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Project Title: Strategies adopted by ITC in FMGC

SUBMITTED TOWARDS FULFILLMENT OF

POST GRADUATE DIPLOMA IN MANAGEMENT
(Approved by AICTE)

ACADEMIC SESSION
2019-20

Submitted by: Faculty Guide

Akshay Surana: 18PGDM002 Name: Dr.Veeresh Sharma
Ayushi Gaba: 18PGDM010 Professor: Strategy Implementation
Basant Surana: 18PGDM012 IMI Kolkata
Jasmeet Singh: 18PGDM022
Shubham Chhajer: 18PGDM046

INTERNATIONAL MANAGEMENT INSTITUTE KOLKATA

2/4C, JUDGES COURT ROAD, ALIPORE
KOLKATA 700027
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TABLE OF CONTENTS

1. Executive Summary 3
2. About the Company 4
3. Acknowledgement 5
4. Abstract 6
5. About 7
6. References 45
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EXECUTIVE SUMMARY

The FMCG sector in India has played a vital role in the growth and development of the country. Fast
moving Consumer goods also known as consumer packaged goods, are those goods which are sold
quickly at relatively low costs. Some examples of FMCG includes packaged goods like soaps,
toothpastes, detergents, shaving products, packaged food products etc. This report is all about FMCG
sector of ITC limited. ITC limited is the company which is dealing mainly in goods comprising Food,
cigarettes and Cigars, personal care, Education and Stationary Products, Branded apparel, Incense Sticks
and Safety Matches, Hotels, Agri-business, Paperboards& Specialty Papers, Packaging, and Information
Technology. In terms of global ranking ITC is the 6th largest FMCG company in the world. ITC is the
first Indian company and the second in the world to win the prestigious development gateway award.
Indian Tobacco Company also won $100,000 amount for its trailblazing ITC e-Choupal initiative in the
year 2005which has achieved the scale of movement in rural India.
Project:
1) Provides all the crucial information on ITC required for business and competitor intelligence
needs.
2) Contains a comprehensive study of the major internal and external factors affecting ITC
performance in the form of SWOT analysis as well as breakdown and thorough examination of its
strategies.
3) Major factors contributing to the success and failure of Indian Tobacco Company.
4) Analysis done through charts, Bar graphs and Boston Consulting Group(BCG) Matrix.

With this project report we have tried to understand the different business processes and strategies
identified and implemented by the FMCG Company, as well as analyzing its strength and weakness
as compared to other company and its competitors. Our project is mainly focused on making ITC’s
Comprehensive study on its present position and strategic option adopted by the firm. It will begin
with tracing back the history, positioning and strategic reasons for the activity undertaken by the firm.
It shall illustrate through data, include background, information that is significant from the point of
view of Strategy Implemented by the firm. This project report will critically evaluate the
implementation of the strategies adopted by the organizations in terms of its success and failure.
This project report also includes recommendations to the organization for further improving
implementation for sustaining competitive advantage.
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About the Company

ITC Limited or ITC is an Indian conglomerate based in Kolkata, West Bengal. Established in 1910 as the
Imperial Tobacco Company of India Limited, the company was renamed as the Indian Tobacco Company
Limited in 1970 and later to I.T.C. Limited in 1974. The periods in the name were removed in September
2001 for the company to be renamed as ITC Ltd.2005-09, by Boston Consulting Group. The company
completed 100 years in 2010 and as of 2018-19, had an annual turnover of US$10 billion and a market
capitalization of US$52 billion. It employs over 34,000 people across India and is part of Forbes 2000 list.

“Mission”
To enhance wealth generating capability of the enterprise in a globalizing environment, delivering superior
and sustainable stakeholder value.

“Vision”
Sustain ITC position as one of the India’s most valuable corporation through world class performance
creating growing values for the Indian economy and company’s stakeholder.

