Parle Ivey Case Study

1921 words 8 pages
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What are the various issues & considerations?

Mr. P. Kulkarni, general manager, Parle Products Pvt. Ltd. (Parle) is faced with the dilemma of increasing the price of the biscuit or decreasing the grammage of its SKU. The Indian consumer holds strong brand equity with Parle G biscuit on account of its low cost and value for money (VFM) proposition. The company started as a value for money brand in 1939.This was a marketing perception which has remained intact for last sixty year. But in last sixty years Indian market has opened up and MNC companies are new competitor.

Now the same value for money strategy is gnawing at the profit margin of Parle G. Essentially brand is something that create a niche segment for itself and consumers do not mind loosening up their pockets a bit more every next year to associate with that brand and buy it. But here in India, the consumer are very price sensitive and increasing the price leads to the risk of losing the existing and prospective customer. Thus the question that Mr. Kulkarni is faced with is a very serious dilemma and involves complex thinking and decision making strategy. For example in 2004, Parle has increased the price by 50 paisa from 4Rs. to 4.5 Rs. and sales dropped by 40 per cent within six months. Hence the company has to roll back the price increment.

The brand has a strong dependence on the single brand ”Parle G” and on its single SKU of 100 gram, which contributes to 50 per cent