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Bingo: More for less
Business Standard - 19 Oct 2009

ITC has added 50 per cent more content without increasing prices.

ITC is adding more spice to Bingo. The packaged snacks brand, which has a 13 per cent market share, has added 50 per cent more content to all its packs. The spicier part of the new strategy is that the company has not increased prices in the western region — its biggest market.

The move, says ITC, is aimed at “maximising revenues by driving high sales volumes in the high potential western India market”.

Chitranjan Dar, Chief Executive, Foods Division, ITC, says schemes and promotions are a part of the marketing mix that are deployed at various times through the year. The objective obviously is to build a greater brand franchise through enhanced consumer experience and encourage repeat use and trials.

Similar offers are there across different regions of the country, though the exact quantum varies from region to region. Dar says the move has paid off as Bingo has attracted a sizeable number of new consumers.

The latest move has, however, taken everyone by surprise as the prices of Bingo’s inputs — corn, oil, soya, potato and food grains — have increased sharply in the past one year. Dar says the company had planned for this activity much earlier and hence budgeted for the commodity price spike. However, “we have streamlined several other costs to make this happen,” he says.

ITC’s procurement and manufacturing synergies across divisions have helped it to reduce costs for Bingo as well. Its e-choupal model for direct procurement is also well known, under which ITC partners with over 100,000 farmers for spices and wheat procurement. This kind of rural pedigree is hard to beat.

Experts say that Bingo’s move may have been prompted by the fierce competition in the snack foods space. For example, PepsiCo has started giving 20 per cent extra content with its flagship brand Lays and Parle Products has started offering 50 per cent extra on Musst Chips and Stix.

Anand Ramanathan, Manager, Business Performance Services, KPMG, says, “The snack foods market is certainly heating up in India with the ongoing war between the three biggies (Pepsico, ITC and Parle). ITC and Parle Products are expected to garner bigger market share this year with extremely aggressive marketing and advertisement plans,” he says.

According to analysts, ITC is eating into the market share of PepsiCo’s Lays, which now leads the pack. While Lays has a market share of around 48 per cent, Parle’s Musst Chips and Musst Stix have a combined 5-7 per cent market share.

But Bingo has tough competition from Parle which is now eying a 25 per cent market share through an aggressive marketing and distribution strategy. Mayank Shah, Group Product Manager, Parle Products, says, “We have witnessed good demand for our snacks. More people are trying our products and we will continue doing activities to generate more trials.” Parle has increased the volume of Musst in west, east and north and is now in the process of replicating it in the south.

But Parle and Frito Lay can hardly afford to under-estimate Bingo. Dar says the company has several other surprises up its sleeve, which are at various stages of development and completion. Though he refuses to give details, analysts say Bingo, which is already worth Rs 400 crore, has the ability to shake up the market.

Since variety is the core of a snacks brand to retain consumers’ interest, the company asked the chefs at its hotels to suggest 16 flavours with twists like bindaas masti chaas, chatkila nimbu achar and tandoori paneer tikka-flavoured potato chips, chilli and tomato-flavoured mad angles - inspired by khakras - and other snacks.

The second part of the variety came through irreverent and fun campaigns. Consumers were asked to design the ads for Bingo using the angular shape of the chips as the central theme. Marketers call this ‘crowd sourcing’, which serves two purposes — it engages the end-consumer and the campaign is done at the lowest possible cost.

Bingo also ensured that it reached its audience through every possible medium. It first created a website with offers, online games, downloads and even mobile games. The site was advertised with banners on websites such as Yahoo!, Rediff and Sify.

Analysts believe the Bingo story is also about well-leveraged distribution. The company, for example, distributed more than 400,000 large racks, to display the brand at all points of sale. The racks created a huge impact.

The importance of Bingo is evident from the fact that potato-based snacks are the largest product segment (85 per cent share) in the Indian snacks market, followed by snack nuts, chickpeas and other pulse-based savoury snacks.

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