INTRODUCTION
INDIAN SOFT DRINK SCENARIO
OBJECTIVES OF THE STUDY
SCOPE OF THE STUDY
RESEARCH METHODOLOGY
LIMITATIONS
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INTRODUCTION INDIAN SOFT DRINKS SCENARIO The Indian market offers a strong consumer potential as the majority of the population is in middle class category, which is a strong consumer base for any soft drink industry. Coca-cola and Pepsi are the man combatants in the soft drinks wars. They wage constant and pitch battles for the retail shelf space. They engage in price wars, copycat advertising, court battles etc, After 16 years, soft drinks again coca-cola came to India and launched coke in October 1993 for the first time in Agra. As a result of liberalization and opening doors to the multi national companies, Pepsi came to India in the year 1990 and for indianization it has added the word lehar. Coca-Cola India’s objective is to create more seasons and reasons for enjoying a coke. That us why the 200ml “mini” coke bottle coke, as a brand has a 21% market share.Coca-cola India accounted for 135 million unit’s cases. While Pepsi Company accounted for 79 million units cases.In 2001 coca-cola claims a market share of 58% of the total soft drinks market Of this, coca-cola and thumps up accounted for 42% with 16% accounted by other drinks such as limca, maaza, sprite and fanta. Pepsi company market share is 42% respectively.
2
OBJECTIVE OF THE STUDY The study will provide a representation of the ready to drink market for coffeetea in the twin cities, which will help in understanding the market in a better way and also enables coca-cola to identify opportunities in the near future an measure the potential of this sector, thus allowing it to gain considerable share of the market and cater to the needs of the customers.
The study also concentrates in detail the behavior of the consumer towards the hot beverages at the vending machines.
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SCOPE OF THE STUDY
The study will provide a representation of the ready to drink market for coffeetea in the twin cities, which help in understanding the market in a better way and also enables coca cola to identify opportunities in the near future and measure the potential of this sector, thus allowing it to gain considerable share of the market and cater to the needs of the customers.
The study also concentrates in detail the behavior of the consumer towards the hot beverages at the vending machines.
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RESEARCH METHODOLOGY SAMPLING DESIGN: The study is conducted in the twin cities of Hyderabad and Secunderabad spanning over a period of eight weeks.
For the purpose of collecting the required information, two heterogeneous sets of population were identified and studied.
1
The retail vendors under various categories of point of sale.
2
The consumers at the vending points.
RESEARCH DESIGN
NATURE OF RESEARCH:
1
Descriptive research: This method has been used to identify and provide an accurate picture of aspects of market environment like….
2
Market size of twin cities
3
Market shares of leading brands in terms of value and volume
4
Consumption pattern at various outlets etc.,
PROBLEM STATEMENT: The problem statement includes the following:
5
a. Management dilemma: ‘Can the market size for ready to drink coffee-tea through vending, in twin cities, be expanded, by introducing Georgia coffee-tea in the retail segment?’ b. Management questions: ‘How can the retail market for ready to drink coffee-tea be increased or expanded in order to achieve a considerable market share in this segment, in twin cities?’ c. Research question: ‘What are the marketing strategies being practiced by the existing companies in twin cities and what is the customer preference?’
RESEARCH OBJECTIVES: The research study has been carried out with the aim of collecting the information, which will be useful in formulating an effective marketing strategy for the launch of Georgia in twin cities. The following are some of the major objectives of this research study, which have been identified.
PRIMARY OBJECTIVES: 1
To understand the environment for the existing ready to drink coffee-tea through vending machines in twin cities, by determining the market size, market share of the existing brands and other related trends in the market.
2
To assess the competitive position of Georgia in respect to other 6
brands and identify possible threats and opportunities in the market.
DATA COLLECTION: The personal interview technique is used in order obtain the required information from the respondents. This has been conducted in two phases….
Phase I: data has been collected by using a structured questionnaire consisting of close-ended questions, from a sample of 180 outlets.
The following important points are known from the questionnaire:
1
Market share of the competitors.
2
Average cuppage per outlet.
3
Machine placement schemes of the competitors.
4
Service frequency.
5
Maintenance costs.
6
Source of water
Phase II: data has been collected by using a structured questionnaire consisting of closed ended and open ended questions, from a sample of 167.
The following points are known from the questionnaire:
1
Consumer’s beverage preference
2
Consumers brand preference 7
3
Consumers flavor preference in both tea and coffee
4
Consumption rate per day
5
Consumers chicory perception
6
Age break up at the vending points
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LIMITATIONS OF THE STUDY
Respondents reluctant to provide information.
Regency effect: during the process of data collection the
respondents might have given the sales figures of the recent month, which might lead to inaccuracy.
A broad spectrum of market aspects have been studied which
resulted in lack Of as in depth understanding of those aspects.
The distributor’s data has not been studied to give a complete
picture of the market.
The limited period of 8 weeks for the project did not allow the study to be
continued in detail.
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COMPANY PROFILE
COMPANY PROFILE
About Hindustan coca-cola Beverages Pvt. Ltd. “The COCA-COLA Company exist to benefit and refresh everyone who is touched by their business”
HISTORY OF COCA-COLA The history of coca-cola is a story that begins more than a century ago in the back yard a few blocks down the street from where the world head quarters of the coca-cola company is now located. Coca-cola originated in Atlanta, Georgia, on May 8, 1886. Pharmacist Dr.John Styth Pemberton stirred up fragrant caramel colored syrup in a three -legged brass kettle in his back yard and now carried a jug office formulation down the street to Jacob’s pharmacy, Atlanta’s largest drug store. That same day, the new product made its debut as a soda fountain drink for five cents a glass. When carbonated water was mixed with new syrup, refreshment history was made.
Dr.Pemberton’s partner and book keeper frank M.Robinson suggested that name and calligraphed the famous trade mark in unique script. Since then the coca-cola has grown up became the most favorable soft drink in more than 200 countries across the world. The coca-cola bottling system continued to operate as an independent local business until the late 1970’s and early 1980’s when, for economic and other reasons; bottling franchise ownership began to consolidate. In 1986, the coca-cola company recognized the opportunity to 10
Significantly advance this consolidation by merging some of this company owned operation with two large ownership groups that for sale. These bottling operations were combined into coca-cola enterprise Inc. the company offered
Its stock in the New York stock exchange on the November 21st, 1986, in the largest initial public offering made up to the date.
