PURE

CUSTOMER SEGMENTATION AND ANALYSIS

Submitter By: Pooja S- 092517002 Roshni D Singh- 092517012

TABLE OF CONTENTS
INTRODUCTION ............................................................................................................... 3 WHY ORGANIC?? ............................................................................................................ 4 INDUSTRY SECTOR ......................................................................................................... 5 TRENDS IN THE INDUSTRY .......................................................................................... 6 MAJOR PLAYERS ............................................................................................................ 7 THE LEADING F&G RETAIL STORES ......................................................................... 7 FAQs- CUSTOMER INSIGHTS..................................................................................... 10 MAIN COMPETITOR- NAMDHARI FRESH ............................................................... 12 STRATEGIES ................................................................................................................... 13 HOW AND WHY OUR BRAND PURE WILL SUCCEED? .................................. 13 CHALLENGES WE HAVETO OVERCOME ............................................................ 13 THE ORGANIC CUSTOMER......................................................................................... 14 CUSTOMER SEGMENTS FOR PURE- CLUSTERS ................................................ 16 CONCLUSION ................................................................................................................. 17 QUESTIONNAIRE ........................................................................................................... 18

INTRODUCTION
Organic foods are foods that are produced using methods that do not involve modern synthetic inputs such as pesticides and chemical fertilizers, do not contain genetically, and are not processed using irradiation, industrial solvents, or chemical food additives. For the vast majority of human history, agriculture can be described as "organic"; only during the 20th century was a large supply of new synthetic chemicals introduced to the food supply. The organic farming movement arose in the 1940s in response to

the industrialization of agriculture known as the Green Revolution. Organic food production is a heavily regulated industry, distinct from private gardening. Currently, the European Union, the United States, Canada, Japan and many other countries require producers to obtain special certification in order to market food as "organic" within their borders.

WHY ORGANIC??
Organic is good for you and your planet, is kind to animals and wildlife and allows us make a big difference - simply through the way we shop. With all these benefits, its easy to see why organic delivers such good value for money. When you buy organically produced farm products, you support farming techniques that improve soil fertility without the use of petroleum-based synthetic fertilizers. You protect surface and groundwater from exposure to persistent, toxic pesticides. Organic farmers work with, not against, the balance found in a healthy eco-system: wildlife is encouraged by including forage crops in rotation and by retaining fence rows, wetlands and other natural areas where wildlife can thrive. Better for your planet Today, substantial amount of greenhouse gas emissions come from food and farming. Nitrogen fertiliser manufacturing is the worst offender. To produce just one tonne takes one tonne of oil, seven tonnes of greenhouse gasses and one hundred tonnes of water. Organic farmers work with nature to feed the soil and control pests. By choosing organic, local and seasonal - we can significantly reduce our carbon footprint.

Great for You No food has higher amounts of beneficial minerals, essential amino acids and vitamins than organic food. Organic food avoids pesticides and all controversial additives including aspartame, tartrazine, MSG and hydrogenated fats. Organic food contains higher levels of vitamin C and minerals like calcium, magnesium, iron and chromium as well as cancer-fighting antioxidants and Omega 3.

Encourages wildlife The plant, insect and bird life is substantially greater on organic farms. Organic farming relies on wildlife to help control natural pests, so wide field edges are left uncultivated for bugs, birds and bees to flourish. They are also not sprayed away by the fertilisers, chemicals and pesticides routinely used on non-organic farms. GM free Genetically modified (GM) crops and ingredients are banned under organic standards.

INDUSTRY SECTOR
Food and grocery segment constitutes about 62 per cent of the total INR 12000 billion (USD 270 billion) Indian retail market. There are about 12 million retailers in India and 80 per cent of those are actually mom and pop shops run by family members. The modern organized retailing is about 3 per cent of the total. In South, however, the modern retailing is said to be 10% of the total. As per IMAGES F&R Research estimates organized food and grocery retail market was a mere 0.5 per cent of the total in 2004. This organized segment has now grown to just about 0.8 per cent in 2006 valued at INR 500 billion at 2004-05 prices. The organized food and grocery retail sector grew at the rate of 35.6 percent in 2005 and at 42.5 per cent in 2006 over the previous year. Until recently, this segment was dominated by players with regional presence as most of them had established themselves in local markets only such as Subhiksha in Chennai, Trinethra in Andhra Pradesh and Margin Free Markets in Kerala. Food World tried to expand to West India (Pune) but failed. This was primarily attributed to inefficient supply chain management and lack of investment in establishing effective SCM network in different regions. But players like Food Bazaar has established a pan-India presence and Subhiksha has moved towards north India and currently testing the NCR market. It can be noted that grocery retailing accounts for nearly half of the packaged fast moving consumer goods (FMCG) sales. ACNielsen study indicates that there will be significant switch in spending from traditional grocery stores to modern stores in the region. (Source: India Retail Report 2007: An Images F&R Research)

