PRICING ASSIGNMENT

SECTION D, GROUP- 8
S.No
1
2
3
4
5
6
7

Roll No.
1301-328
1301-078
1301-551
1301-558
1301-442
1301-233
1301-424

Name
Bawa Anshuman Singh
George P. Alex
Prateek Rawat
Ritika Shrivastava
Vipul Kumar Singh
Tanmay Mathur
Tanooj Chandak

Table of Contents
Introduction ............................................................................................................................................................................ 2
About the Company ................................................................................................................................................................ 2
Distribution Channels.............................................................................................................................................................. 3
ITC Product Mix Chart ............................................................................................................................................................. 3
List of Brands and prevailing prices ........................................................................................................................................ 5
Price Comparison .................................................................................................................................................................... 7
Field Visit Data & Findings .................................................................................................................................................... 10
Findings from the Visits......................................................................................................................................................... 12
Variables stimulating pricing strategy................................................................................................................................... 14
Comments based on Observations ....................................................................................................................................... 14

Introduction
The packaged snacks market in India is estimated to be worth around 9,400 crore and is the 5 th largest sector
in the Indian economy. It has grown rapidly at a C.A.G.R. of 15 % in the period 2007-2013 and is estimated to
continue growing at a healthy rate due to various growth drivers such as changing urban lifestyles as well as
rapid urbanization, growing disposable incomes and modern retail trade.
The potato chips and potato based items account for 85% of the snacks market and is dominated by three
major players namely Frito-Lays, Haldiram and Bingo which together possess 88 % of the market share, the
rest being small regional players such as Balaji and Smart Chips. The ingredients used in the product are
potatoes, edible vegetable oil, sugar, salt and various spices and condiments that are added after frying.
Besides the potato based snack items, there are also innovative new products in the market available such as
Mad Angles by ITC that are made on a traditional khakra base consisting of ingredients such as rice meal,
edible vegetable oil, corn meal, gram meal, wheat flour, salt, spices and condiments. Most of the other
manufacturers such as PepsiCo also have products made of alternative ingredients.

About the Company

ITC Limited is one of the biggest private sector companies in India whose business includes Fast Moving
Consumer Goods, Hotels, Agri-Businesses, Paper Boards & Specialty Papers, Information Technology and
Packaging. In 2012-13 ITC had a turnover of 7 billion US $. ITC is rated as one of the World's Most Reputable
Companies by Forbes magazine and among India's Most Valuable Companies by Business Today.
E-Choupal of ITC
E-Choupal is a unique initiative taken by ITC to deal with the challenges faced by Indian agriculture. Using echoupal, ITC sources farm produce. And such produce are used in ITCs food products. For e.g. Aashirwad Atta
uses wheat which is sourced from this program. Bingo is produced from potato which has been procured from
this program.
Bingo
Bingo was launched in March 2007, with a range of exciting packaged salted snacks. The launch of Bingo is
symbolic of ITC Foods' distinct approach of introducing innovative and differentiated products in a largely
undifferentiated market place. Offering from Bingo includes varieties of Potato Chips and finger snacks. The
product is available in prices of 5, 10 and 20.
The brand has 4 sub-brands:
1)
2)
3)
4)

Bingo! Yumitos Take a Yumitos Break

Bingo! Mad Angles - "Har Angle se Mmmm..."
Bingo! Tedhe Medhe - "Har Stick mein alag twist..."
Bingo! Tangles - "Khaoge to Khilaoge..."

Distribution Channels
1) For Retail Shops

Manfacturer

C & F agent

Distributor

Wholesaler

Retailer

*Some retailers take the product directly from distributor

2) For modern retail stores

Warehouse(Buying
team)

Manfacturer

Distribute to stores

ITC Product Mix Chart

FOOD

STAPLES

AASHIRWAAD

SNACK FOODS

BINGO

READY TO EAT
FOODS

CONFECTIONARY

KITCHEN OF
INDIA

CANDYMAN
MINT-O

YIPPEE

BINGO !

