Parle G: Marketing
Parle G: Case Analysis
The Parle G case is a classic scenario where the price elasticity of a particular product is exceedingly high and any deviations as far as price change is concerned can have long term ramifications which could be in the form of declining sales, loss of market share consequently leading to revenue and profitability decline.
At the outset it’s important to look at the case in a variety of perspectives and while we understand that it’s almost impossible to look into them individually, we have attempted to see the case from two perspectives:-
Overview of the Case:-
Parle G is the world’s largest manufacturer of biscuits by volume or tonnage and has been in the numero uno spot since a very long time. It has done so primarily by positioning its product, Parle G Biscuit, at optimally affordably rates which caters to customers from all walks of life especially the low income groups in the Bottom of the Pyramid.
Of late, due to inflation and evolution of economic factors, the input of two major raw materials, sugar and weight which constitutes 55% of the manufacturing cost have risen provoking the management to rethink on the pricing strategy.
The outcome of this inflation has resulted in the decrease in the margin it used to command. The dip has been from 15% to 10% of margins of its total revenues. Management is now mulling over to raise the price to reinstate the margins at 15% as previously mandated.
Pravin Kulkarni, the GM of Parle Products has to take two major decisions regarding the above scenario and they are as follows:- These questions needs to be addressed as soon as possible because of the presence of competitive products and companies in the same domain.
The other very visible trend that management bore witness to, was the gradual migration of consumer spending to high-end biscuit segment belonging to the sweet, cream and
The Parle G case is a classic scenario where the price elasticity of a particular product is exceedingly high and any deviations as far as price change is concerned can have long term ramifications which could be in the form of declining sales, loss of market share consequently leading to revenue and profitability decline.
At the outset it’s important to look at the case in a variety of perspectives and while we understand that it’s almost impossible to look into them individually, we have attempted to see the case from two perspectives:-
Overview of the Case:-
Parle G is the world’s largest manufacturer of biscuits by volume or tonnage and has been in the numero uno spot since a very long time. It has done so primarily by positioning its product, Parle G Biscuit, at optimally affordably rates which caters to customers from all walks of life especially the low income groups in the Bottom of the Pyramid.
Of late, due to inflation and evolution of economic factors, the input of two major raw materials, sugar and weight which constitutes 55% of the manufacturing cost have risen provoking the management to rethink on the pricing strategy.
The outcome of this inflation has resulted in the decrease in the margin it used to command. The dip has been from 15% to 10% of margins of its total revenues. Management is now mulling over to raise the price to reinstate the margins at 15% as previously mandated.
Pravin Kulkarni, the GM of Parle Products has to take two major decisions regarding the above scenario and they are as follows:- These questions needs to be addressed as soon as possible because of the presence of competitive products and companies in the same domain.
The other very visible trend that management bore witness to, was the gradual migration of consumer spending to high-end biscuit segment belonging to the sweet, cream and