Core values of ITC

ITC core values aims at developing a customer focus, high performance organization, which creates value
for its stakeholders. Core values are based upon following factors:
 Trusteeship: As professional managers, we are conscious a-that ITC has been given to us in “Trust”
by all our stakeholders. We will actualize stakeholder value and interest on a long-term sustainable
basis.
 Customer Focus: We are always customer focused and will deliver what the customer needs in
terms of value, quality and satisfaction.
 Respect for people: We are result-oriented, setting high performance standards for ourselves as
individuals and teams. We will simultaneously respect and value people and uphold human-ness
and human dignity. We acknowledge that every individual brings different perspectives and
capabilities to the team and that a strong team is founded on the variety of perspectives. We want
individuals to dream, value differences, create and experiment in pursuit of opportunities and
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achieve leadership through teamwork.

 Excellence: We do what is right, do it well and when. We will strive for excellence in whatever we
do.
 Innovation: We will constantly pursue newer and better processes, products, services and
management practices.
 Nation orientation: We are aware of our responsibility to generate economic value for the nation.
In pursuit of our goals, we will make no compromise in complying with applicable laws and
regulations at all levels.

Working sector of ITC limited: -

1. FMCG
 Foods
 Personal Care
 Cigarettes
 Branded Apparels
 Incense sticks & Safety matches
2. Hotels
3. Paper Boards & Specialty papers & Packaging
4. Agri-Business
5. Information Technology

Journey
Initially, cigarette was the sole product. Later in the year 1925 the company started its packaging unit which
now is considered to be the most cultured packaging house. In 1975, ITC took a step as a welcome gesture
and commenced the Hotel Business, which was their first move towards the hospitality sector. In the year
1979, the company started its Paper Boards and Specialty paper units.
In the year 1990, the company involved itself in the Agri Business, the basic agenda of the business was to
export agricultural commodities. Today, this division of Agri business is one of the India’s largest exporter.
The company started its lifestyle business i.e. garment business in the year 2000, with the brand name Wills
and John Players in 2002.
In the same year i.e. 2000 the company was involved in business-friendly solution as a result they got into
IT Business.
In the year 2001 ITC involved itself in the Food business with the introduction of Kitchen of India, then in
2002 ITC entered the confectionary and staples segments with the launch of the brands Mint-o and
Candyman confectionary and Aashirvaad Atta (wheat flour).
With the name of Sunfeast ITC entered into biscuits segment in the year 2003. In the year 2007, they entered
snacks category as Bingo. In 2010, ITC launched Sunfeast Yippee and with this they were into noodles
segment.
2002 – Came into safety matches and incense sticks business, educational and stationary business which is
presently recognized as India’s largest notebook brand named Classmate.
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2005 – Addition of Personal Care to its business with products like Vivel, Superia, Fiama Di Wills, recently
they added Engage one of India’s first range of couple’s deodorant.
The company being in FMCG, Personal Care, Branded Apparels, Incense Sticks and Safety Matches and
is becoming leading player in different segments and giving a tough competition to HUL, P&G, Britannia,
Parle, Peter England, Levi’s, Godfrey Philip India Ltd, Nestle, etc.

Categories

1) Foods – One of the fastest growing foods businesses for ITC is branded packaged food driven by the
factors like market standing and consumer franchise of its popular brands - Aashirvaad, Bingo!, Sunfeast,
Fabelle, Sunbean, Yippee! Kitchens of India, B Natural, ITC Master Chef, Farmland, mint-o, Candyman
and GumOn. In today’s world Food Businesses represents in multiple categories in the market - Staples,
Confectionery & Gums, Ready to Eat Meals, Snacks, Biscuits, Chocolate, Noodles & Pasta, Beverages,
Dairy, Spices, Coffee and Frozen Foods.
ITC's commitment to the health and safety of its consumers ensures adherence to the highest levels of
safety, quality and hygiene standards in manufacturing processes and in the supply chain. The business
keeps thriving to invest in every department of manufacturing, marketing and distribution to make sure
that it can capitalise on its emerging opportunities and fulfil its aspiration of being one of the most reputed
deliverable of the Branded Packaged Foods in the country.

