Marketing Management 1
Assignment 1

Company: Shri Mahila Griha Udyog Lijjat Papad
Product: Papad
Section: 3
Group: 5

Group Members:
Abhishek FT163006
Divya FT163020
Jimmy FT163035
Megha FT163051 Prateek FT163068
Shamipa FT163085
Vaibhav FT163099

Contents Introduction 3 PESTEL Analysis 4 Political and Legal 4 Environmental 4 Socio-cultural 4 Technology 4 Economic 4 Porter’s five forces analysis 6 Competitive Rivalry: Moderate but constantly increasing 6 Threat of New Entrants: Low 7 Bargaining Power of Suppliers – Low 7 Bargaining Power of Buyers – High 7 Threat from Substitutes – Moderate 7 SWOT Analysis 8 Strengths 8 Weaknesses 9 Threats 10 Opportunities 10 Current Segmentation, Targeting and Positioning 10 Segmentation 10 Targeting 11 Positioning 11 Growth strategy for Lijjat Papad 12 Recommendations 12 ANSOFF’s matrix 12 12 Proposed segmentation 13 Proposed Targeting 13 Proposed Positioning 13 References: 14

Introduction

Lijjat papad was established on March 15, 1959 by a group of 7 women to spend their leisure time and earn their livelihood using the only skill they possessed, that was cooking. It has grown from 7 women in 1959 to 40000 in 2006 and 43000 in 2014 and from their 1st profit of 80 paise to 300 crores in 2006 and 650 crores in 2014.

It started in Girgaum village of South Mumbai and the 2nd office was opened in Vadala that became the regd. Office for them. The only time they took any fund was Rs 80, and since then, they have not accepted any charity. The group of board members comprises of 21 women, and only women are allowed to join the company.

They advertised for the first time in late 1980's and have grown mainly after 1990. It has stayed away from the commercials and other modern marketing techniques. The only other time they made a commercial was in 2003. Lijjat papad always aimed at women empowerment more than just being in the papad business.

Lijjat papad is made 11:5:1 mixture of flour, water and masala respectively. And dough is given to ladies in kgs to make papad and in turn they get paid for the same next day. All the papads are handmade and use of machines has been left out intentionally.

It’s a traditional Indian food and liked by people as an accompaniment with the food. Made of pulses and cereals, it is good for health and even better to eat.it is used as a snacks and an appetite both.

Shri Mahila Griha Udyog are known as makers of the famous Lijjat papad as they were the force behind to get company registered and show this way. Smt. Pratibha Sawant is its manager for last 45 years. It has 81 offices now and have presence in 27 states. It has been exporting to various countries now. It has grown as symbol of women strength [9].

PESTEL Analysis

From the analysis data secondary data following PESTEL analysis is done

Political and Legal
Lijjat papad was established in 1959. During those days, India was striving for economic and social growth. The policies and climate was very favorable to start a cooperative society. Lijjat papad utilized this opportunity and evolved as a cooperative society, empowering women of India and growing steadily since then. The present tax policies are very favorable. Purchase of raw material is exempted from tax. Papad as a product is exempted from sales tax. Khadi Village Industries Commission (KVIC) provides strong support and cooperative societies can borrow money at a subsidized interest rates. The papad industry has very little to worry about political factors [6].

Environmental
India is a country blessed with very favorable climate for agriculture, therefore it is easy procure agro-based raw materials. One of the major components of papad production is drying of papad. India has 320 days of bright sun which favors drying at a very low cost.

Socio-cultural
Papad is the integral part of Indian food from centuries. It is a preferred accompaniment to meal in many families. Statistics say that 67% of Indian population consume 4 to 5 kilograms of papad in a year. Therefore going by data, papad industry is a very lucrative industry. The majority of women of India are adept at the art of papad making. It was just matter of organizing them and forming a cooperative society. All these socio-cultural conditions contributed in success of Lijjat papad [13].

Technology
The use of technology for papad making is intentionally restricted to provide employment to large number of unemployed, non-earning women. Technology to test the quality of product is available and is employed by Lijjat to test its papad.