Board of directors
James D. Robinson [General Partner of RRE Ventures] Warren E. Buitentt [Chairman of the board and chief executive officer] Dunaut F. Henery [President of the IRC Group, LIC] Sam Naun [Chief executive officers of nuclear threat initiatives] Paul F. Oreffic [Board of director and chief executive officer of Dow chemical company] Douglas N Daft [Chairman of the board and chief executive of the Coca – Cola Company] Herbert A. Aller [Director and Managing director of Allen and company] Cathlon P. Block [President of Henrst Magazines]
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James B. Williams [Chairman of the executive committees] Robert L. Nardeil [Chairman of the board] Parter V. Veheniroth [Chairman of Contrarian]
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PROFILE OF COCA-COLA INDIA
Coca-cola India began in the year October 1993. Prior to this the company was forced to leave the country in the year 1977, 16 years from the date of its reentry. The political developments made the company to wind up its operations in India. In 1993, coca-cola was re launched in the historic city of Agra. Immediately after reentering the country, it took over the network of 52 bottlers of the national soft drink leader at the point of time i.e. parole exports. The major advantage the company gained through the re-entry was that it acquired all the brand leaders in the industry i.e. thumps up, Limca, Citra, gold spot and Maaza. The bottles were convinced to invest money and upgrade their plants to suit cokes requirements in 1994. 18 bottling plants in the country launched the international flavors coca-cola and Fanta in their respective markets. This continued with the rest of bottlers launching these brands gradually in their respective markets. The company aims to takeover all the 52 plants and set up new plants in order to cater to the customers and the increasing demand for the soft drinks manufactured in organized sector. The brand promotion was between 1994-96. The bottling acquisition occurred between 1997-99. Its quest for profitability started from 2000 onwards. In India coke has its concentrate plants at Pune producing 10 brands . Its company-owned bottling operations are at six operating regions, 29 operating areas with 26 plants 10 green fields and 3000 associates. It enjoys a turnover of over rs.3000crores in India.
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AP region Consists of five operating locations- Moula-Ali, Ammenpur, Nellore, Vijayawada and Visakhapatnam having a turnover of over 750crores with 3 plats, 2 green fields 1500 associates.
VISION OF COCA-COLA
Provide exceptional strategic leadership in the coca-cola India system resulting in consumer and customer preferences and loyalty, through cocacola’s commitment to them, and in a highly profitable coca-cola corporate branded beverages system
MISSION OF THE COCA-COLA INDIA
Create consumer product, services and communications, customer service and bottling system strategies, process and tools in order to crate competitive advantage and deliver superior value to: 1. Consumer’s as a superior beverages experience. 2. Consumer’s as an opportunity to grow profits through used of finished drinks. 3. Bottlers as an opportunity to grow profits and volume. 4. TCCC as trademark enhancement and positive economic valueadded. 5. Suppliers as an opportunity to make reasonable profits when creating real value added in an environment f system-wide teamwork, flexible business system and continuous improvements. 6. CCI associates as superior career opportunity.
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7. Indian society in the form of a contribution to economic and social development.
BUSINESS: Coca-cola enterprise is in the business of marketing, producing and distributing liquid non-alcoholic refreshments to customers and the consumers in their franchise tern tones. Coca-cola enterprise is the world’s largest bottler of the products of the coca-cola company; its operations extend in over 22 countries worldwide. The coca-cola enterprise and the coca-cola company are in the business partnership. The coca-cola company develops the product: while as a bottler the coca cola enterprise combines the product concentrates with other ingredients and packages in bottles, cans and fountain containers.
MANAGEMENT PHILOSOPHY: CORPORATE AREA: The major concept of the management philosophy is to remain in the beverage industry and not diversity into other areas. The management believes in investing in non capital-intensive areas. In fact, the beverage industry requires little capital, and produces maximum returns. The returns from the foreign markets are tapped to the most. Management as a whole believes in expanding into the global market.
FINANCIAL AREA: The corporate objectives are to increase the shareowners value. The management believes
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That in increasing the shareholders value it requires consistent growth in financial results complemented by effective use of the cash flow.
MARKETING AREA: The coca-cola consistently ranks first in the world’s most valuable brands. The brand value is about $39 billion. This is the greatest heritage of the company. As far as the branch management concerned, we find that coca cola ranks itself as the third only after Microsoft and Louis vuitton.
PRODUCTS:
The carbonated market
Four basic segments
Refreshment: -carbonated soft drinks (CSDs): Coca-Cola, fanta, sprite, thums-up and limca.
Rejuvenation: -ready to drink tea and coffee: Nestea, Georgia gold
Health and nutrition: -juices and milks: bibo, Fruitopia, minute, maid, sunfill
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Replenishment: -water and sports drinks: kinley, shock, PowerAde
Six operating groups
North America group
:
30% share
Latin America group
:
26% share
Europe and Eurasia group
:
21% share
Asia pacific group
:
16% share
Africa and Middle East group
:
7% share
Marketing Research of Coca-Cola Company
In the beginning near by 1985 when coke was not running in a proper manner due to regular innovation in the taste of coke. It was losing its market value of shares. This was due to the research done by the company.
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But, then Coca-Cola began the largest new product research project in the company’s history. It spent more then two years and four million on research before setting on a new formula. It conducted some 2, 00,000 taste and 3, 00,000 on the final formula taste alone. It blind tests, 60% of consumers chose the new coke over the old and 52% chose it over Pepsi. Research showed that new coke would be a winner and the company introduced it with confidence. The Coca-Cola Company has one of the largest Best-Managed and most advanced marketing research operations in America-a top the rough and tumble soft drink market for decades. But marketing research is far from an exact science. Consumers are fuel or surprises and figuring then out can be touch. If Coca-Cola L.T.D. can make a large marketing research mistake, any company can.
Marketing Process The marketing process involves:
Analyzing market opportunities Selecting target markets Developing the marketing mix Managing the marketing efforts The strategic plan defines the company’s overall mission and objectives with each business unit; marketing plays a important role in helping to accomplish the overall strategic objectives marketing role and activities in the
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organization can be clearly seen by knowing the marketing strategy of the company.
Targeting the consumer is very important step in the marketing process. The company identifies the total market; select the most promising segments and focalizes serving and satisfying these segments. It designs a marketing mix made up of factors under its control; Product; Prices; Place and promotion. To find the best marketing mix and put it into action, the company engages in marketing analysis planning implementation and controls.