Positioning under Food Category

Backed by significant investments in product development, innovation and manufacturing technology,

ITC’s Foods portfolio includes staples, spices, biscuits, snack foods, instant noodles, confectionery and
ready-to-eat meals. The success of this business is driven by the popularity of its seven brands -
Aashirvaad, Sunfeast, Bingo!, Kitchens of India, mint-o, Candyman and Yippee. New variants were
introduced under the Sunfeast Dream Cream and Dark Fantasy Choco Fills range. In the snack food
segment, ITC introduced an innovative offering called Tangles and Mad Angles Masti Chaat. ITC also
introduced mint-o Ultra mintz in the confectionary category.

2) Personal care- ITC's Personal Care portfolio has received encouraging consumer response and is
being progressively extended nationally under the category 'Essenza Di Wills', 'Fiama', 'Vivel', 'Engage',
'Savlon', 'Charmis', 'Shower to Shower' and 'Superia' brands. In connection with ITC’s aspiration to be
India’s premier FMCG company known for its consumer trust and world class trust it has taken steps into
the Personal Care business in the year 2005. ITC has gained insights through its widespread consumer
engagements that have provided the platform for its R&D and same for its Product Development teams to
develop and underwent superior, differentiated products that meet the consumer's stated and focusing on
their utmost innate needs. The formulation of the product uses globally recognised safe ingredients,
subjected to the highest standards of safety and performance.
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Positioning under personal care

During the current scenerio, the Personal Care Products business fortified its skincare segment with the
launch of Vivel Cell Renew, comprising of Body Lotion, Hand Crème and Moisturiser. Introduction of
Fiama Aqua Pulse deodorant was also commenced in target markets. ITC’s Personal Care Products offer
unique and superior value propositions to discerning consumers. This, along with investment in R&D,
technology and world-class manufacturing processes it has enabled the business to capture a significant
share of the market in a short duration of time, despite knowing the fact that there is a high degree of
competition, especially from established players like HUL.

3) Education and Stationary- ITC announced its entry into the Education and Stationary business with
its Papercraft business placed in the premium segment in 2002 and in the later stage they went into the
expansion into the popular segment with its classmate brand in 2003. By the year 2007, Classmate has
became the largest notebook selling brand in the country. Together, Classmate and Paperkraft offer a
range of products in the Education & Stationery space to the judicious consumer, providing unmatched
value in terms of both product & price. ITC is also the creator of India's first Ozone treated environment
friendly Elemental Chlorine Free (ECF) pulp, paper and paperboard. ITC mixes its knowledge of,
printing, conversion and image processing garnered from Packaging & Printing Business with its building
of the brand value and trade marketing and distribution intensities resident in its FMCG business to offer
superior value products to consumers.

4) Lifestyle Retailing- Wills Lifestyle offers authentic and real apparel which is Built on the promise of
purity, quality and craftsmanship, which is 100% natural fiber. Offering a crafted selection of
contemporary formals and casual wear. Inspired by the unique art and handicraft ethnic to diversify its
clothing sections in the different regions of the country, and it has also combined with Western silhouettes
for the Global Indian.

5) Safety Matches- In this category, ITC offers brands like AIM, Homelites, Ship Superior, Cheeta fight,
kapas etc which are well known across the different parts of the country.

6) Agarbattis & Dhoop- ITC’s business strategy aimed at creating multiple drivers of growth in the
FMCG sector, for which the company started manufacturing and marketing Agarbattis (Incense Sticks)
Sourced from various small scale and cottage units in 2003. This helps the business in leveraging the core
strengths of ITC in nation wide distribution and marketing, manufacture of high quality paperboards,
supply chain management, brand building and the creation of innovative packaging solutions to offer
Indian consumers high quality Agarbattis & Dhoop. With its participation in the business, ITC aims to
enhance the competitiveness of the small-scale and cottage units through its matching R&D based product
development and strengths in trade marketing and distribution. In association with ITC's Triple Bottom
Line philosophy of every business contributing to the nation's economic, social capital and environmental
dynamics Mangaldeep agarbattis are manufactured by small scale and cottage units, providing livelihood
opportunities for more than 7,000 people. Mangaldeep Agarbatti is manufactured at various centers across
the domestic region and helps in standardizing the process which are followed to ensure the same quality
across locations.