TRENDS IN THE INDUSTRY

Changing consumer preferences due to increased disposable income. Consumers are demanding wider range and unique merchandise with consistent quality all under one roof Gradual increasing cosmopolitization of Indian population due to western influence and internationalization of palates and lifestyle created the need of wider array of products and services New types of packaged and convenience foods such as processed meat and meat products requiring refrigerated storage and transportation and retail shelf space As of now the emphasis in food and grocery retailing is on dry groceries. The wet groceries like fruits, vegetables and meat products account for only 3-5 per cent of the overall offering of the organized players. However, consumers spending indicate that about 40% of total consumer spending is on wet groceries. The major challenge would thus be putting appropriate supply chain management infrastructure for wet products and those who will be able to do it faster will have a major differentiation advantage to leverage. The signs of eliminating involvement of middlemen and backward integration in SCM among Indian retailers are increasingly visible.

MAJOR PLAYERS
Major players in the fray are Big Bazaar ( belonging to Pantaloon), Giant (rechristened as Spencers), Star India Bazaar (of Tata Group), Landmark (in association with South African Retail giant Shoprite), Reliance Industries, Rainbow Retail (of Raheja Group), Godrej, Adani, Trinethra (now under AV Birla Group), Dairy Farm, Jubilant Group among others.

THE LEADING F&G RETAIL STORES

SUBHIKSHA Chennai based retail chain is the largest discount stores in India with over 315 stores. Started in 1997 it is the first company to start tie ups with the manufacturers for cost saving. In 2006 it has 315 stores with 60 stores in Bangalore, Mysore and one store in NCR. The turnover of the company is INR 3.34 billion. They have launched aggressive television campaign to reach masses. They plan to invest additional INR 1000 million to add 180 more stores in eight cities of which 100 stores will be in Mumbai city itself. As per plan they would like to have 600 stores by the year end 2007. FABMALL

Bangalore based Fabmall operated 12 stores and achieved INR 500 million in sales in 200304. It has been acquired by Trinethra of Hyderabad with 80 outlets in eight cities in Andhra Pradesh covering retail space of more than 1300000 sqft. Post acquisition, Trinethra had added five more stores under Fabmall and now operating both the formats. Trinethra super retail with 172 stores subsequently got acquired by AV Birla Group which acquired 90 percent stake. Balance 10% is still with India Value Fund managed by GW capital, a private equity fund .By year 2006-07 Trinethra has 198 stores in more than four cities with total area of 525566 sqft and sales INR 2780 million FOODWORLD Dairy Farm International entered Indian market and took over Food World from Spencer as a route to dilute the shareholding in RPG group. It had a four city presence and 100 stores in 2005-06 as compared to the previous year 79 outlets. Dairy Farm now plans to set up bigger stores as well as large format stores .As per plan they would like to set up 500 outlets by year 2010.

