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NACCO: Morketing Jqm

This case is based on the folowing pastures:

r Price pian
. Distributisnstructure
. Media plan
. Developing, an advertisement

Nagpur Canning Company Ltd was started as a smallscale unit in Ramtek, in Nagpur
district for processing fruits, Ramtek was known for growing fruits like orange, mango,
pineapple, gu&vfl, piantain, etc. Many of these fruits in larger quantities were easiiy
available for processing in this p1ace. A good number of units in small scale sector
were started in the rgsos and 6os in the district of Nagpur for processing, canning
as well as for making other fruit based products, Mr Govind Jain, an entrepreneurial
person, sa\^/ an opportunity quite earlier in the year rg4g, to start a small-scaie unit for
processing and canning fruits. A few years later, Govind Jain incorporated his unit as
a public limited company under the name, Nagpur Industrial and Canning Company
Ltd, for preserving and canning fruits in large quantities, to. be marketed later. After
the demise of Govind Jain, Mr Subhas Jain, his son, took over as its Managing Director
(MD) in 1956. The present MD Mr Shridhar Jain (the nephew of Subhas Jain) took
charge from ry77.ln tg74, the name of the colnpany was changed to lttagpur Canning
Company Ltd (NACCO). The company had been regulariy adding more products to
rits portfolio. One of its successful products for years had been jams. Over the last ten
i

;This case was prepared by Profe.ssor Simon George, as the basis for c/oss room discus'sion, rather ttha-n
ito illustrate either inffictiue or effectiue handling of an administratiue situation. The case "NACCO'
'Markenng Jam" by Dr Simon George, Prafessor, TAPMI, Manipal, e'mail: simorr@tapmi.edu.in.
 NACCO; Morkefing'Jom

multinationals, other national piayers,

years, it had been facing stiff competition'from \
a rarge number of regional piayers in addition to the "home made"
store brands'and
management beiieved that' it had
products in its marketing efforts. But, btACCOs' any
the market and the n1oducl,.to tide over
the internal strength, understanding of
or ,or2 decided that, he will initiate
certain
charlenge., shridhar, towards the uno
brand of jams, a strong brand to reckon
drastic marketing action, to make the NAcco
in the market.
!'
i; Market and Its Behaviour
sector was estimated at around Rs z8o
i' crores,
The Indian jam market in the organized
i'

unorganized sector. The jam market

was
Rs 150 crores coming from the
with another
dominated by Hindustan unirever,s
(HuL) Kissan with a market share of.6oYofollowed
with +.s%, Mapro with 3'6 Yo' tnd a host of
by Marico,s Sil at r4%, Druk al5%,Mala
regionaiplayers}ikeLion,Prestoaswellassomestorebrands.ADenmark-basedfood
in a too%o sugar-free product'
group was planning to entei India, by bringing
and upper middle class family
Jams were a c'mmon food item in man1,urban middle
jams.
with children (from age 6-15) were the biggest purchasers of
in India. Famiiies
breakfast and snack items, sweeter for
Mothers used jams to make the food especiariy also
short of time to cook-eraborate breakfast,
the ch,dren. young coupres, who were
,,quick" breakfast items, More females (640/o) consumed
used jams as spread in their
jamsthanmaies(sq%).tt%of'femaleswerehealyfrequencyconsumersasagainslg%
of male, while

of.the children who consumed it were heavy users' It was also an item' which
ss%
waspackedininthefooditemsbasket,infamilyoutingsonweekends'Hotelsand
more
jams as spread with other food items. Jams were
upscare hostel messes aiso used
in south India (84'/o) followed by west (zl%); then, East
preferred by households
(zzo/o)and North (tZ%)'

management interns on households'