Market Segmentation Market consists of buyers and buyers differ in one or more ways, they may differ in their wants, resources location, buying attitude etc. each buyer is potentially a separate market. Ideally, a seller must design a separate marketing program for each buyer.
Most sellers face large no. of small buyers and do not final complete segmentation worth while instead; they look for brand classes of buyers who differ in their product needs or buying responses.
Types of Segmentation:1 Geographic segmentation:-
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Dividing market by its geographical limits does it. For example dividing the market as rural market urban market, International market, domestic market etc.
2 Demographic segmentation:It is done because of population of a particulars state of a country.
3 Psychographics segmentation:It is done because of taste, chose in company preferences, psychology etc.
4 Behavioral segmentation:It is bone because of the behavior of the consumer.
Market Targeting
Marketing targeting involves evaluating each markets segment attractiveness and selecting one or more segment to enter. A Company should target segments in which it can generate the greatest consumer value and sustain it overtime. A Company with L.T.D. resources might decide to save only one or a few special segments.
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MARKETING MIX Once the company has decided on its overall competitive marketing strategy, it is ready to being planning the details of the marketing mix. The marketing mix is one of the major concepts in modern marketing. We define marketing mix as the set of controllable tactical marketing tools that the firm blends to produce the response it wants in the target marketing. The marketing mix consists of everything the firm can do to influence the demand for its product. The many possibilities can be collected into four groups of variables known as the “Four Ps”: product, price, place, and promotion. Figure 5-6 shows the particular marketing tools under each P. Product means the “goods-and-service” combination the company offers to the target marketing. Thus, a Ford Taurus “product” consists of nuts and bolts, spark plugs, pistons, headlights, and thousands of other parts. Ford offers several Taurus styles and dozens of optional features. The car comes fully serviced and with a comprehensive warranty, that is as much a part of the product as the tailpipe. Price is the amounts of money customers have to pay to obtain the product. Ford calculates suggested retail price that its dealers might change for each Taurus. However, Ford dealers really change the full sticker price. Instead, they negotiate the price with each customer, offering discounts, and trade-in allowances, and credit terms to adjust for the current competitive situation and to bring the price into line with the buyer’s perception of the car’s value. Place includes company activities that make the product available to target consumers. Ford maintains a large body of indecently owned dealerships that sell the company’s many different models. Ford selects its dealers carefully and supports them strongly. The dealers keep an inventory of Ford automobiles, demonstrate them to potential buyers negotiate prices, close sales, and service 21
the cars after the sale.
PRODUCT Product variety Quality Features Brand name Size Services Warranties Returns
PRICE List piece Discounts Allowance Payment period Credit terms
Target Customers Intended Positioning
PROMOTION Advertising Personal selling Sales promotion Public relations
PLACE Channels Coverage Assortments Locations Inventory Transportation Logistics
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GEORGIA
GREAT REFRESHER - Any time any where. Long ago when the ancient Saadhus started using a queer herb that helped them stay awake for their prayers, the whole world woke up to a new beverage. It has, over the years, found its way into lives of almost all mankind, be it the spicy green tea of china, or the crushed black coffee of south America, or the sweet, milky version of both tea and coffee that has wooed us Indians whichever way you like it, there is no denying the role that a cup plays in our lives. And why only mornings… we Indians cannot resist a delicious hot sip anytime of the day. Late nights, evenings, afternoons, early mornings and all times in between tea and coffee has been an integral part of India for ages. Research proves that an average Indian wakes up to a hot cup of tea or coffee and consumes many more before he ends his day. It also proves that with this backdrop, Georgia fits perfectly in the Indian market.
GEORGIA: A SWEET STORY OF SUCCESS Way back since 1886 quality beverages, around the world, has been synonymous with one name: coca cola they extended the same quality into the hot beverages segment with a new brand, called Georgia tea and coffee. It became instantly one of the most popular international brands. In markets like Japan where people take tea very seriously, Georgia teas and coffees are a big hit. Today, Georgia brings all its quality and experience into India. Perfectly blended to pamper the Indian taste, and the Coca-Cola promise of quality, hygiene and unwavering consistency…cup, after cup, after cup!
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Every cup is brewed so that it delivers a consistent and splendid taste.
Ready-to-drink tea and coffee from Georgia comes to you a winning variety of taste and mouth-watering flavors.
Tea
→
Plain tea, Cardamom tea, Adrak tea and Masala tea
Coffee
→
coffee, cappuccino and mochacino.
TASTE THE DIFFERENCE: That’s because the Georgia vending machine is the most advanced of its kind. Microprocessor controlled digital counter, hardware lock, auto flush system and state-of-the-art. This means low failure rates, hygienic, insect proof and durability like never before. The Georgia vending machine stands out as one of the most convenient to use, producing the best tasting tea and coffee, more profitable than any other in the market.
TECHNOLOGY: Georgia vending machines have been specially designed and are introduced keeping the unique requirements of the market in the mind. Technologically Georgia vending machine is the most advanced of its kind. Flexibility in cup offering full and half: is another attribute that makes Georgia vending machine. The technologically superior machine has been put through intense stress tests so that it can withstand the demanding local market conditions.
Georgia vending machines come in four different types
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•
Solo
→
single canister
•
Twin Georgia
→
double canister
•
Tri
→
triple canister
•
Georgia max
→
four canister
SWOT ANALYSIS STRENGTHS •
DISTRIBUTION NETWORK: The Company has a strong and reliable
distribution network. The network is formed on the basis of the time of consumption and the amount of sales yielded by a particular customer in one transaction. It has a distribution network consisting of a number of efficient salesmen, 700,000 retail outlets and 8000 distributors. The distribution fleet includes different modes of distribution, from 10-tonne trucks to open-bay three wheelers that can navigate through narrow alleyways of Indian cities and trademarked tricycles and pushcarts. •
STRONG BRANDS: The products produced and marketed by the
Company have a strong brand image. People all around the world recognize the brands marketed by the Company. Strong brand names like Sprite, Fanta, Limca, Thums Up and Maaza add up to the brand name of the Coca-Cola Company as a whole. The red and white Coca-Cola is one of the very few things that are recognized by people all over the world. Coca-Cola has been named the world's top brand for a fourth consecutive year in a survey by consultancy Interbrand. It was estimated that the
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Coca-Cola
brand
was
worth
$70.45
billion.
