How PARLE G Became World's No.1 Biscuit | Parle G Case Study | DEEPAK BAJAJ

DEEPAK BAJAJ

4 Aug 202310:43

Summary

TLDRThe video script narrates the remarkable journey of Parle G, a biscuit brand that has maintained its price at ₹5 for decades despite inflation. It discusses the brand's strategic location advantages, economical material procurement, and consistent quality that contributed to its success. Parle G's ability to remain affordable while driving sales and revenue is highlighted, along with its role as a sales driver for Parle's other profitable products. The script also emphasizes the importance of not relying solely on one successful product, focusing on controllable factors, and maintaining brand value for long-term profit.

Takeaways

💰 Despite inflation over the past 20-30 years, Parle-G biscuits have consistently remained priced at ₹5.
🏆 Parle-G is the world's best-selling biscuit brand, with revenue growing from ₹5,000 crore in 2013 to over ₹16,000 crore in 2022.
📜 Parle-G started as a small factory in 1880 making orange candies and launched its first biscuit, Parle Gluco, in 1939.
🎯 Parle-G's success is attributed to its affordability and good taste, making it popular among all age groups and helping it outperform British biscuits.
🔄 The company rebranded Parle Gluco to Parle-G in 1987 to distinguish it from similar competitors' products.
🌍 Parle-G operates ten factories across India, strategically located to minimize transportation costs and reach urban and rural markets effectively.
🤝 Parle-G uses contract manufacturing with local vendors, ensuring cost-effective production while maintaining quality standards.
📉 To keep prices stable at ₹5, Parle-G reduced the biscuit's weight from 100 grams to 55 grams over time.
🔗 Parle-G serves as a 'loss leader,' driving sales of other profitable products like Monaco, Krackjack, and Frooti under the Parle brand.
💡 Parle-G’s strategy emphasizes brand value and controlled costs over immediate profits, teaching valuable lessons for business success.

Q & A

What has remained at ₹5 for the past 20-30 years despite the general rise in prices?
-The price of Parle G biscuits has remained at ₹5 for the past 20-30 years, despite an increase in the prices of other goods and services.
What was the revenue of Parle G in 2013 and how much was it in 2022?
-In 2013, Parle G's revenue was 500 billion rupees, and by 2022, it had increased to more than 1600 billion rupees.
What was the initial product made by Mohanlal Dayal's factory in 1880?
-Mohanlal Dayal's factory initially made orange candy and not biscuits.
When did Parle Company launch its first biscuit and what was it called?
-Parle Company launched its first biscuit in 1939, which was called Parle Gluco.
What made Parle Gluco biscuits a hit among consumers?
-Parle Gluco biscuits were affordable and had a great taste, making them popular among consumers of all ages.
Why did Parle G biscuits become a challenge for competitors to replicate?
-The biscuits became so popular that competitors found it difficult to convince consumers that their similar biscuits were the original Parle Gluco.
What strategy did Parle G adopt to ensure the availability of its biscuits across different regions?
-Parle G used contract manufacturing with local manufacturers to ensure the biscuits were available in remote locations with minimal transportation costs.
How has Parle G managed to keep the price of its biscuits at ₹5 despite increasing costs?
-Parle G has managed to keep the price at ₹5 by reducing the quantity of biscuits in each pack without increasing the price, thus maintaining its affordability.
What is the significance of Parle G's 'sales driver' strategy in maintaining its market position?
-The 'sales driver' strategy involves Parle G biscuits acting as a pull product that attracts customers, who then also purchase other, more profitable products from Parle Company.
How has Parle G's packaging strategy contributed to its success?
-Parle G has maintained its old, simple, and cost-effective packaging over the years, avoiding unnecessary expenses that could increase the product's price.
What are the three key lessons that individuals can learn from Parle G's success according to the script?
-The three key lessons are: 1) Do not be dependent on one successful product; 2) Focus on controllable factors and minimize costs; 3) Maintain brand value for long-term profitability.

Outlines

00:00

🍪 The Timeless ₹5 Parle-G Biscuit

This paragraph narrates the enduring affordability of Parle-G biscuits, which have remained at ₹5 for the last 20-30 years despite inflation affecting other commodities. It highlights the brand's journey from a small factory making orange candy in 1880 to becoming the world's largest biscuit brand with a revenue of over 16000 crores in 2022. The script discusses the strategic moves that have allowed this brand to maintain its price while increasing revenue, such as its initial success with the affordable and tasty 'Gluco' biscuit launched in 1939. The paragraph also touches on the challenges of counterfeit products and how the company rebranded 'Gluco' as 'Parle-G' in 1987 to maintain its identity and quality, ultimately leading to its status as the number one selling biscuit worldwide.

05:03

📈 Parle-G's Strategies for Success and Profitability

The second paragraph delves into the specific strategies that have contributed to Parle-G's sustained success and profitability. It emphasizes the brand's location advantage with factories situated at optimal distances from major cities, reducing transportation costs and ensuring easy distribution. The use of contract manufacturing with local manufacturers to maintain quality standards while minimizing costs is also highlighted. The paragraph explains how Parle-G leverages economic buying to procure raw materials at the lowest cost, which, combined with minimizing waste in production, contributes to its profitability. It also discusses the brand's decision to reduce the quantity of biscuits in a packet without increasing the price, maintaining customer loyalty. The importance of the Parle-G brand as a customer pull factor, driving sales of other, more profitable products from the company, is also covered. Lastly, it touches on the company's approach to packaging, opting for cost-effective solutions that do not compromise quality.