A perception study carried out by a group of to the
snacks items eaten was a big contributor
showed that the type breaHast and
purchaseofjams.Advertisements,storedisplays,priceandpromotionincentives
jams. consumers were specifieally influenced by
a
influenced consumer,s purchase of
of the jam' sweetness' richness of
fruit'
host of factors such as: brand name, thickness of
colour, package design, ease of spreading and fruit richness in their choice
flavour,
jams for children were arso conscious
brands (see Tabrer). Mothers when they bought
extensive use leadinS to tooth decay'
of its low nutrition value as well as its
 rphons of uarious brands by,9o\su!ne,r:
Table 1: Percepno
Mala NACCO Mapro_
sil Kissan Dmk
Brarrds/ Feature{ I
5.4
5.0 5.3 5.4
T'lrinlrness of the iam s.8
:'t, / 5.1 5,6
s.8 6.r 5.9
Sweetness s.8 5,0
Dinhnpcs of frrit 5.4 s.6 6.0 *
s.6 5.2 5,2
6,0 6.o s,9
iFlavour q.2
6,3 5.4 4,5
iPnckase desien, 5,9
(.o s.6 5.0 5.4
5.7 J,/
iColour
i.oo ^f "t'r"pnding 6,r 6.0 5,/ \,/ 5,4
trD (.5 6.0 5.5
5.9
Value for moneY 5.O 5.6
6.s 6.r 5.(,
Brand name 6,3
nomos sa
least satisfactory to 7being
Ie ofmik;being

Companl''s Performance
that
been launching new products over the years. The product categories
NAcco had
and pure), fruit pulp and slices, fruit
it had w*r€ fruit slices, fnrit juices (synthetic pineapple'
tinegur, soft drink, and pickles' Mango'
cocktail, jam, squashes;and .*rhur,
the fnrits it uses for processing, canning'
lr.
papaya, grapes, ,;;;;;,.and rea cherry total
producis. The major contributor to the c'mpany's
and making,other finished fruit
jams in zorz (see rribre 2). A]l the company's'products
revenue came from the sales of
were known bY NACC0 brand'

Sales of us prpducrs (in lak@l

2010 2011 20.L2
Pjo-aYcls
. 102,0Q 87.00 rr8,oo
-- ., J, F ' 232.O0 2L7.OA r.83.oo
il*lEtp (mineo PinttP']t) rg6,oo 242,40
^nd
f lJuices (pineappls,_rngngq m , and tomato) r87,oo
j13,o0
2go.oo 303,o0
i lsduasnes ano crusrrEs
sso.8o 572,25
m'lgaftuitt) 6os,oo
' "Pa 260.oo z6l,oo
nli*td) 245,OO
g8,oo 31,00 27:59^-
6, ,,,Ls.gftdrilk. , -, .
22.OO 14.00 16.oo
i S:nthetic dnegm

The Product jams' were

The basic component of Jams was
fruits' The fruits to be used for making
pulping
in water' Washed fmits were fed into a
first cut into pieces, washed and soaked
which extracted the pulp. The puip coriected was boiled adding citric acid'
machine
meta bi sulphate) was added'
It was then, cooled and then, preservatiut'lpott'sium
outside for preparation of
The pulpthus produced was canneii and wai either, sord
etc. or, stored in the company in barrels for the manufacture of
squashes, crurhes,
was then, boired and sugar added.
Along with the sugar,
Jams rater. The purp made
acid' coiour' and flavOur were also added'
while boiling was added.pectin. ffr.n, citric
Thisfina}outputwastheJam,which*T,,,,.:},,,r,,,#packedincontain.'''
 NACCOT, #lorketin g'-lom
G
juice of one fruit or from a combination of
Jams were usualry made from pulp and
the world are single fruit jams' some of
severai fruits, though most popular all over
peaches' plums' mango' raspberry'
the popular fruits for jams were berries, apricots,
jam ha'd a soft, even consistency without
strawberry, grapes, and pineapple. Good
(mango had dark yellow coiour' while
distinct pieces of fruit. It had a bright colour
pineapple had iight yellow colour, and mixed
fruit had reddish brown colour)' a good
easy to spread but had no free liquid'
fruit flavour and,a semi-jellied texture that was
some used it as a spread with dosas
Jams were majorly used with bread for breakfast.
as a "spread" with chapattis andpooris
in south India while in North India, it was used
as taste enhancer for snacks, by children' :

NACCO manufactured and rnarketed mixed

fruit jams made from grapes, papaya'
variants of jams by NACCQ were mangg'
mango, and pineapple. But, the more popuiar
and marketed these jams in
pineapple, and mixed fruit jam. NACCO manufactured
more of them in glass bottles'
pet, glass, and tin packages. But the company marketed
costiy.
as it found that the preference to tin
had reduced, whiie pet was about 5% more
(glass and tin bottles)
' ii*unufactured 4 kg (pet bottle), I kg (pet bottle) and 5oo gm
bigger packagtt u11, househoids used the
i

