Promotions

Objective: Persuasive advertising

Development of the Campaign:

Promotions are of 2 kinds for a product.

Above The Line (ATL)

1. Television Commercials:

2. Print 

     

                                                 

Below The Line(BTL)

1. Online:

 

                                                 

2. Sponsorship:

• MTR has been sponsoring magic shows and theatre performances which resulted in high brand equity and recall. 
• Holds live demonstrations and gives out free samples to people visiting the performances, before and after the show.

Shortcomings:

• Not enough clarity on the differentiators. Though they are the market leaders, MTR till now hasn't been successful in creating an impact in the minds of its perspective consumers.
• Not enough focus on marketing.
• Doesn't explore alternate media as such. 
• NO proactive or defensive marking strategies applied.
• At most, it is position defense, trying to occupy the most desirable market space in consumers' minds.

According to a press release, MTR spent 3% of its sales revenue on advertising and marketing till 2009. It has now gradually increased to 14-16% and expected to stay that much till 2015.

MTR advertises its RTE products 14 times more in terms of average ads scheduled per day over an year.

But most of the promotional activities are concentrated on their masalas and breakfast mixes ranges as the RTE industry in India is being seen as something a little futuristic. People are not yet ready to outsource their meals, even though the urban population are embracing RTE positively. 

Being an FMCG product and more importantly, commanding the kind of value the brand offers, the forgetting rate is relatively low. But as a processed food item in India, so is the purchase frequency. Buyer turnover is also reasonable with a lot of big names already in the market and many local brands coming up.

As of now, MTR did not foray into personal or direct marketing.

Distribution Channels

According to american marketing association: distribution is 1. (economic definition) A study of how factors of production are priced in the market place, i.e., the de-termination of rents, wages, interest, and profits. 2. (marketing definition) The marketing and carrying of products to consumers. 3. (business definition) The extent of market coverage.

According to american marketing association: channel of distribution is an organized network (system) of agencies and institutions which in combination, perform all the functions required to link producers with end customers to accomplish the marketing task.

Marketing Flows In The Marketing Channel:

Consumer and Industrial Marketing Levels:

FOR MTR READY-TO-EAT

• Initially the distribution chain wasn't scientifically mapped out. Distribution was random and based on gut-feel. MTR was in 200 towns in the East and North where the brand had no equity.
• Adoption of a two-pronged distribution strategy:  “In the North, West and East, we’ve strengthened our distribution network in the top 100 cities and towns and have shut down (operations) in 70-80 towns. Simultaneously increased presence in South India where the brand is virtually a household name." says Jyotiroop Barua, Vice-President, Sales and Distribution. (www.outlookbusiness.com)
• MTR is focussing on "distribution push & advertising pull" to make its presence felt.
• Also, the consumer base for its RTE range is mostly the urban and suburban markets. So distribution is also concentrated to cities and larger towns.
• Type of distribution intensity- Intensive in Selective areas

Pricing

Product Mix Pricing:

Product Mix (AMA): The full set of products offered for sale by an organization. The product mix includes all product lines and categories. It may be defined more narrowly in specific cases to mean only that set of products in a particular product line or a particular market. 

Product Mix Pricing: When a product is a part of a product mix, a different price-setting must be considered as opposed to it being a single product..Here the Company searches for a set of prices that maximize profits on the total mix. 

At MTR, their product mix consists of :  

• MTR Snackup
• Masala Powders
• Sweet Mixes
• Breakfast Mixes
• Ready to Eat
• Ready to Cook
• Drinks
• Vermicelli
• Pure Spices
• Snack Mixes
• Meal Mixes
• Masala Pastes
• Sweets
• Pickles
• Soups

So, the pricing strategy for Ready to Eat is not completely independant. Pricing of the whole mix has to be kept in mind. 

Broadly, there are 6 situations that call for product mix pricing.

1. Product Line Pricing: For the product line of Ready to Eat, the prices range from Rs.75-50 depending on the dish and the quantity offered. Typically, curries range from Rs.75-50 in 300 mg cartons, whereas the meals(rice) are typically placed at Rs.50 for a 250-300 mg carton.
2. Optional Feature Pricing: Many companies offer additional products, features and services with their main product. It is tricky because the Company should decide which features to include in the standard price and which to offer seperately. Typically for FMCG products, there are no optional features.
3. Captive Product Pricing
4. Two-Part Pricing
5. By-Product Pricing
6. Product Bundling Pricing

Typical FMCG products, specially food, does not require all the other pricing situations except Product line pricing. Product Bundling Pricing may be applied when the sales go down for individual products or when the Company has to increase sales in terms of the units sold.

MTR has Product bundling pricing for RTC products during festive seasons for the best selling products. For example,

Product

Product heirarchy includes everything right from basic needs to particular items that satisfy those needs. There are six levels of product heirarchy.