SPENCERS RETAIL A RPG group company entered into F&G retail in 2001.In the year 2006-07 they had 68 stores in 17 cities with retail space of 582490 sqft. They have both small (2000sqft) as well as large( 8000-15000 sqft) format outlets selling both fresh products and durable item under one roof. Small format outlets sell fresh food, groceries, chilled and frozen foods. FOOD BAZAR Food Bazaar, the Pantaloon groups F&G chain , has in all 45 outlets across more than 20 cities and is located within the groups value retail format Big Bazaar. Food Bazaars value proposition selling below MRP helped in high stock turn over. It has launched private label brands of tea, salt, sugar, spice and processed foods. The turnover for the year 2003-04 was INR 1.5 billion which is expected to go up to INR 32.5 billion by year 2010.The company plans to have 110 outlets in 2007 and 250 outlets in 2010. They have over 10000 SKUs. TRUMART Launched by Piramal group and managed by Mumbai based Crossroads. First outlet was opened in Pune in upscale Bhandarkar Road of 6000 sqft size. They have 12 oulets in five cities in 2005-06 although started initially in Pune and Mumbai. Now they have 42 outlets ( 2006-07) in 14 cities with plan to have 150 outlets in the year 2010.They plan to have 82 outlets in 2007.The theme of their stores is AUOR (All under one roof). NILGIRIS It has pioneered the organized retail operation in the country started as early as 1905 in Bangalore. In 2004-05 it has about 140000 sqft retail space which has now gone up to 200000 sqft. They have mainly franchisees and a few company owned format outlets. They have pioneered franchisee model in India in F&G retail. ARAMBAG FOODMART It belongs to the Arambag Hatcheries and is a household name in Kolkata. Spread over Kolkata and other cities in West Bengal company operates 24 stores with an average area of 600-1000 sqft of retail space. It deals in groceries, confectioneries, toiletries, frozen foods and of course its products Arambag Chicken (dressed chicken). The unique features of these

stores is below MRP price, good quality and convenient location.There has been gradual increase in sales from INR 181 million in 2004-05 to INR 212 million in 2005-06 to the current to INR 260 million now. NAMDHARIS FRESH Namdgaris Fresh (NF) a sister concern of Namdhari Seeds Pvt. Ltd, a leading Seed company was started four years back with a vision to be the leader in Quality Fresh Produce following Integrated Pest Management Practices with eco friendly bio- agents. Currently they have 13 outlets in Bangalore and 3 more in New Delhi

RELIANCE FRESH

Reliance entered the F&G sector recently with its Reliance Fresh outlets foraying through the Hyderabad stores. First set of roll out included 11 stores all located in the same city. First day turnover was INR 2.2 million. The company is targeting at least 35 outlets in major cities. Expansion is planned and is in progress to cover immediately Delhi, Mumbai and nearby areas in the first phase. They are planning 70 cities and 784 urban towns and 6000 odd rural mandi towns to cover 100 million sqft of retail space backed by about 68 strong distribution network by year 2011.The company expects to get sales approximately of INR 1000 billion.

FAQs- CUSTOMER INSIGHTS

What is organic? Organic refers to the way agricultural productsfood and fiberare grown and processed. Organic food production is based on a system of farming that maintains and replenishes soil fertility without the use of toxic and persistent pesticides and fertilizers. Organic foods are minimally processed without artificial ingredients, preservatives, or irradiation to maintain the integrity of the food.

What does "Certified Organic" mean? "Certified Organic" means the item has been grown according to strict uniform standards that are verified by independent state or private organizations. Certification includes inspections of farm fields and processing facilities, detailed record keeping, and periodic testing of soil and water to ensure that growers and handlers are meeting the standards, which have been set. Certified Organic is the only way to guarantee that the product is organic. Producers cannot use the term Organic legally without certification. To bypass this legal requirement for certification, various alternative approaches, using currently undefined terms like "natural" instead of "organic", are emerging.

Who regulates the certified organic claims? In India, APEDA regulates the certification of organic products as per National Standards for Organic Production. "The NPOP standards for production and accreditation system have been recognized by European Commission and Switzerland as equivalent to their country standards. Similarly, USDA has recognized NPOP conformity assessment procedures of accreditation as equivalent to that of US. With these recognitions, Indian organic products duly certified by the accredited certification bodies of India are accepted by the importing countries

Are all organic products completely free of pesticide residues? Certified organic products have been grown and handled according to strict standards without toxic and persistent chemical inputs.

Is organic food better for you? There is mounting evidence at this time to suggest that organically produced foods may be more nutritious. Furthermore, organic foods and fiber are spared the application of toxic and persistent insecticides, herbicides, fungicides and fertilizers. In the long run, organic farming techniques provide a safer, more sustainable environment for everyone.

