MB0030 MM Complete

8142019 MB0030 MM Complete

httpslidepdfcomreaderfullmb0030-mm-complete 124

Name G M Firoz Khan

Roll No 520931217

Program MBA

SubjectMarketing Management

[Set 2]

Code MB 0030

Learning

Centre

Systems Domain ndashIndira Nagar

Bangalore [2779]

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1 Write a short note on ldquoProduct Life Cyclerdquo

The product which is introduced into the market will undergo some

modifications over the period Its sales also fluctuate Therefore marketeris interested in finding out how sales also fluctuate over a period andwhat strategies are best suited at that point A product life cycle can begraphed by plotting aggregate sales volume for a product category overtime Generally the curve resembles bell shaped curve but it is not theonly one type of curve We can obtain style fashion or fad style of product life cycles also

Product life Cycle (Bell shaped curve)According to this type of cycle a product passes through 5 stages

i Product development stage In this stage company identifies the viableidea and develops it Sales in this stage are zero but huge researchand development budget is required Therefore company incurs lossesat this stage

ii Introduction Stage Company introduces the product into the marketAs the product is new to the market awareness is usually very lowHere company adopts heavy sales promotion and product awarenessprograms The cost of product is very high and sales are very low Atthis junction the company charges high price to the customer

iii Growth Stage Company gets experience over the period and now triesto get the maximum market share sales will grow rapidly resulting inlesser cost and better profit Company reduces the price of the product

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Sales amp

Profits

Profits

Sales

Losses -

Investments

0Time

Product Dev

StageProduct Dev

Stage

Growth

IntroductionMaturity

Decline

Style

Sales

TimeTimeTime

FashionFad

SalesSales



and offers varieties and values in it It focuses on building betterdistribution network and pushes the product through it Number of competitors will grow and it forces company to keep a tab on them

iv Maturity Stagea Peak salesb Low cost per customerc High profitsd Competition based pricinge Communicating the product differentiation to customerf Improving supply chain efficiencyg Defend the market shareh Industry experience the consolidation

v Decline Stage In this stage product sales and profit decline Company

should phase out weak items from their product mix Theadvertisement budget of the company also comes down

Other Product Life cycles

i Style A style is a basic and distinctive mode of expression thatappears in the field of human behaviour For example styleappears in homes art and clothing once the style invented it willbe there for longer period

ii Fashion Currently accepted or popular style in a given field forexample cargo jeans are now fashion with the college goingstudents

iii Fad A fashion that enters quickly is adopted with great zeal peaksearly and declines very fast For example when the pager wasintroduced everybody wanted to have the product But whenpeople find mobile as alternatives the demand for the productwhen down drastically

1 Explain various categories of brand sponsorship with example

Brand managers have four points of sponsoring the brand They are

a Manufacturer brandb Private brandc Licensingd Co-branding

a Manufacturer brandThe brand owned by manufacturer and promoted either directly orindirectly This type of strategy has been followed for many years

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Pilsbury atta is a manufacturer brand In the image below you can seethat pilsbury is launching the Punjabi atta in the market

b Private brandThese are also called store brands These brands bear the store nameor store selected vendor name Basic ingredients of private labels arebull It must be a unit package It is difficult to assign a private label

character to say rice sold loose from a 100 kg bag Even though itmay enhance consumer loyalty for whatever reason it does notqualify as a private label product

bull Relabeling The unit pack must bear only the brand name of theparticular store or any there party the store may choose for its labelprogramme

Private labels will enhance the category profitability increase the

negotiation power oof the retailer and better value creates betterconsumer loyaltyPrivate labels can be introduced if and only if

bull The consumer is not getting the tangible valuebull The retailer is not making enough returns from the sale of the

branded goods

Emerging issues in private labelling

bull The private label strategy is effective profitable and realistic

bull The retailer must understand the price quality and willingness topaybull The retailer must have a sufficient large base of loyal customers in

the store before introducing the private labelbull The focus must be on consumer needs and not any private agenda

of the retailerbull There must be a stringent system for the private label production

