pricing which subseEuently reduced its volume thereby affecting its market share.

+hese efforts have resulted in pushing up selling costs. 1ritanniaFs stock has fallen by more than 115 during the two sessions# post results. +he Euestion in front of investors is what could drive stock prices up if they are to stay invested in this %!0( scrip. &n the case of 1ritannia# investors can look forward to t@o .actor$. Fir$t# the trend in prices of raw materials including flour# sugar and milk. 8f these# sugar and milk prices after inflating so much in the past few Euarters are easing out. +his may take away some pressure on margins. Another factor is the companyFs strategy to focus on new differentiated products that would attract premium pricing. &ts future performance thus largely depends upon the success of this strategy and the inflation scenario.

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