Friday, September 30, 2011

Balaji Wafers-David vs Goliath turned on its head

I recently read on Gaurang Kapupara's blog(http://gaurangkapupara.blogspot.com/2010/05/wafer-sultan-mr-chandubhai-virani.html) about the success story of Balaji Wafers. It did not strike me with much surprise, because I've witnessed this phenomenon during my travels in Maharashtra, Gujarat and Rajasthan. While its competitors(Pepsi/ITC) own the distribution relationship, with Haldiram having the premium branding, Balaji Wafers has carved out a value positioning('cheap at its price' in MBA jargon). And now, others struggle to match it despite their fully depreciated machinery and existing relationships, or maybe because of it.

Another player(Samrat Namkeen) has taken the chips market by storm. While others offer a measly airfilled 35gm potato chips pack, it gives 60gms pack for Rs 10, that too masala flavoured chips. No wonder then, that its stocks run off the few shelfs they are kept on('few' because the price differential is so much that retailers know they will not be able to easily sell the other stock if they keep Samrat).

So what do these teach us? It is essentially conventional marketing turned on its head. These players do not spend(waste?) money on branding, and instead let quality and price do the talking. This was the earlier(non American) way of doing business before the marketing/advertising craze caught on. So will these players remain or be brought out/turn into contract manufacturers? There is plenty of material for a MBA case here, if only people will bother to step out of their ivory towers and smell the roses.

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