Quality control is a must since there is no one else to blamebull Private label must work to fill in gaps in the category and not target

the brand leaderbull

Smart manufacturers may take a private label initiative of theretailer seriously and avoid value gaps in the categories as animpediment to growing private labels

a Brand licensingIt is the legal authorization by the trademarked brand owner to allowanother company to use its brand for a fee For example Hugo BossTommy Hilfiger Lacoste and Nike are some of the textile brands thoselicensed their brands in the Indian market The major benefits of brandlicensing are low cost free publicity and revenue from royalty fees

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Brand licensing also suffers from serious limitations like lack of manufacturing control and failure of licensing arrangements

b Co-BrandingAccording to Kotler co-branding is the practice of using theestablished brand names of two different companies on the sameproduct For example ICICI and HPCL came together to sell ICICI-HPCL petro cards to the customer Here card is the co-brandingbetween the two companies Co- branding helps ICICI to utilize theirfinancial resources well It adds another banking facility to the bankwhile HPCL can lock the customer from buying the petroleum productsfrom competitors HPCL also gets the benefit of financial power whichit doesnrsquot have Both companies promote these products Hence theycan leverage brand image and can reduce the cost All companies willnot get benefit from co-branding Some times company may lose the

brand image if the product fails

1 Explain the product mix pricing strategies with examplesa Product line pricing Strategy of setting the price for entire product

line Marketer differentiates the price according to the range of products ie suppose the company is having 3 products in lowmiddle and high end segment and prices the three products say Rs10 20 and 30 respectivelyFor example of Nokia mobile phones Nokia 1110 is priced at Rs 1349Nokia 7610 is priced Rs 6249 and Nokia E90 is priced 35499 All

the three products cater to the different segments- low medium andhigh income group respectively The three levels of differentiationcreate three price points in the mind of consumer The task of marketer is to establish the perceived quality among the threesegments If the consumers do not find much difference between thethree brands heshe may opt for low end products

b Optional product pricing strategy is used to set the price of optionalaccessory products along with a main product Maruti Suzuki will notadd the accessories like body cover slide molding rear under body

etc to its product swift but all these are optional Customer has topay different prices as for different accessories as add-onsOrganisations separate these products from main products so thatcustomer should not perceive products are costly Once the customercomes to the show room organisation explains the advantages of buying these additional accessories

c Captive product pricing is setting a price for a product that must beused along with a main product For example Gillette sells low pricedrazors but makes money with replacement cartridges

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d By-product pricing is determining the price for by-products in order tomake the main productrsquos price more attractive For example LToverseas manufactures of Dawaat basmati rice found that processingof rice results in two by-products (rice husk and rice bran oil) If thecompany sells husk and bran oil to the other consumers thencompany is adopting by-product pricing

e Product bundle pricing is offering companies several products together

at the reduced price His strategy helps companies to generate morevolume get rid of unused products and attract the price consciousconsumer This also helps in locking the customer from purchasing thecompetitorsrsquo products For example Anchor tooth paste and brush areoffered together at lower prices

1 What are the various logistics functions Describe in brief

Providing the right product at a right place in a right time is a challengingtask Therefore in the modern marketing management the study of movement of goods become predominantThe following are various logistics functions

a Warehousing Goods produced at the factor may not be consumedsimultaneously Therefore companies need to store the goodsCompanies able to use proper warehousing facilities enhance theiroperation efficiency Ware housing can also be used as a hub wheregoods come to the facility and cross docked Below is an example of how Barista a coffee chain supply used the services of Safe Express(Logistics Company) to improve their competitivenessSafe express is right on time with front the mocha and crackers Itrsquos Just In Time Management ensures minimal inventory for the Baristachain of coffee bars Both parties are involved in a win-win situationBarista one of the favoured outlets for coffee and snacks in the Indiansub-continent is a good example of transparency in supply chainmanagement operations For newly established Barista outlets in

India it was very difficult to maintain he supply across all the citiesHence it has taken Safe Express as third party logistics partner tosupply each Barista outlet in Indian cities with different ingredients forthat just right coffee cup Just In Time [JIT] this will leave Baristaabsolutely free of any investment and recurring costs for the logisticsand warehouse managementThe JIT operations aided by weather forecasting are fully carried outby third party logistics providers Safe express looks after thedistribution and inventory requirement of Barista outlets operating

