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Technological factors: The IT systems are becoming more efficient, more powerful and cost effective every day. The company should be proactive in adapting these changes for better supply chain management and cost reduction.
Political factors: There is an increased awareness about the need to develop Indian alternatives to organized western fast food in political circles. With parties like Shiv Sena starting their own Vada pav chains and campaigning for the product (http://ibnlive.in.com/news/shiv-senas–shiv-vada-pav-for-marathi-manoos/78945-37.html). The political environment is favorable for the product as it represents Indian culture and ethos and also enjoys popular support from various political organizations.
Economic: Since food is a basic necessity of life, economic factors generally have little effect on food consumption pattern. Since the company’s product is a mass market product available at affordable prices for middle and lower income groups. The overall economic situation will not cause much change in consumption. But one economic factor that that is crucial for the operations is Inflation and price volatility. These have a direct impact on the margins of the company and also cause the company to change the price and quantity offered frequently, which might result in consumer dissatisfaction. The year on year inflation for 2009 was 11.49% (http://www.economywatch.com/indianeconomy/india-inflation.html) with whole sale price index hovering around 12.92% at June 19. (http://www.businessweek.com/news/2010-07-01/india-food-inflation-drops-to-8-month-low-manufacturing-slows.html). The high inflation rates prevailing for the past few years is a concern for the company which it has to factor in for future planning.
Social: The growth of globalization in India has resulted in change in lifestyle, tastes and preferences in urban customer. The rise in disposable income and adaption of fast life style influenced by west has resulted in shift of consumer towards fast food joint. . There has been an increase in the number of global fast food joints opening franchises in India. The consumer is more exposed and hence more receptive to varied tastes from different cuisines
PORTERS FIVE FORCES MODEL
Threat of new entrants:
Entry barrier is very low
The capital required to setup is relatively less.
Initial scale of operation need not be large.
Shop & establishment certificate – approximately Rs. 100.
Police license & FIR NOC – approximately Rs. 900.
Food license – Rs. 300 – Rs. 500.
License from local authority – Around Rs. 500.
Health license – approximately Rs. 50.
Since land requirements are low, availability of location is very high.
Easily available – Pav or the Indian bread, potato, etc.
Procurement cost is less.
Need for processed raw materials are low.
No intermediaries as direct service to customers.
Exit barrier is also low
Capital investment in assets is very low.
No requirement for vertical integration.
Easy geographical mobility.
Bargaining power of suppliers: limited scope for bargaining at supplier’s side.
Raw material used is mundane and universally available.
There are large numbers of suppliers.
Switching cost is very low.
Threat of substitutes: is medium to high
Product to product substitution ranges from medium to high depending on the geographical location and taste preferences. Low in Mumbai area but high elsewhere.
Potential substitutes: low in Mumbai area, but relatively high in other areas.
E.g.: Dosas, Mc Donald Burger, Chhole Bature, .Paranthas
Bargaining power of Buyers:
There are large numbers of small and unorganized players already existent.
Distributed nature of buyers and absence of bulk purchase since it is a retail segment.
Cost of switching between brands is very low because of profusion of the competitors.
The segment is almost a pure competitive market. The existing market already has large number of unorganized competitors (such as roads side and marginal vendors) with similar offerings. Hence Differentiation is of utmost importance. There are relatively few players in the organized fast food sector, some of the prominent ones being Mc Donald’s, Dominos, Pizza hut, CCD, Nirula’s etc, but the no of such players serving Indian cuisine is very low especially when it comes to a local product such as Vada Paav. However there are large numbers of unorganized players for e.g.: the road side vendors in Mumbai sell around 1.5 lakh Vada Paav and related items per day  . The present market share of customer spending on fast food is 2.6 %  and is expected to grow with the changes in the culinary tastes and preferences of Indians.
The strategies followed by competitors are reactive. The unorganized sellers lack innovation and use undifferentiated positioning. Little or no importance is given to promotion and development of the product. The differentiating factor between the present sellers of Vada Pave is the price factor which is stable and hence not a prominent one. The fragmented nature of the market makes it tough for the suppliers to adopt and follow a sustained strategy.
Market Performance: India’s Fast food industry is growing at a rate of 40% year on year. The multinational segment catering the fast food industry is $ 6 billion in worth2. However there is a strong presence of unorganized players operating in localized areas For e.g.: the road side vendors in Mumbai sell around 1.5 lakh Vada Paav and related items per day1.
