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Case Analysis

Kurdola Product Portfolio Decision

Vision
19(1) 6568
2015 MDI
SAGE Publications
sagepub.in/home.nav
DOI: 10.1177/0972262914568057
http://vision.sagepub.com

Sreeram Sivaramakrishnan1
Vineet Hansaria2
Product portfolio decisions are some of the most challenging decisions that a brand manager or a marketing team
will have to encounter. And so far, it seems like MOMCO
has been reacting to external events rather than proactively
taking the initiative. Figure 1 presents a graphical timeline
along with major events. Generally, a market leader is the
one who takes proactive decisions to maintain its preeminent position in the market.
The sunflower oil threat was ever present. However,
MOMCO did not take this head-on until pushed against
the wall due to competitive pressures and regulatory
changes.
The margin for Kardi oil (KO) is not explicitly mentioned in the case, though margins for KOCO (40 per cent)
and KORBO (30 per cent) are mentioned. The margin

for KO is thus being assumed to be 45 per cent since it is


mentioned that it has the highest contribution.
Product portfolio decisions will be typically guided by
overall corporate strategy. Corporate strategy could be to
build a mass market presence or maximize profits or be
customer centric which would presage several product
launches which could then leverage the existing brand
image and distribution strength. Corporate strategy could
also be to consciously maintain as profitable a business
as possible which would mean slow but sure growth with
high margin products. Since the corporate strategy has not
been explicitly mentioned in the case, selecting the correct
product portfolio becomes increasingly difficult.
MOMCO had a strong product development and R&D
team. It also had an excellent distribution and production

Figure 1. Timeline with KO sales

1School
2School

of Business Management, NMIMS.


of Business Management, NMIMS.

Corresponding author:
Sreeram Sivaramakrishnan, School of Business Management, NMIMS.
E-mail: sreeram.s@nmims.edu
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66

Vision 19(1)

Table 1. Overall and Product-wise Sales Volume


Sales Volume
Year

19992000
200001
200102
200203
200304
200405
200506
200607
200708
200809
200910
201011
201112

Kurdola Yummy Blend Healthy Tasty


(KO)
(KOCO)
Blend (KORBO) Total

400

400

500
400
600
800
950
1000
1200
1000
1100
1175
350
500

500
400
600
800
950
1000
1200
2000
2250
2575
7425
7075

1000
1150
1400
1575
1575

5500
5000

is warranted to understand how consumers in all the target


segments perceive these three oils. Also the biggest market
was of the tasty segment with healthy being an additional
benefit which can help in differentiation. There was
attempted to be leveraged by the organization.
There is no data in the case on either the consumer bases
or the marketing expenditure or the production cost with
the new composition on each of the products. Gross
margins may not capture the marketing effort involved. For
instance, it is possible that marketing expenses for the
lower priced brands may be far higher than for KO. Also
it has not been mentioned what percentage of people
check the composition who have not been recommended
an oil by a doctor. This makes the job of selecting the
correct product portfolio very difficult.
1. What to communicate to the existing, loyal base
of Kurdola consumers? If they do not inform them
that this was not the best product for their heart,
they would belie the consumer trust that they have
garnered over a long period. What alternative to
provide?
The company has the following options in front
of it:

Source: Authors.

infrastructure. However, in the edible oils segment it chose


to remain a one-horse player despite there being opportunities in the market. Moreover the edible oil segment is
highly unorganized with retailers influencing purchasing
decisions and quite a lot of edible oil being sold loose as
the purchasing power of people is low. The market opportunities are very apparent from several clues in the case:
(a) The distribution infrastructure available for hire
which means there was considerable slack.
(b) Table 1 provides details on the sales and shows that
the overall sales of MOMCOs edible oils jumped
by nearly five times over a period of six years, signifying huge untapped opportunities.
Over the years the positioning for KO has changed.
The changes are encapsulated in Table 2.
On the face of it there seems to be considerable difference
between the three edible oils. However, a consumer research
Table 2. Product Positioning
Kurdola
(KO)

Year
19992000
200001
200102
200203
200304
200405
200506
200607
200708
200809
200910
201011
201112

Yummy Blend
(KOCO)

Healthy Tasty
Blend (KORBO)

Heart patients
and family

People who
want a healthy
heart
Good for
heart/Prevention
Heart Specialist

Source: Authors.