TANGLES

TEDHE MEDHE

MAD ANGLES

YUMITOS

TOMATO
MISCHIEF

PREMIUM SALTED

MASALA TANGLES

INTERNATIONAL
CREAM AND ONION

SALTED TANGLES
CHILLI
DHAMAKA

RED CHILLI BIJLI

MASALA REMIX
JUICY TOMATO
KETCHUP

ACHAARI

Types of packaged Snack foods available in market

1. Ingredients based : Includes all salty and savoury snacks, with or without added flavourings, but
excludes unsweetened crackers (bakery products).
Potato based contains mainly potato along with small amount of spices/salt eg. Potato Chips.
Corn based contains corn along with the spices and salts.
Cereal based contains pulses, dal(s), flours, maize, potatoes, salt, dried fruit, vegetable,
peanuts, spices and condiments, masalas, dried fruits, nuts and seeds.
Mix based contains a mix of cereals with either corn or potato or both.
2. Flavour based
The snacks are also classified on the basis of flavour that they offer. Some of the flavours are Tomato,
chilli, Achaari, Masala, classic Salted, Pudina, Cream and onion, Magic masala, hot n sweet etc.
Brand/Flavours

Lays
Bingo
Kurkure

Salted Tomato

Chilli

Mint

Cream
n
onion

Cheese Masala Jalapeno

Achaari

Khatta
Meetha

Lime

Haldiram
O yes
Peppy
Piknik
Cornitos Nachos

3. Baked and Fried Snacks

Baked snacks are lower in fats and are considered to be healthier for consumers
Fried Snacks have higher contents of fats and thus have high calorie.
Brand
Lays
Bingo
Kurkure
Haldiram
O yes
Peppy
Piknik
Cornitos Nachos

Baked
Snacks
Yes
No
No
No
No
No
No
No

4. Packaged Differentiation -: Good Packaging is important for keeping the fresh snack and distributing it
safely.
Premium packing includes packing the snacks in a matt finish high quality packet. This gives a
premium feel to the consumers eg Cornitos nachos. These products are highly priced.
Normal packing is done for maintaining the low cost of packaging.

List of Brands and prevailing prices

The various brands of packaged snacks available in the markets of greater Ghaziabad are listed below with
their prices and the quantity provided in grams. Prices per 10 grams have been calculated based on the data.
This gives a common metric to compare the prices of different products under different brands.
Bingo offers potato chips under the Yumitos line and corn based triangular snacks under the Mad Angles line.
Tedhe Medhe is a spindle shaped snack whereas Tangles is a crunchy snack.

Bingo Yumitos

Premium Salted
International cream n onion
Red Chilli Bijli
Masala Remix
Juicy tomato ketchup
Fiery red tomato

Weight

Price

Price/10g

59
59
59
59
59
59

20
20
20
20
20
20

3.39
3.39
3.39
3.39
3.39
3.39
5

Bingo Mad
Angles

Oye pudina

59

20

3.39

Tomato Mischief
Chilli Dhamaka
Achaari Masti
Masti Chaat

100
100
100
100

20
20
20
20

2.00
2.00
2.00
2.00

142

20

1.41

100
100
100

20
20
20

2.00
2.00
2.00

Bingo Tedhe
Medhe

Bingo Tangles

Masala Tangle
Salted Tangle
Tomato Tangle

Haldiram offers 7 flavors in their potato wafers line called Haldiram Chips. Takatak is their corn based snack.

Haldiram
Chips

Classsic salted
Mast masala
Pudina Treat
Sour cream n onion
Tangy Tomato
Pudina Treat
Aloo masala
Takatak (regular, crunchy
tomato)

Weight
70
70
70
70
70
70
70

Price
20
20
20
20
20
20
20

Price/10g
2.86
2.86
2.86
2.86
2.86
2.86
2.86

70

10

1.43

Uncle Chipps is a popular brand which was acquired by Frito-Lay in 2000. The flavors offered are shown below:

Bombaat chilli masala

Papri chaat
Sendha namak
Uncle Chipps
Jhakaas tomato twist
Plain Slated
Spicy treat

Weight
72
72
72
72
72
72

Price
20
20
20
20
20
20

Price/10g
2.78
2.78
2.78
2.78
2.78
2.78

Lays is one of the largest selling snack brands in India. In addition to fried, it also offers baked chips in their
range.

Lays

American Cream n Onion

Classic Salted
Spanish tomato tango

Weight
26
26
26

Price
10
10
10

Price/10g
3.85
3.85
3.85
6

Magic Masala
Hot n Sweet Chilli
Salt n Pepper
Chile Limon
Lays Baked cream n
onion
Lays baked original
salted
Lays baked Sunkissed
tomato

26
26
26
26

10
10
10
10

3.85
3.85
3.85
3.85

65

30

4.62

65

30

4.62

65

30

4.62

Owned by Frito-Lay, Kurkure is the namkeen snack developed exclusively for Indian market.