Why does organic food sometimes cost more? Prices for organic foods reflect many of the same costs as conventional items in terms of growing, harvesting, transportation and storage. Organically produced foods must meet stricter regulations governing all of these steps, so the process is often more labor- and management-intensive, and farming tends to be on a smaller scale. There is also mounting evidence that if all the indirect costs of conventional food productioncleanup of polluted water, replacement of eroded soils, costs of health care for farmers and their workerswere factored into the price of food, organic foods would cost the same or, more likely, be cheaper.

MAIN COMPETITOR- NAMDHARI FRESH

Namdhari's Fresh (NF), a unit of Namdhari Seeds started in 2000 at Bangalore - 'The Garden City of India', with a view to export fresh vegetables and provide a premium quality produce to domestic customers. Namdhari Seeds is a market leader in Indian Vegetable Seed Industry and a leading Exporter of Vegetables and Flower Seeds.Presently, more than 40 different vegetables and fruits are being cultivated by Namdhari's Fresh at various productions centers across the country. Namdhari's Fresh is also involved in natural farming to produce and supply Organic Vegetables and Fruits in the International market with the blessings of His Holiness Shri Satguru Ji, who himself is a strong believer of organic farming. The natural gift of suitable climate, availability of sufficient infrastructure, technical manpower and the applications of advanced technology in Production, Processing, Grading, Packing, storage, Transportation, Communication and with dedicated skilled laborers enables this company to produce and sell one of the best quality vegetables and fruits for Fresh Market to meet the International Standards. To ensure the freshness of the vegetables till it reaches the consumer, the company is having a continuous cold chain network right from the produce is harvested. The harvested vegetables are transported in refrigerated trucks, which also helps in the removal of field heat. From the refrigerated trucks, the vegetables are transferred to the pre-cooling room. Then the vegetables are transferred to the grading hall, which is also air conditioned and packed under cool climate. The packed vegetables are stored in the cold rooms before being air lifted to the destinations and during the transit in the air also, the product is stored in reduced temperature. Thus the uninterrupted cold chain network makes Namdhari's Fresh to deliver the quality vegetables with optimum freshness. The good number of Flights per week to Europe guaranties a regular supply of produce Namdhari's Fresh is a certified ORGANIC PRODUCER. It has become India's first vegetables growing and exporting firm, which has received EUREP-GAP Certificate. The pack house is under implementation of BRC and HACCP, however all the norms, essential for the same are practiced. Ethical trading is their corporate philosophy and implementation of SA 8000 is part of their commitment.

STRATEGIES
HOW AND WHY OUR BRAND PURE WILL SUCCEED? Ability of the companies to achieve economies of scale and supply chain integration leading to cost reduction , improved stock turnover and better credit terms from vendor Building scalable model that is replicable across regions and extending models to smaller cities and towns Passing on benefits of lower costs to consumers offering better value proposition than what neighbourhood stores offer. Home delivery to match the customer convenience offered by the unorganized segment Better shopping environment benchmarked to international standard Focus on private label particularly for staple foods Extend into other categories for private label brands Health and physical fitness are current trends that might be combined with organic food. Organic food in combination with regionality shows a promising market potential. To attract new consumers interested in, for example, chilled or functional food, the organic product range should be enlarged by innovative and imaginative products. The organic product policy should focus on high-quality products to strengthen the quality image. More communication activities are needed to increase consumers' brand and product knowledge. Organic products should be placed among their conventional equivalents rather than in separate blocks, in order to be noticed by occasional buyers. CHALLENGES WE HAVETO OVERCOME Efficiency related issues in supply chain management areas for significant cost reduction Food and grocery is still a localized affair. People are unwilling to travel far off distances for grocery shopping when options are available nearby. Finding solution to this issue is thus a big challenge.

THE ORGANIC CUSTOMER

25 percent of the consumers surveyed have purchased organic foods. Most consumers are aware and concerned about food from genetically modified organisms (GMOs); women consumers are particularly concerned about GMOs. Most consumers also believe that organic foods are healthier and better for the environment than conventionally produced food products.