(http://news.bbc.co.uk/1/hi/business/4706275.stm) •
LOW
COST
OF
OPERATIONS:
The production, marketing and
distribution systems are very efficient due to forward planning and maintenance of consistency of operations which minimizes wastage of both time and resources leads to lowering of costs.
WEAKNESSES •
LOW EXPORT LEVELS: The brands produced by the company are
brands produced world wide thereby making the export levels very low. In India, there exists a major controversy concerning pesticides and other harmful chemicals in bottled products including Coca-Cola. In 2003, the Centre for Science and Environment (CSE), a non-governmental organization in New Delhi, said aerated waters produced by soft drinks manufacturers in India, including multinational giants PepsiCo and CocaCola, contained toxins including lindane, DDT, malathion and chlorpyrifospesticides that can contribute to cancer and a breakdown of the immune system. Therefore, people abroad, are apprehensive about Coca-Cola products from India. •
SMALL SCALE SECTOR RESERVATIONS LIMIT ABILITY TO INVEST AND ACHIEVE ECONOMIES OF SCALE: The Company’s operations
are carried out on a small scale and due to Government restrictions and ‘red-tapism’, the Company finds it very difficult to invest in technological advancements and achieve economies of scale.
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OPPORTUNITIES •
LARGE DOMESTIC MARKETS: The domestic market for the products of
the Company is very high as compared to any other soft drink manufacturer. Coca-Cola India claims a 58 per cent share of the soft drinks market; this includes a 42 per cent share of the cola market. Other products account for 16 per cent market share, chiefly led by Limca. The company appointed 50,000 new outlets in the first two months of this year, as part of its plans to cover one lakh outlets for the coming summer season and this also covered 3,500 new villages. In Bangalore, Coca-Cola amounts for 74% of the beverage market. •
EXPORT POTENTIAL: The Company can come up with new products
which are not manufactured abroad, like Maaza etc and export them to foreign nations. It can come up with strategies to eliminate apprehension from the minds of the people towards the Coke products produced in India so that there will be a considerable amount of exports and it is yet another opportunity to broaden future prospects and cater to the global markets rather than just domestic market. •
HIGHER INCOME AMONG PEOPLE: Development of India as a whole
has lead to an increase in the per capita income thereby causing an increase in disposable income. Unlike olden times, people now have the power of buying goods of their choice without having to worry much about the flow of their income. The beverage industry can take advantage of such a situation and enhance their sales.
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THREATS •
IMPORTS: As India is developing at a fast pace, the per capita income
has increased over the years and a majority of the people are educated, the export levels have gone high. People understand trade to a large extent and the demand for foreign goods has increased over the years. If consumers shift onto imported beverages rather than have beverages manufactured within the country, it could pose a threat to the Indian beverage industry as a whole in turn affecting the sales of the Company. •
TAX AND REGULATORY SECTOR: The tax system in India is
accompanied by a variety of regulations at each stage on the consequence from production to consumption. When a license is issued, the production capacity is mentioned on the license and every time the production capacity needs to be increased, the license poses a problem. Renewing or updating a license every now and then is difficult. Therefore, this can limit the growth of the Company and pose problems. •
SLOWDOWN IN RURAL DEMAND: The rural market may be
alluring but it is not without its problems: Low per capita disposable incomes that is half the urban disposable income; large number of daily wage earners, acute dependence on the vagaries of the monsoon; seasonal consumption linked to harvests and festivals and special occasions; poor roads; power problems; and inaccessibility to conventional advertising media. All these problems might lead to a slowdown in the demand for the company’s products.
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COMPETITORS TO COCA COLA The competitors to the products of the company mainly lie in the non-alcoholic beverage industry consisting of juices and soft drinks. The key competitors in the industry are as follows: •
PepsiCo: The PepsiCo challenge, to keep up with archrival, the CocaCola Company never ends for the World's # 2, carbonated soft-drink maker. The company's soft drinks include Pepsi, Mountain Dew, and Slice. Cola is not the company's only beverage; PepsiCo sells Tropicana orange juice brands, Gatorade sports drink, and Aquafina water. PepsiCo also sells Dole juices and Lipton ready-to-drink tea. PepsiCo and CocaCola hold together, a market share of 95% out of which 60.8% is held by Coca-Cola and the rest belongs to Pepsi.
•
Nestlé: Nestle does not give that tough a competition to Coca-Cola as it mainly deals with milk products, Baby foods and Chocolates. But the iced tea that is Nestea which has been introduced into the market by Nestle provides a considerable amount of competition to the products of the Company. Iced tea is one of the closest substitutes to the Colas as it is a thirst quencher and it is healthier when compared to fizz drinks. The flavored milk products also have become substitutes to the products of the company due to growing health awareness among people.
•
Dabur: Dabur in India, is one of the most trusted brands as it has been operating ever since times and people have laid all their trust in the Company and the products of the Company. Apart from food products, Dabur has introduced into the market Real Juice which is packaged fresh
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fruit juice. These products give a strong competition to Maaza and the latest product Minute Maid Pulpy Orange.
REVIEW OF LITERATURE
The Marketing mix is generally accepted as the use and specification of the four p's describing the strategic position of a product in the marketplace. One version of the origins of the marketing mix starts in 1948 when James Culliton said that a marketing decision should be a result of something similar to a recipe. This version continued in 1953 when Neil Borden, in his American Marketing Association presidential address, took the recipe idea one step further and coined the term 'Marketing-Mix'. A prominent marketer, E. Jerome McCarthy, proposed a 4 P classification in 1960, which would see wide popularity. The four Ps concepts are explained in most marketing textbooks and classes.
Marketing Mix A Marketing mix is the division of groups to make a particular product, by pricing, product, branding, place, and quality. Although some marketers[who?] have added other P's, such as personnel and packaging, the fundamentals of marketing typically identifies the four P's of the marketing mix as referring to: •
Product - A tangible object or an intangible service that is mass produced or manufactured on a large scale with a specific volume of units. Intangible products are often service based like the tourism industry & the hotel industry. Typical examples of a mass produced tangible object are the motor car and the disposable razor. A less obvious but ubiquitous mass produced service is a computer operating system.
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•
Price – The price is the amount a customer pays for the product. It is determined by a number of factors including market share, competition, material costs, product identity and the customer's perceived value of the product. The business may increase or decrease the price of product if other stores have the same product.