Kurkure

Chilly Achari
Hyderabadi Hungama
Naughty Tomato
Green Chutney
Masala Munch
Puffcorn Yummy cheese
Puffcorn Mad Masala

Weight
100
100
100
105
107.5
69
69

Price
20
20
20
20
20
20
20

Price/10g
2.00
2.00
2.00
1.90
1.86
2.90
2.90

SM Foods snacks are made from rice, wheat and soya in the form of pellets of various sizes and shapes.
Cornitos are primarily corn based crispy snacks and are comparatively new in the market.

SM Foods
Cornitos

Picnik
Peppy
Senor Pepito
Nachos Crisps

Weight
23
23
180
65

Price Price/10g
10
4.35
10
4.35
80
4.44
30
4.62

Price Comparison
Based on the common standard of price per 10g of snack, Bingo Yumitos has the highest price per unit of 3.39
Rs/10g whereas Tedhe Medhe is the cheapest of all at 1.41 Rs/10g. The spread of their prices is 1.98 Rs/10g.
The difference is primarily in the major ingredient being potato in Yumitos and Corn and Rice mix in Tedhe
Medhe.

Looking at the product pricing of the competitor brands, potato based snacks like Haldiram chips, Uncle chips,
Cornitos Nachos have a higher price per unit as compared to their Corn/Rice based counterparts like Takatak,
Kurkure etc.

Maximum Price
5.00
4.50
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00

Rs per 10g

The highest cost per unit weight is under the lays and Cornitos brands at Rs 4.62 Rs/10g. The spread of
maximum price per brand is 1.84 Rs/10g

Minimum Price
5.00
4.50
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00

Rs per 10g

Bingo offers the lowest price among the brands at 1.41 Rs/10g. The spread of minimum price among the
brands is 2.94 Rs/10g.

Field Visit Data & Findings

We surveyed various places in the region of Greater Ghaziabad such as Muradnagar, Adhyatmik Nagar, Dasna,
Masotha Village and Massorie and have spoken to various distributors, wholesalers and retailers in order to
understand the pricing strategy of our branded product, namely ITCs Bingo vis-a-vis its various competitors.

Area

Product
Bingo
chips
Bingo
chips
Muradnagar
Lays
Chips
lays
Chips

Weight
(gm)
26
59
26
55

Distribut
or
Retailer
Wholesaler Wholesaler Wholesaer
Distributor Distributor Margin(
MRP
Retailer Retail SP Retail CP Margin(%) Wholesaler
SP
CP
Margin Distributor
SP
CP
%)
Shree
10 Kirana
10
8.5
17.65 Bajrang
8.5
8.41
1.07
8.5
8.15
4.29
Sare
20 gazee
20
17.5
14.29 Rakesh
17.5
17.3
1.16 Khanna
17.5
16.8
4.17
Traders
Jainu
10 Mainu
10
8.7
14.94
20 Jaypee

20

18

11.11

Observations:
1. In Muradnagar, the wholesaler is supplying to adjoining villages such as Vilaspur, Sultanpur, Mathurapur etc.

Area

Road
side
shops

Product
Bingo
chips
Bingo
chips
Lays
Chips
Lays
Chips
Bingo
Mad
Angles
Bingo
tedhe
medhe
Bingo
tangles
Haldiram
Chips
Uncle
chips
Haldiram
Taka tak
Kurkure

Weight
Retailer Retailer Retailer Distributor Distributor Distributor
(gm)
MRP SP
CP
Margin SP
CP
Margin
26

10

10

8.54

17.10

8.54

8.15

4.79

59

20

20

17.6

13.64

17.5

16.8

4.17

26

10

10

8.72

14.68

55

20

20

18.1

10.50

45

10

10

8.54

17.10

8.54

8.15

4.57

60

10

10

8.54

17.10

8.54

8.15

4.57

40

10

10

8.54

17.10

8.54

8.15

4.57

40

10

10

26

10

10

24
105

5
20

5
20

Observations:
10

1. Road side shops carried a lot of variety of products. But it also had lot of expired products.
2. The road side shops were able to purchase only when distributor was coming to them. They did not have access
to distributor by themselves.