Healthy & Tasty

A. Change the formulation of the current Kurdola


brand to a premium product with MUFA and
PUFA. Although the formulation will be similar
to the other products, the quality could be
enhanced. Under this option three possible scenarios could arise:
a. The production cost would remain the same
thereby no changes in prices would be
required.
b. The production cost could increase thereby
two alternatives are available (Choice would
depend upon corporate strategy).
i. Increase price to maintain margin
ii. Keep the same price and compromise
on margin
c. The production cost could decrease
i. Maintain same price and increase the
operating profit margin
ii. 
Reducing price could lead to three
possibilities
1. Loyal customers might perceive that
the brand quality has reduced or they
were charging unfairly earlier
2. New customers might come to try
the brand due to additional health
benefits
3. Might cannibalize into yummy blend
B. Withdraw the Kurdola (KO) brand and replace
with a new brand with the new formulation.
C. Withdraw the Kurdola brand altogether.
D. Continue with the existing portfolio with
changes in Kurdolas positioning. It may be

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Sivaramakrishnan and Hansaria 67


a good idea to soften the heart connection and
move to a broader, healthy positioning.
E. Continue with the existing portfolio with no
changes.

The advantages and disadvantages of these options are


further delineated in Table 3. Table 4 and Table 5 present
some key data that can be inferred from the data in the
case.

Table 3. Options and their Possible Implications


Options

Advantages

Disadvantages

C
 ontinues with existing product mix with only changes in
formulation. Lesser marketing effort.
Majority of existing, loyal Kurdola customers would continue
and pay premium.
Brand can be relaunched as Kurdola Premium/Kurdola Heart.
Brand extensions do not need to be changed. They would
remain Kurdola Yummy and Kurdola Healthy and Tasty.
Communication could be focussed upon improved Kurdola
with better technology and better health effect. If the price
remains the same that could be communicated as well.
Makes a clean break from the past
Protects the image of the company
If increasing customers check the composition this would
be a wiser choice.
New product communication could be done and a premium
could be charged.
Share of only 7% of sales (Table 1) and 10% (Table 4) of
contribution, the Kurdola brand has already lost significance
in the company.
Makes a clean break from the past.
Protects the image of the company
Saves on marketing and product development effort in
Option B.
Retains the product in the portfolio
No new product development cost

 roduct development effort and cost


P
Chance of change in formulation alienating some
customers upon knowing reasons for change.
(The fact that the company has been selling them
something that was not healthy as claimed).

R
 etains the product in the portfolio
No new marketing or product development cost
Retains existing Kurdola customers

M
 ajority of existing, loyal Kurdola customers
may defect
Some level of alienation inevitable
Marketing and product development effort
and cost.
Brand extensions may also require a rethink
All existing, loyal Kurdola customers may defect
Brand extensions may also require a rethink
Could be construed as an admission of guilt
Brand equity build around healthy products would
be lost.
M
 ajority of existing, loyal Kurdola customers may
defect
Marketing effort and cost
People might shift to competition and also might
consider it a breach of trust over a period of time
Other products might also suffer
High risk of exposurecompetition may certainly
give high publicity to the 2012 findings.
May seriously impact products and perhaps even
existence of the company

Source: Authors.

Table 4. Product Contributions


Year
19992000
200001
200102
200203
200304
200405
200506
200607
200708
200809
200910
201011
201112

Table 5. Contribution Share in Portfolio in Percentage

Kurdola
Yummy
Healthy Tasty
(KO) Blend (KOCO) Blend (KORBO) Total
180
225
180
270
360
428
450
540
450
495
529
158
225

Source: Authors.

