Case of Natural’s Ice Cream

Group members

Mrugesh Bagadia – M 1102

Prateek Bisht – M 1107

Jyoti Dikshit – M 1111

Rupa Nayak – M 1139

Jay Shah – M 1150

Shibani Shah – M 1152

Preface

The MMS course is well structured and integrated course of business studies. The main objective of practical training at MMS level is to develop skill in students by supplement to the theoretical study of business management in general. The MMS course provides students with a fundamental knowledge of business and organizational functions and activities, as well as an exposure to strategic thinking of management.

In every professional course, training is important factor. Professor’s gives us theoretical knowledge of various subjects in the college but we are practically exposed to such subjects when we get the training and learn the practical real time case-studies. We can learn about various departmental operations being performed, which would in return, help me in the future when we will enter the practical field.

Case studies are particularly useful in depicting a holistic portrayal of a client's experiences and results regarding a program. Case studies are used to organize a wide range of information about a case and then analyze the contents by seeking patterns and themes in the data and by further analysis through cross comparison with other cases. We get help to analyze any situations i.e. we can relate it to some other case and find out the solution.

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Acknowledgement

With immense pleasure, we would like to present this project for Natural’s Ice creams. It has been an enriching experience for us to undergo the case-study of Natural’s Ice creams. As the students of NAVINCHANDRA MEHTA INSTITUTE OF TECHNOLOGY AND MANAGEMENT we would like to express our sincere thanks to Mrs. Anita Bobade for giving us the case-study of Natural’s Ice creams.

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Contents

Case Facts....................................................................................5

Key Issues..................................................................................21

Analysis......................................................................................21

Conclusions................................................................................24

References..................................................................................25

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Case Facts

Origin

Natural’s Ice creams was started in 1984 by Mr. R. S Kamath with an initial investment of Rs.3Lacs. This was the 1st business venture he embarked on all by himself with the idea of introducing ice creams in a Natural’s way.

Since he had domain experience from his past workings with his brother in his own business-Gokul, a chain of restaurants serving ice creams, fast food and juices. What dawned on him was to introduce ice creams with no preservatives, stabilizers or artificial flavors.

At that moment the market was dominated with players like Amul, vadilal, Kwality so to give them an edge he started adding bits of fruits to the ice creams.

A few months after the outlet opened he introduced 15 new fruit flavors, of which Sitafal was an instant hit. He even introduced Jamun flavor on the feedback of a customer.

Initially he had started with a single outlet of 300 sq.ft in Mumbai, and now he possesses 70 outlets across the country. All the outlets get there ice creams from factory in Charkop, Mumbai.

As the ice creams have no preservatives and fresh fruits are added, the stock must be sold and consumed within a short time period of its manufacturing.

The philosophy is to find the purest and finest ingredients for producing ice cream. This is the reason Natural’s ice cream epitomes the finest ice creams of India.

In 2006 it was voted as one of the top ice creams at the 2 nd consumer Reaction Award conducted by Bhararti Vidyapeeth Institute of Management Studies and Research and a daily newspaper in Mumbai.

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Some of the major players in Indian Ice cream Market

Amul Ice cream

It was launched on 10th March, 1996 in Gujarat. The portfolio consisted of impulse products like sticks, cones, cups as well as take home packs and institutional/catering packs. Amul ice cream was launched on the platform of ‘Real Milk. Real Ice Cream’ given that it is a milk company and the wholesomeness of its products gives it a competitive advantage.

In 1997, Amul ice creams entered Mumbai followed by Chennai in 1998 and Kolkata and Delhi in 2002. Nationally it was rolled out across the country in 1999.

It has combated competition like Walls, Mother Dairy and achieved the No 1 position in the country. This position was achieved in 2001 and it has continued to remain at the top.

Today the market share of Amul ice cream is 38% share against the 9% market share of HLL, thus making it 4 times larger than its closest competitor.

Not only has it grown at a phenomenal rate but has added a vast variety of flavours to its ever growing range. Currently it offers a selection of 220 products. Amul has always brought newness in its products and the same applies for ice creams.

In January 2007, Amul introduced SUGAR FREE & Prolife Probiotic Wellness Ice Cream, which was a first in India.