Economic
There’s a consistent demand for papad throughout the year. The economic conditions are also very favorable for women empowerment and women employment. Hence, cooperative society with the focus on uplifting the women receives many incentives offered by government. The Lijjat papad has hardly any effect on economic upturn or downturn.

Below block diagram gives the overview of the PESTEL analysis for Lijjat papad firm.

ECONOMIC factors
Consistent demand for papad
Favorable environment for cooperative society
Policies supporting women environment.

ECONOMIC factors
Consistent demand for papad
Favorable environment for cooperative society
Policies supporting women environment.

TECHNOLOGICAL
Handmade papad as women of India are adept at this art.
Intentionally no use of technology for production of papad
Technology to test quality available and employed
TECHNOLOGICAL
Handmade papad as women of India are adept at this art.
Intentionally no use of technology for production of papad
Technology to test quality available and employed
SOCIO CULTURAL
Papad is major accompaniment in Indian meals
Women know the art of making papad
Statistics show 67% of Indian families consume papad

SOCIO CULTURAL
Papad is major accompaniment in Indian meals
Women know the art of making papad
Statistics show 67% of Indian families consume papad

ENVIRONMENTAL
Agro based country, easy procurement of raw material.
Bright SUN, favorable for drying papad.

ENVIRONMENTAL
Agro based country, easy procurement of raw material.
Bright SUN, favorable for drying papad.

ECONOMIC factors
Consistent demand for papad
Favorable environment for cooperative society
Policies supporting women environment.

ECONOMIC factors
Consistent demand for papad
Favorable environment for cooperative society
Policies supporting women environment.

TECHNOLOGICAL
Handmade papad as women of India are adept at this art.
Intentionally no use of technology for production of papad
Technology to test quality available and employed
TECHNOLOGICAL
Handmade papad as women of India are adept at this art.
Intentionally no use of technology for production of papad
Technology to test quality available and employed
SOCIO CULTURAL
Papad is major accompaniment in Indian meals
Women know the art of making papad
Statistics show 67% of Indian families consume papad

SOCIO CULTURAL
Papad is major accompaniment in Indian meals
Women know the art of making papad
Statistics show 67% of Indian families consume papad

POLITICAL and LEGAL
Favorable factors for cooperative society
KVIC supports Lijjat papad, gives loan at subsidized interest rate.
Tax exemption on raw material purchase, sales.
POLITICAL and LEGAL
Favorable factors for cooperative society
KVIC supports Lijjat papad, gives loan at subsidized interest rate.
Tax exemption on raw material purchase, sales.

Porter’s Five forces Analysis:

Porter’s five forces analysis

Below diagram depicts the Porter’s five forces analysis -

Competitive Rivalry: Moderate but constantly increasing
It can be attributed to the fact that Lijjat papad is the pioneer in the field of papads and has maintained market leader position for long years in India. It has turnover of 829 crores of which 36 crore is from export revenue [1]. Currently other established food players has jumped into papad industry to take market share of Lijjat papad. Following table shows increasing market share of one such competitor [3].
Highly fragmented industry as more and more major players are entering.

Company | Units sold in 2013 (‘000) | Market share (%) | Lijjat Papad | 35456 | 23.6 | Bikaner Papad | 77054 | 51.3 |

Threat of New Entrants: Low
Threat for new entrants is low as papad industry requires Economies of scale.
Also for the new entrant high investment is required in setting up manufacturing process, setting distribution network and branding promotion campaign.

Bargaining Power of Suppliers – Low
Lijjat papad have their own flour mills. They have to purchase just dal and other raw materials from farmers. Due to highly fragmented market of supplier, they have very low bargaining power.

Bargaining Power of Buyers – High
Papad market is perfectly competitive market. Also the customer demand is highly elastic. Hence customer is highly sensitive to price.
Customer is highly influenced by marketing strategies.
Customer loyalty fluctuates frequently.

Threat from Substitutes – Moderate
The traditional practice of preparation of papad as a convenient food at household level is still in practice in India. For e.g. a sample survey in Dharwad city with sample including retail shops and mahila mandals revealed that 72% of the sample still relied on house hold preparation.
Various product such as nachos, mathiyas are gaining popularity among children. They can act as a substitute of starter in Indian food [7].