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from its mother warehouse further supports three regional warehousesin Bangalore Mumbai and Kolkata With new outlet opening in every10 days Barista expects to have 175 coffee bars by 2003A typical Barista outlet world is 1000 sqft store with seats around atable The inventory space is zero percent and a set amount of supplies ranging from paper cups to coffee beans are replenished ondaily basis The efficiency of supply chain in such a case becomes acritical issue and hence requires the best of logistics management Thefour warehouses cater to the supplies for the outlets in the respectivecities as well as the whole of the regions outletsThe safe express strategy focuses on reducing the product responsetime thereby ensuring that the customersrsquo demand is met at rightplace at the right cost Any supply chain strategy has to dovetail withthe business strategy As globalisation catches up outsourcing isgetting more and more popular as a business strategy 3PL is a proven

practice worldwide and is gaining acceptance in India as well At thesame time 3PL partner must prove credentials by way of ensuringcost rationalisation as a measure of his performanceFurther safe express has the capability to suggest business modelspacking parameters reduction of logistics costs as a value to itscustomers Safe express is streamlining its warehouse managementtoo by developing innovative software and web tracking facility Theend result is the completely web compatible solution for cargo andwarehouse management Safe express has also offered Barista acompletely web based waybill tracking system for online delivery

tracking of consignments Sae express has also pioneered in lsquoRadioTrunkingrsquo technology along with V Sat links for monitoring routevehicles and intra-city runs through a global positioning system

b Inventory Management Organisations need to store the goodsrequired for day to day operation They cannot store high inventory asstock piles up and cost also increase They are not sure of demandfluctuation and its impact on the inventory so they do not want takethe risk by carrying little inventory For example Safe Express whichprovides inventory solution to Barista replenishes the goods on daily

basis so that Barista maintain zero inventory space in their outlets

c Transportation The goods need to be carried from one place toanother Transporters ship the goods from supplier location to factoryand from factory till customer The different modes of transportationarendash Air transportation This mode of transportation is used to transport

perishable goods The dominant characteristics of this mode arequick delivery premium pricing and limited quantity transportation

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ndash Water transport This is the slowest but most cost effective mode of transportation It can carry wide varieties of goods but it can reachonly limited places The mode is usually suited for bulky low valuenon perishable goods

ndash Surface transportation This mode is again divided into high waytransportation and rail transportation It can carry wide variety of assortments In case of rail transportation it can carry bulkyproducts while in highway transportation it is of high value goods

ndash Pipelines This mode is excellent in meeting delivery schedules as itis having fewer obstacles The drawback of this type of transportation mode is it carries very limited variety of productsand covers limited geographic space The cost of this transportationis very low The most suitable products for this mode are oil and gas

and slurries

ndash Internet carriers This mode is used to carry digital products fromproducer to customer via satellite enabled modem and telephonewires Software companies education institutions etc are very fewto name who uses this mode of transport

1 What is IMC Describe the communication developmentprocess in briefIntegrated Marketing Communication [IMC]

According to the American Marketing Association Integrated MarketingCommunication is ldquoa planning process designated to assure that allbrand contacts received by a customer or prospect for a productservice or organisation are relevant to that person and consistent overtimerdquo

ObjectivesTo plan develop execute and evaluate coordinated communicationswith organisationsrsquo stakeholders

Reasons for growth of IMCndash The growth of innovative promotional tools and need to integrate

themndash Specialised media vehicles for niche target customersndash Growth of retailer dominated market and passing of control from

manufacturer to consumerndash Growth of database marketingndash Wider geographical coverage through internetndash Higher accountability and performance linked compensation

schemes

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Communication Development Process

Preparing Target Customer ProfileEffective marketing communication starts with identifying the targetcustomer to whom the communication is to be developed In this stagecompany prepares target consumer profileExample Company - Exide Industries

Company Exide industries Copy Help whenever wherever your car battery is in trouble we will bethere just dial the bat mobile number of your city and we will be righttheir to bring your car back to life because we love cars Target customer profile