CONSUMER BEHAVIOUR ANALYSIS
The need to purchase Vada Pav (a no-frills food item) can be attributed to the following factors:
Hunger as a basic need
Cultural preferences shaped by regional cuisine
Personal preference for hygienic food products due to high levels of awareness
Quick on the go food for fast-paced urban life
Passive knowledge through recommendations by acquaintances and media coverage
Value for money desired from the product
SEARCH FOR INFORMATION
Environmental influences are significant in shaping the consumer’s decision making process.
They are mainly
Recommendations from the friends and acquaintances
Preference for the local cuisine.
Preference for the food which facilitates fast paced life.
All these factors act as stimuli and person develops exposure to the Jumbo King Vada Pav brand.
This exposure is reinforced by wide spread coverage in main stream media and also the strategic location of Jumbo King Vada Pav outlets at busy locations such as railways stations, bus depots and office complexes.
The comprehension of the product offering is facilitated by the high acceptance of Vada Pav as a fast food item across Mumbai. There is very low inertia on the part of consumers and they show a high propensity to establish a relationship with Jumbo King Vada Pav as a brand.
The acceptance of the brand is extremely high because the Jumbo King Vada Pav offers a unique value proposition of a popular fast food item like Vada Pav being served in hygienic conditions. This creates customer delight as Vada Pav is associated with vendors having poor standards of hygiene. This further facilitates the cementing of customer relationship with the brand.
The success of Jumbo King Vada Pav as a brand has been the due to the fact that they have been able to maintain high standards of the unique value proposition they offer to customers. In the minds of customers the product offering is retained as customer associates the brand with excellence and high levels of quality.
The search for information tends to be generally passive and revolves around recollections of the good experiences narrated by acquaintances as well as newspapers articles covering the chain because of its novel offering.
However in cases of repeat buyers which make up for the majority of the consumers, the active search component involves gathering information about the location of outlets in unfamiliar locations as well as new additions to the menu.
SOURCES OF INFORMATION
Sources of information are generally non marketer dominated stimuli as explained previously and marketer dominated stimuli is limited in its scope.
In recent times the brand has established itself in web space through web sites giving details about the product and locations.
The two major categories of alternatives were evaluated
Established fast food chains like McDonalds, KFC, etc.
Local street vendors of fast food
The following evaluative criteria were used for comparing alternatives across the two categories mentioned above.
Value for money
Preference for regional cuisine
Portability of food item
The above mentioned evaluative criteria are in the descending order of preferences. The brand alternatives were compared as per these criteria and it is extremely interesting to note that most of the consumers had a very high preference for the hygiene factor and consequently local street food vendors suffered from an unfavorable consumer perception. This impression in consumers mind is accentuated by recent outbreak of food poisoning related illnesses which are prevalent across Mumbai especially during the monsoons.
Also established fast food chains like McDonalds tend to score low on the value for money criteria by the majority of the consumers. Thus we see that the Jumbo King Vada Pav has succeeded in creating a unique product offering exploiting the synergy between the two key factors between hygiene and value for money.
On interviewing consumers we came to the conclusion that the consumer decision was not a purely a lexicographic rule but there is a strong heuristic element involved in the form of a strong cultural preference for regional cuisine expressed by the interviewees. The extent of preference for a regional cuisine can be gauged from the fact that consumers equated the product offering of Jumbo King Vada Pav favorably with premium segment offerings of established food chains. Thus we can conclude that certain hygiene factors do play a critical role in the purchase decision but it is also strongly influenced by the intangible factor such as cultural preferences.
Purchas decision can be categorized on the basis of two segments
Regular consumers displayed a curiosity to try out new product offerings which were prominently communicated via in store promotions. However they generally tended to purchase their preferred offering more.
Irregular consumer on the other hand tended to choose entry point offering and expressed unwillingness to try out higher priced products initially.
Consumption tended to be immediate for most of the consumers although the consumption was primarily after moving out of the store instead of conventional model of consuming in the store such as in KFC and Pizza Hut.
Very low percentage of consumers tended to delay the consumption primarily in the cases where the purchase has been made for the family.
This is one of the deficiencies of the model Jumbo King Vada Pav as it is not associated as a place for family outing and other chains such as McDonalds, Pizza Hut etc. score over it.
Since it is a fast food category product the maintenance or longevity of it does not come into the picture.
POST CONSUMPTION EVALUATION
Expectations associated with the product are primarily hygiene, value for money and good service. These expectations are generally matched by perceived performance. Therefore a high percentage of repeat customers exist for the product. However some of the offerings were not accepted enthusiastically by the consumers especially the hybrid offerings such as Spanish Vada Pav. These offerings therefore were discontinued by the Jumbo King Vada Pav.
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