10:06

🚀 Learning from Parle-G's Business Model

The final paragraph wraps up the video script by summarizing the key lessons that can be learned from Parle-G's business model. It stresses the importance of not relying solely on one successful product, focusing on controllable factors, and maintaining brand value for long-term profitability. The speaker invites viewers to share their insights and requests in the comments, offering to analyze other brands or companies in future videos. The call to action encourages collaboration and the sharing of knowledge, positioning the speaker as a partner in the pursuit of business excellence.

Mindmap

Keywords

💡Inflation

Inflation refers to the rate at which the general level of prices for goods and services is rising, and subsequently, the purchasing power of currency is falling. In the context of the video, it is noted that over the past 20-30 years, many things have become more expensive due to inflation, except for the Parle G biscuit, which has remained at 5 rupees.

💡Parle G

Parle G is a brand of biscuit that has maintained its price at 5 rupees for decades, despite inflation. It is highlighted in the video as an example of a product that has not increased in price while still contributing to the company's revenue growth and success.

💡Revenue Growth

Revenue growth indicates an increase in the income generated by a company over time. The video mentions that Parle G's revenue has grown significantly, from 50 billion rupees in 2013 to over 160 billion rupees in 2022, despite the constant price of its biscuits.

💡Economical Strategy

Economical strategy in the video refers to the cost-effective approaches taken by Parle G to maintain its biscuit price while still ensuring profitability. This includes efficient use of resources and minimizing costs without compromising product quality.

💡Location Advantage

Location advantage is a strategic business concept where the geographical positioning of factories and operations can reduce costs and improve accessibility. The video explains that Parle G operates factories in locations that are conveniently accessible to both urban and rural markets, reducing transportation costs.

💡Contract Manufacturing

Contract manufacturing is a practice where a company hires another manufacturer to produce goods to its specifications. In the script, Parle G is said to have used contract manufacturing to extend its reach to various locations within India, maintaining quality and reducing transportation costs.

💡Economies of Scale

Economies of scale occur when the cost per unit of a product decreases as the scale of production increases. The video describes how Parle G benefits from economies of scale due to its large production volumes, allowing it to procure raw materials at lower costs.

💡Brand Value

Brand value represents the worth of a brand in terms of its ability to contribute to the company's overall value, reputation, and customer loyalty. The video emphasizes that Parle G's strong brand value helps drive sales and profits for the company, even though the biscuit itself may not be highly profitable.

💡Product Range

Product range refers to the variety of products offered by a company. The script mentions that Parle G has expanded beyond biscuits to include a range of products such as candies, drinks, and snacks, contributing to the company's overall success.

💡Controlled Factors

Controlled factors are aspects of a business that can be managed and influenced by the company. The video advises focusing on factors within one's control, such as cost management, rather than worrying about uncontrollable external factors like petrol or diesel prices.

💡Packaging

Packaging is the process of enclosing or protecting products for distribution, storage, sale, and use. The video notes that Parle G has maintained its simple and cost-effective packaging over the years, avoiding unnecessary expenses that could increase the product's price.

Highlights

Parle G has maintained its price at ₹5 for the past 20-30 years despite inflation affecting other commodities.

The biscuit's affordability has made it a staple in Indian households, contributing to its popularity.

Parle G's revenue has grown from 5000 crores in 2013 to over 16000 crores in 2022, indicating significant business success.

The brand's strategy includes a focus on location advantage with factories placed strategically to minimize transportation costs.

Parle G uses contract manufacturing to extend its reach to rural areas, ensuring widespread availability.

Economical buying leverage allows Parle G to procure raw materials at the best rates, contributing to cost efficiency.

The company has managed to keep the price of Parle G biscuits at ₹5 without compromising on quality.

Parle G's success is attributed to its strategy of not relying solely on the biscuit for profits but diversifying its product range.

The brand has a wide product portfolio including snacks, drinks, and confectionery, which are more profitable than the biscuits.

Parle G uses its brand value to drive sales of other products, making it a sales driver rather than a profit generator on its own.

The packaging of Parle G biscuits has remained consistent over the years, avoiding unnecessary costs and maintaining brand recognition.

The company focuses on controlling factors within its reach and does not worry about uncontrollable external factors.

Parle G's strategy emphasizes long-term brand value over short-term profits, ensuring sustained growth.

The brand's success is also attributed to its ability to minimize waste and maximize efficiency in production.

Parle G's biscuits are a symbol of trust and quality, which has helped the brand maintain its position in the market.

The company's commitment to not increasing the price of Parle G biscuits has resonated with consumers, enhancing brand loyalty.

Parle G's story is an example of how strategic thinking and a focus on value creation can lead to business success.

The video promises to reveal three key lessons from Parle G's success that can be applied to business and life.

The video concludes by emphasizing the importance of creating value and focusing on brand value for long-term profitability.