Customercharacteristics

Description

Type of customer Individual

Income Upper middle class and upper class

Media exposurePrint ( English magazines dailies and journals)

occupation Salaried or business class

Need of the product OEM of a car

Identifying promotion objectives Target customer profile providesinputs about hisher readiness to purchase the product Customer may bein any of the six stages of hierarchy of effects The six stages areawareness knowledge liking preference conviction and purchase Everycompany likes to bring their customer to purchase stage from other fivestages Therefore it create different promotion program at different stageTo make it clearer Company first creates awareness about the producteducate them about the advantages induce them to choose the brandstimulates and monitor that customer purchases the producta Awareness Marketer creates the new range of products Awarenesslevel for these products is very low Intention of the advertisement is tocreate awareness about these new products In the following example of Reebok play dry technology garments it focuses to create awarenessamong the target audience Look at the message copy of printadvertisementCopy Dravid does this simply by sporting his Reebok Play Dryapparel These fabrics have been designed with a special moisture

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ventilation system that dries away perspiration in action Workingeffectively by pushing moisture away from the skin to the outerlayer of the fabric for evaporation So if you want to stay cool allsummer just do what the hottest players do Walk into the nearestReebok Storeb Knowledge In this stage target audience donrsquot have completeknowledge of the product Marketer explains the product in detail and itsadvantages to the target customers Following advertisement of ParryNeutraceuticals explains the advantages of beta carotenes

CompanyParry NeutraceuticalsCopy You know these are good for you Natural beta carotene and othercarotenoids like it are the natural pigments found in orange yellow red

and some green fruits and vegetables Theyrsquore some of the biggestreasons why fruits and veggies are good for you They help prevent theworst things that can happen to you ndash cancer heart disease diabetesarthritis cataract and even ageing The age-related or lsquodegenerativersquo diseases begin with repeated damage to cells which adds up over timeThe biggest cause of damage to cells is a common process calledoxidation Carotenoids help prevent oxidation damage because theyrsquoresome of naturersquos best anti-oxidants But to get enough natural betacarotene and other carotenoids you need to eat 5 servings of fruits and 5servings of vegetables every day Or just one soft gel of Parryrsquos Natural

Beta Carotene It is a mixture of natural carotenoids that comes fromDunaliella salina one of naturersquos best sources of carotenoids c Liking Promotion is used to convert knowledgeable audience intolikeable category Marketer uses celebrities to create interest in theproduct For example Reid and Taylor highlight their product quality inthe advertisement by using Amitabh Bachhan a film actord Preference Creating differentiation in the market place so thatcustomer identifies it over the rival brands Big bazaar advertisement withtag line lsquo is se sasta aur achcha kahin nahirsquo or nobody sells cheaper and

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better is alluring the customer by telling them what differentiation theycan bringe Conviction customer may have preference over the product butheshe still not able to decide In this situation marketer develops themessages in such a way that it provides platform for him to decide Forexample Tata indigo requests its customer to go for test drive andexperience the truth Customer may be convinced about indigo but notdeveloped the conviction Look at the words used in the copyCopy Business class travel Now with power dressing Presenting thestylish new Tata Indigo Make a powerful style statement on the roadswith the new Tata Indigo The fascia is accentuated by dual chamberheadlamps and more pronounced chrome-lined grille while sill valancecovers chrome insert door rub rails and dual tone ORVMs add a sportytouch to the overall elegance of the car The rear sports a chiseled body-hugging bumper new tail lamps and chrome surround registration plate

garnish The interiors turn beige for the full range and the new cockpittopped off by the 3-spoke steering wheel carries forward the classicmodernity of the exteriors The best-selling sedan just got better Take atest drive today And discover power dressing on wheels Spoil yourself

f Purchase Sometimes customers are having strong desire to buy theproduct but due to affordability or any other environmental characterthey are not able to purchase In this situation marketer usespromotional schemes particularly reduced price schemes to attract thecustomer Company also comes out with communication programs forrepeat purchasers and loyal customersDesigning a message

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After deciding the communication objectives Marketer turns to developright message which should create attention interest desire or action(AIDA) by the customer Before deciding what should be there in themessage we will understand AIDA model in detail

1 AIDA modelbull Attention The marketing communication should generate attention

towards the product In this stage customer is having the needorganization should provide solution from their communication

bull Interest Once the customer provides enough attention towards thecommunication organization should stimulate it to create interest

bull Desire The interest created should be forced in the customer mind sothat he will develop desire towards the product

bull Action Strong desires should be turned into action Hence companyshould provide the advantages of purchasing of the product in theircommunication messages