Product heirarchy

1. Need Family: The core need that underlies the existance of a product family. Here, the core need is food.

2. Product Family: All the product classes that can satisfy a core need with reasonable effectiveness.
3. Product Class: All the products having the same functional funtional coherence.
4. Product Line: Group of products that have a similar function.
5. Product Type: Share one of the several possible forms of the product.
6. Item: A distint unit distinguishable by size, price, appearance or some other attribute.

Product heirarchy of MTR RTE 

1. Need Family: Food.

2. Product Family: Packaged Foods

3. Product Class: Meal Related

4. Product Line: Ready-to-Eat

5. Product Type: South Indian

6. Item: Pongal

Setting Product Strategy

According to Kotler, a Product is anything that can be offered to a market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations, information and ideas.

Product Levels: The Customer Value Hierarchy

The Company needs to address 5 product levels each of which adds more customer value. These five levels constitute a customer value hierarchy. 

Product Levels and 3 C's in the MTR RTE context

Core benefit and Customer:

The service or benefit the Customer is really looking for in RTE foods is convenience. The main aim of the company is to provide these benefits.

MTR's RTE foods are packaged conviniently and are very convinient in terms of prepapration and consumption.  

Basic product and Company:

At this second level, the Company must turn the core benefit into a basic product. It started off with RTC products, the first being the Rava Idly mix which became a huge hit. It soon ventured into RTE foods. MTR was in a sense a pioneer, offering ready-to-eat food when such products were still a novelty and not entirely a necessity in the Indian market. 

Expected product and Customer:

At the third level, the consumer normally expects a set of attributes and conditions when he buys the product and the Company prepares an expected product. Minimally, the Customer expects good quality and taste from any packaged food product. MTR is known for its recipe expertise, the choicest ingredients and the quality, taste and purity of its products. Also, competetion and brand positioning happens at this stage. Competitors like ITC, Parle etc sprung up.

Augmented product and Competetion:

At this level  the Company develops an augmented product which exceeds the Customer expectations. Competition (ITC, Haldiram's, Parle, Frito Lay) plays an important role here as products with the same or better offerings spring up. The most significant competitor in this context is ITC with its 'Kitchens Of India' range. 

Potential product, Company and Competition:

At the fifth level, the product encompasses all the augmentations and transformations the product may undergo in the future. MTR introduced RTE soups, North Indian dishes and rice meals to deal with competition.

Competetion

 The total processed foods market size this year is Rs1500 crore, out of which Ready to Cookfoodscapture Rs 1275 crore and Ready to Eat capture Rs.225 crore this year and is expected annual growth of 25 – 30% over next 5 years shows huge potential for growth by tapping a larger consumer base. 

According to Tata Strategic Management Group, the RTE market is expected to grow to Rs 2900 crore by 2015.

An analysis of the drivers explain the factors for growth of the industry including the target consumer base for RTE is expanding, organized retail displays advantages in driving RTE sales, cold chains development, and government initiatives. Indian Government is also providing more infrastructure for this sector. Excise duty is now ZERO % on RTE and 100 % tax deduction for the first 10 years for new units. This allows manufactures to bring down their prices & spreads its flavors to the world. 

The prices of most brands in this segment range from Rs25/- to Rs.40/- for a typical 285g dish. The 'Kitchens of India' range from ITC comes in a tin pack, and is priced much higher than the rest, ranging from Rs110 to Rs150 for 450g. This brand also finds its way to homes overseas, where it is mainly sent as a gift item. Purchases for overseas travel constitute almost 10% of sales in this 

category. MTR foods is the largest player in this emerging market with a near 65% share.  

Direct Competetion 

Maiyya's

Satnam Overseas 

ITC

Tasty Bites

GCMMF

Haldiram

other local players.

Indirect Competetion

Ready To Cook category products and players like

Gits

ITC 

Bambino

Kohinoor Foods

Marketing Mix

Marketing Mix (AMA Definition):  Marketing Mix is a mix of controllable marketing variables that the firm uses to pursue the desired level of sales in the target market.

According to Kotler, McCarthy classifies marketing mix tools as four broad kinds-the four P’s of marketing-

1.      1. Product
2.      2. Price
3.     3.  Promotion
4.   4. Place 

  
       In service marketing, however, the four P's have been expanded to seven P's to address the different nature of services.

       A general marketing strategy:

     For MTR Ready-to-Eat,

     Target Group: 

    The urban market where both the husband and wife are working and are pressed for time.

    Positioning: 

Life Cycle Concepts

Industry Life Cycle

In the processed food industry, the Ready To Eat segment,

 Research and Development: "Retort Technology" developed by Defence Food 

Research Laboratory (DRFL) introduced the concept of packaged food in 1961

Introduction: The Ready To Eat segment (apart from cup noodles) were introduced in the 1990's

Growth: The industry has been experiencing growth only since 2002.

The RTE segment in India is still in the growth phase. 

Product Life Cycle

MTR has been the pioneer in this industry. It introduced the concept of Ready To Cook and Ready To Eat food products. Seeing the immense potential, other players (competition) like ITC etc have forayed into the industry.