•
Place – Place represents the location where a product can be purchased. It is often referred to as the distribution channel. It can include any physical store as well as virtual stores on the Internet.
•
Promotion – Promotion represents all of the communications that a marketer may use in the marketplace. Promotion has four distinct elements - advertising, public relations, word of mouth and point of sale. A certain amount of crossover occurs when promotion uses the four principal elements together, which is common in film promotion. Advertising covers any communication that is paid for, from television and cinema commercials, radio and Internet adverts through print media and billboards. One of the most notable means of promotion today is the Promotional Product, as in useful items distributed to targeted audiences with no obligation attached. This category has grown each year for the past decade while most other forms have suffered. It is the only form of advertising that targets all five senses and has the recipient thanking the giver. Public relations are where the communication is not directly paid for and includes press releases, sponsorship deals, exhibitions, conferences, seminars or trade fairs and events. Word of mouth is any apparently informal communication about the product by ordinary individuals, satisfied customers or people specifically engaged to create word of mouth momentum. Sales staff often plays an important role in word of mouth and Public Relations (see Product above). Broadly defined, optimizing the marketing mix is the primary responsibility
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of marketing. By offering the product with the right combination of the four Ps marketers can improve their results and marketing effectiveness. Making small changes in the marketing mix is typically considered to be a tactical change. Making large changes in any of the four Ps can be considered strategic. For example, a large change in the price, say from $19.00 to $39.00 would be considered a strategic change in the position of the product. However a change of $131 to $130.99 would be considered a tactical change, potentially related to a promotional offer. The term "Marketing Mix" however, does not imply that the 4P elements represent options. They are not trade-offs but are fundamental marketing issues that always need to be addressed. They are the fundamental actions that marketing requires whether determined explicitly or by default.
Product marketing Product marketing deals with the first of the "4P"'s of marketing, which are Product, Pricing, Place, and Promotion. Product marketing, as opposed to product management, deals with more outbound marketing tasks. For example, product management deals with the nuts and bolts of product development within a firm, whereas product marketing deals with marketing the product to prospects, customers, and others. Product marketing, as a job function within a firm, also differs from other marketing jobs such as Marcom or marketing communications, online marketing, advertising, marketing strategy, etc. A Product Market is something that is referred to when pitching a new product to the general public. The people you are trying to make your product appeal to is your consumer market. For example: If you were pitching a new video game console game to the public, your consumer market would probably be a younger/teenage market (depending on the type of game).
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Thus you would carry out market research to find out how best to release the game. Likewise, a massage chair would probably not appeal to younger children, so you would market your product to an older generation.
Role of product marketing Product marketing in a business addresses four important strategic questions:[1] •
What products will be offered (i.e., the breadth and depth of the product line)?
•
Who will be the target customers (i.e., the boundaries of the market segments to be served)?
•
How will the products reach those customers (i.e., the distribution channels to be used)?
•
Why will customers prefer our products to those of competitors (i.e., the distinctive attributes and value to be provided)?
Product marketing vs. product management
Product marketing frequently differs from product management in high-tech companies. Whereas the product manager is required to take a product's requirements from the sales and marketing personnel and create a product requirements document (PRD),[2] which will be used by the engineering team to build the product, the product marketing manager can be engaged in the task of creating a marketing requirements document (MRD), which is used as source for the product management to develop the PRD. In other companies the product manager creates both the MRDs and the PRDs, 33
while the product marketing manager does outbound tasks like giving product demonstrations in trade shows, creating marketing collateral like hot-sheets, beat-sheets, cheat sheets, data sheets, and white papers. This requires the product marketing manager to be skilled not only in competitor analysis, market research, and technical writing, but also in more business oriented activities like conducting ROI and NPV analyses on technology investments, strategizing how the decision criteria of the prospects or customers can be changed so that they buy the company's product vis-a-vis the competitor's product, etc. In smaller high-tech firms or start-ups, product marketing and product management functions can be blurred, and both tasks may be borne by one individual. However, as the company grows someone needs to focus on creating good requirements documents for the engineering team, whereas someone else needs to focus on how to analyze the market, influence the "analysts", press, etc. When such clear demarcation becomes visible, the former falls under the domain of product management, and the latter, under product marketing. In Silicon Valley, in particular, product marketing professionals have considerable domain experience in a particular market or technology or both. Some Silicon Valley firms have titles such as Product Marketing Engineer, who tend to be promoted to managers in due course. The trend that is emerging in Silicon Valley is for companies to hire a team of a product marketing manager with a technical marketing manager. The Technical Marketing role is becoming more valuable as companies become more competitive and seek to reduce costs and time to market.
Qualifications Typical qualifications for this area of business are is a high level Marketing or Business related degree, e.g. an MBA, not forgetting sufficient work experience in related areas. As a key skill is to be able to interact with technical staff, a 34
background in engineering is also an asset.
Pricing is one of the four Ps of the marketing mix. The other three aspects are product, promotion, and place. It is also a key variable in microeconomic price allocation theory. Price is the only revenue generating element amongst the 4ps, the rest being cost centers. Pricing is the manual or automatic process of applying prices to purchase and sales orders, based on factors such as: a fixed amount, quantity break, promotion or sales campaign, specific vendor quote, price prevailing on entry, shipment or invoice date, combination of multiple orders or lines, and many others. Automated systems require more setup and maintenance but may prevent pricing errors.
Questions involved in pricing Pricing involves asking questions like: •
How much to charge for a product or service? This question is that a typical starting point for discussions about pricing, however, a better question for a vendor to ask is - How much do customers value the products, services, and other intangibles that the vendor provides.
•
What are the pricing objectives?
•
Do we use profit maximization pricing?
•
How to set the price?: (cost-plus pricing, demand based or value-based pricing, rate of return pricing, or competitor indexing)
•
Should there be a single price or multiple pricing?
•
Should prices change in various geographical areas, referred to as zone pricing?
•
Should there be quantity discounts?
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•
What prices are competitors charging?
•
Do you use a price skimming strategy or a penetration pricing strategy?
•
What image do you want the price to convey?
•
Do you use psychological pricing?
•
How important are customer price sensitivity (e.g. "sticker shock") and elasticity issues?
•
Can real-time pricing be used?
•
Is price discrimination or yield management appropriate?
•
Are there legal restrictions on retail price maintenance, price collusion, or price discrimination?