I packages. Hotels and restaurants used

c&rne from r kg
i ;;;;;res. eoz of its jam sales come from the 5oogms, while \2o/o
were marketed in pet
pack and 8%from 4 kg. The bigger packs (r kg and + kg) :"T1..
company followed all the norms required,by
and were preferred by institutions, The
mark. (Fpo mark is a cernficanon
the Food product 0rder (Fpo) and had an FpO
fn rndia, foltowing the Faod
mark mand.atory on au processed fruit products so/d
guarantees that the producf rlp's
safety and stand.ard.s Act of zoo6. The FPO mark
thus ensuring pro.du,ct
manufactured in a hygienic'food-safe" enuironment, '-h1:'-hu
pictures of different fruits
isfitfor consumption). NACCO',s glass package labei showed
and other mandatory information (see Figure
l). Kissan had the 5oo gm' 200 gm' 1001
had 5oo gms, 200 gm bottlel
gm as well as a sachet containing 15 gms packages. sil
packages and the 1oo gms pet package. Druk and
Lion had 5OO gms as well as 2oo gms:
package.

NACCO, three years back purchased a'lset of

modern machinery and equipment to
crores, out of which fu z'oo
stren$hen its production facilities by investing Rs 5.00
pet bottles. This amount was taken as
crores were for the machinery for its own making
purchase. The manufacturing thus became
loan from a nationaiized bank, to finance the
be used for manufacturing of
fully automated. The machines were such that, they could
was not being manufactured'
other products of the company' when one product
WW
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Coses i n Bran d Mgnage menl's nd Sarvliei' futolrJidilag

lt'

: iiiijii:'::ti tll .'i!lilil,llitiliiiii.l]'!;liilit:iitliii!:tiiitilli.ltiitiiii i!: tltir til'

COt{ TAI t'lS PERMIiT,TED

INGREDIENTS: 0 l"ASS lI PRESERYATIVES
Mlxsd Frult svNffigflc
Sugar, Pectin COLOUR AND
Cltric Acld. DED FLAVOUR

Best Before within,,

RatalllFrice
12 months
Rs 70.00,
date of Mfg: (lnclulivr of AllTuro)
Mlg. Dete: 2344'2013
Batch No. : 15

EilO 290 U l(!tl

Prffi 0 !79 Manulaclured by: NAGPUR CANNING COMPANY tID
(:S$)!fJrE INDIA
floor xo.s,iianfnd Eulialng, $hanthl Nagrr, Ramtok, Nagpur'
61.16 0
Frr 72t t

Figure t: Label on the Package

Distribution System
NACCO had its administrative office in Nagpur and factory
in Ramtek. NACCO did not
was managed
have its own sales and distributicln set up. But, saies and distribution
headed by Mr
by an exclusive distributor (Ms Far and Wide distribution agency)
prateek Jain, who was the son of Mr Shridhar Jain (the MD of NACCO). Far and \'Vide
premises, located in
distribution agency (FADD) was based in Nagpur. Their office
at a subsidized rate. FADD had its
NACC9,s administrative building, was charged a rent
sales executives appointed stockists,
own sales set up with eight sales executives.'These
ensured timely despatch
planned prom.tion campaigns with stockists, received orders,
(mainly through mail and
of goods and received payments from them, Th.y interacted
transported
phone) with the stockists located in different farts of the country' NACCO
gooas to tt e stockists on the basis of the order schedule received
form FADD and the
of 6% of mw<imum
distribution cost was borne by the company,'They got a commission
retailers, book orders'
retail price (MRP). Stockists stockedlhe product, appointed
payment. Most of the company's
distribute the product to retailers and coiiected the
stockists got a commission of
stockist also distributed other non-competing products.
g%, while retailers received a commission of %. NACCO had 2r stockists I and t664
,retailers (see Iable 3)
'HUL,s
Kissan had a {istribution system, where the company
distributed the product to
This was the practise followed
the wholesaler, who in turn distributed to the retailer,
5,y.*t i1 una other companies too. In the case of Kissan and Sil, the wholesalers
about
;;;;, |-6%and the retailer about 8-ro%. The other regionai players offered
"r% and Sil)
wholesalers, keeping almost same percentage (similar to Kissan
^rrrio
+^ rL^
 ffii,;" ....i.]'..,.,.,.i...
Table g: Monthly sales and distribution data
State/City Sales (Number of Number of Stockists Number of
Soo gm tins) Retailers
Mumbai 5070 2 t20
Bangalore 5155
t)
115
Hyderabad 4050 2 1og
Chennai 3750 L 99
Calcutta 3720 2 702
Cochin 4150 2 rr7
Delhi g8Bo 1 124
Patna 2g5o i qB
Nagpur r68o 1 170
Lucknow 372c. 2 L07
BhopaI 3270 1 110
Cuttack 251O 1 LO2
Ahmedabad 2550 1 101
Chandigarh 2925 1
97
Jaipur i120 1 93

