The food market in India is valued Rs 65,586 crore and is expected to reach Rs 95,382 crore by 2012.
It consists ofbakery, beverages, packaged and processed food.
The bakery market in the country is valued at Rs 3,295 crore.
The beverages market is expected to reach Rs 34,746 crore by 2012.
The packaged food market is valued at Rs 33,234 crore.
NUGGETS
selections from management journals
In this article, the authors examine the effect of Wal-Mart’s entry into the UK on the performance of European retailers. The focal measure of performance is shareholder value, which has recently been recognised as an important metric for evaluating the effect of marketing actions, but the findings are validated using alternative performance metrics. The authors test the hypotheses on nearly 100 European retailers.
They find that the expected performance of incumbents is negatively affected by the degree of overlap with Wal-Mart in assortment, positioning, and country of entry. Overlap in country of entry amplifies the negative implications of overlap in positioning. Moreover, they find that the incumbent’s capacity to withstand the threat matters as well. Small, less profitable, and financially highly leveraged firms are much more negatively affected than firms with stronger financial resources.
In addition to the financial capacity, the organisational capacity to withstand the threat plays an important role. Retailers that have built organisational experience in countries with a strong price focus, in competitive countries, and in international markets are less negatively affected than retailers that have not built up these experiences. Finally, development of a competitive repertoire based on direct competition with the entrant (Wal-Mart) in other countries also plays a significant, positive role.
On the basis of these results, the authors suggest that incumbent retailers can employ proactive strategies when faced with the prospect of the possible entry of a much larger competitor, such as Wal-Mart. For example, to contain the seriousness of the threat, an incumbent retailer using everyday low prices may consider moving to a hi-lo strategy to render direct price comparisons with Wal-Mart more difficult.
Incumbent retailers might also reduce the overlap in assortment with Wal-Mart by focusing on niches that Wal-Mart does not cover. The overlap in assortment can be reduced by carrying exclusive, specialised, niche, or service-augmented products that are difficult to reconcile with the big-box retailing formula that drives Wal-Mart’s success. A possibility is upscale manufacturer brands that do not want to be sold at Wal-Mart for fear of damaging their brand image. Another option is the retailer’s own line of premium store brands or exclusive items.
Dancing with a giant: The effect of Wal-Mart’s entry into the United Kingdom on the performance of European retailers
By Katrijn Gielens, Linda M Van De Gucht, Jan-Benedict E M Steenkamp, and Marnik G Dekimpe
Journal of Marketing Research, Volume 45, Number 5, October 2008
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This research sheds light on a major dilemma a firm faces when contemplating entry into a market dominated by an incumbent. Such an entrant needs to decide what kind of product to develop and how aggressively to invest in R&D. One option is to attempt to develop a product similar to that which the incumbent offers — an imitation strategy. The other option is to attempt to develop a novel and superior product relative to what exists in the marketplace —an innovation strategy.
In navigating this new product dilemma, the entrant needs to account for three critical factors: (1) R&D is uncertain, and the different entry strategies entail different development risks and costs; (2) there can be considerable upfront market uncertainty about the rewards, which affects the potential return to each of the entry strategies; and (3) there is competitive pressure; facing the threat of entry, the incumbent devises a response that will allow it to innovate and sustain industry leadership.
At best, imitation results in duopoly rewards, whereas being the only firm to successfully develop an innovation results in monopoly rents; thus, a key factor in understanding how firms should behave is related to the relative attractiveness of these two profit levels.
To innovate or imitate? Entry strategy and the role of market research
By Elie Ofek and Ozge Turut
Journal of Marketing Research Volume 45, Number 5, October 2008
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As officials worldwide scrambled to contain the spreading financial virus, hopes are rising that the latest government plans to purchase equity stakes in banks may finally offer the right medicine. And with the patient showing intermittent signs of improving, thoughts turn towards next steps, including new restrictions on the markets. In addition, expect individuals and business to have a tougher time getting loans. And watch for authorities to prescribe greater transparency, stricter capital requirements to reduce leveraging, and more standardised financial contracts to push opaque securities into the sunlight.
How the credit crisis could forge a new financial order
Knowledge@Wharton October 15-28 Read this article at http://knowledge.wharton.upenn.edu/