•
Do price points already exist for the product category?
•
How flexible can we be in pricing? : The more competitive the industry, the less flexibility we have. •
The price floor is determined by production factors like costs
(often only variable costs are taken into account), economies of scale, marginal cost, and degree of operating leverage •
The price ceiling is determined by demand factors like price
elasticity and price points •
Are there transfer pricing considerations?
•
What is the chance of getting involved in a price war?
•
How visible should the price be? - Should the price be neutral? (ie.: not an important differentiating factor), should it be highly visible? (to help promote a low priced economy product, or to reinforce the prestige image of a quality product), or should it be hidden? (so as to allow marketers to generate interest in the product unhindered by price considerations).
•
Are there joint product pricing considerations?
•
What are the non-price costs of purchasing the product? (eg.: travel time to the store, wait time in the store, disagreeable elements associated with the product purchase - dentist -> pain, fishmarket -> smells)
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•
What sort of payments should be accepted? (cash, check, credit card, barter) Pricing
Process of determining what a company will receive in exchange for its products.
Pricing factors are manufacturing cost,market place,competition,maket condition,Quality of product.
What a price should do A well chosen price should do three things: •
achieve the financial goals of the company (e.g., profitability)
•
fit the realities of the marketplace (Will customers buy at that price?)
•
support a product's positioning and be consistent with the other variables in the marketing mix
•
price is influenced by the type of distribution channel used, the type of promotions used, and the quality of the product
•
price will usually need to be relatively high if manufacturing is expensive, distribution is exclusive, and the product is supported by extensive advertising and promotional campaigns
•
a low price can be a viable substitute for product quality, effective promotions, or an energetic selling effort by distributors
From the marketers point of view, an efficient price is a price that is very close to the maximum that customers are prepared to pay. In economic terms, it is a price that shifts most of the consumer surplus to the producer. A good pricing strategy would be the one which could balance between the price floor(the price below which the organization ends up in losses) and the price ceiling(the price beyond which the organization experiences a no demand situation).
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Definitions The effective price is the price the company receives after accounting for discounts, promotions, and other incentives. Price lining is the use of a limited number of prices for all your product offerings. This is a tradition started in the old five and dime stores in which everything cost either 5 or 10 cents. Its underlying rationale is that these amounts are seen as suitable price points for a whole range of products by prospective customers. It has the advantage of ease of administering, but the disadvantage of inflexibility, particularly in times of inflation or unstable prices. A loss leader is a product that has a price set below the operating margin. This results in a loss to the enterprise on that particular item, but this is done in the hope that it will draw customers into the store and that some of those customers will buy other, higher margin items. Promotional pricing refers to an instance where pricing is the key element of the marketing mix. The price/quality relationship refers to the perception by most consumers that a relatively high price is a sign of good quality. The belief in this relationship is most important with complex products that are hard to test, and experiential products that cannot be tested until used (such as most services). The greater the uncertainty surrounding a product, the more consumers depend on the price/quality hypothesis and the more of a premium they are prepared to pay. The classic example of this is the pricing of the snack cake Twinkies, which were perceived as low quality when the price was lowered. Note, however, that excessive reliance on the price/quantity relationship by consumers may lead to the raising of prices on all products and services, even those of low quality, which in turn causes the price/quality relationship to no 38
longer apply.
PREMIUM PRICING Premium pricing (also called prestige pricing) is the strategy of consistently pricing at, or near, the high end of the possible price range to help attract statusconscious consumers. A few examples of companies which partake in premium pricing in the marketplace include Rolex and Bentley. People will buy a premium priced product because: 1. They believe the high price is an indication of good quality; 2. They believe it to be a sign of self worth - "They are worth it" - It authenticates their success and status - It is a signal to others that they are a member of an exclusive group;
3. They require flawless performance in this application - The cost of product malfunction is too high to buy anything but the best - example : heart pacemaker. The term Goldilocks pricing is commonly used to describe the practice of providing a "gold-plated" version of a product at a premium price in order to make the next-lower priced option look more reasonably priced; for example, encouraging customers to see business-class airline seats as good value for money by offering an even higher priced first-class option.[citation needed] Similarly, third-class railway carriages in Victorian England are said to have been built without windows, not so much to punish third-class customers (for which
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there was no economic incentive), as to motivate those who could afford secondclass seats to pay for them instead of taking the cheaper option.[citation needed] This is also known as a potential result of price discrimination.
The name derives from the Goldilocks story, in which Goldilocks chose neither the hottest nor the coldest porridge, but instead the one that was "just right". More technically, this form of pricing exploits the general cognitive bias of aversion to extremes. This practice is known academically as "framing". By providing three options (i.e. small, medium, and large; first, business, and coach classes) you can manipulate the consumer into choosing the middle choice and thus, the middle choice should yield the most profit to the seller, since it is the most chosen option.
DEMAND BASED PRICING Demand-based pricing is any pricing method that uses consumer demand based on perceived value - as the central element. These include : price skimming, price discrimination and yield management, price points, psychological pricing, bundle pricing, penetration pricing, price lining, value-based pricing, geo and premium pricing. Pricing factors are manufacturing cost, market place, competition, market condition, quality of product. MULTI-DIMENSIONAL PRICING Multidimensional pricing is the pricing of a product or service using multiple numbers. In this practice, price no longer consists of a single monetary amount (e.g., sticker price of a car), but rather consists of various dimensions (e.g., monthly payments, number of payments, and a downpayment). Research has shown that this practice can significantly influence consumers' ability to
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understand and process price information [1] Pricing as the most effective profit lever. Pricing can be approached at three levels. The industry, market, and transaction level. Pricing at the industry level focuses on the overall economics of the industry, including supplier price changes and customer demand changes. Pricing at the market level focuses on the competitive position of the price in comparison to the value differential of the product to that of comparative competing products. Pricing at the transaction level focuses on managing the implementation of discounts away from the reference, or list price, which occur both on and off the invoice or receipt.