SWOT Analysis

STRENGTHS * Economies of scale * In-house distribution channel * Quality control * Different varieties of papad * Simple production process * Empowerment of women * strong set of core values * Recognition and awards * Decentralization of power * motivated employees

STRENGTHS * Economies of scale * In-house distribution channel * Quality control * Different varieties of papad * Simple production process * Empowerment of women * strong set of core values * Recognition and awards * Decentralization of power * motivated employees

WEAKNESSES * Limited image building * Decentralized production * Lack of healthy working conditions * Space crunch for drying papads

WEAKNESSES * Limited image building * Decentralized production * Lack of healthy working conditions * Space crunch for drying papads

OPPURTUNITIES * Online marketing * Use of advanced technology * Increase of export shares * Packaging improvement
OPPURTUNITIES
* Online marketing * Use of advanced technology * Increase of export shares * Packaging improvement
THREATS
* Low barriers to entry * Fake Lijjat papad distribution * Rainy season * Availability of local papad * Automated processes * Expansion constraints

THREATS * Low barriers to entry * Fake Lijjat papad distribution * Rainy season * Availability of local papad * Automated processes * Expansion constraints

Strengths
Distribution channel of Lijjat Papad is well established. The distributors pick up the quantity of papad they require and pay cash on delivery. Each distributor has his three-wheeler and about eight to ten salesmen to deliver to retail outlets within his territory. To select a distributor, they advertise on newspapers in the respective areas [11]. Members from the marketing division personally go and check the godown facilities so as to choose and appoint the distributors. A distributor pays Rs150000 as deposit initially. They do not have individual door-to-door salesmen or women selling from homes. They have a committee of 21 members that decides how the profits are to be distributed. Everyone gets an equal share of profit, irrespective of who does what work, irrespective of seniority or responsibility [2].
Varieties – Papads of different varieties are made like plain, garlic and red chilli masala. Different packaging in terms of quantity and price are done. The below details are found from secondary data [4].

Quantity | Price in Rs | Flavours | Type | 100,200,250 gms | 11.5,22,23,24,2733 | Plain,Garlic,Red Chilli Masala | Blackgram |

High Value system and Quality - Lijjat's strong value system and quality consciousness has created a sustainable business model for them. They proudly claim ‘consistently good quality’ to be their USP. From the moment a new member joins and throughout the training session, sisters are taught to make the ‘perfect’ Lijjat papad. It is evident in the fact that even without modern machines, every consumer of Lijjat papad gets the same consistent quality of papad because every ben rolls the papad to the same specification and every lot of papad goes through testing. They get papad for testing from all centers every day and if any deviation is found in the quality of Papad, for example, if the salt is less or more, etc., they immediately intimate that particular center to destroy the entire lot, even if amounts to a million rupees worth of production [1].

Empowerment of Women - The study which conducted a survey of 60 respondents from Shri Mahila Griha Udyod Lijjat Papad Society in Hyderabad District through structured questionnaire. It was found that it has positively contributed in the psychological, social and economic factors in empowerment of women through Shri Mahila Griha Udyod Lijjat Papad Society. Lijjat is one such organization which has defined the mechanism for women’s development to bring in individual and collective empowerment through improvement in both condition and position of women.

Recognition and awards-
Received Award from Khadi & Village Industries Commission as ‘Best Village Industries Institution’.
The Economic Times Award given to the Institution for Corporate Excellence “Business Woman of the Year”
Received the “Best Village Industry Institution” award at the National Convention on “Rural Industrialization”, held by Khadi & Village Industries Commission along with Ministry of Agro and Rural Industries.

Weaknesses
Image building – Since Lijjat Papad was known via word of mouth, it has limited image and it has not advertised since 2003. There were only two advertisements made in 1990 and 2003.
Decentralized Production - Production is carried out not in one central location but in hundreds and thousands of individual homes. Certain activities, however, are centralized. This price factors in the cost of raw materials, transport, taxes, distributors commission, profit percentage and so on.
Lack of good and healthy working condition – Production is carried out not in one central location but in hundreds and thousands of individual homes. So, the working conditions may be different.
Space issue – Lack of adequate space for drying Papads.

