Annexure-1V

Casa 1< Rasna

Rasna is a soft drink concentrate brand manufactured by Pioma Industries Limited. The company was set up under the leadership of Mr. A. Khambatta, who is a leading food technologist of India. The company was incorporated in 1976 in Ahmedabad. The factory is situated near Asarwa bridge in Ahmedabad. 1

The Product: Rasna is a soft drink concentrate available in the form of dual format. It has a liquid flavour base which is packed in a small glass bottle and there is a pouch which contains concentrate in a powder form. They both are packed in 'Ceka’ and the outer pack is a paper carton.

Since 1978, Rasna has clearly emerged as India’s largest selling soft drink concentrate enjoying about 90% * * market share in SDC (soft drink concentrate) market. It is a uniqueproduct in that it is the first to offer preparation of syrup through cold process thereby offering convenience as a major benefit. It also offers real fruit like flavour and taste. Currently Rasna is available in eleven different flavours namely orange, lime, pineaple, kalakhatta, khus, shahi gulab, cola-cola, grape glory, lemon-up, kesar elaichi and mango ripe. Lemon-up and cola-cola are the recent additions to its flavours in '90s and have emerged as run-away success. Exhibit-1 gives flavour-wise sales performance in percentage terms of Rasna.

The Company”: The company has set up advanced R&D Centre which continuously monitors new product development, quality control and flavour analysis and optimises process. It also carries out experiments to introduce new flavours at regular intervals. It has most modern a'utomated plant. International class technology is used to pack Rasna in world-class, pilfer proof, moisture resistant lined packs which ensure that the product retains its flavour and freshness for years together. Presently Rasna is available in 3 innovative pack sizes namely 6 glass mini packs, 32 glass standard packs and 100 glass party packs. It is the first soft drink concentrate to receive the prestigious IS1 (Indian Standard Institution) mark.

*0RG Retail Audit*feource; Company catalogue

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■Si.

Since introduction, Rasna’s turnover has increased rapidly. It achieved its peak in 1988. Thereafter the growth has slowed down as the product has attained maturity stage particularly in urban markets. As per ORG Retail Audit, Rasna has attained 90,538 kilolitres of volumes in 1988. After that volumes have slipped down and has stabilised at 64,750 kilolitres in 1992. Exhibit-2 gives year-wise, region-wise consumer offtake in volumes and growth over previous year in percentage terms.Competition: The competition in soft drink concentrate industry is from both organised as well as unorganised (local, regional) sectors. Also at generic level, Rasna competes with aerated'and nonaerated soft drinks, fruit based tetrapack drinks, sherbets, syrups etc. as explained in Appendix-A. (A Note on soft drink lndustry).4 In soft drink concentrate industry, Rasna is a dominant brand capturing almost 90% of market share. The other significant brands capturing not more than 1% market share are Trinka (Kerala based company), Sudha (Nasik based company) and Priya (Ahmedabad based company). The flavour-wise prices of various brands are listed in Exhibit-1 of Appendix-A. From that exhibit it is clear that Rasna is the highestpriced brand and all other brands are priced closely below Rasna’s prices. Initially when Rasna was introduced it was available for Rs.8.50 per packet. It was quite economical - about 60 p&ise per glass compared to other soft drinks - aerated, non-aerated, tetrapacks, squashes and syrups. Over the years, however this gap is reduced as Rasna prices have increased and it is available for Rs.13.50 for a pack. The price rise in other soft drinks is not as high as that of Rasna which is clearly evident from Table-4 of Append i x-A.

Profile of Home-drinks Market: Rasna and other soft drink concentrates are positioned as a convenient, economical, family drinks. It is promoted for home consumption. By providing wide variety of flavours it tries to cater to variety in taste needs. The price of Rasna is affordable to the masses and it has attracted - a large chunk of middle class families mainly in urban markets. Housewives and children are the target for Rasna’s communication programmes.

The recent research commissioned by the company about soft drink concentrate market and Rasna in particular has shown that soft drink concentrate market has become static in recent years. The rate of growth has slowed down indicating maturity stage. Aerated and non-aerated soft drinks have snatched a part of SDC market in home drinks on cost factor as evident from Table-4 of Appendix-A. The products in SDC market has seasonal demand achieving peak in March-June period. The company considers main season as Jan-July and mini-season in October-December period. There are also variations in this demand pattern across regions. For example in Western markets the company gets about 80% of its business during main season and 20% during mini-season. In

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Bombay region the demand is - levelled throughout the year. In South the company gets 60% of the business during main season and 40% during mini-season.