Promotion (marketing) Promotion involves disseminating information about a product, product line, brand, or company. It is one of the four key aspects of the marketing mix. (The other three elements are product marketing, pricing, and distribution.) Promotion is generally sub-divided into two parts: •
Above the line promotion: Promotion in the media (e.g. TV, radio, newspapers, Internet and Mobile Phones) in which the advertiser pays an advertising agency to place the ad
•
Below the line promotion: All other promotion. Much of this is intended to be subtle enough for the consumer to be unaware that promotion is taking place. E.g. sponsorship, product placement, endorsements, sales
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promotion, merchandising, direct mail, personal selling, public relations, trade shows
The specification of these four variables creates a promotional mix or promotional plan. A promotional mix specifies how much attention to pay to each of the four subcategories, and how much money to budget for each. A promotional plan can have a wide range of objectives, including: sales increases, new product acceptance, creation of brand equity, positioning, competitive retaliations, or creation of a corporate image. The term "promotion" is usually an "in" expression used internally by the marketing company, but not normally to the public or the market - phrases like "special offer" are more common. An example of a fully integrated, long-term, large-scale promotion are My Coke Rewards and Pepsi Stuff. The publicity for the 40th anniversary of the 1966 NCAA Basketball championship included The renaming of a city street 1. A tie-in with an autobiography with the same title 2. The screening of a film with the same title 3. The release of a breakfast cereal box with coordinated materials 4. A pep rally on a university campus 5. Media coverage
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DATA ANALYSIS & INTERPRETATION CONSUMER’S PREFERENCE OF HOT BEVERAGE: The following points give us the percentage for the preference for the hot beverage i.e. coffee and tea BRAND Coffee Tea
PERCENTAGE 60.6% 39.4%
INTERPRETATION: The consumer’s preference towards the vending machine coffee can even be analyzed from a different angle. “Age” can be used as a
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parameter to explain this. From the general observation it is very clear that the consumer who comes to have a coffee or tea at the vending point is generally aged between15 to 25. Nearly 82% of the consumers belonged to the age segment of 15-40 years.
CONSUMER’S AGE BREAK UP AT THE VENDING POINTS: The following graph will explain us about the age break up of the consumers at the vending point. AGE GROUP 15-25 25-40 >40
% 44% 37% 19%
From the following
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INTERPRETATION: chart it was found that 44% of the respondents are belongs to age group of 15-25,followed by 37% are 25-40 and finally19% are belongs to the age group of > 40. CONSUMER’S PREFERENCE OF FLAVORS IN TEA: The following graph will give us the tea flavor preference of the consumers: TEA FLAVOUR ADARAK ELAICHI MASALA PLAIN
% 23% 38% 11% 28%
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INTERPETATION: An interesting point that can be observed from the survey is that nearly 47% of the consumers say that they expect the tea to taste like the one they get at “Blue sea” (a very famous café at secunderabad)
CONSUMER’S PREFERENCE OF FLAVORS IN COFFEE: COFFEE FLAVOUR BLENDED COFFEE PURE COFFEE
% 24% 76%
INTERPRETATION: From the above figure it is clearly evident that most of the consumers prefer to have a pure coffee rather than the blended one. But many of them don’t even realize that the coffee they are consuming right now is a blended
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one. So this clearly tells us that here the brand is the one which is driving the consumer rather than the product on its own.
CONSUMER’S PREFERNCE OF BRANDS: BRAND PREFERENCE NESCAFE LIPTON &BRU SUNRISE COFFEE DAY
% 44% 39% 5% 12%
INTERPRETATION: From the above chart it is clear that the brand preferences of respondents. Many consumers who were interviewed feel that sunrise is an inferior version of Nescafe.
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RESPONSE OF CONSUMERS WHETHER THEY STICK TO ONE BRAND OR NOT
Yes
No
Not
90
65
6
Respond
INTERPRETATION: The findings suggest that the majority that is 56% of the respondents do stick to one brand. 40% of them suggest that they don’t stick to one brand. 48
DOES AN ADVERTISEMENT MAKE YOU TO SHIFT FROM VARIOUS BRANDS
Yes
No
Not Respond
28
68
4
INTERPRETATION: The findings suggest that an advertisement does not influence people to shift between various brands of a soft drink.
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VARIOUS ADVERTISING SOURCES OF AWARENESS
ADVERTIZING SOURCES
%
Newspaper
30
Television
60
Magazines
4
Other sources
6
INTERPRETATION: The findings suggest that most of the respondents that is 60% come to know 50
about the advertisement through television.
THE RETAILERS OVERVIEW Market share of the competitors: MARKET SHARE NESCAFE COFFE DAY HLL
% 30 12 58
Though the brand value of Nescafe is good in the market, but the market leader is HLL. The company is very aggressive in the recent past in installing its vending machines. Nestle is very selective in placing its machines in the retail market. Coffee day has started very recently but is trying to spread itself into the market with rapid pace. Coffee day’s target for the first financial year is to install 3,000 vending machines in the retail market. Coming to TATA, its market share is negligible in the retail market. Hardly there are any vending machines found in the market.
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Average cuppage of the competitors:
CUPPAGE
%
COFFE DAY
35
HLL
33
NESCAFE
32
INTERPRETATION: HLL has the minimum number of machines in the market and its cuppage is also healthy. Coffee day has a very few outlets and the existing outlets of coffee day are very potential once. That’s the reason why its average cuppage is good.
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Types of cups used:
COMPANY
BRANDED
UNBRANDED
HLL
2
97
NESCAFE
11
40
COFFE DAY
19
1
INTERPRETATION: HLL and Nescafe use branded cups only at selected outlets. Coffee day uses only branded cups and it even provided them free of cost to the retailers along with a lid over it. Infact many retailers say that the distributors themselves advise them to go in for unbranded cups, to reduce their cost per cup.
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Machine placement scheme:
SCHEME
%
FINANCE SCEME
35
SHARING/CUP
12
MONTHLY RENTAL
114
INTERPRETATION: 71% of the machines in the market are given on monthly rental basis, 22% on sharing/cup basis and only 7% are given on finance scheme.
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Source of water used:
BRAND HLL NESCFE COFFE DAY
TAP WATER 92 45 0
MINERAL WATER 6 4 20
Once again the discrimination has been shown by HLL and Nescafe in this issue. These companies use mineral water only at some premium outlets. But coffee day uses it every where. It provides mineral water to the retailers free of cost. This will give a good message in the market especially in the minds of consumers who has turned out to hygiene conscious. They even provide a lid over the cup of coffee you purchase. All these things add value to your product.