Consumers are concerned about the safety of the food they eat. According to the survey only 22 percent of consumers have a low level of concern about the food they eat and most have a medium level of concern. Fully 30 percent of consumers have a high level of concern. Food products that address this concern have a definite potential to be successful. Furthermore, 55 percent of all respondents and 61 percent of women are concerned about genetically modified food. Asians are more concerned about genetically modified foods than whites and foreigners. Another way to increase the market for organic foods is to make it more a more common experience. Most of those consumers surveyed who buy organic food only do so occasionally. Also, 47 percent of those surveyed wish there were more organic foods available where they shopped. Most consumers of organic foods have not made it the determining factor in their food purchases. Other factors besides whether or not a food item is organic play a role in food purchases. A drawback to the increased purchase of organic foods remains the price. Approximately 62 percent of the consumers surveyed would by more organic food if it were less expensive, and almost half desired a greater selection of organic foods. Consumers also buy organic foods at more than one outlet, of those consumers who buy organic food 65 percent buy at supermarkets, 45 percent at health food stores and 24 percent at Namdhari Fresh. One interesting aspect of consumer behaviour is the fact that most consumers of organic food buy what is available. Of those consumers surveyed 64 percent normally bought whatever was available, 26 percent normally purchased a name brand and 9 percent normally purchased a store brand. This may be evidence of the immaturity of the organic market, as more and more organic foods become available and more and more store brands and food manufacturer brands enter the market, consumers may become more sophisticated. It may

also indicate the depth of desire for organic foods; a dedicated group of consumers interested in organics will take whatever is available. If organics are not available consumers look for other product attributes as well as organic. Sixty percent of those surveyed are also interested in products with no artificial ingredients, 55 percent are interested in no preservatives, and 11 percent are interested in buying products from firms that give a percentage of their profits to charity. In the livestock industries, how animals are treated is an important consideration for some consumers. There are other ways to appeal to health and socially conscious consumers besides going organic. This could be especially important for dairy and livestock producers and processors who are having difficulty obtaining organic feed. Women are somewhat more likely to purchase organic foods as are people aged between 18 and 24. The level of income and region of the country where the consumer lives appears to have less impact in determining organic purchases.

CUSTOMER SEGMENTS FOR PURE- CLUSTERS

1. True Naturals 2. 3. 4. New Green Mainstream Affluent Healers Young Recyclers

True Naturals The True Naturals (roughly 7-11percent) hold the strongest views on environment. Consumers in this segment tend to act on their beliefs. They regularly purchase organic food and earth-friendly products and are willing to pay premium prices. New Green Mainstream The New Green Mainstream consumers are concerned about the environment, in particular the impact of chemical fertilizers and pesticides. While they may have purchased organic foods in the past, this group has found barriers for further purchasing to be availability, price and other criteria. However, given the maturing of the industry (i.e. increased availability, selection, etc.), the new green mainstream consumer is likely to grow. Affluent Healers The last two segments are well named. Affluent healers are wealthy, older people interested mainly in their health - the nutritional aspect of organic food is more important to them than the environmental aspects. Young Recyclers Young recyclers are young, single individuals who, although they claim to be environmentally sensitive, do not follow through unless it is very easy to do (e.g. recycling). With the exception of the True Naturals, these other segments of the population must meet their own core purchasing criteria before they purchase organic. These criteria include taste, convenience, price, nutrition, health and ease of preparation. The importance of some of these factors will be seen a little later. However, all things being equal, the environmental aspect of a product may be the tie-breaker in terms of purchasing.

CONCLUSION
The organic food market is in the process of being split into two groups. The first and largest is the market for organic foods that are considered by consumers to be healthy. The needs of this group of consumers are increasingly being met by large scale producers, processors and retailers of organic food. These consumers also tend to be somewhat price sensitive. In order to supply this market being a low cost producer is very important. This market is in the process of becoming a commodity market. Many large food processors and retailers are increasingly becoming involved in this market segment. The second market is the market for organics as a social choice. In additional to being perceived as a healthier option, these consumers buy organic because they believe buying organics is good for the environment, support sustainable farming systems, support humane treatment of livestock, and support alternative retailers. For many of these consumers locally grown food is an important product attribute. While this market is smaller than the first market, it has the potential for high profit margins and it creates opportunities for smaller producers and processors who may have higher production costs. Direct marketing through farmers markets or by other means also has potential for local producers. This market segment still presents opportunities for smaller producers and processors interested in providing products with attributes above and beyond organic. The market for organics continues to grow in all food categories. Perhaps because it is the most established the market is fruits and vegetables, it may be somewhat more difficult to get established in this market. Perhaps the markets that show the most potential are dairy and meat, the primary difficulty in becoming established in this market is the lack of organic feed. The demand for all organic food products remains strong, this includes the market for processed foods and prepared organic meals. The potential for profits in the organic food sector exists for all industries along the supply chain. This is especially true for products in the social choice market segment.

