Kingfisher Soft Drink

Group 9B

Anjana Satpathy (B09069)

Gaurav Chowdhary (B09079)

Marshal Sonavane (B09089)

Pathikrit Basu (B09099)

Sandeep Singh (B09109)

Vijay Khairnar (B09119)

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NEW PRODUCT LAUNCH

UB GROUP – SOFT DRINKS

COMPANY OVERVIEW

The UB Group was founded by a Scotsman, Thomas Leishman in 1857. The Group took its initial lessons in manufacturing beer from South Indian based British breweries. United Breweries made its initial impact by manufacturing bulk beer for the British troops, which was transported in huge barrels or "Hogsheads". At the age of 22, Vittal Mallya was elected as the company's first Indian director in 1947. After a year, he replaced R G N Price as the chairman of the company. Kingfisher, the Group's most visible and profitable brand, made a modest entry in the sixties. With currently into business of Spirits (United Spirits Ltd.), Wine, Beer (United breweries Ltd.), Engineering (UB Engineering Limited), Fertilizers (Mangalore Chemicals and Fertilizers) company has made its mark and presence in each sector it is in.

United Breweries Limited (UBL) - has assumed undisputed market leadership with a national market share in excess of 50%. Through a process of aggressive acquisition and market penetration, The UB Group today controls 60% of the total manufacturing capacity for Beer in India. The flagship brand, Kingfisher is now sold in over 52 countries worldwide having received many accolades for its quality.

The sub-continent’s Beer market has been equally dynamic, growing by almost 90% since the turn of the century. Exceptionally high growth was generated in the northern states of Punjab, Haryana and Rajasthan which took full advantage of reduced taxes and improvements in the distribution policy. In contrast to Russia, consumers are displaying a distinct preference for Strong Beer which has gained market share steadily in recent years and now accounts for almost 70% of total volume. Kingfisher Strong replaced Kingfisher Premium as the leading Beer and the Kingfisher brand overall now holds a commanding position.

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MACRO-ENVIRONMENTAL ANALYSIS

Political FactorsThe political forces affect the beer industry to a large extent. The rates of the beer in various parts of the country are affected by the taxes and duties applied by the Govt. The political forces also affect the pricing of the beer by lowering the duties or deregulating the distribution channel. This leads to lower margins for the distribution channel partners. But, as 75% of the Indian market is covered by two players, there hasn’t been a reduction in the margins of the manufacturers. The taxation policies also affect the consumption patterns.

Economic Factors India is home to nearly one-sixth of the global population and is one of the most attractive consumer markets in the world today. The total worth of Indian Beer Market is Rs 750 crore. This market is expected to expand by 39% by 2010. The beer consumption has been growing at a CAGR of 7% over last nine years. India provides attractive profit margins due to the consolidated nature of the industry. Various research studies have shown that a rise in the income levels has a direct positive effect on beer consumption. The National Council for Applied Economic Research (NCAER) projects India's 'very rich', 'consuming' and 'climbers' classes to grow at a CAGR of 15 per cent, 10 per cent and 2 per cent respectively. Thus, India gives ample opportunities for the UB Group to grow.

Social FactorsA deep-seated traditional social aversion to alcohol consumption has been a traditional feature of the Indian society. However, as urban consumers become more exposed to western lifestyles, through overseas travel and the media, their attitude towards alcohol is relaxing. Social habits are undergoing a transformation as mixed drinks are becoming more popular. The greatest evidence of this trend is the increase in beer consumption among women. More and more women are consuming beer – the penetration in metropolitan areas is almost twice as high as the penetration in other large cities – implying that the greater tolerance towards alcohol consumption in metropolitan areas facilitates the consumption of beer. With increasing urbanisation, this acceptance is only going to rise. As a consequence of the high birth rates prevalent until the 1990s, a large proportion of the Indian population is in the age group of 20-34 years. This age group is the most appropriate target for beer marketers. This population trend will give a further boost to the growth of beer consumption in India.