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This range of SUGAR FREE, LOW FAT Diabetic Delight & Prolife Probiotic Wellness Ice Cream is created for the health conscious.

Amul’s entry into ice creams is regarded as successful due to the large market share it was able to capture within a short period of time – due to price differential, quality of products and of course the brand name.

Amul Business Model

Amul followed a unique business model, which aimed at providing 'value for money' products to its consumers, while protecting the interests of the milk-producing farmers who were its suppliers as well as its owners. As milk was a perishable item, the farmer suffered a loss if it was not sold before the end of the day.

Amul bought all the milk offered by the milk producer, made timely payment, and shared with the producers the profit generated from marketing the milk and milk products under the Amul brand name...

Introduction

Gujarat Cooperative Milk Marketing Federation (GCMMF), the largest food company in India, recorded a turnover of Rs 2882 crore ($ 0.65 bn) in 2003-04. Its flagship brand 'Amul' was the market leader in butter, whole milk, cheese, ice cream and dairy whitener. GCMMF was the largest cooperative movement in India with 2.2 million milk producers of Gujarat organized in 10,552 cooperative societies. GCMMF collected 5 million litres of milk per day from its shareholders who owned 3.2 million buffaloes, one million cows and 0.3 million crossbred cows. The Federation's extensive marketing network comprised 3000 distributors and 500,000 retailers spread across the country.

Pricing

Amul's philosophy had all along been to deliver value for money to its customers. Despite being priced economically, Amul maintained its product quality.

Distribution

GCMMF's (Gujarat Cooperative Milk Marketing Federation) formidable distribution network comprised 300 stock keeping units, 46 sales offices, 3,000

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distributors, 100,000 retailers with refrigerators, an 18,000-strong cold chain, and 500,000 non-refrigerated retail outlets.

Advertising and Sales Promotion

Over the years, Amul's advertising philosophy had been "to be simple, fresh and innovative". The clean, emotion-based ads refrained from using hi-tech special effects, and aimed at maintaining the perfect balance between the traditional and the modern.

Mother Dairy ice creams

It was launched in the year 1995 and has shown growth over the years and today has approximately 62 percent market share in Delhi and NCR.

It introduced new flavours like O’blast, an orange based ice cream dessert and the Toffee twist. Its brand Chillz that targeted the entire family was aired as TV commercial with tagline, “Goodness Inside”.

It has range of ice creams particularly targeting children, like the Lic Lolleez Cool buddies. It also targets the segment aggressively by arranging a media blitzkrieg in summers and plans to increase the number of carts outside schools holds contests and promotions offering goodies to them.

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Kwality Walls

It was launched in 1995 as Hindustan Unilever Ltd’s master brand for ice creams. Unilever claims it to be the World’s biggest ice cream manufacturer with an annual turnover of euro 5 billion.

Their product is termed as ‘Pleasure food’, and enjoys great popularity. Some of them are Cornetto, Feast, and Paddle Pop. Also by introducing a new product, Moo, calcium enriched ice cream, the company lured kids and their mothers with its nutritional offering.

Kwality walls have also introduce its retail brand named ‘Kwality walls Swirls’ parlours in tune with the growing number of shopping malls in the country. At present there are 51 parlours across country.

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Vadilal

In 1972-73, the company had 8-10 outlets in Ahmedabad. Gradually, it moved from the city to other parts of Gujarat. By 1985, the company moved towards neighboring states like Rajasthan and Madhya Pradesh. But the expansion was undertaken very methodically and it spent five to six years in spreading the business and then consolidating it.

The Ice Cream industry in India today has a turnover of Rs. 15 billion [US$ 330 million]. A quarter of this comes from the house of Vadilal alone. But that’s no surprise, considering that they have the largest range of Ice Creams in the country – 120 – plus flavors, in a variety of more than 250 packs and forms. The range includes cones, candies, bars, ice-lollies, small cups, big cups, family packs, and economy packs. Something for all tastes, preferences and budgets.

Vadilal offers the widest range of ice creams and frozen desserts (above 250 Stock Keeping units) in the country in packs including cups, party packs, family bricks, dollies, cones and candies, something for all taste, preference and budgets. To meet with the consumer demand on regular basis, Vadilal introduces new flavors for different segments of customers throughout the year.