Deciding the message content

Message content must have any one of the following appeals

bull Emotional appeal Positive emotional appeal or negative emotionalappeals are strong tools used to intensify the purchasing activity of thecustomer Positive emotions like love pride joy and humor are used inthe message Following are the advertisement where such attributes of positive emotions used

wwwmakemytripcom- Joy BMW fastest saloon car in the world-

pride

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Fevicol ndash humor Wheel- love

The negative emotions like fear guilt and shame are also used in theadvertisement to attract the customer

ICICI prudential- fear

NIIT- if you are not studying at NIIT youare missing something- guilt

Rexona deodorant ndash shame

Rational appeals highlight on the desired benefits about the productsThey highlight quality economy value or performance of the product

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Dabur Amla ndash value appeal ( long Hair)Lakme brilliance- Quality products

Reliance India mobile- performance( works

even in flood situations)Reliance Infocom- Like the first three the mobile

phone must come to me as a necessity and not as aluxury- economy

bull Moral appeal These are concerned towards public health or environmentor social responsibility For example Shell lubricants show itscommitment towards environment in their advertisements

Message format In this section we will discuss how messageshould look and stimulate the interest

Constituents of message format

Characteristics Suitable media

Headline Print Outdoor Online

1 Copy Print TV outdoor online

2 Illustration Print TV Outdoor online

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3 Color Print TV outdoor online

4 Pictures Print Outdoor online

5 Message size Print TV Outdoor

6 Shape Print Outdoor Online

7 Words Print TV Product Outdoor

8 Sounds Radio TV Online Outdoor

9 Voice Radio TV Online

10Body language TV Online

11Texture Product Print Online

12Scent Product

13Distinctive formats Print Online Outdoor

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Print advertisement Message format

Colors used Saffron Yellow Red Watermark brown Black Brown Size 35inch breadth 42 inch lengthShape Rectangle Words Straight out of the pack and into your mouth thatrsquos the usualstyle of eating Haldiramrsquos Namkeen But now therersquos a whole new way of doing it A blend of our delicious namkeen with a dash of imaginationpresented in a list of yummy recipes just for you But where do you getthese Recipe Remixes So get your own booklet and start whipping upyour remixes in your kitchen itself or simply visit us at our outlets Butwait therersquos more You can even create your own recipes and send it tous Who knows your recipe could win you a gift voucher of up to Rs2500- Not only that your winning recipe could also feature in our nextHaldiramrsquos Recipe Remix booklet So get those recipes started and letthe good times begin

Selecting the channels of communicationsThe communicator may use company sales people reference groupsblogs RSS webinar online communities and social networking sites to

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promote their products The word of mouth campaigns buzz marketingand viral marketing are some examples of personal communicationchannels Word of mouth communication the personal communication betweencustomers and their reference groups about the product Buzz marketing The marketing technique in which organizations createopinion leaders (people whose opinion are sought by others) and spreadthe product information to others For example Gmail ndash Google did no marketing they spent no moneyThey created scarcity by giving out Gmail accounts only to a handful of ldquopower usersrdquo Other users who aspired to be like these power users ldquolustedrdquo for a Gmail account and this manifested itself in their bidding forGmail invites on eBay Demand was created by limited supply the cachetof having a Gmail account caused the word of mouth rather than anymarketing activities by Google

Viral marketing The marketing technique of using socialnetworks on the internet to create the brand imageViral marketing is a phenomenon that facilitates and encourages peopleto send messages to others voluntarily Viral promotions may take theform of video clips interactive Flash games images or even textmessages For example Cadburyrsquos Dairy Milk 2007 Gorilla advert washeavily popularized on YouTube and Face bookSelecting the message sourceMessages communicated by the celebrities and proper sources have highcredibility among the target consumers Many companies use well known

actors and actresses cricket players and even cartoon characters topromote their advertisements Colgate- Palmolive well known FMCGcompany used Indian Dental Associationrsquos (IDA) recommendation topromote their toothpaste If the product character does not match withsources then product will fail in the market Recently Pepsi dropped itssources Rahul Dravid and Sourav Ganguly and selected Rohit Sharma forthe promotion campaignsTarget Customer FeedbackThe communicator collects the feedback on the promotion campaign toassess how many of target customer able to see hear or read the

message This stage helps communicator to understand how many of target customers actually able to recall the message And among themhow many of them really purchased it Some companies go further andask the customer to provide suggestion to improve the promotioncampaign