Threats
Barriers to Entry – There are Low barriers to entry in Papad industry. Due to the low barriers to entry many private firms have entered the market as the papad market is growing steadily across the country.
Rainy season – They have to take measures to preserve the stocks of Papad and take measures for the distribution during rainy season.
Threats of competitors – Availability of traditional Papads by local resources in local market with lower price is a threat which Lijjat Papad faces.
Automated Processes used by other firms– Competitors like Bikaner use automated processes which reduces the time of production and makes it available in market within less time. Opportunities
Online Marketing – Lijjat Papad can start its sales via online sites.
Export Share – It can increase its marketing and export to foreign countries.
Packaging improvement – It can improve its packaging design and make it more attractive.
Advanced technology – It can use advanced technology to reduce the production time of Papad.Technology used to for grinding flours etc.

Current Segmentation, Targeting and Positioning

Segmentation
From our analysis of secondary data and online research, we have broadly segmented the market based on following factors –

Geographic:
Location and Region: Currently, Lijjat Papad distributes in seventeen states. These states majorly comprises of northern and western regions of India. The product is distributed primarily in Maharashtra, Andhra Pradesh and Gujrat.
Urban/Rural: The firm has segmented the market into urban and rural markets. The rural market contributes to very low market share of Papad industry. Rural inhabitants prefer to make Papad on their own.

Demographics:
Age: The firm sells Papad for all age groups.
Income group: It’s a relatively inexpensive product. The firm produces Papad packages in various size and quantity. The pricing strategy for bulk order is flexible. Thus, the product is launched for all income groups. The price margin for dealer is 8% percent on mid-sized Papad package [12].

Behavioral:
Rate of usage: Papad forms every day consumable food item as an accompaniment to meal. The rate of usage is high among the Indians who love to eat Papad with their everyday meal.
Readiness to purchase: Being an accompaniment to meal, target customers are willing to shell out the money for the product.
Occasions: Indian has a diverse culture. The occasions such as marriages, gathering functions, and festivals increases the sales of Papad. Indian cuisines in restaurants are served with Papad as starters [8].

Psychographics:
Social class: Indian cuisines promotes the supplementary food items. The Papad is one among such favored items by all socio-classes of society.
Preference to hand-made product: The people prefer hand-made Papad as it tastes better than Papad made by use of machines.
Lifestyles: The firms promotes Papad for families, restaurant, caterers, and midday meals for schools.

Targeting
Lijjat papad is targeted at the lower and middle class of the society. These segments are extremely price-sensitive and hence the method of pricing-Cost Plus Pricing Strategy allows them to market their products extensively. They also target the urban population rather than the rural population because in rural areas people make the papad themselves or buy them from local manufacturers at lower prices.
Lijjat papad can target lower income class by reducing the size and price of the papad. They also can target higher income by improving the packaging of the product and introducing more attractive flavors.

Positioning
Papad is an integral part of Indian cuisine. It is served as a food companion basically as a starter. Before Lijjat papad came into existence, papad was prepared at home only. Making papad was cumbersome and tedious task, and urban working women found it very difficult to make papad at home. Lijjat utilized this fact and positioned itself in urban market as a premium high quality papad, which could be served easily at home. Moreover, Lijjat papad was crispy and crunchy compared to homemade papad and quickly gained popularity.
Papad is equally liked by people of all age and income groups. To cater to different age groups, Lijjat introduced variety of flavor in papad like moong papad, adud dal papad, double pepper papad, plain, chilly and garlic which was unique at that point of time. To cater to different income group, Lijjat created various weights of packet and priced them from Rs 25- Rs 730. It satisfies need of all income groups.
Lijjat Papad’s positioning strategy worked really well and helped to differentiate itself in Indian Papad Industry [10].