Vadilal Ice creams come in a wide variety of flavors, with additives such as chocolate flakes or chips, nuts, fruit, and even small candies/sweets. Some of the most trendy ice cream flavors of Vadilal in markets are vanilla, chocolate, strawberry, and butter scotch. Many people like ice cream sundaes of our Happinezz Parlor, which regularly have ice cream, hot fudge, nuts, whipped cream, cherries and other toppings of their choice.

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Vadilal’s concept of serving ice creams with a difference was launched in 1991 with the name “Happinezz”. Happinezz parlors are now popular hangout places for all age groups. But that is no surprise considering that the group has the largest range of ice creams in the country in a variety of flavors, packs and forms.

Brand Promotion

Basically, they are very well known brand in every nook & corner of the country with a strong brand image and high brand recall.

They generally promote their brand through various ways like, Advertisement, Sponsoring Events, and by providing Publicity material (Glow signs, Danglers, Posters, Banners etc.) at their Retail Outlets. They basically look forward to print media as main stay to promote their brand & for the advertisement of their products as well as schemes / offers, as well as TV commercial to cover maximum consumers. They give advertisement in leading National (Hindustan Times, Times of India etc.) as well as popular Vernacular Dailies (like, Gujarat Samachar, Divya Bhaskar & Sandesh in Gujarat, Rajasthan Patrika & Dainik Bhaskar in Rajasthan, Dainik Jagran & Amar Ujala in U.P. & Uttranchal, etc.) and done TVC in leading TV channels like Star Plus, Star News, Cartoon Network, Nick, UTV and Hungama etc,.

At present they do not have any celebrity connected with their Ad Campaigns. However, they take Models for their Product & Brand Promotion.

Sales Network

Vadilal has very strong sales network, they have a sales team network, which covers their entire distributor network. They have a state wise sale team, which generates sales through retail outlets, institutions, Hotels & restaurants, Functions. Here for Sales, Company’ management plays major role like providing various Dealer schemes, consumer schemes etc. Vadilal has one of the widest ranges of consumer schemes in the industry. More sales are generated through new product developments, schemes and lucrative dealer margins.

Network: Plant - C&F – Distributor – Dealers – Consumers

With their supply chain of about 23 C&FA, more than 500 Distributors and over 40,000 Retailers ice cream is widely accessible in most parts of India. Ice cream can be purchased in big tubs and surrounds from supermarkets/grocery

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stores, in smaller quantities from ice cream shops, convenience stores, and milk bars, and in individual serves from small carts or even at public events and places

Plants              Ahmedabad, Pundhra, Gujarat and Bareilly, UP

Above three plants are located in geographically favorable areas with ultra modern production facilities. It is their quality traditions and stringent norms only due to which their plants are accredited with world’s most trusted quality standards like ISO 22000:2005, ISO 9001:2000 and BRC Global Standard - Food: Issue 4

Distribution Network/ C& F agents

The reason for having strong distribution and dealer network is due to the lucrative margin and returns that Vadilal provides to them. Vadilal provides them deep freezers for storage of ice creams, Display sing broads, POP, etc promotional material that helps for in boosting business.

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Market Share of Various Ice Cream players in India

Source: www.dare.co.in/opportunities/other-business-opportunities/ice cream-industry-in-India.htm

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Natural’s Ice Creams Positioning Strategy

Offering 100% vegetarian ice cream in a country like India where religious aspects and traditions hold great importance has given Natural’s ‘an edge’ over its competitors in the market. Moving away from artificial was its ‘Unique Selling Proposition’, which was adored by the Indian consumers.

Natural’s has positioned itself differently by offering wide product variety with reasonable price range, methodology adopted for quality service and through customer’s preferred locations.

Product Range:

Differentiating itself from established market players by offering fruit-based flavors Natural’s has created a niche for itself. Besides the other dry-fruit, chocolate based flavors these ‘fruit-based’ ones became the ‘customer’s choice’. By frequently introducing new fruit flavors like raw mango (pickle flavor) Natural’s served its customer in innovative way adding to their taste.

