Case-Study-Analysis-on-Cargill-India-Pvt

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OVERVIEW
Examine the opportunity to expand Cargills

operation into business to consumer segment

or space in India. Seeing this plan of Siraj A.
Chaudhry was to launch a portfolio of food
products, beginning with edible oils for the
consumer market in which the domestic
demand was being met largely by importers

Case background

B2C was a new strategic direction for Cargill

Inc., as it was popular for B2B products and

services. Reason for entry are :
1) B2C model would enable the company to tap
into the popular end of domestic edible oils
market
2) It would improve the contribution of Cargill
India to global revenues of Cargill Inc.
3) If it worked in India, The B2C model could be
replicated in different geographies, particularly
in emerging markets

Characteristics of Indian Market in

B2C Segment

1) At home consumption was maximum,

people rarely go out to eat, hence B2C was the

viable option.
2) Diversity of markets, brands were local or
regional rather than national.
3) Over 95% of retail activity are conducted
through traditional retail
4) Younger demography, 70% less than 35
years of age.
5) Value for money, paisa vasool nature.

Challenges for Cargill

1) Building networks among vendors and

customers, setting up manufacturing capacity in a

small period was a challenging job.
2) It was not easy building food brands in India and
moreover creating a supply chain network was very
expensive.
3) Diversified and scattered population of India.
4) Cargill was known for B2B, so Chaudhary was
concerned about the recruitment of specialist staff
in B2C segment.
5) There were other issues like pricing, adverting,
competitors, etc.

SOLUTION OF THE CASE

Yes, the B2C was the right thing to do for Cargill India as

in India people have a habit of preparing food at homes

for most number of times, eating outside in restaurants,
hotels and other outlet is very less as compared to US,
Thailand and Indonesia.
India being the second largest market as per population
there was a huge scope for Cargill to increase its revenue
many fold in India
Most important part of this process was the distribution.
Indian market was scattered and widely spread, beyond
that people in different region had different taste and
preference for edible oil, eating patterns were different.
So, Chaudhary was correct that, approach need to be slow
as cracking the complex process would be hard for once,
but a viable option in a long run.

SOLUTION OF THE CASE contd

Major advantage of Cargill was its Import, being an old

company Cargill had an access to various category of

edible oil at a reasonable rate.
Only advertising on TV and radio was not the feasible
option for Cargill, as it would only cause awareness, but
major success of operation was with reaching the
distribution
There are more than 12 million small retail outlets
(kiryana) are there. So in order to reach maximum retail
stores the option with Cargill was to go for Hub and
Spoke, where hub it the main warehousing unit in each
major district and spoke are the regions nearby hub, and
hub should be given responsibility to sell the edible oil
packets and pouches in rural segment, an extra
commission to spoke, on selling it to retail outlets.

Marketing plan
The elements of the marketing plan, that would ascertain profit

and growth for Cargill India are:

Branding of the product, though edible oil are available in loose in

Indian markets, but with the latest trend, refined oil is

experiencing increasing sales. So Branding of the product was
very essential.
2) Brands are not born but made, so the process might take some

time, but in few years down the line Cargill can face huge profits.
3) A combination of above the line communication (largely

adverting) will cause awareness in the mind of people by which

people will develop liking for the products. Radio advertisement in
local language and TV commercial would play a major role behind
the success of this.

Marketing plan contd..

Hiring good experienced employee in the field of marketing

and branding, as Cargill did not had any experience in the

field of B2C segment.
Major attention should be given in the field of packaging.

Buying capacity of maximum population of India is not

good, so Cargill should decide 250ml special packs for rural
areas and pack of 500ml,1 liter ,5 liter and 10 liter thereon,
depending upon the segment and market.
Below the line communication would also play a major role

behind the success of sales, as Indian consumer are price

sensitive, promotional scheme would attract many
consumers and will lead to volume sales

Marketing plan contd..

Keeping

a price which is best suited for people in India, and is competitive or

less as compared to other competitors. Six leading players were Adani Wilmar
which include brands like Fortune, Kings, Bullet, Raag Gold. Ruchi group,
Bunge India, Kamali Oil Industries and Marico. All the companies had popular
oil brands which were synonym for oil in India, so task of the brand
management team was to come up with brand names which are familiar with
health and could be spelt easily.

8)

Merger and Acquisition was a good option, acquiring some established

brands would help Cargill to save time, but that would be an expensive
option.

9)

Come up with variants of Mustard oil, Soy oil, Palm oil and new variants of
oil like Olive oil, which was a new concept in India in early 2000s.

10)

Following the strategy of Competitive pricing as Indian consumers are

price sensitive, they compare the products of same category of different
brand in terms of price and quantity, so setting up a price which will built
sales for the company

CONCLUSION
Cargill Company has huge resources in terms of

Human resource, finances required. Indian market is

huge and has a huge potential, as still few players are
there in edible oil segment, India spends more than
45% on food products plus more than 80% of this
45% is consumed by household, so in this case B2B
model would not be of much use, rather B2C is a
more viable option, i.e. tapping individual households.
Edible oil seed demand projections show that total
demand will increase from 10.9 in 2004 to 21.3 in
2015 as per exhibit 8 of case study. Cargill should
also go for backward integration in India, in terms of
growing of mustard, this will help company to
decrease it costs of procurement from other vendors