TechnologicalBeer industry is not technology specific. As the UB group is one of the oldest players in the market, they have achieved economies of scale. Thus, technological factor is not of great importance for the beer market.

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SWOT ANALYSIS

PORTER’S FIVE FORCES MODEL

Threat of new Entrants - LowIn India, beer industry is growing with 11% CAGR making it attractive for new players. Strong brands like Kingfisher and Hayward’s which are already established and have strong brand recall will make it tough for new entrants and they are expected to struggle to expand their consumer base as they try to penetrate the beer market in India. Foreign brewers have been eyeing the Indian market for some years now since India is widely acknowledged to be the last untapped big growth market. Several international brewers have built brand associations and are marketing their brands aggressively through various point-of-sale promotions throughout their distribution networks. But with strong players in the market any new entrant will face problems of:

a) Economies of scale - For example benefit associated with bulk purchases and sales – create high barriers to the national and global markets

b) Cost of entry - For example investment in technology, costs associated with salesc) Distribution channel For example ease of access for competitorsd) Government Legislations -Introduction of new laws might weaken have adverse

effectse) Differentiation - For example certain brands that cannot be copiedf) Supplier power - Possibility of forward integration by supplier

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STRENGTHS1. Strongest Worldwide distribution system2. Huge financial backing from UB group3. Oldest and Largest player in India4. World wide known brand

WEAKNESSES1. High concentration on Strong Beer market2. Too much diversified

OPPORTUNITIES1. Beer consumption is increasing2. Per Capita beer consumption in India is very low3. Brand extension benefits4. Changing lifestyles of middle class5. Increase in disposable income

THREATS1. High Taxes and Regulation2. Prohibition on Advertising3. Indian culture is a hindrance4. Negative perceptions about alcoholic beverages highly prevalent5. Many new players entering India

Bargaining power of suppliers – LowDue to increasing costs of raw material and decreasing cost of barley suppliers, bargaining power of suppliers was high but by doing backward integration, done by acquiring Maltex Malsters Ltd., and shifting their production of beer on malt the company has achieved a hold on its raw material and considerably reduced supplier strength and dependency. Company has also entered into collaboration with Government of Punjab and Haryana for supply of its raw material.

Bargaining power of buyers - ModerateThis factor measures the extent to which customers are successful in forcing prices down, or securing high quality or more service at the same price. Customers tend to be powerful when the quantities they purchase form a large portion of the seller's total sales. Buyers do have a very clear understanding about the quality and as there are very few players in the market the customer cannot influence the price in any significant way. But while this is true a decline in consumable income shifts consumer preferences away from premium brands to lower-priced brands since the switching costs is low. Due to this the bargaining power of buyer tends to increase.

Threat of substitutes - ModerateIndia is predominantly a spirits market and beer has traditionally been a minority preference for those who consume beverage alcohol. Therefore substitutes are the biggest threat as preference for beer among alcohol beverage drinkers is less but also the low penetration in beer consumption in comparison to international levels offers the potential for substantial and sustainable growth in demand for beer in India for years to come.

Rivalry amongst Competitors – Low to ModerateRivalry is the means through which competitors fight for position by using tactics such as price, competition, advertisement battles, and new product introduction, to lower the profits of competitors in the industry. As stated above CAGR of 11% is expected for beer in the next 5 years due to which many MNCs are eyeing the Indian market. Currently the major rivals for Kingfisher Premium are Budweiser, Carlsberg, Foster and Tiger and for Kingfisher Strong it’s Hayward 2000, Hayward 5000, Palone. SABMiller who came to India by acquiring small breweries and has made its hold as best-selling strong beer brand but still Kingfisher has managed to remain the largest-selling strong beer brand with 29% market share. There are also some small local players that are in the market but are not much of a threat to Kingfisher.