The product soft drink concentrate is a Iow-invo1vement item and not a habit-forming product. Families buy the product to serve their guests and for self-consumption. They seek for variety in flavours. It is an item of impulse purchase and hence visibility and availability is a critical factor for success. Buyers are not very loyal to particular brand and hence top of mind awareness is very essential. It is also pointed out in research that people have saturated in terms of flavours and taste of Rasna and expects something new.Distribution System; Rasna is available throughout the country in 1600 towns through about 2.5 lakh retail outlets. These retail oulets are of different types namely grocery stores, provision stores, kirana shops, medical stores, departmental stores, super bazaars and apna bazaars, bakery and confectionery shops, panvallahs etc. The company has a marketing depot which serve 17 distributors who in turn serve over 2000 stodkists. These stockists then supply to 2.5 lakh retailers. Also company employs cycle vallas who sell and supply to gola-walls, sherbat- vallas etc.

In nineties facing static sales in urban markets, the company has started putting in efforts in rural areas. Mobile vans and video-on-wheels are used to create awareness and make products available in interior of rural markets.Marketing and Sales Organization;

The marketing division of the company is headed by General Manager Marketing who reports to Managing Director. Under GM marketing there are 5 regions 1/area managers (branches in Delhi, Bombay, Madras, Calcutta and Ahmedabad). There is a product Manager who reports to GM marketing. There is a management trainee who also reports to GM Marketing. Under each brand manager there are sales officers (usually number of sales officers are 1 per state but if state is big, then there are 2 officers per state. Each state is divided into districts and about 4-8 sales representatives are supervised by a sales officer. The organisation chart for Marketing and Sales is drawn in Exhibit-3.

Rasna has over the years taken the market by storm and enjoyed a near monopoly situation in the market. So one of the objectives of marketing is to maintain leadership in the market. Soft drink industry has been growing at the rate of 10%. So the company expects to achieve at least that much growth. Thus, marketing objective is set in terms of growth of certain percentage over previous years’ sales.

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Initially, the communication objectives were to increase awareness. Now in urban areas the communication objectives arei) to act as reminder, ii) to remain top of mind awareness and iii) to increase awareness/announce new flavours in the market place. The company has spent about 2.7 crores on advertising in 1992. The Ad-spend of SDC category is believed to be 3 crores. In the industry, it is believed that 80% of the budget is spent on TV and 20% on Press*. Even Rasna follows industry trend by spending 80% of the budget on TV. Exhibit-4 gives summary of advertising messages of Rasna from the Ad-clippings of Rasna for 1991-92 period. From this exhibit it can be seen that the target auidence of Rasna’s message is children and housewife and it is shown that Rasna is useful for all occasions. Recently, the company has started penetrating rural areas hence increasing awareness in rural areas is the objective for rural promotion. Mainly mobile vans, video on wheels, hoardings, cinema slide shows are used to promote Rasna in rural areas.Sales Promotion Practices;

Sales promotion is perceived as a short term tactical tool by the management of the company. Company executives feel that as 'sales promotion involves mainly providing short term material inducements to consumers and distribution channels’ - such material inducements in terms of price offs or more goods at the same price etc. are not necessary as Rasna already enjoys 90% market share in SDC market. The company since inception has relied on pull strategy. Through creative campaigns on TV and Press the company has been successful to increase awareness to a great extent such that Rasna has been synnonymous with SDC. As demand is created through heavy advertising retailers themselves are interested in keeping stocks of Rasna. Hence the company has made policy not to give direct monetary inentive to either a retailer or consumer. However, inspite of above philosophy the company has not neglected sales promotion function. Since inception the company has carried out several sales promotion activities as will be described later.

The company does not set up sales promotion objectives both for retailers as well as consumers beforehand. They assume that objectives are understood. From various activities that they carry out, following objectives can be inferred.1) to act as a reminder2) to create awareness about new flavours3) to create excitement

*Ad Agency’s internal records.142

4) to induce trial for new flavours

5) to motivate consumers for more usage6) to lure consumers from competitors’ products.

For distribution channels, the objectives inferred ares1) to motivate retailers to display products prominently2) to ensure visibility and act as reminder3) to generate enthusiasm among retailers

♦

4) to motivate retailers to sell/promote Rasna.