400
460
560
630
630

1650
1500

180
225
180
270
360
428
450
540
850
955
1,089
2,438
2,355

Year

Kurdola (KO)

19992000
200001
200102
200203
200304
200405
200506
200607
200708
200809
200910
201011
201112

100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
52.9%
51.8%
48.6%
6.5%
9.6%

Source: Authors.
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Yummy
Healthy Tasty
Blend (KOCO) Blend (KORBO)

47.1%
48.2%
51.4%
25.8%
26.8%

67.7%
63.7%

68

Vision 19(1)

Options D & E are fraught with risk and not befitting a


large and respected company with considerable revenues
and employees to consider.
The choice between A, B and C can be resolved by
conducting a consumer survey to understand possible
ramifications of the different strategies.
Option C can be considered only if there are no exclusive
distributors of Kurdola. In case distributors sell all products
of MOMCO then withdrawing the Kurdola brand may be a
very safe option. But the disadvantages outweigh the
advantages and thereby might affect the other two brands
as well. This option is full of danger of affecting the other
two brands and future extensions. This might also provide
opportunity to other players to enter this space.
Between A and B, A is the superior option since it will
be able to retain a large number of the existing customer
base. What is also evident from the data is that there does
not seem to be too much of overlap between the target
segments of KO and KOCO. Table 1 shows that in the
years 2006 to 2008 there was only a drop of 200 klpm for
KO while KOCO grew from nothing to become almost
equal to KO volumes. This loyal customer base will be up
for grabs if KO is withdrawn from the market. On the
flip side, this customer base will be the most aware
and discerning lot and hence may get alienated. Again
something that needs to be tested through research.
Option A is by far the most optimal option based on the
history of the brand and enabling MOMCO to leverage on
past successes. The Kurdola can be retained with new
formulation which can be positioned as New Kurdola
a healthier option developed with superior cutting edge
technology. New always resonates with the consumer
as has been seen in multiple examples in the market
(like Surf, Ariel and Rin).
The pricing decision is crucial since it will start affecting
the bottom line of the company. Also the unorganized
nature of the market needs to be considered and adequate
research should be done on parameters specified above
before considering a choice between A and B.
2. The best product for healthy heart platform was
possibly closest to Healthy tasty blend (currently
the low contribution product). How could they leverage the newfound benefits associated with the
product to command a premium?

In case option A is chosen, then Healthy tasty blend


continues to remain the low cost healthy alternative to the
more expensive Kurdola option. This should ideally not
be tampered for fear of impinging on the sales of the
more premium Kurdola.
Here 2 situations arise based upon production cost
(assuming in both cases taste is not affected).
1. The production cost with the new composition of
MUFA and PUFA remains the same.
2. The production cost increases with the new composition of MUFA and PUFA.
Based upon corporate strategy on profits, option 1 or 2
would be chosen. Communication around a healthier and
tastier brand could be communicated and a premium can
be charged in due course depending upon market size
and the growth of sales of the product.
3. What to do with the Yummy blend in case there was
any change in the marketing of Kurdola and Healthy
tasty blend?
The Yummy blend is providing 22 per cent of the sales
(Table 1) and 27 per cent in contribution (Table 4). This
makes it a significant contributor to the business.
Based upon the percentage of people checking composition and production cost changes with new composition a decision needs to be taken whether to change the
composition having both PUFA and MUFA or continue
with the same composition.
Irrespective of the choice of composition it must be kept
at the same price band to avoid cannibalizing sales of the
other two brands. The new communication for the Kurdola
and Healthy tasty blend if successful could be leveraged
at a future stage for the Yummy blend as well. Till that
time it would be advisable to continue with the same marketing to maintain its market share and contribution since
positive influence of the other two brands could enhance
the brand image of the Yummy blend.
Sreeram Sivaramakrishnan
School of Business Management, NMIMS
Vineet Hansaria
School of Business Management, NMIMS

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