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PRODUCT PORTFOLIO ANALYSIS

BCG MATRIX

STARStars are high-growth, high-share businesses. Very often, they need heavy investment for financing their rapid growth. Eventually, their growth slows down and they turn into cash cows.

Tajmahal Beer - Taj Mahal Premium Lager beer is prepared with finest malt made at United Brewery own malt house using premium quality barley. It has a distinct aroma and unique taste. The demand of this beer is mainly in abroad (Australia, France, and USA) as it is premium priced and has bitter taste. The demand outside is very good and it accounts for good market share in the exported beer in India.

Kingfisher Strong - spectacular growth of 36% is seen in strong beer (against a market growth of 16%) was witnessed. Kingfisher Strong has now achieved the number one position in the strong beer segment.

CASH COWCash cows are low-growth and high-share businesses. Such established and successful business lines require less investment to maintain their market share. They generate a lot of surplus that a company can use to pay its bills, or invest in other businesses.

Kingfisher Lager Beer - it has witnessed a market growth of 13% in comparison to the lager beer industry growth of 9.4%.in the lager beer segment, UBL is the market leader in all the 10 largest states of the Country. UBL commands a market share of around 40% with 67% of the market share in the lager beer segment.

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QUESTION MARKQuestion marks are low-share business units, in a high-growth market. They require a lot of cash, for maintaining the market share. Any business has to think between building a question mark into stars or whether they have to be phased out

London Pilsner - it has witnessed a market growth of more than 20% and targeting a market share of 15%. (Indiantelevision.com)

Kingfisher Draught - this beer has less water in comparison to other beer type. It has good market growth as it is proving success in its 2nd year still the market share is less. (thaiindian.com)

Kingfisher Blue - this is launched around 8-9 months before to tap those customer who wants less alcoholic beer in comparison to strong beer but more than mild. It has around 6% alcohol content. Since it has launched sometime before hence the market share occupied is less as strong beer and lager beer segment is increasing very fast however market growth rate main up.

DOGDogs are low-growth and low-share businesses. They may generate enough surplus to maintain themselves, but do not hold out the promise to be a large source of cash.

Ub Ice Beer - this beer is launched for trendy people in 330ml can. It was different from the traditional lager beer as it was made using a unique refrigeration process which involves the formation of ice crystals which were filtered out giving the brew a crisp, clear and strong taste. It didn’t get good response as it has very low market growth instead people are drinking more the lager and strong beer.

Kalyani Black Label - one of the oldest brands launched in 1969. It has low market share as it is only popular in east India and it assumed to be economical. The market growth for this brand is not good as people are shifting towards other beers such as London pilsner which is also economical brand.ANSOFF MATRIX

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MARKET RESEARCH ANALYSIS

Most appealing factor about the MIST:

Out of the five facts mentioned about the Mist, 36% of the people find ‘A soft drink from kingfisher’ as the most appealing factor about the drink. The second most appealing factor is the ‘Easy to carry can’ of the Mist. Rest other factors like high carbonation, high level of caffeine and citrus flavor are not that appealing as general soft drink consumers are much concerned about the exact contents of ingredients in it. Thus our promotion strategy should be focusing upon the Kingfisher as a parent brand and the easy to carry can of the Mist.

Level of interest in buying Mist:

Based upon the features mentioned, we asked the respondents about their interest in buying MIST. 48% of the respondents said that they are somewhat interested. 22% were found to be very interested in buying this product, while 25% said that they are not sure. This interprets how our marketing strategy should be. We are directing our strategy in

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Citrus Flavor, 8%

High level of

caffeine, 14%

High level of

carbona-tion, 14%

Easy to carry can, 28%

A soft drink from King-

fisher, 36%

Most appealing factor

Very In-terested,

22%

Somewhat interested, 48%

Not sure, 25%Not very interested, 4%

Not at all interested, 1%

Level of interest in buying MIST

such a way so as to convert the somewhat interested people into interested ones and to make the people who are not sure to try the product at least once.