Seasonal Products Rs.Sitafal 32/-Mango 32/-Tender Coconut 32/-Watermelon 32/-

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Chickoo 32/-Papaya-Pineapple 32/-Peach Apricot 32/-Jack Fruit 32/-

RegularMalai 32/-Butter Scotch 32/-Kaju Kismis 32/-Anjeer(FIG) 32/-Coffee Walnut 32/-Chocó Almond 32/-Chocó Cream 32/-Chocó bite(chips) 32/-Roasted Almond 32/-Kesar Pista 32/-

Physical Structure:

The hand-churn method adopted by Natural’s for its ice cream making gives rise to much denser, creamier and richer structure unlike the industrially or machine made ice cream.

Capitalizing on consumer’s mindset:

Devoid of preservatives and emulsifiers the fresh taste of hand churned ice cream is truly cherished by the people. In this way Natural’s tapped the Indian consumer’s preference for Natural’s and fresh food over the artificial ones and offered exactly the same. It has won the loyalty of its consumers.

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Price:

Offering its variety of products through a reasonable price range Natural’s stood out among its market competitors.

Rs.32 bucks a scoop is perhaps the lowest price among branded ice creams.

Natural’s has consciously priced the ‘seasonal’ as well as the flavours ‘that are available throughout the year’ equally. Its outlet also offers a waffle cone just for an additional Rs.5 against its competitors like Bask in Robbins who charge Rs. 11 for it.

Place:

Demographic and demand analysis for opening an outlet or parlor has helped Natural’s to locate its potential customer base and reaching out to them in more numbers.

Studying the consumer behavior in advance market conditions and realizing the shifting habits of consumers from shop to malls it opened a counter in Mega Mall in Mumbai.

Processes:

Understanding its need to reach out to the customers in highly competitive market along with its outlets in different locations Natural’s has adopted different methodologies to attract its consumers like free home delivery, offering them services on long journeys or picnics.

Following a rigid quality control program at its Mumbai plant they have been successful in maintained their ‘quality product’ status winning the consumers belief.

Physical Evidence:

Providing good ambience, with seating facility at its outlets, it is serving consumers through its hospitable nature.

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Network:

Natural’s has built-up a strong network through its suppliers, franchisees and distributors.

1. Suppliers

Creating dedicated supplier base to obtain the timely delivery of the raw materials required.

Fruits are bought from Metros and APMC market situated in Vashi, Mumbai APMC caters to seasonal fruit requirement and the Metro market supplies off season fruits to the company’s factory located in Kandivli, Mumbai.

2. Franchisees

Carefully selecting franchisees by studying the area in terms of capacity, competitors and demand factor before setting up an outlet.

3. Distributors

Consciously opting for centralized distribution channel from Mumbai given a premium product base.

Facilitating transport through their own trucks and vans for distribution to the outlets in Mumbai, Nasik, Ahmedabad, Bangalore, Pune, Jaipur, Hyderabad, Kolhapur, Shirdi and Goa.

Ahmedabad —1 Outlet

Nasik—1 Outlet

Shirdi—1 Outlet

Mumbai — 52 Outlets

Bangalore – 4 Outlets

Pune – 11 Outlets

Goa – 4 Outlets

Kolhapur – 1 Outlet

Hyderabad – 1 Outlet

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SWOT Analysis of Natural’s

Strength:

No preservatives, stabilizers, emulsifiers. 100% Vegetarian ice cream. Made from fresh fruits. Made from Natural’s ingredients. Rigid quality control at their manufacturing plant.

Weakness:

Ice cream shelf life of 3 days. Poor supply chain management. No promotion strategy except relying on word of mouth. Limited business channels. Relying on old distributors only.

Opportunities:

Potential to become a national player. Increase their profit margin by targeting organisers of events like award

ceremonies, marriages, business meetings etc. Opening retail outlets at high end places like shopping malls, airports etc

Threats:

Health Conscious products from competitors like Kwality walls and Amul which is eating the market share of Natural’s.

Attractive customer services offered by their other competitors.

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Assumptions

Mr. Kamath didn’t believe in spending time on outlet ambience but instead believed his product will speak for itself. It worked as an advantage for him as he was not under pressure to earn high returns immediately.

Mr. Kamath didn’t believe in promoting his product but in word to word publicity.

