Fourth Quadrant_SCMHRD

1. Submitted By:
Team : Fourth Quadrant
Debi Prasad Dash
Harshit R
Shaleen Agrawal
(MBA-1)
Healthy Child
Happy Child…

2. Baby Food
Industry
From A Rural
Perspective
Source : National Family Health Survey,
Nielsen survey, 2010
RURAL INDIA-PRESENT SCENARIO
• Forms >70% of consumer base, over 50%
contribution to National income.
• Strong emergence of rural middle class,
increase in disposable income and avg
household spend
•>70% own TV and are influenced by Brand
ambassadors and jingle in TVC
•Rise in aspirations, awareness towards use
of brands
ISSUES:
• 1 in 3 of world’s malnourished children
lives in India
•46% children underweight, 74% anaemic
• Levels of breastfeeding dangerously low,
50% mothers quit breastfeeding after 6
months
• Absence of a low-cost high nutrition food
supplement
CONSUMER TRENDS-RURAL INDIA :
• Awareness for branded baby food – 31%
• Consumption level – 15%
• Frequency of use of branded baby food
products by consumers – Occasional
• Reason for not preferring branded
products
18% - costlier
15% - unavailability in local shops
Baby Foods Industry Analysis
• Nestle India Ltd - Market leader with
85%(Rs1,500 crore) market share in infant
foods and nutrition market. Brands-Cerelac
and Nestum (infant foods), Lactogen,
Nestogen and Nan (infant milk).
• Farex from Heinz India Pvt. Ltd – key
competitor in infant foods
•Low penetration in rural India

3. Nestle in Rural Baby Food Segment
Nestlé's Foray into Rural Market
1. Baby food industry growing at an average CAGR
of 12% (Current size – 1500 cr, Cereal food
Market size – 300 cr)
2. Emerging robust demand for a low-cost
nutritional supplement for infants in the wake of
evolved consumer mindset, rising disposable
incomes and willingness to buy branded
products for improved healthcare of young ones.
3. Nestlé's strong position as market leader,
strong presence in urban market (Cerelac),
strong distribution network, R&D capacity and
trust factor.
4. Low entry barriers and absence of potential
threat from competitors.

4. Competitive Advantage
Strengths
Market Leadership with 85% share of the 300 cr baby cereal Market
Trusted Brand name in Indian households
Little competition/threat from competitors
Sound Financial position to promote R&D
Strong distribution network for other Nestle Products which can be used to
promote Cerelac and Ceremeal
Weaknesses
Low customer preference and awareness in rural
India due to High cost, low availability and lack
of focused advertising.
Opportunities
Capture Market share of Artificial Milk substitutes which are suffering due to
Govt regulations and WHO initiatives to promote Breastfeeding
Capture the untapped potential of Rural Markets by introducing low cost
product variants
Absence of any other nutritional supplements (apart from mother’s milk) for
newborns in villages
Threats
Regulations by IMS Act 1992, prohibiting TV
advertisements, using Baby models on
packaging for <2 years baby food products
Availability Awareness
Acceptability Affordability
4 As of Rural Market
(sorting out the issues)
Inclusive Distribution
strategy through rural
distributor and
kirana shop
Providing free
Free samples in PHCs and
Positioning as the solution
for many diseases
Health camps in
panchayat and PHCs,
regional helpline, Doctors
and ASHA karmis
Small Packs and
product pricing within the
range of rural consumers
SWOT

5. Go To Strategy I
Cerelac Essential strategy
Introduce low-cost variant of Cerelac in rural
market in the under 2 years baby foods
category
Promote the product as an essential
supplement(not a substitute) to mother’s
milk for required nutrition
Develop the new Cerelac variant fitting in
the cost by R&D, collaboration with labs
like DRWA* and lab certifications
Capitalize on the growing spending power
of the rural middle, upper middle and
upper class, and willingness to spend for
children and build strong customer
preference
*DRWA -Directorate of Research on Women in
Agriculture
Ceremeal strategy
Aggressively promote
and advertise Ceremeal
as a highly nutritional
product for >2 years
babies
Capitalize on the
customer preference
built by the new Low-
cost Cerelac in rural
markets and increase
market share
Build preference
among children by
introducing new
flavours, promoting toy
merchandise etc.
•Enter the largely untouched rural market with a “Twin – Product” Strategy of a Low cost Cerelac Variant –
‘Cerelac Essential’ for newborns (<2 years) and ‘Ceremeal’ for >2 years baby foods category.
Target Customer Group: R1, R2
Expected Output
Birth Rate : 20.97/1000 per
annum
Population : 1.21 billion born
2.54 crores (1.21bn/1000 X
20.97)
Urban: rural Population Ratio =
0.76:0.24
Below 3yrs children in Rural India
= (7.5 crores X 0.76) = 5.7 Crores
Potential Market : R1 & R2 only
(23.6%) = 1.345 crores
Expected Sales (Per Year)
= (1.345 crores X 200) = 135
Crores

6. Go To Strategy II
PRODUCT AND INNOVATION
Cerelac Essential
Low cost ‘Cerelac’ variant
created in association with
DRWA*
Product constituents: sweet
potato based weaning mix with
cereals, pulses and oil seeds
providing necessary nutrients to
infants
Packaging: 375gms standard
packing with a new ‘mascot’
rather than baby models as
prescribed by IMS Act,1992
Product introduced as a
supplement to Mother’s milk
Ceremeal
Highly nutritious food
supplement for 2 years+ babies
category.
Sold and promoted as a slightly
premium and value added
product than Cerelac Essential.
PRICING AND DISTRIBUTION
Cerelac Essential
New variant to be
priced at 50/- for a
standard 375gms pack
Each serving to cost
approximately Rs.5/-
and last for a week
To be made available at
kirana stores and
medical stores using
pre existing strong
distribution network of
Nestle (Maggi, Sauce
etc.)
• Ceremeal
To be sold at 100/- price
range for a standard
300gms pack
Distribution - Same as
Above
ADVERTISING AND PROMOTION
Cerelac Essential
Promotion majorly by Word of mouth and
listribution/shopkeeper push
Associations with labs and certifications to provide trust
and authenticity to the product
First use to be initiated by recommendations from doctors
and health centres as an essential supplement to mothers
milk.
Ceremeal
To be promoted aggressively to convert Cerelac Essential
users to slightly premium and more nutritious ‘Ceremeal’
Pan India TV advertisements launched to appeal to rural
Cerelac users
Establish a mascot with chewable mascot toys for
teething children
Introduce variety of flavours to build preference among
kids
Thank You