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ITC plans to make a match of it
The Hindu Business Line - 27 Feb 2003

Mohan Padmanabhan

‘AIM’, ‘Delite’ and ‘Vaxlite’ may be pedestrian: another set of ‘me-too’ products, collected from the panwallah for 50 paise, used and thrown away. But the real enigma is ‘i kno’, especially from the marketing point of view. Labelled as the collection series, these upmarket sturdier matchboxes (priced at Rs 1.50 for a box of 40 sticks with coloured flints). 100 per cent outsourced from the cottage sector and marketed by ITC with its vast supply chain network, mark the beginning of a new marketing journey- a journey to help befriend the ubiquitous, but hardly noticed matchbox, which can be made to carry much more than mere friction sticks.

Senior company officials say that the project is one more in the line of ITC’s new businesses based entirely on the outsourcing model, and aimed at improving the lot of Indian SMEs and preparing them for international competition.

Speaking to Business Line recently on the brand-building exercise being taken up to make these designer matchboxes go places, Mr. Rajeev Gopal, CEO, Safety Matches Business of ITC, said, "We are trying to convert the matchbox into a high involvement product from being a low involvement one."

The consumer spend in this segment is pegged at a handsome Rs 1,250 crore per annum, and the industry turnover at this point of time is said to be around Rs 800, riding on the back of some 24 billion matchboxes sold annually. While admitting that converting a matchbox into a high involvement product for the not so discerning customer was a Herculean task, Mr. Gopal feels it can be done in stages- distribution first, and then the big bang.

ITC, with core strengths in paper and board, printing and packaging, brand building, trade, marketing and distribution and a proven supply chain management, has taken up this challenge. Says Mr. Gopal: "We are trying to do our bit for the obscure SSI matchbox units, which are dime-a- dozen, but capable of delivering high quality under strict supervision." The company is now working with as many as 20 SSI match units in places like Sivakasi, Kovilpatti and Gudiyatam in Tamil Nadu, and the experience has been extremely rewarding, he points out.

The 50 paise matchboxes account for 92 per cent of the Indian market today, and "our aim is to gradually scale up this 8 per cent segment through quality matches which would be picked as value for money". The initial burst is to make the product as visible as possible, kindle customer curiosity and then see if that punchline could be built around the brand.

What are the Chinese Pyramids or the Easter Island of Statues? General knowledge questions like these are featured at the back of the i kno series, which can be collected. According to the CEO, a matchbox is very much an eastern concept, and what better way to re-kindle knowledge among young minds through safety matches.

The Mangal Deep range of carborised matches, competing with Homelite, and prices the same at Rs 3 for a box of 150 sticks is strictly aimed at the Indian housewife- the helpful tip for her on the pack is "add about one-third a cup of white vinegar to your rinse cycle, and your clothes can come out brighter". Some carry interesting cooking recipes too.

There are also mini crossword puzzles on the back of the inside boxes. Mr. Gopal says the matchboxes, launched only some six months back, will have to first go through the distribution chain in the first year, after which serious brand-building will begin. He conceded that 2003-04 will be a crucial period. Asked on the experience of working with totally unorganised SSIs, he says they are open to ideas, and ITC was helping them build infrastructure and also step up a notch or two in terms of quality. "We are doing out bit to help them raise their capabilities to upscale at short notice, as volumes drive this market," said Mr. Gopal. On the kind of volumes required, he said there are bundles of 600 matchboxes, and "we need to push at least 10,000 bundles per month".

Asked why ITC zeroed in on matchboxes, Mr. Gopal said the company has had a long association with this product, from 1991 to 1996, when complete matchboxes outsourced from the market were being exported (as part of the company’s merchant exports business) to countries in Africa, South America, West Asia and New Zealand.