Perfetti's teething problems

The first products to be sold were some gums that had a large success in the home country. But then the first market problems started. The strategy used by the company was centered on the standardisation of products and communication and specifically the extension of the products and communication mix used with success in the home country. The formats initially produced and marketed were similar to those utilised in Italy, namely stick pack of five pieces each — both for Big Babol, a bubble gum, and Center Fresh, a liquid-filled chewing gun. Such packs were sold in display boxes of 24 pieces at a (consumer) price of ₹7 each (hence ₹168 for display boxes).

The price was way above the market prices from two different perspectives: local gums were sold at ₹0.5 each — Re 1 for the “premium” ones — and they were mainly sold in mono pieces. Formats like those initially introduced by Perfetti were unaffordable both for the retailers and for consumers. The former were used to buy displays of 100/150 pieces of much cheaper products, for a total expense of ₹75 to 150 (at consumer price). Perfetti used to sell the displays for ₹168 (at consumer price), hence with an out-of-pocket for retailers up to over two times that of the local competitors. 

Only restricted elites among Indian consumers could afford spending ₹7 for a pack of gums, particularly since the core target here was children and not young adults, like in Italy. The communication used was a standardised one: Italian commercials were dubbed in English and aired. Even the communication mix did not really work well, since there was a kind of disconnect between the Italian commercials and the average Indian public. If the reason to enter the Indian market was mainly the large number of potential consumers, given the country’s huge population, the initial marketing mix was possibly not coherent with such objective. 

There was scope for learning also in the formulations of the products. After a few weeks since the liquid-filled gums were in the market, the first complaints surfaced about the fact that the products had started leaking: the syrup inside was coming out of the gum making the product look messy and the wrapper sticky. Here the problem was caused by much hotter and humid climatic conditions compared to the European ones, whereas the products’ recipe of the home country had not been changed much. Soon the management realised that a complete revision of the marketing mix was necessary and studies began to improve the formulation and create a tropical recipe that could withstand the local climate. 

Pricing was perceived to be an extremely important variable and actions were taken to create an offer more appealing also to masses. To the five-pieces stick pack, the price of which was brought down from ₹7 to 6, were also added single-piece offers for both the brands: gums were individually wrapped and sold at the price of ₹1.5 per piece.