1 What are alternative approaches to marketing while goinginternational Study Pepsirsquos international marketing strategy

A lternative a pproaches to International Marketing

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The orientation towards the market varies from company to companyEach one adopts different approaches on the basis of their expertise orstrength of the company Some companies adapt same product for all themarkets while others differentiate for each country The three alternateapproaches used in international marketing are

a Domestic market extension approach Companies adopt thisstrategy thinks international markets are secondary to its domesticmarkets

b Multi domestic market orientation In the international market each

company has its uniqueness Their preference varies The consumerprofile is different from domestic market Companies developdifferent market plans for such markets For example in Francemen use more cosmetics than women whereas in India women usemore cosmetics than me A company should change the product

positioning differentlyc Global Market orientation Company thinks that product needs are

universal in nature irrespective of country where they workCompany tries to standardise their product and services Forexample Walkman is same across the world The productinformation brochure contains explanation in different languages of different countries The final product is same in all the countries

Pepsirsquos International Marketing strategy

In 1965 PepsiCo Inc was founded by Donald M Kendall president andchief executive officer of Pepsi-Cola and Herman W Lay chairman andchief executive officer of Frito-Lay through the merger of the twocompanies Caleb Bradham a New Bern NC pharmacist created Pepsi-Cola in the late 1890s

At the international level PepsiCo International has been focusing moreon India where the consumption of soft drinks is expected to increasemany-fold which is only three ounces per person now as compared to 200ounces in Europe and over 300 ounces in North America But at thesame time it is not realized that there is a vast difference between thepurchasing power of an average Indian and North American as it takes anIndian 15 hours of work to be able to buy a bottle of Pepsi whereas foran North American it takes less than 5 minutes

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No single foreign investment project has been the center of muchattention and controversy in the late 1980s and early 1990s as the PepsiCo project in IndiaInternational Marketing Strategies

Ω For a business to be successful with its marketing activities itwill need to undertake a situational analysis including aSWOT analysis A business must continually identify and takeadvantage of opportunities if it is to retain a competitiveadvantage over its rivals or competitors This will also involvecontinual improvement in the organization and operations of the business and the development of a marketing plan

Ω Identify the target markets that the business wants to

pursue This is where a business distinguishes between thedifferent groups that make up the market This can be doneon demographic (eg age and sex) geographic location orpsychographics (consumer behavior) variables

Ω Develop a marketing mix appropriate to the target markets

Ω Put a marketing management system in place to collect dataon items such as the marketing strategies or product sales sothat informed decisions can be made about future marketing

activities

Types Of Products Non-alcoholic soft drink beverage market can bedivided into fruit drinks and soft drinks Soft drinks can be further dividedinto carbonated and non-carbonated drinks Cola lemon and oranges arecarbonated drinks while mango drinks come under non-carbonatedcategory The soft drinks market till early 1990s was in hands of domesticplayers like campa thumps up Limca etc but with opening up of

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economy and coming of MNC players Pepsi and Coke the market hascome totally under their control While worldwide Coke is the leader incarbonated drinks market in India it is Pepsi which scores over Coke butthis difference is fast decreasing (courtesy huge ad-spending by both theplayers) Pepsi entered Indian market in 1991 coke re-entered (After theywere thrown out in 1977 by the then central government) in1993Carbonated soft drinks major Pepsi India is now putting together a lsquococktailrsquo to take a bigger lsquoslicersquo of the fruit juice market Close on theheels of the launch of its global lemon drink Twist in an Indian avatar asPepsi Aha Pepsi once again is all set to roll out another global productmdashin a localized version Come June 2002 and Pepsi will roll out the blendsof its international fruit drink Twister in the country albeit with adifference In India Twister blends will be launched as mixed fruitcocktails under Pepsirsquos existing juice brand Slice Pepsi spokespersonwhen contacted confirmed the launch but said the products will be

launched on an lsquoexperimental basisrsquo for three to four months beginningJune 2002 However confirmed sources said that the product has beentest-launched and is ready for a formal launch in June Globally theproposed Slice fruit blends exist under Twister brand and are available inover 10 flavors and in various packaging options The company had atone time contemplated bringing Twister in its original self to India but theplan was later shelved ldquoInternally we have been debating whether to goahead with Twister or keep Slice as a mother brand for juicesrdquo the Pepsispokesperson saidMarket Segmentation