Demand determination:To find out what would be the approximate demand of such kind of product in the market, we asked people that how often they consume the products which are somewhat similar to MIST.

More than once aday, 2%

Once a day, 28%

2-3 times a week, 53%

Once a week, 13%

2-3 times a month, 3%

Once a month, 1%

Frequency of usage

53% of the respondents said that they consume the products similar to MIST approximately 2-3 times a week. Looking at this statistic we estimated the approximate demand (considering the cities in which the product is going to be launched) and evaluated the sales and profit margins. The details are shown in the profitability analysis.

Willingness to pay: As we are going with the value based pricing, we surveyed that how people perceive the comparatively high cost of a soft drink from kingfisher. We asked people that given the price of MIST as Rs 24, how much they are willing to pay. 41% of the respondents said that they perceive MIST as a high value product looking at the associated brand name and features. They are willing to pay 5-10% more for the product like MIST. This shows that we have space to increase the price of the product and increase the expenses on advertising accordingly.

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STRATEGIC FIT OF MIST WITH UNITED BREWERIES GROUPThe UB Group (United Breweries Group) is a multi-faceted conglomerate with business interests in Beverage Alcohol, Pharmaceuticals, Media, International Trading, Aviation, Fertilizer, Research & Development, and Infrastructure Development with a major focus on the brewery (beer) and alcoholic beverages industry most of which is marketed under the Kingfisher brand. UB Group is already planning to venture into the mineral water segment via the Kingfisher Himalayan Water Brand. Thus strategically thinking Mist will be a perfect fit in the UB Group’s expansion plans. In fact introduction of a soft drink will make UB Group present in all versions of drinks and will be a wonderful way to reach out to customers who admire the Kingfisher brand but do not consume alcoholic beverages. Launching Mist will be a form of line extension and will help it respond to customer’s needs favorably.

If we see the attributes of Mist, i.e. adventure, energy, fun and the “Hat Ke” attitude; it is very much in sync with the existing brand image of UB Group. Mist being a soft drink, it is very necessary to ensure proper distribution of the product. This is where UB Group can use its core competency of having a strong distribution network and bank upon its reputation regarding the stringent quality control measures it follows. Also if we look at the soft drink market, the only direct competitor of Mist is Mountain Dew and the market for soft drinks providing the set of benefits as Mist is in a growth stage. That makes it a perfect moment to introduce a drink like Mist under the Kingfisher brand name. Considering the sync between Mist attributes and Kingfisher’s brand image, we can also use the events held by the UB Group like the Derby, Kingfisher Calendar, IPL matches , functions like the Incredible India Party held last year at Cannes and the TV channel NDTV Good Times to increase awareness about Mist. It can make use of the cricket and Bollywood stars already associated with Kingfisher brand to endorse the product and help build a strong connect with its loyal customers. Added to that serving Mist in the Kingfisher Airlines will be a great way of making future customers try out the drink.

PRODUCT INTRODUCTION

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20-30% more, 11%

5-10% more, 41%

neutral, 28%

5-10% less, 13%2-30% less, 7%

Willingness to Pay

Mist is a soft drink that is being launched by UB group under Kingfisher brand. It is a citrus flavoured drink and unlike other soft drinks, it is more carbonated and has high levels of caffeine.

MARKETING STRATEGY

SEGMENTATIONDemographic Segmentation

1. Age

2. Gender

A consumer needs and wants change with age. Hence this segmentation is important for this product. On the basis of age, we can divide the population into the following categories

a. 16-25 years b. Teenagersc. 25 years and above

This is an important segmentation since both genders behave and respond differently to same situations.