Area

Product

Adhyatmik
village

O yes
Parle Wafers
Popko puff
Parle Wafers

Weight
(gm)
MRP Retailer

30.00
13.00
30.00
13.00

5.00
5.00
5.00
5.00

Retail
SP

Aizan Kirana &

Semi
Wholeseller

5
5
5

Observations:
1. Unavailability of branded chips.
2. Semi wholesaler and retailer were located close by. Semi wholesaler was selling at lower prices than retailer.
Semi wholesaler was ready to sell even in quantities like 1 or 2.

Area

Dasna

Product
Lays
Lays
Lays
Uncle
chips
Kurkure
Haldiram
chips
Bingo
chips
Bingo
Chips
Bingo
Mad
Angles

Bingo
tedhe
medhe
Bingo
tangles
Observations:

Distribu
tor CP

Distribut
or
Margin(%
)

8.54

8.15

4.79

14.29

17.50

16.8

4.17

8.54

17.10

8.54

8.15

4.57

10

8.54

17.10

8.54

8.15

4.57

10

8.54

17.10

8.54

8.15

4.57

Weight
(gm)
26
12
55

MRP
10
5
20

Retail
SP
10
5
20

Retail
Retailer
Distribut
CP
Margin(%)
or
8.50
17.65
4.50
11.11
17.00
17.65

55
50

20
10

20
10

17.00
9.00

17.65
11.11

17.00
9.00

40

10

10

8.30

20.48

4.50

26

10

10

8.54

17.10

59

20

20

17.50

45

10

10

60

10

40

10

Umesh

Distributor
SP
8.50
4.50
17.00

1. The road side shops were able to purchase only when distributor was coming to them. They did not have access
to distributor by themselves.
2. There was almost full product variety available. But distributor does not readily supply here.
11

Area

Masotha
village

Weight
(gm)
30

Product
Oyes
Crax
Fun
Parle
20-20
Parle G
Cream
orange
(Parle)

Retail
SP
5
5
5

5
5
5

Retailer
CP
4.17
4.50
4.33

45

5
5

5
5

4.58
4.58

9.09
9.09

40

66.67

MRP

Retailer
Margin(%)
20.00
11.11
15.38

Observations:
1. It was a typical village with very few retailers. Retailer was getting products from Pilakhwa in every 3 days.

Area

Product
Haldiram
Chips
Lays/uncl
e chips
Lays/uncl
e chips
Bingo
chips
Bingo
Massorie
Chips
Bingo
Mad
Angles
Bingo
tedhe
medhe
Bingo
tangles

Weight
(gm)

Retailer
Distributor Distributor Distributor
Retail SP Retail CP Margin(%) Distributor
SP
CP
Margin(%)

MRP

40

10.00

10.00

8.20

21.95

55

20.00

20.00

17.00

17.65

26

10.00

10.00

8.5

17.65

26

10

10

8.54

17.10

59

20

20

17.50

14.29

45

10

10

8.54

60

10

10

40

10

10

8.54

8.15

4.79

17.50

16.8

4.17

17.10

8.54

8.15

4.57

8.54

17.10

8.54

8.15

4.57

8.54

17.10

8.54

8.15

4.57

Umesh

Observations:
1. Almost all product variety is available. Retailers are taking from distributor.

Findings from the Visits

Margins at every stage of the supply chain are decided by the company itself. ITC has decided the profit
margins for distributors as well as retailers and these margins are independent of locations.

12

ITC follows a 2-level distribution channel. A 2-level distribution channel contains 2 intermediaries. In
consumer markets, these are typically distributers and retailers. There is only one distributer in a given
area which is decided by the company and every distributer serve only in his territory. All the retailers in
that area have to buy products through that distributer. In urban and semi-urban areas, the retailers buy
directly from the distributers but in villages and rural areas, the retailers buy directly from wholesalers as
the distributers dont distribute the products in interior villages.

Wholesalers buy products directly from the distributers and the buying price for a wholesaler is almost
same as that for a retailer. The wholesalers are getting products on cheaper rates only when the
distributer is offering some scheme (either discounts or extra packets) to the wholesaler.

There is no compulsion by company for a retailer to achieve any target, but extra margins are given if sales
exceed certain given amount.

Sometimes companies provide extra margin of around 1 % to the distributers on achieving certain target.
Distributers achieve those targets through retailers and wholesalers by sharing margins. This share is
decided by distributers and retailers.

ITC provides visual merchandizing inside shops, other brands do not.