“Your product should be your best advertisement. Attract customers by taking care of their needs and requirements. A business flourishes if its virtues spread by word of mouth rather than advertising gimmicks. It may be slower, but it is sure path to success”, R.S. Kamath in an interview to Hindustan Times on 15 July, 2008

Whichever methodology he uses to flourish in his business, he believes in maintaining the brand name.

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Natural’s ice cream faced many Challenges like:

1. Indian ice cream market was not only slow but also laborious and production had to be done manually, which meant maintaining the consistency in taste was a huge challenge.

2. His education background poised a problem to him at one point of time. He was unable to handle the taxation issues.

3. He believed in no distribution techniques and he did no promotion of his product.

4. Supply of ice creams from the factory in Charkop imposed a problem of less life span of the ice creams.

5. Since the ice cream contained fresh fruits, it had to be consumed within 24 hours.

6. Natural’s ice creams started facing problems when the market share of its competitors like Amul and Vadilal increased.

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Key Issues• Should Natural’s increase its advertising to reach out to larger segment of

the masses?

• How can Natural’s expand its market?

• How to make a Local Brand into National Brand?

Analysis

• Should Natural’s increase its advertising?

The Indian Market changes at its own speed which cannot be predicted. One cannot walk on the same strategies and plan of actions. Today, the Indian Ice cream Market has changed. There are many national and international players which directly and indirectly act as the competitors to Natural’s. As competitors and there changing patterns or strategies, Natural’s have to be changed in terms of selling methods.

Word of mouth publicity did miracles to the sales. Natural’s showed 25 crores of sales in 2009 and the net profit touched 1.5 crores and is determined to double it in the subsequent financial year. Without any external efforts on advertising, Natural’s found its way into the market and is running at a stable speed.

Natural’s traditionally focused on attracting youth and family with kids by their products. Running on one outlet at initial stage produced fruitful outcomes but then the market changed and so did outlets of Natural’s increased. From the above we conclude that Natural’s is making a steady progress with every passing year and it does not need any advertising gimmicks.

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• How can Natural’s expand its Business?

Natural’s possesses 70 outlets throughout the country but it has limited its reach to the retailers. As it is been seen, there is a boom in the area of business of shopping malls and hotels, many ice cream manufacturing houses have expanded their business. Natural’s should start making use of shopping malls, five-star hotels and airports. It should also provide ice creams to events such as high profile gatherings and other such events. Since Natural’s keeps on introducing new flavors there is no left scope for them so they should shift their focus on pro-biotic products since people have become health conscious and it is a need for diabetic people. To beat its competitors who have already entered the market of pro-biotic products, this can give an additional advantage to Natural’s. As it is been known Natural’s have spread its business in some major parts of west and north but the supply of Ice cream is done from one factory in Charkop located in Mumbai which meant there is a scope of improvement in terms of supply chain management and that distributers should be assigned to make the supply chain easier. When the side-lined problems are eliminated, the focus can be shifted on expanding the business in areas where expansion is possible. Net profit of Natural’s might not be effective in terms of opening new outlets in unreached areas or starting new factory setups. Considering the well-rooted name of Natural’s, hands are open by the people as well as the market for Natural’s to establish and wide spread its business.

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How to make Natural’s into National Brand from local brand?

As seen in the above picture, Natural’s do not want to expand their business Nationally or Internationally.

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Conclusions

• Natural’s ice cream has already achieved its success sans advertising.

• It has also created a niche which keeps at bay the threats posed by new entrants.

• If it follows the given recommendation, it can retain its competitive edge & expand its market.

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References

• Nuzhat Aziz, Hindustan Times, Mumbai, July 15, 2008

http://www.hindustantimes.com/StoryPage/Print.aspx?Id=db0863ac-c29e-4587-8e1a-379dc0af5f6fSmallideasbigchanges_Special

• Jhilmil Motihar, India Today , Cold is gold,  November 27, 2008

http://indiatoday.intoday.in/site/Story/21118/ECONOMY/Cold+is+gold.html

• http://www.Natural’sicecreams.in/company/media.asp

• Manglorean Times, Mumbai Dec 14, 2008

http://www.mangalorean.com/news.php?newsid=104990&newstype=local

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