Geographic Segmentation

This segment primarily refers to the location of the segments. For our product there will be three segments.

a. Urbanb. Semi-Urbanc. Rural

Psychographic Segmentation

Under this segmentation buyers are divided into different groups on the basis of personality traits, lifestyle or values. For MIST, on the basis of behaviour, the following segments can be formed:

a. Excitement, Adventure seeking, Risk loversb. Health Consciousc. Rebelliousd. Fashionable and stylish

For our product, we can begin with demographic segmentation. These segments would be further divided using psychographic segmentation. The product is soft drink, but we will not go in for mass marketing and rather target based on psychographic segmentation. The target would also be different from those of already existing soft drinks.

TARGETING

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Evaluating the above segments on the parameters like Measurable, Substantial, Accessible, Differentiable and Actionable, the target segment for MIST would be:

Individuals (both genders) in age range 15-29 in urban areas (this is because the promotional activities would be focused on urban areas only).

Based on market research data, we decided to target people who embrace excitement, adventure and fun.Reasons for choosing this target segment are:

Our market research showed us that there were primarily five different target groups in the market. There was considerable presence of other soft drinks in the other target groups.

Also in urban areas there are very few individuals in the age group 15-29 years who have not heard of Kingfisher; hence this would be our target age group. This segment in India is substantial and would be profitable.

Kingfisher already has large distribution networks for selling its other products in urban areas. Hence there would be little cost of adding distribution channels.

It is also easier to involve people from the aforementioned age group in various promotional activities and also they are easily accessible through internet. So it would be easier reaching across to them.

POSITIONING

Salient Attributes

Offer from the Kingfisher brandHigher price for perception of premium quality and differenceAvailable only in stylised cansInvigorating effect due to higher caffeineTingling taste and flavorSelective availability in retail outlets, pubs, clubs, discos and other socializing places

Values

Adventure SeekingThrillDifferent from competitionAspiration for youngsters to be associated with Kingfisher brand.

CompetitionMountain Dew

As compared to Mountain Dew, we will position MIST as an exclusive brand and it will only be available through selective outlets. We are going for value-based offering that is premium in nature due to higher quality and reflects the values of aspiration for Kingfisher.

Coke and Pepsi

Both Coke and Pepsi are brands that differentiate themselves on the basis on the endorsements eg. Pepsi targets the youth market through endorsements from young celebrities. Price is not a discriminating factor between these two. We shall charge a higher price as compared to Coke and Pepsi and put forth quality as a prime concern while manufacturing MIST. This should

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help us differentiating from Coke and Pepsi since they have had troubles in the past regarding their quality.

Media Influence

Extensive promotion schemes across different media (using teasers, events and web portals)Advertisement frequencyBrand endorsement

Based on the above factors, our positioning of Mist vis-à-vis its main competitor (Mountain Dew) and other similar lime and lemon flavoured drinks (Coca cola was also included as a reference) has been quantitatively depicted in the cobweb diagram below.

Carbonation

Caffeine

Color

Awareness

Taste

Ingredients

Refrigeration

Availability

0

5

Coca ColaMt DewSprite7 UpMist

Some of the attributes are – 1. Ingredients – Mist is an augmented product over other citrus flavoured drinks, being

packed with higher carbonation and caffeine. So, we rated this attribute above the other drinks.

2. Awareness – As Mist is a new product to be launched, we cannot gauge its awareness. However, we intend to bring it to the desired level based on our extensive promotional campaign which will be explained in the Marketing Mix. As of now, awareness is being measured based on the current awareness level for Kingfisher.

3. Availability – Unlike the extensive mass distribution and availability of the other drinks, we intend to have a selective distribution for Mist.

4. Refrigeration – This is based on the amount of refrigeration required and the level of service given by the companies by providing refrigerators. As Mist is selectively available, we intend to provide refrigeration facilities at all points of sale. This refrigerators will be small and exclusively for Mist. It will have eye-popping displays labelled with the title Mist and will be painted in its colours.

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MARKETING MIX

PRODUCT

Functionality Great tasteQuench Thirst

Features Invigorating effect due to higher caffeine

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Tingling taste and flavor

Appearance Available in Stylised cans

PRICING

Competitor based pricingThe price of a can of Mountain Dew and other soft drinks is Rs. 20. We may choose to price it higher than this since we are not going in for mass marketing but rather selecting a specific target segment.

