PT. Indofood CBP Sukses Makmur Marketing Strategy Model
Brief Background of ICBP and its Major Markets
PT. Indofood CBP Sukses Makmur (“ICBP”) is one of the biggest food manufacturers in Indonesia. Founded in 1971, ICBP has successfully launched the most successful instant noodle brand, Indomie, as their main product since 1972 (Marbun & Isnaniah, 2018). At the end of 1980, the company started expanding to the global market by exporting its product to several continents such as Africa, Asia, Australia, America, and Europe. Today, ICBP has profitably sold 19 billion packs to more than 100 countries globally annually.
Based on the report written by The First Pacific Company Limited (2020), the major markets of Indomie is not only Indonesia, but also several ASEAN countries (such as Malaysia, Singapore, Thailand, Vietnam, and other SEA countries), Nigeria, the USA, Canada, and Australia. In 2020, ICBP has acquired Pinehill Co., Ltd. (“Pinehill”). This is a crucial pivotal point for ICBP that enables ICBP to distribute its product to Pinehill’s fast-growing markets that include over 550 million people in Saudi Arabia, Nigeria, Egypt, Ghana, Kenya, Morocco, Serbia, and Turkey. Furthermore, to increase its production capacity, ICBP has built additional factories in Malaysia, South Africa, Egypt, Nigeria, and Kenya.
Striking Benefits to Consumers
As stated in the Instant Noodles Industry in Indonesia: Analysis of Growth, Trends, and Forecast (2020–2025) report,
“Indomie is the most selling brand in Indonesia with a market share above 72% in 2014. While Indonesia is the world’s 2nd largest market for instant noodles with sales of 13.4 billion units in 2014.”
The continuous innovation to create various unique tastes of Indomie is one of the main reasons why consumers never get bored with it. The other main reason is the price. Despite its tasty and unique taste, the price offering is affordable even for the Indonesian mid-low class population. The cheapest is the standard one which offers 2000 IDR/pcs and the highest is Indomie Premium which offers 4900 IDR/pcs.
ICBP Marketing Strategy Model
Product — The product offering by ICBP is an instant noodle with various Indonesian local tastes, named Indomie. ICBP continues to innovate its product by creating new flavors regularly to fulfill their customer tastes.
Price — The pricing strategy done by ICBP is to maximize profits by lowering its prices to win 72% of the instant noodle market share in Indonesia and defeat its competitors. As stated in The Journal of Community Development in Asia (Ba Wazir et.al, 2020), ICBP has chosen mark-up pricing methods. Let say the profit for each sale is 50%, production cost per piece is 900 IDR other additional cost is 200 IDR/pcs, then the final price offer will be 2000 IDR/pcs.
Place — All Indonesian provinces including more than 100 countries (Australia, USA, Canada, throughout Asia, Africa, Europe, and Middle Eastern countries).
Promotion — ICBP advertises its products via advertisement on media, digital marketing, events, sponsorship, etc.
Segmentation
Geographic — Each Indonesian province has its local flavor. For example, Mie Kocok Flavor for people living in West Java, Rendang Flavor for people living in West Sumatera, Soto Betawi Flavor for people living in Jakarta, and many more.
Demographic — Customers are segmented based on their gender, age, religion, and level of income. For example, ICBP has been producing Indomie Bulgogi flavor to target Millenials who are heavily influenced by K-Pop or Korean culture.
Psychology, Personality, and Lifestyle — Customers are segmented based on their background. University students who are living far away from their families tend to have Indomie as their emergency meals if they don’t have any money left. On the other hand, ICBP also targets people with high income by producing The premium version of Indomie at a higher price.
Product Pricing Strategies to Maximize Profit in the Short and Long-term
As for the short-term strategy, I would like to suggest gaining more profits by attracting more customers attention by providing bundle (example: selling 5 pcs Indomie for 9000 IDR instead of 10,000 IDR) and value pricing strategies (example: selling Indomie with other ICBP food products in one package). As for the long-term strategy, keeping the low price to win the competition and psychology pricing by setting the cost at 1900 IDR/pcs instead of 2000 IDR/pcs, will be the recommended strategy to gain more market share (Business Strategy Hub, 2021).
Conclusion
ICBP has successfully proven its competitive marketing strategy by continuous innovation and lowering its price offering. Short-term strategies recommended for ICBP to gain more profit are by providing bundle and value pricing, while the long-term strategies for ICBP to retain and gain more market share are to keep the price low and provide a psychology pricing by setting the price a bit lower than it should be.
References:
Instant Noodles Industry in Indonesia: Analysis of Growth, Trends and Forecast (2020–2025) | Opportunities and upcoming projects |. (n.d.). Mordor Intelligence. https://www.mordorintelligence.com/industry-reports/instant-noodles-industry-in-indonesia
Marbun, P., & Isnaniah, L. (2018). Marketing Strategy Done By PT. Indofood Sukses Makmur Tbk, Indonesia. IOSR Journal of Economics and Finance (IOSR-JEF), 9(5), 30–35. DOI: 10.9790/5933–0905013035
Indofood Cbp, An Indonesian Subsidiary Of First Pacific’s Indonesian Flagship Indofood, Goes Global With $2.998 Bln Consumer Food Investment. (2020, May 22). First Pacific Company Ltd.
Ba Wazir, A. K., Kee, D. M., Siregar, A. F., Tian, C. S., Loong, C. S., Yamaputra, A. W., & Wahbeh, S. (2020). PT. Indofood Sukses Makmur Tbk strategies for more international growth & global competition. Journal of The Community Development in Asia, 3(1), 70–81. https://doi.org/10.32535/jcda.v3i1.710
9 pricing strategies — Maximize your profit with a good pricing strategy! (2021, February 5). Business Strategy Hub. https://bstrategyhub.com/9-pricing-strategies-maximize-your-profit-with-a-good-pricing-strategy/
Note:
This article is written based on University of The People Marketing Management (BUS 5112) written assignment by Fristy Tania in October 2021