7) Cigarettes- ITC is the market leader in the cigarettes in India. ITC has leadership position in every
segment of the market in the domestic region due to its wide range of invaluable brands in the Cigarette
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segment. ITC’s policy in cigarette sector mainly focuses on consumer, unrivalled commitment to quality
and innovation. ITC also has more than a hundred years of expertise in developing products to match the
evolving taste of the consumer. ITC’s wide range of brands includes, Classic, Insignia, Gold Flake,
American Club, Navy Cut, Players, Scissors, India Kings, Capstan, Berkeley, Bristol, Flake, Silk Cut,
Duke & Royal. In overseas markets, ITC's cigarette business continues to maintain high standards of
international quality and competitiveness. ITC has launched its hand rolled cigar, Armenteros, in India in
the year 2010. Armenteros cigars are hand rolled to perfection, providing an unmatched balance of
Flavor, Aroma, and Taste for cigar connoisseurs. Right from holding the cigar between your fingers,
wrapping your lips around it and watching the tip of the cigar come alive, it soothes all your senses with
its smooth and earthy texture.

PORTER’S FIVE FORCES

1. Bargaining power of suppliers(low): ITC consumer product faces low supplier power as it deals
in huge volume of goods and have direct access to its distribution network. Due to constant
pressure of taxes on tobacco, ITC has created a separate division for distribution. Earlier
distribution was a part of firms cigarette division. ITC’s innovation e-choupal also helped the
firm in a way to have direct access to products and faster delivery.

2. Threat of substitutes(low): The threat of substitutes were comparatively low as ITC strong
consumer base and brand power. Its competitor Godfrey Philips prices were strategically kept low
to capture market share of gold flake. In order to fight this, ITC launched a similar variant which
was cheaper and smaller in size. ITC’s diversification strategy has further helped the firm in
keeping its hold over market share.ITC has launched 20 flavours of bingo which was
comparatively huge in number than its competitors lays and Frito Lays. It also launched new
flavours for its yippee noodles which is giving tough competition to Nestlé’s maggi.

3. Threat from new entrants(low):.FMCG sector is already dominated by brands like HUL, P&G,
Britannia ,Nestle, Patanjali and ITC.. Also because the capital requirement in this sector is high.
Further, these companies have maintained a direct and strong control over its distribution
network.which makes it difficult for the new player to invest in this sector .One of the many
reasons is also product differentiation as this companies has already launched variety of products
and its variants in different price segments.

4. Bargaining power of buyer(low): Bargaining power of buyer is low as the nature of product is
addictive.

5. Competitive rivalry(high): There is a tough competition between established brands like HUL,
Parle, Nestle etc over price.Every industry indulging in product differentiation are providing
customers with numerous varieties to switch to other products. Therefore, price sensitivity plays a
major in increasing rivalry between competitors in this sector.
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BCG Matrix

SWOT Analysis

Strength Weakness
Brand Image
Distribution Network Dependence on Tobacco Revenues
Efficient Management Negative association of Tobacco
Diverse Business
High quality of products & services

Opportunity SWOT Threat

Rural Market Competition, domestic and International
e-Choupal Increasing Tax rates on cigarettes
Increased spending power of rural Excise duty on unfiltered cigarettes
sector
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IMPLEMENTATION OF VARIOUS STRATEGIES IN FMCG SECTOR BY ITC

Over the years ITC has been doing Surrogate Advertising for its Wills brand of Cigarettes.
For various segments like Ashirvaad, Bingo, Sunfeast in Food products Fiama Di wills, Engage in
Personal care segment and education stationary segment Classmate ITC has been using both Above the
Line(ATL) and Below the Line(BTL) advertising strategies with the frequent advertisement appearing on
Televisions and Newspapers respectively.