Cost Based pricingCost Based pricing is integral to establish the lowest point of a new product's price range. By accurately analyzing cost per unit and taking into account a margin that corresponds to the lowest satisfactory return on investment, companies can define a new product's floor price. If the market cannot support this price, then the company must reconsider if the product is feasible.If we take the major cost components as manufacturing, advertising and distribution we can come to a rough estimate of the variable cost of Mist. This will not include the costs associated with machinery installation, R & D of the product and other associated capital expenses. This shall be collected through contribution per can.Using estimates for the major variable cost components we take:

i. Advertising Cost per can – Rs. 8 – 10ii. Manufacturing Cost per can – Rs. 4-5iii. Administrative Costs and other overheads per can – Rs. 2-3iv. Distribution Costs – estimated to be Rs. 1 per level

Therefore the total cost of producing one can comes out approximately to be Rs. 17-19.

Value Based Pricing While some benefits have values that can be readily quantified, others such as brand reputation and premium are more difficult to measure and must be probed using market research. Since we are positioning Mist as a premium brand it should be priced higher than its direct competitor (in this case Mountain Dew) in order for the target group to it as a premium brand. Since a can of a cola costs Rs. 20 then we will price it at Rs. 24 (we are trying simultaneously to take advantage of bundles of five pricing and have the customers perceive it as a premium brand).

As shown by the market research, customers are willing to pay more for a product like Mist. Moreover, considering the aspiration value of the product and the parent company, we have decided to follow value based pricing.

PROMOTION

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According to the positioning of the Mist, a promotional campaign will be designed to create awareness and pull in the market. AIDA model will be followed for the promotional campaign. The steps taken in each stage will make consumers to “Think, feel and do”. The steps to be taken in each step of the AIDA model are given below:

1. AWARENESSObjectiveTo create awareness about Mist among its target population

Media ChannelsTV: ESPN, Star Sports, Star plus, SonyPrint Media: Autocar, Sportstar, Adventure time, Hoardings

Promotion StrategyA teaser campaign will be run on TV for creating awareness about the Mist. The teaser campaign will be such that it will only give the features of the Mist and clarify its positioning. This will be aired before 4-6 weeks of the launch. The TV channels targeted will be sports channels, Star Plus, Sony etc. The shows during which the advertisement will be aired will be likes of “fear factor”, “Khatron ke Khiladi”, MTV Roadies etc that goes in tandem with the value proposition of the Mist. The Mist is for those people who want thrill in their life. In sports channels, the advertisement will be shown during sports such as Wrestling, Extreme sports, Formula 1 etc. The frequency of the advertisements will be 10 times during a day for a channel i.e for MTV channel, in which the advertisement will be shown during Roadies, Stripped etc. in a day there will be 10 advertisements. In addition to the advertisements, print media will also be used to create awareness. Magazines such as Autocar, Sportstar, Adventure time magazine etc will be used to show print ads. Hoardings and newspapers ads as one of the target groups consist of those people who are bored of their lives.

2. INTERESTObjectiveSuccessful launch of the product and generating interest about the product

Media ChannelTV advertisements, Rock Concerts

Promotion Strategy The teaser campaign aimed at increasing awareness about the Mist will be run for 4-6 weeks before launch. The campaign will be changed as per the time. The steps taken in the awareness stage will create the stage for the launch of the Mist. The launch will made at an occasion which will create a situation that will cater to the value proposition of the Mist. A grand Rock Show is ideal for launch of the Mist. The city targeted will be Bangalore as it

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has a huge tradition and rock culture. Rock show is an event where people are on a high and come for a night that relieves them of all tension. The amount of crowd gathered at a Grand rock show is more than 50,000 (figures based on average audience in the rock show of Iron Maiden in India in last two times). The soft drink will be the official drink of the rock show. This is just regarding the launch. For further creating interest, the soft drink will be the official sponsor of the college circuit rock fests in India. This is aimed to create loyalty customers in addition to generating interest. Moreover, the soft drink will be sponsoring shows such as fear factor and Khatron ke khiladi, Roadies etc. The frequency of advertisements will be increased to 15 times for a channel for a day. It will also sponsor the Force India team.