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FINDINGS
1
Coca-cola as an excellent opportunity of entering in to the RTD coffee-tea segment in the relatively less competitive market of Hyderabad and Secunderabad and establishes its brand Georgia
. 2
The twin cities are going to experience an all new pleasant scenario in the hot beverages segment and it can also to some extent change the consumption pattern in the twin cities
3
The RTD market itself is bound to grow with the increase in the competition and more of the latest technology will be used to provide the consumer with the ultimate satisfying experience.
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SUGGESTIONS The company can think of the following combination of marketing options:
1
It has to take drastic steps towards revolutionizing the market
2
Try to crack the market share of nestle at the corporate segment. Aim for a share of at least 20% to 25%.
3
Try to dominate even the retail segment where there is a lot of scope for future growth
4
Go for good promotional campaigns which hell help in building the brands and helps the company to bang its product in the retail market.
5
The company has to aim for not less than 1300 to 1500 outlets in the retail market in the first financial year. (Competitors are aggressive).
6
See to it that the distribution system is not complicated. Avoid the conventional, “carry forward” agents in the distribution chain.
7
Company can also think of setting up exclusive Georgia outlets. This will help the company in building the brand image. (just like coffee day)
8
Think over the option of putting mobile vending machines just like
the CSD mobile three wheelers at Neckles road. These things contribute a lot to the Company’s business.
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9
(Not less than 700 to 1000 cups will be sold a day).Some of the
potential places for these mobile vending machines are Dilshuknagar, Narayanaguda, Himayat nagar, Panjagutta, Osmania University road, Mehdipatnam.
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Conclusion While launching the product the company has to go in for the flavors promotion program by going for a tie up with some good retail chains, big shopping complexes, etc.,One of the best strategic ties up options would be to go with the petroleum companies. At RP road, a petrol bunk which is the member of club HP has been given the vending machine by the company. Hindustan Petroleum Company has gifted the vending machine to the petrol bunk as the petrol bunk is a good contributor to its business. The powder supply and all will be handled by the distributor.
For the call centre facility the company can use the existing Kinley bulk water call centre. (Srika Aqua) One of the main hidden potential retail outlets are pan shops.Providing total beverage solutions to the institutions will help the company in building its market share.Building brand Georgia is the most important exercise that has to be taken up by the company
Georgia should be positioned as a quality refreshment beverage at an affordable price.There must be a physical product appeal in the market which gives the consumer a strong reason to try the product..
1
Georgia must be positioned as a good house hold coffee in the minds of the consumers.
2
Apart from a good communication in the market the company should
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even take care of good merchandising. 3
The target market has to be focused on the teenage and young segment consumers who form a major part in the coffee consumption figures.
4
The quality aspect has to be highlighted. The company should send strong signals to the consumers that it will never compromise on any thing when the aspect of quality comes in to picture.
5
Coming to the in outlet promotion during the first couple of months try to put in a giant cup of Georgia in the outlets which will catch the eye of the consumer. This can also be used in the road shows.
6
Coming to the road shows part the company has to make sure that the sales executives who are conducting it must be dressed red in color (Red shirt, Red cap,…).
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. QUESTIONNAIRE FOR CONSUMERS 1. Name and address:_________________________________ __________________________________ ____________________________________ 2. Age:
_____________________
3. Occupation:
______________________________
4. What do you prefer to take? 1. coffee
2.
tea
5. What is the brand that you prefer to have? 1
Nescafe
:
2
Sunrise
:
3
Lipton & bru
:
4
Coffee day
:
6. What flavors do you prefer to have? 1
Coffee: ♦ Pure
:
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2
7.
♦ blended
:
♦ masala
:
♦ adrak
:
♦ Plain
:
♦ Elaichi
:
Tea:
How many times do you consume tea / coffee? a. 1
b. 2
c. 3
d. 4
e. 5
f. More than 5
8. When do you prefer to take _____________________
9. Where do you prefer to take? a. Bakeries d.
b. Departmental stores
cinema theatre
c. fast food
e. others
10. Why do you prefer to have tea / coffee? _________________________________ 11. At interval in cinema theatres what do you prefer to take? a. Tea
b. Coffee c. Cool drinks
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d. Others
12. Do you think that ads can make to shift from one brand to other a.
Yes
b.
No
13. How you know the brand a.
Tv ads
b. Magazine
c. News paper
14. With whom do you prefer to have Tea/ Coffee a. Friends
b. Family c. Alone d. Others
15. How do you expert a good coffee to taste Like:_____________________________________ _________________________________________________ 16. How do you expert a good tea to taste Like:________________________________ _________________________________________________________ _____ 17. In which departmental stores do you shop a.
Trinetra
b. Apna bazaar
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c. Food world
d. Others
QUESTIONNARIES FOR THE RETAILERS Name :
____________________________________
Location:
_____________________________________
Address:
______________________________________
Ph. No:
___________________________________
1. What is the vending machine that you see?
2.
a. HLL
b. Nescafe
c. Coffee day
d. Tata
Number of walks ins a. 10-50
b. 50-100
c. 100-200
d. >200
3. Number of cups you sell per day? Coffee: ___________
Tea: ________________
4. Number of options you offer in each machine
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a. 1
b. 2
c.
3
d. 4
e. 5
5. M.R.P of each cup. Coffee: ____________
Tea: ________________
6. Margin per cup. Coffee: ____________
Tea: ________________
7. Number of flavors you provide. Coffee: _______________
Tea:_________________
8. Which machine placement scheme do you prefer a. Finance scheme b. Sharing per cup c. Monthly rental 9. How many cups you get from each Kg. of coffee powder______________ 10. Cost of coffee powder per Kg. Pure coffee___________
Chicory mix_____________
11. Cost of tea bags. Per 100 _____________
Premix______________
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12. Cups used a. Branded 13.
b. Unbranded
How do you get the cups? a. Company gives them for free b. You buy it from the company c. You get it from any other source(Please Specify)
14.
Machine maintenance cost is born by a.
15.
Weekly
b. Monthly
c. other option.
Source of water used. a. Tap water
17.
b. Yourself
Service Frequency a.
16.
Distributor
b. Mineral water
Are you interested in installing new brand of coffee/ tea through vending machine a. Yes
b. No
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BIBLOGRAPHY
Principles of Marketing
:
Philip Kotler
Marketing Resarch
:
Luck David & Rubin Ronald
Consumer Behavior
:
Leon G. Schiffman
Lesli Lazer Kanuk
Website :
WWW.google.com
:
www.ikipedia.com
:
www.cocacola.com www.cocacolaindia.com
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