Cost and Pricing Approach

I'IACCO procured most of its raw material from nearby places. Most of the raw materials
hence were quickly and easily available, Its 5oo gms bottles was priced at Rs
7o, r kg
at Rs re5 and the 4 kg at Rs 4oo. NACCO followed a poiicy of allocating 25 % of allthe
fixed cost (see Table 4 far cost details) of all the products manufaetured to its Jam the
5oo 8ms which was the major contributor), for its price computation. Its total fixerl
cost included costs at the factory, administrative costs, and distribution costs, The
company's total fixed costs under the three heads totaled Rs 6+.68lakhs for the month.
This did not include depreciation and interest on working capital. The company spread
this fixed cost over 50, ooo kg of jams produced in a month.

Kissan prices its packages as follows: soo gm (Rs roz) 2oo gms (Rs +g.oo) roo gms
(fu z+) and the piastic sachet (Rs is). Sil's 5oo gms was priced at Rs roe and 2oo gms
at Rs 45. Druk's 5o0 gms bottle container was priced at Rs 95 and the zoo gms at Rs
5z
Lion, which was a regional brand, was priced at Rs zo far its 5oo gms bottle.

Table-4: Cost details* of a 5oo gms bottle of I{ACCO

Cost heads Yalrg fus % of Ex-factory price)
Fixed cost 3o
Material 37
Bottle to
Label D

andVAT
Excise I
Uortt margin 11
*Cost details
till December zote

&jiili
 ,:,
.i-,1. ' ,', ': l,'
i

/
For the year 2013, I.{ACCQ was,expecting an increase of 6% in its material cost as well
as S% in its bottling and packaging cost, It was also expecting an increase of its fixed
cost by about zo/o,The company hence had decided to increase the price of its
jam, by
following a price differentiation strategy, by regiqns. It was planning to fix tts 8o for
North and Eastern India and Rs 85 for South and West, for the coming year'

Promotion Activities
NACCQ's sales function was carried out by FADD, But, there was a small marketing
team consisting 0f h,vo persons working under the MD of NACCO, for all its products. 0f
them, the senior person was designated as fusistant Marketing manager and the junior
as Marketing Assistant. These two coordinated with FADD, as well as coordinated any
marketing and promotion activities, initiated by the company from time to time. There
were very iess promotion efforts taken up by the company for the last five years. Five
years back the company came out with an advertising campaign i4 a few lvomen and
children magazines highlighting "NACCO*the taste giving jam for your breakfast" (see
Figurea) spending about Rs rz lakhs. It also made displayed limited copies of posters
and POPs to be displayed at retail outlets, during some years. It all had limited success.
Mr. Shridhar Jain suggested to the two-member marketing team to come out with
a promotion plan for year eot3 exclusively for jams to inOrease its sales, He wanted
the details of the promotion media and schedules, promotion spend, duration etc,
Shridhar was willing to spend S-8% of the revenue on promotion. He also wanted their
comments and views on the other changes, pianned in fhe marketing of the product.

Figure z: The maqazine aduertisement of I'{ACCO jam

Questions for Discussions: :
of NACC0
1, Is it advisable to remove FADD from the sales and distribution system
jam?
2, Is the present package label appropriate?
3. What sfroUa be the new cost and price structure of NACCO'jams?
4, Is the present print advertisement effective?
5. What should be the media plan and media spend for NACCO?
5, What is the new BEP for NACCO jams?