3. DESIREObjectiveCreate aspiration value for the product

Media ChannelsPrint and TV advertisements, interactive web portal

Promotion StrategyAfter creating sufficient awareness and desire among customers, the advertisement will now focus on creating an aspiration value of the Mist. The Mist is from UB group which already has aspiration value among its consumers. The motive is to move from interest of consumer to sales of the Mist. For this, campaigns will be designed to make a connection with the consumers. For example, a normal college student, who is bored of his routine life and want some change in his life. The advertising campaign will be about what the soft drink can do for him. The frequency of advertisements will be increased to 10 times for a channel for a day. A big step that will be taken to increase the connection of the consumer with the Mist will be to create an interactive web portal. This portal will contain interesting games that will throw out the boredom out of people. In addition, customers will be able to share their soft drink moments with other people. It will enable them to share their stories, photographs, songs etc. This will enable us to create a loyal customer base, top of the mind recall and manage the needs and demands of each customer.

4. ACTIONObjectiveConverting the interest about the product into sales

Media channelsPrint and TV advertisements, interactive web portal

Promotion StrategyAfter sufficient desire has been generated in the customer, sales promotion, celebrity endorsements etc will be undertaken for generating sales. The web portal will be used for

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AWARENESSTeaser campaignPrint adsHoardings

INTERESTLaunch at Rock showSponsoring TV shows and Force IndiaSponsoring college festivalsTV ads

DESIREFeature and aspiration based TV adsInteractive web portal-games, share stories, moments, songs etc

ACTIONSales promotions

Celebrity endorsementsContests on web portals

Sponsoring showsOrganize sports events

sales promotions. Based on number of times you visit the site, games won, record set, stories shared etc, winners will be declared. The winners will get a trip to Grand Canyon, Mount Everest etc. This will generate more interest, desire etc among customers in addition to strengthening the proposition of the Mist. The Mist will continue sponsoring shows which are “out of the box”, thrilling and target the youth.

Measuring interactionA contest will be run during the shows asking the messages conveyed in the Mist advertisements. The reward for winning the contests will be kept in a way so as to motivate maximum number of people to participate in that. The number of entries received will give us an estimate of number of people remembering the advertisement and its message and hence the product. The same kind of estimate will be obtained from web portal also.

The AIDA model in a Nut shell:

PLACE

PLACE

The distribution will be on 2 levels – To large retail outlets To pubs and other hangouts and places for socialising

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THINK FEEL DO

We’ll be leveraging on the existing distribution channels for beer cans as far as clubs and pubs are concerned. As we’re not focussing on mass distribution, we’ll be channelling our distribution mainly towards large retail outlets, hypermarkets and key accounts.

The basic flowchart of our distribution channel is shown below -

PROFITABILITY ANALYSIS

Expenses1. Manufacturing Costs – Variable Cost2. Advertising and Marketing Budget – Fixed Cost3. Administrative Overheads – 4. Distribution – Variable and Fixed

RevenuesRight now the only revenues are to be derived from the selling of cans. The market for carbonated drinks in India is estimated to be worth US$ 1.5 billion which is approximately Rs. 6900 Cr. We hope to capture about 2% of this market in the first year. Also we assume our growth rate to be at the rate of 10% which is in line with the market growth rate.Also we have assumed that there will be no Cap-Ex since the company can use its existing capacity to bottle cans. If it is required to set up a bottling plant then approximately Rs. 20

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Producer

CFA

Distributer

Clubs PubsOther

hangout places

Large retail

outlets

Cr. plant can be set up and it will have a capacity worth Rs. 200 Cr. This will be depreciated on a straight-line basis and will increase the costs by 2 Cr per year.