The soft drink markets can be segmented on the basis of place of consumption or on the basis of type of products The segmentation on thebasis of place of consumption divides the market into two parts -

bull On-premise-80 of the consumption of soft drinks is on premiseie restaurants railways stations cinema etc

bull At-home- the rest 20 of the market compromises of the soft drinkpurchased for consumption at home

The market can also be segmented on the basis of types of products intocola products and non-cola products

bull Cola products account for nearly 61-62 of the total soft drinks

market The brands that fall in this category are Pepsi Coca-ColaThumps Up and diet coke Diet Pepsi etc

bull Non-cola segment which constitutes 36 can be divided into 4categories based on the types of flavors available namely

Orange

Cloudy Lime

Clear Lime

Mango

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i Orange flavor based soft drinks constitute around 17 of themarket The segment is largely dominated by national brands likeFanta of Coca Cola and Mirinda Orange of PepsiCo whichcollectively form15 of the market rest of the market is in hands of smaller brands like Crush (earlier of Cadbury Schweppes and nowof coca Cola) Gold Spot etc

ii Cloudy Lime flavor constitutes 14 of the market and is largelydominated by Limca of coca cola and Mirinda Lemon of PepsiCoLimca is the market leader with around 70-75 of the marketfollowed by Mirinda Lemon

iii Clear Lime this segment of the market witnessed good growthinitially with all the players launching their brands in the segmentBut now the growth in the segment has slowed down The brandsavailable in this segment are 7 Up of Pepsi Sprite of Coca Cola and

Canada Dry (earlier of Cadbury Schweppes and now of Coca cola)The segment constitutes 3 of the total soft drinks market

iv Mango this flavor segment constitutes 2 of the total soft drinksmarket and it directly competes with mango based fruit drinks likeFrooti The leading brands in this segment are Maaza of Coca ColaMangola (Earlier of Dukes now of PepsiCo) and Slice of PepsiCo

Market CharacteristicsThe soft drink market is highly skewed in terms of place of consumptionin terms of regional distribution amp soft drink flavors as well as in terms of

SKUsWhile 80 of the consumption is impulse based outside home 20comes from consumption at home This trend is slowly changing withincrease in occasion led sales Another peculiar feature of the market isthat of positioning and targeting of various brands While Cola brand of Coke is targeted at teen-agers nd is positioned as refreshment for mindand body Its Thumps Up brand is targeted at people in age group of 20-29year positioned as thing for adventure-loving successful and machoperson Fanta is targeted at consumerrsquos in pre-teen age group and ispositioned as fun thing Sprite is targeted towards teenagers positioned toconvince them to follow their instincts and not to fall for false pretence

Maaza is positioned as family drink while diet coke is targeted towardshealth and figures conscious people especially teenage girls

Market Share (in )

Brand Name Market Share (in ) Market Share (in )

Pepsi 41 49

Coca Cola 57 48

Consumer Habits And Practice

Set 2 MB0030



diams Soft drinks come under the category of products purchased inimpulse Though the market is marred by brand loyalty thepurchase decision itself is a low involvement decision This attitudeof impulse buying is slowly changing to occasion-led buying andalso to some extent to consumption through home refrigerationparticularly in urban areas

diams The market is slowly moving from non alcoholic carbonated drinksto fruit based drinks and also to plain bottled water due to lowerprice and ready availability

diams Consumers purchase soft drinks primarily to quench thirstTherefore people traveling and not having access to hygienic waterreach out for soft drink This accounts for a large part of the sales

diams Brand awareness plays a crucial role in purchase decisionsdiams Consumers prefer convenient and economy productsdiams Availability in the chilled form affects the purchase decision This

has made both the companies to push its sales and to increase itsretail distribution by offering Visi Coolers to retailers

diams While there is no aversion to consumption of soft drinks by any agegroup the main consumers of this market are people in the agegroup of 30 and below

diams Product differentiation is very low as all the products taste thesame But brand loyalty is high in the case of kids and people in theage group of 20-30 yrs

diams Consumers are sensitive to the outlay where the purchase of beverages is concerned Hence the market is price sensitive

diams Due to the high cost of soft drinks a lot of times consumers preferbeverages like tea coffee or other drinks like sherbet andsquashes

diams Per capita consumption in India is among lowest in the world at 5bottles per annum compared to 80 bottles in Thailand and 800bottles in USA

diams While 75 of the PET bottle consumption is in urban areas the200ml bottles sales are higher in rural areas

