Objective

The main objective is increasing its revenue margin from 10% to 15-20% and maintaining it in the Parle-G brand for the parle company.

Problem Statement

The revenue margin gets decreased due to increase in raw materials cost. The company is in situation that it cannot increase price to retain the original revenue margin due to its Value for money (VFM) perception among consumers, its competitors and customers are switching to other premium brands because of increase in their income level.

Chosen Alternative

The alternative to overcome the problem is reducing the grammage of different SKU and shifting their focus from INR 4 to INR 5.

Justification

The reason for selecting this alternative is by reducing the weight of packets only they can earn more than 15% revenue margin. Because Parle-G is in maturity stage it cannot increase its price this may lead to decline in sales and they experience this already. And consumers have perception that Value for Money on Parle-G brand it cannot be changed easily.

And over the year the demand for premium brand biscuits are increasing and the revenue from glucose category it get decreasing this due to the increase in income level for households. Due to that they ready to spent more money for premium brand and not for the low brand biscuits.

Since it is in maturity stage the increase in price leads to decline stage. So by reducing the weight can help them to increase the revenue margin. And if it increase price means its competitor will gain more market share from them, this will again reduce their revenue. Since it is a flagship brand they should gain more revenue and should retain the customers.

They should shift its focus from INR4 to INR5. They should stock more INR 5 SKU to dealers and distributors because the difference between INR4 and INR5 is only 5.5gms. For extra one rupee they are spending only 5.5gms extra so this will bring more revenue for them. And they are not increasing price in this. The INR5 packet is already available in the market. They should do this gradually. By doing this gradually people will start buying INR5 packet instead of INR4 because of the more availability of INR5 in shops and more biscuits. This will create impact in consumer’s mind that Parle-G will available in INR5.

People will buy INR5 packet because they are getting more income and they will buy only due to the more grams they are getting than the INR4. And also they should reduce the supply for INR4.

Action Plan

First they should reduce their weight in the following manner

Price Present SKU in grams New SKU in grams

1 16.5 15.88

2 38.5 36.36

3 72.6 68.56

4 82.5 77.91

5 88.0 83.11

This is calculated by based on assumption that for present weights they are earning 10% revenue for earning 15% they should have new weights.

For shifting their focus from main revenue generating INR4 to INR5 they can do following things. After reducing weight they should give 20% extra to INR5. Now INR5 packet will have 99.732 grams and they can offer 100 grams also. They should supply this packet more than the INR4 packet to distributors and retailers. Distributors also accept this because they will earn more revenue and retailers also welcome this for having more revenue and they doesn’t need give one rupee change for the customer.

Consumers initially refuse to buy INR5 packet since they don’t know the extra grams getting. Now parle should show INR5 packets with 20% extra in advertisements. People will think and start to buy INR5 because of extra biscuits they are getting. And it won’t affect VFM perception because for extra money they are getting extra biscuits. When the sales for INR5 gets increase means they should further reduce the supply of INR4. And they should reduce the INR4 supply as much as possible. This is due to some customers will not change from INR4 and to meet the competitors.

Once the customer become familiar with INR5 packet, Customer will feel and thinks that Parle-G will be available only in INR5 packet. When majority of their revenue started to coming from INR5, they can further reduce the INR4 supply. During this course of time the revenue will be less due to the additional grams giving to the customers. Then they can withdraw the 20% extra offer. And they should do this at least after 3-5 months INR5 getting familiar.

Then company can gain their expected revenue. Customers will also not look for INR4 since them familiar with INR5 packet. In glucose category since Parle-G is market leader the customer will not move to other competitors easily. Consumers will buy which are readily available to them. So Parle should take care of supply chain. It should have adequate stock to meet the customers all the time. Then customer will not go for competitors.

Customers are switching to other category they should not focus only on Parle-G. And also their revenue margin in premium category is 25-30% which is more than the glucose category. They should try to retain their existing customer rather than getting new customers for glucose category. They should increase their sales in other premium brands. So they dependency on Parle-G for revenue will get decrease. So the revenue for company will increase if they get more revenue on other brands. Every product has decline and death. They should not depend only on Parle-G.

If parle act according to this plan their revenue can increase to 15-20%.