Year 1 Year 2 Year 3

Revenues1,38,00,00,000.00 1,51,80,00,000.00

1,66,98,00,000.00

Manufacturing Costs 34,50,00,000.00 37,95,00,000.00 41,74,50,000.00Advertising and marketing costs 58,00,00,000.00 55,90,00,000.00 54,69,50,000.00Distribution Costs 37,25,00,000.00 38,97,50,000.00 40,87,25,000.00Administrative Overheads 15,00,00,000.00 15,00,00,000.00 15,00,00,000.00 Depreciation  2,00,00,000.00  2,00,00,000.00  2,00,00,000.00Operating Income -8,75,00,000.00 1,97,50,000.00 12,66,75,000.00

We see here that our break-even year is Year 2 and payback period is approximately 2 years 6 months.

AssumptionsInitial Sales 2% of marketGrowth of sales 10% of market

Advertising Assumptions

Trial Rate 0.05Frequency 10.00Rate per 30 sec spot ad. 1,00,000.00Reach to target audience 0.10Target Audience 0.03

Print Ads + Hoardings 5,00,00,000.00Distribution Rs. 3 per can + fixed cost of 200000000Other Promotion Activities 25,00,00,000.00

Website Development and maintenance

10,00,00,000.00 first year5,00,00,000.00 Second year1,00,00,000.00 subsequently

Advertising and Marketing CostsThese costs constitute the major part of a soft drink company. Here these costs include advertising, website development and maintenance, print ads and other promotional activities carried out each year like in order to increase sales such as conducting sporting events etc.

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The costs break up is already given in assumptions and the costs for advertising in Rs. 18 Cr. which would include air-time and all other costs such as fees of agencies etc.

ANNEXURE

1. Test market survey

This survey is about the new product concept which is described as follows:

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Mist is the soft drink that is being launched by UB group under the kingfisher brand. It is citrus flavored drink and unlike the other soft drinks it is more carbonated and has high levels of caffeine. Mist is not just any ordinary cola drink but it is the symbol of thrill, passion and fun.

It comes in the standard 240ml chilled can.

Ingredients: carbonated water, natural flavor, citric acid, sodium benzoate (preserves freshness), caffeine, sodium citrate, gum arabic, calcium disodium edta (to protect flavor), brominated vegetable oil, panax ginseng root extract, blue 1, red 40

Nutrition Info:

Per Serving(240 ml)

% DV*

Calories 140 -Total Fat(g) 0 0Sodium(mg) 40 2Total Carbs(g) 35 10Sugar(g) 27 -Protein(g) 0 -

1. Below are lists of features that are part of Mist. How important is each for you?

Extrm imp

Imp Neutral

unimp Extr unimp

a. Citrus flavorb. High level of caffeine c. High level of carbonationd. Easy to carry cane. A soft drink from Kingfisher

2. Based on the description, how interested would you be in buying Mist if priced within

your budget?

a. Not at all interested

b. Not very interested

c. Not sure

d. Somewhat interested

e. Very interested

3. Please mention the name of the particular product(if any) that you recall based on the description above

4. What is it that you like most about the Mist(mention as many items as you can)

5. What is it that you like least about the Mist?6. How often do you feel the need of this kind of product?

a. More than once a day

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Not a significant source of other nutrients.*Percent Daily Values (DV) are based on a 2,000 calorie diet

b. Once a dayc. 2-3 times a weekd. Once a weeke. 2-3 times a monthf. Once a month

7. Given the price of a MIST can (240ml) as Rs 24, how much you are willing to pay?a. 20-30% moreb. 5-10% morec. No more or no lessd. 5-10% lesse. 20-30% less

2. A FEW PRINT ADS

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