Cola Wars

Set 2 MB0030



Before the first bottle of Pepsi hit the shelves local soft drinkmanufacturers increased the size of their bottles by 25 without raisingcosts The new battleground for the cola wars is in the developingmarkets of Eastern Europe (Russia Romania The Czech RepublicHungary and Poland) Mexico China Saudi Arabia and IndiaWith Coca-Colas and Pepsis investments in these countries not only willthey increase their sales worldwide but they will also help to build upthese economies These long-term commitments by both companies willraise the level of competition and efficiency and at the same time bringvalue to the distribution and production systems of these countries Manyissues need to be overcome before a company can begin to produce itsgoods in a foreign country These issues include political socialeconomic operational and environmental topics which must beaddressed When companies like Coca-Cola and Pepsi effectively analyzeand solve these problems to everyones liking new foreign markets can

translate into lucrative opportunities in the long run

The ongoing cola war between global rivals Pepsi and Coca-Cola hastaken a weird twist in India with the former dragging the latter to courtThe charge Coca-Cola has snatched employees bottlers and agents allof whom are bound to Pepsi by a contractPepsi has charged Coke with having entered into a conspiracy to disruptits business operations by inducing key employees and associates tobreak existing contracts illegally

Pepsi has sought a permanent injunction and an ex parte order againstcoke restraining it from taking away Pepsis employees and businessassociates Pepsi has also reserved the right to seek financial damagesfrom Coke at a later date if necessaryThe total market is normally too large and fragmented to be viable targetfor a firms marketing efforts Therefore a business will select a targetmarket-a group of customers with similar characteristics who currently orwho may in the future purchase the product two broad approaches canbe adopted when selecting a target market the total approach or themarket segmentation approach

Total market approach-applies when a firm targetsthe total market for a particular product The firm develops a singlemarketing mix and directs it at the entire market for the product Thismeans there is one type of product with little or no variation onepromotional program aimed at everyone one price and one distributionsystem used to reach all the customers

Market segmentation approachIt occurs when the total market is subdivided into groups of people whoshare one or more common characteristics

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Marketers use for main variables when segmenting the total market

Demographic- age gender ethnicity income occupationeducation level religion family size and social class

Geographic- urbansuburbanrural location region climatelandform

Product related- regular use first-time use brand loyaltyprice sensitivity end use

Psycho graphic- personality motives lifestyles

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1 Write a short note on ldquoProduct Life Cyclerdquo

The product which is introduced into the market will undergo some

modifications over the period Its sales also fluctuate Therefore marketeris interested in finding out how sales also fluctuate over a period andwhat strategies are best suited at that point A product life cycle can begraphed by plotting aggregate sales volume for a product category overtime Generally the curve resembles bell shaped curve but it is not theonly one type of curve We can obtain style fashion or fad style of product life cycles also

Product life Cycle (Bell shaped curve)According to this type of cycle a product passes through 5 stages

i Product development stage In this stage company identifies the viableidea and develops it Sales in this stage are zero but huge researchand development budget is required Therefore company incurs lossesat this stage

ii Introduction Stage Company introduces the product into the marketAs the product is new to the market awareness is usually very lowHere company adopts heavy sales promotion and product awarenessprograms The cost of product is very high and sales are very low Atthis junction the company charges high price to the customer

iii Growth Stage Company gets experience over the period and now triesto get the maximum market share sales will grow rapidly resulting inlesser cost and better profit Company reduces the price of the product

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Sales amp

Profits

Profits

Sales

Losses -

Investments

0Time

Product Dev

StageProduct Dev

Stage

Growth

IntroductionMaturity

Decline

Style

Sales

TimeTimeTime

FashionFad

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Coca Cola 57 48


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Coca Cola 57 48


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Coca Cola 57 48


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Coca Cola 57 48


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Pepsi 41 49

Coca Cola 57 48


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Coca Cola 57 48


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Pepsi 41 49

Coca Cola 57 48


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Pepsi 41 49

Coca Cola 57 48


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Mango

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Coca Cola 57 48


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Documents