Major Strategies followed

1) Distribution network: ITC followed massive distribution Channel due to its core business i.e.
Tobacco. In present scenario ITC’s, Bingo and Sunfeast are available at nearly 1.8million outlets
whereas Parle is available at only 1.5million outlets.
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Distribution Network

COMAPNY HUB FACTORY

Carried and Forward Agent

Wholesale Dealer

Small wholesale Dealer

Retailer

Consumer

2) Market Differentiation: ITC followed differentiation strategy in each and every segment for
e.g. In case of biscuits it introduced orange Marie, butter scotch cream biscuit, chilli flakes and
honey flavour under sunfeast brand. ITC food launched sunfeast pasta a whole wheat based
product which mainly targeted children. They are expected to give tough competition to its rival
brands like Nestlé’s Maggie noodles.
3) Cost Control Strategy: ITC realised that they offer products at a price which more or less equal
to what their competitors such as HUL, Parle, Nestle etc. Are offering. So they followed cost
control strategy in almost every segment. ITC’s printing and packaging business provided high
quality cost effective and innovative packaging. ITC benefitted over its competitors owing to its
major innovation i.e. electronic procurement system called e-choupal which also contributed in
increasing its revenue.
4) Diversification of products: ITC has diversified it products range for e.g. Bingo came up with
21 new flavours in comparison to what its competitors lays or Frito which has less in number.
And it also launched few different flavours inn noodles “sunfeast yippee” as well.
From cigarettes, ITC launched its hand roll cigar which is called Armenteros. In Paper and
packaging industry ITC launched paper craft “eco friendly premium business paper” and 2010
ITC launched its art stationary brand i.e. colour crew. In apparel section, it has two brands one is
Wills Lifestyle which is a premium brand and the other is John Players concentrated on mass
segment.
5) Extensive Advertising: ITC hired expert professionals and popular brand ambassadors in the
country to make their products famous. Famous taglines like “jab Leila ko karna tha impress toh
majnu ne khayi mintofresh” has successfully passed the test of time and is still widely
remembered. ITC captured major media channels such as MTV, star world and mass hindi
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channels like zee and star TV and news 19 channels. It also has around 20 spots on the variety of
radio channels and advertises in most leading national daily newspaper. ITC strong financial hold
helped in spending huge amount on the marketing of its product.
6) Positioning of ITC business products: For ITC, entering the Food Business category was itself
a drastic strategic decision for ITC. ITC core business was suffering a setback owing to several
factors like major competitors were also coming up with their products, government bans on
advertising and smoking. Hikes in the excise duty for cigarettes are some of the factors which led
ITC to utilise its surplus in the packaged food business where it saw huge potential.

Current strategies of ITC

1) In current scenario, ITC’s major aim is to accelerate growth in non cigarette business. ITC has
lined up 25crores investment in 65 projects in an attempt to move away from the cigarette maker
tag.
 It is working on 8 point strategy. Under 8 point strategy ITC wants to bring in
products and services which are premium or differentiated to cater to the future
needs of the consumer.

2) ITC has been working on the strategy for factory - to - retail point distribution within a day. ITC
aimed at “creating new ITC by shifting its concentration from cigarette to its other business
segment especially packaged food segments.”
3) One of the strategic aims is to stay closer to the retail market. ITC made strategic investment in
creating physical infrastructure and capacity building.
4) ITC’s new competitive strategy aims to create Indian brands that it can take to overseas markets
to stay more competitive in the domestic market and to outrun competition.
5) In order tom fulfil its value creation plan ITC is ready to bear cost challenges and depreciation for
the time being.
6) ITC wants to concentrate in creating brands that will bring royalties to India rather paying
royalties to Multi nationals for selling their brands. It wants to become self sufficient and self
reliant by giving India its own brands which are powerful.