QUESTIONNAIRE
Dear friend, Kindly spend a few minutes on filling the below questions organic and natural food. We really appreciate this kind gesture. 1. According to your which colour comes to your mind with name organic? Blue 2. Yellow Green Red Orange Brown White Purple Black

What is the first word that comes to my mind when I say Organic? ........................................................................ What do you know about Organic products? ...................................................................................................................................................................... If some offers me Organic vegetables or fruits my first reaction would be ................................................................................................................................................ Strongly agree Somewhat agree Neither agree nor disagree Somewhat disagree Strongly disagree

3. 4.

5. Statements I feel Organic refers only to Vegetables & Fruits. It interests me to know more about Organic products. Organic products are expensive According to me all Organic outlets sell pretty much the same things When I see a new organic brand/store, Im not afraid of giving it a try In general I am the last in my friends circle to know the name of the stores that have opened recently 6.

7.

Organic Vegetables/Products are ( rank in order of preference, 1being highest and 5 being lowest) .......Wholesome .......Healthy .......Reliable .......Upper class .......Tasty To me, ORGANIC is........ 1 2 3 4 5 Important Unimportant Expensive Cheap Relevant Irrelevant Meaningful Meaningless Healthy Unhealthy Yummy Tasteless Appealing Unappealing Interesting Boring

8. 9.

Have you heard of the Namdhari chain of outlets? NAMDHARI is............. Expensive Accessible Extensive stock Knowledgeable staff Interesting Ambience Irresistible

Yes

No

1 1 1 1 1 1

2 2 2 2 2 2

3 3 3 3 3 3

4 4 4 4 4 4

5 5 5 5 5 5

Not Expensive Difficult to locate Out of stock Not informed staff Boring Ambience Uninteresting

10. Which of the following describes the chance that you will buy from the Pure/Namdhari outlet? ..........I will definitely buy things from here ..........I will probably buy something ..........I am uncertain whether I will buy something ..........I probably will not buy anything ..........I will definitely not buy anything. 11. Kindly tick on the appropriate column. Statements I feel emotionally attached to my cooking I take good care of my family I trust my friends when it comes to advice on buying food products I go overboard while shopping and get excited with the variety of vegetables in a retail store

Always

Often

Sometimes

Rarely

Never

12. Tick the statements that suit you the best, when it comes to purchasing Organic products. Strongly Somewhat Neither agree Somewhat Statements agree agree nor disagree disagree Assurance that my family & I will have a healthy living Knowing that I eat fresh and chemical free vegetables The Good Packaging makes me want to buy it. The adequate pricing fits in my budget and provides value for my money I have more variety to choose from. I get stuff which is not easily available everywhere. It sorts me apart from the crowd. Dealers have something for my kitchen garden. Not having to go too far, the outlets are in my reach. At organic outlets its even possible to try the food. Purchasing makes me stand out and I also have an opportunity to show off. I feel I am in safe hands and trust that the items are chemical free. I can live without it, but Id rather not.

Strongly disagree

I purchase it coz it is the latest food fad. It fits perfectly in my diet and gives an opportunity for self improvement. We would like to know more about you. Please fill the below detail about you. 1. I am Below 16 Between 16 20 Between 21 25 Between 25 35 Between 35 45 Above 45 2. I am Female Male 3. My religion is ..(we need this questions for cultural reasons) Hindu (Please specify the caste.) Christian Muslim Any other .. (Please specify) 4. I am a Vegetarian Non-Vegetarian Mixed Any other .. (Please specify) 5. I am Working in Private firm Public firm Own firm Homemaker 6. I am a Post graduate Graduate Below Graduation 7. My Familys annual income is Below 5 Lakhs. 5 Lakhs to 10 Lakhs, 10 Lakhs to 15 Lakhs 15 Lakhs and above Thank You for your time and effort in filling these questions.