There is a separate shelf space decided for different brands inside the shops.

For retailers, the distributer comes to the shop to take orders, supply the required quantity and collect
payments. But if retailers buy from the wholesalers, retailers have to go to wholesalers and collect the
required quantity.

For medium to large size retailers, the distributers provide credit and collect the payment on the next
delivery. But small retailers and roadside vendors have to collect the required quantity on cash as
distributers dont provide credit to them.

In order to win retailer confidence and increase rural penetration, Bingo started to take back the expired
products and diffused packets. This unique strategy was started by bingo but this was later followed by
other brands.

Distributers margin is generally lower than retailers because they are playing on large volumes.

Since Bingo had to establish itself in the market, they offered greater margins to retailers than lays to
acquire greater shelf space.

In rural areas, we generally found smaller SKUs of denomination 5 Rs, whereas in urban and semi-urban
areas, we found that SKUs of Rs 10 and Rs 20 were more common.
13

Most popular sub-brand of Bingo in rural as well as urban areas is Mad Angles.

Variables stimulating pricing strategy

1) Competitors price: The pricing offered by Bingo is similar to that of Lays brand of chips. Like Lays they are
also offering chips in price range of Rs.5, Rs.10 and Rs.20. And ITCs strategy to improve its market share by
offering higher margins to the retailers.
2) Offering more quantity of chips for same price: For the same price the quantity offered by Bingo is either
same as the quantity offered by its competitor or more. For eg. For Rs. 10 both Bingo and Lays and Uncle
chips offers 26 gram of chips. For Rs.20 Bingo offers 59 grams of chips while Lays is offering 56 grams.
3) Reduced cost of raw materials with e-choupal system: Under the e-choupal system ITC is able to get raw
materials directly from farmers. As a result ITC is able to source commodities from farmers at lower rates.
4) Utilizing existing distribution channel: ITC is having a very strong distribution network. They have better
reach in rural areas because of the network build due to selling of cigarettes and tobacco based products.
As a result of this while launching Bingo they did not incur very high cost for setting up new distribution
networks.
Pricing strategies being followed by various manufacturers
1.
ITC with its Bingo brand is following the Going-Rate pricing strategy. All its offerings are priced similarly
to the market leader, FritoLays, offerings at Rs 5, Rs 10, and Rs. 20.It has added advantage in its cost structure
due its e-chaupal initiative. It offers better margins to the various intermediaries than Lays in order to be
attractive to them.
2.
Lays being the market leader is cashing in on its brand equity and charging a small premium. Their cost
per 10 grams is Rs. 3.85 compared to the Rs. 3.39/10grams for Bingo Yummitos.
3.

Haldirams is following a low price strategy as its cost per 10 grams is lowest at Rs. 2.86/10 grams

Comments based on Observations

(a) Difficulties in comparison of prices of different brands
The prices of various packaged snacks were made difficult due to some reasons such as those given below
1) Different raw materials used in various packaged snacks: The packaged snack offerings of different
brands have different raw materials being used such as potatoes in case of Bingo and Frito Lays
Classic range, rice meal, corn meal, gram meal, and wheat flour in the case of Bingo Mad Angles
and Kurkure. The difference in the cost structure of the companies based on ingredients has made
it hard in some cases to compare the pricing strategies followed.

14

2) Large number of variants based on flavours available. Especially in the case of Kurkure where the
cost per unit varies with the flavour
3) Extra value packs and party packs with extra quantity of the product offered in addition to the
normal quantity packs offered by most manufacturers.
(b) Difference in the a-priori expectations about the spread of price and the actual price spread
Prior to carrying out our data collection, we did not have much idea about the various SKUs and the
pricing range. We had also not expected much variation in the cost per unit. However there was
substantial spread found namely from Rs. 1.41 per 10 gram to Rs. 4.60 per 10 grams.
We had also expected Bingo to be priced aggressively as compared to the market leader Lays as ITC has a
pre-existing extensive distribution network, however they are following more of a Going Rate pricing
strategy and following the market leader.
(c) Impact of the nature of the product on the price spread
1. Packaged snacks are a FMCG and this nature of the product makes it very sensitive to price change.
2. Product is relatively easy to manufacture and hence the branded players have to be careful of new
entrants as well as regional players and price aggressively.
3. Presence of competitive products such as traditional snacks region wise also influence the price
spread of the various manufacturers.

15