Growth strategy for Lijjat Papad
After the thorough analysis using the marketing framework, we propose the growth strategies for Lijjat papad.
Recommendations

Size of Papad: The firm can reduce the size of Papad and offer them in attractive shapes. This will allow them to position themselves in quick snacks market. The market is dominated by Lay’s, Bingo, Bikaner’s etc. in the quick snack products.
Diet Papad: The firm can invest in producing diet Papad for health conscious people. This will allow them to target senior age group who look for fat-free products.
Bundling Papad of different varieties: The firm can sell a bundle pack of Papad of different varieties in one single packet. This will provide the customers to have Papad of different tastes in one packet.
Improving Packaging design: The firm can redesign the packaging of the Papad. The appeal of the packaging was dull, and this can be improved as product development.

ANSOFF’s matrix
Existing Product

Existing Product

Market Penetration
Bundling of papad of various variety in a single pack.
Offering papad in an attractive sizes and shapes in an attractive cover

Market Penetration
Bundling of papad of various variety in a single pack.
Offering papad in an attractive sizes and shapes in an attractive cover

New Product

New Product

Product development

Diet papad for health conscious people

Product development

Diet papad for health conscious people

Market Development

Tapping potential of rural market by offering papad at an affordable price

Market Development

Tapping potential of rural market by offering papad at an affordable price

DIVERSIFICATION
DIVERSIFICATION
New Market
New Market
Existing Market
Existing Market

Proposed segmentation
Demographic – Geographic: A large of Indian population remain untargeted in the North-eastern region of the country. The geography can be exploited to sell the products. The products can be customized to the preferred eastern flavors.

Demographic – Urban/Rural: The rural areas are neglected in the current market targeting systems. The firm can not only sell Papads in these areas, but also exploit the extensive labor support provided by the rural areas. This will help them set up the manufacturing plant that can provide the employment opportunities for women, as it’s their forte company motto.

Proposed Targeting
The recommendation is to introduce papad in different attractive sizes and shapes. These can be packed in an attractive way and it can be sold as ready to eat snack. For example Movie goers are one of the potential buyers.
By introducing diet papad, Lizzat Papad can foray into Healthy food sector.
Rural market is a very lucrative sector .Papad packets can be introduced in rural market in smaller sizes at an affordable prize.

Proposed Positioning
To position Lizzat papad as ready to snack product.
Merchandise racks exclusively for Lijjat papad could be placed at retail stores, Super markets, and Food courts at Mall and Cinema theatre.

References:

1. Consumption pattern of papad at household level and its availability in the local market*- by Shwetha Kamat, Nirmala Yenagi And Shobha Naganur- Karnataka J. Agric. Sci., 22(2) :(399-403)2009 2. Corporate to Cooperative Entrepreneurial Leadership in Emerging Economy – Lessons from Indian Enterprises by Resham Chopra* Hersh Sharma* 3. Empowerment of women for social development (a case study of shri mahila griha udyog Lijjat papad,hyderabad district)- Shaik Shafeequr Rahman,Director,Hyderabad, AP, India Nikhat Sultana 4. Shurpalekar, S. R. and Venkatesh, K. V. L., 1975, Studies on papad based blends of blackgram with cereals, pulses and starches.-J. Fd. Sci. Tech., 12: 32-35. 5. Meera Singh, Important role of component of product for competitive advantage in marketing, Quest Journals, Journal of Research in Business and Management, volume 1 issue 3 (2013). 6. Philip Kotler (1999), Kotler on Marketing. New York: Free Press.-->ansoff grid 7. Steel, G. D. and Torrie, J. H., 1960, Principles and Procedures of
Statistics, McGraw-Hill Book Company, Inc., New York,
Toranto, London, pp.134-145. 8. Parpia, H. A., 2008, Vision and path-ahead for traditional foods. Indian
Food. Industry., 27: 32-40. 9. http://www.scribd.com/doc/29900032/A-Success-Story-of-Lijjat-Papad#scribd 10. http://www.slideshare.net/hemanthcrpatna/Lijjat-papad 11. http://seeingwithc.org/jsblog/?p=1041 12. http://www.venturefinance.in/interviews/jaswantiben-jamnadas-popat-founder-Lijjat-papad-we-simply-believe-in-honesty-and-hard-work.html 13. http://mgmtfunda.com/studying-labour-cooperatives-with-Lijjat-papad/