Future Strategies of ITC

1)
2) No new investments in cigarettes-ITC’s future strategies aimed at improving growth of non-
tobacco business. It wanted to outdistance itself from the tag of cigarette maker. For the first
time in ITC’s business contribution from tobacco segment was less than half which was an
indicator that ITC’s age old strategy of limiting dependence on cigarettes for revenue and
transforming itself into consumer goods main is giving desired result.
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3) New ventures in agri- business- By this time, ITC have become the country’s second largest
exporter of agri-business. It has major scope in this segment therefore it should continue
exploring in this segment. Its unique strength in this business is due to the linkages it has
formed with farmers which was possible due to its major innovation i.e; E-CHOUPAL. It
currently focuses on exports and domestic trading of:
-Feed ingredients- soya meal
-Food Grains- wheat &wheat flour, rice, pulses, barley and maize.
-Marine Products- shrimps and prawns
-Processed fruits- Fruit purees/ concentrates, IQF/Frozen fruits, organic fruit products
-coffee
3) High degree of promotion- ITC being backed strong financial support concentrated on
marketing of its products by investing huge amount of money in advertising. This also important
to establish itself as consumer good brand in the minds of consumer as it shifted from tobacco to
FMCG and other segments. ITC hired expert professionals and popular brand ambassadors in the
country to make their products famous.
4) Use their distribution network to reach rural Areas
5) Bypass attack through economy and budget Hotels
6) Distribution and pricing of food products
7) Tie ups and acquisitions to boost IT business

CIGARETTES

1) Wide range, market leader in every segment

2) Tax measures became harsher in 2007
3) Volume sales declined
4) ITC had to tweak its pricing strategy. Employed differentiated pricing
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5) Future looks promising

 Rising disposable income and lower aversion to smoking
 India has low per capita cigarette consumption compared to the world

Future Strategies
1) Strategic targeting of women and children
2) Flavoured cigarettes
3) Increasing exports
4) Use other businesses to provide high visibility
5) Naming other brands like Wills Lifestyle

BCG Matrix

FMCG
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1) Entry into branded and packaged food business in 2001

2) Food business is represented in 4 categories
a. Ready to eat food
b. Staples
c. Confectionary
d. Snack foods
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BCG Biscuit Industry

Current Scenerio

1. Entering into less competitive or unexplored markets

2. Distribution network
3. Market differentiation
4. Leveraging technology
5. Variety in offering
6. Extensive advertising
7. Quality product

Future Strategies

1) Cut down prices in the biscuit domain

2) Penetrate the rural market
3) Low fat chips
4) Promote
5) Conduct public events
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Hotels

Categories

1) ITC Hotels luxury collection

2) Welcome Hotels
3) Fortune Hotels
4) Welcome Heritage

Future Strategies
1) Invest more to grow more
2) Economy and budget hotels
3) Political contacts
4) Go global – target east
5) Explore real estate
6) Tie ups with airlines
7) Extensive use of internet
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IT sector

1) Availability of high quality man power

2) Cost competitiveness
3) Sector on a high growth trajectory

Future Strategies

1) Business in European countries

2) Reduce dependence on USA
3) Strategic acquisitions
4) Get government contracts through controlled pricing
5) Use of already established ITC brand
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ITC Paper Boards and Specialty paper

1) Set up in 1925
2) Strategic backward integration for ITC cigarette business
3) Country’s largest convertor of paper board into packaging
4) Positioning as the first supplier of high value added packaging Categories:
 Packaging
 Graphic
 Specialty
 Papers

Future Strategies

1) Pre emptive defense – Acquire rivals

2) Go global
3) Latest technology

ITC Agri Commodities and Rural Services

1) Second largest exporter of agri products
2) Domestic sales in excess of Rs 1500 crore
3) e - Choupal initiative
4) Pioneered the cultivation and development of leaf tobacco in India
5) Future strategies for this segment include
 Building trust
 Training initiatives
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BIBLIOGRAPHY

https://www.business-standard.com/article/management/40-years-ago-and-now-a-journey-of-
transformation-114120700702_1.html

http://www.itcportal.com

https://en.wikipedia.org/wiki/Fast-moving_consumer_goods

https://www.marketing91.com/swot-analysis-itc/

https://economictimes.indiatimes.com/industry/cons-products/fmcg/itc-seeks-to-get-fmcg-
business-to-go-faster/articleshow/68295944.cms

https://www.afaqs.com/news/ooh/52686_itc-launches-frontal-attack-on-rival-brands-pepsicos-
tropicana-daburs-real