The management has set up a rule to apportion Rs.50 for every sale of a carton worth Rs.2000 (which works out to be 2.5% on sales in value terms). This norm has been fixed by the company. Initially the amount apportioned was low (Rs,20 for sale of Rs,2000) but has been increased to this level few years back and is likely to be the same or slightly increase in coming near future. This norm is an upper limit for sales promotion budget. This norm is applied to forecasted sales for coming season and budget is apportioned to various sales promotion activities.

Sales promotion activities are planned in October for coming January-July (main) season and in August for October-December mini-season. The planning horizon is short term - less than a year as planning is done for coming season.

Each area manager is responsible to prepare a detailed list of activities (schemes for retailers as well as consumers, including costs of such activities to be attached as an Appendix to a plan for the coming season. This is prepared in consultation with salesmen and sales officers of the branch, suggestions of retailers, competitive activities as well as detailed analysis of sales for past season. Previous research inputs are also used to prepare such plan. Thus, the area manager coordinates and compiles individual p1ans/activities of various areas/towns alongwith estimated costs, timing, place, expectations etc. Thus all such local, regional planned activities are compiled and a plan for the branch with estimated costs is prepared and sent to the head office for approval. Rationa1e/.justification as well as likely outcome/expectations are all provided for support to the plan. All five area managers are supposed to prepare and submit the plan latest in October. Then a meeting is held between head office and all area managers and overall promotional plan, budget, objectives are conveyed, discussed and suggestions, experiences etc. are shared. Then GM

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Marketing holds discussion with each area manager individually to rationalise and finalise the plan for his branch. This may bring about amendments in the plan provided by the branch manager. Then by December or early January, the branch gets approval of the plan alongwith the budget sanctioned. It is theresponsibility of the area manager to execute the details of the plan as per the plan. Promotional agencies may be appointed by the branch to execute the activities detailed in the plan. Some activities are carried out by the branch. The area manager coordinates the activities and ensures that promotional schemes at local, regional, branch level is carried out as per the plan. Once the budget and the plan is approved, it is the discretion of the area manager to modify or alter within the given limit. But sines last year it has been specified that in case there is a need to redeploy resources to other schemes then the area manager should inform the head office and seek approval. For example during last season there was an outbreak of cholera in Bangalore in summer so it was not possible to carry out liquid demonstrations. There was a need to redeploy money set aside for liquid demonstrations. Hence the area manager proposedredeployment and head office approved the plan with some modifications/suggestions. When such kind of alterations are to be made during the season at times proposals and approvals are made on telephonic conversations and quick decision are made and conveyed through fax. Thus plans are flexible subject to approval by head office.

Exhibit-4 gives sales promotion budget scheme-wise. all India and region-wise for January-July season of 1992 & 1993.For the year 1992, proposed sanctioned and used figures of sales promotion budget in Rs. lacs is given.

Table-1Total Sales Promotion Budget

(Rs. lacs)199,2 1993 % increase

Proposed 62. 70 ■79.78 27%

Sanct i oned 57 62. 25 9.2%

Uti1ized ‘ 54.14 N. A.

Company Turnover About 30 crores

Sanctioned as % of T.O. 1.9% 2. 1%

Advert i sing 3 crores

Ad. money as % of T.O. 10%144

" I

From the above table it is clear that sales promotion budget is fixed after considering proposals given by the regional offices. Over 1992, proposed money asked for was 27% more whereas it was only Rs.62.25 lacs which was sanctioned as against proposed amount of Rs.79.78 lacs. While sanctioning the amount, norm of Rs.50 for every 2000 Rs. sales is kept in mind - which is the upper limit. Similarly needs for promotion, financial availability as well as competitors’ activities not only in soft drink concentrates industry but also in aerated soft drinks as well as other consumer packaged goods companies are compiled and discussued. The information on new sales promotion acivities of MNCs like HLL, Nestle, P&G etc. are sought from the market and compiled. Salesmen who are in the field gather information on such schemes and inform the branch immediately.

?abl«-2Region-eie* Sales Proaotion Budget

P * Proposed S ■ Sanctioned

V* Utilised

1992 1993Region P S S to total U P S S as * of totalUest-Boabay 12.50 14 25 13.35 15.53 12.80 21Uest-Ataedabad 6 7.50 13 7.43 9.85 7.95 13North-Delhi 4.50 8 14 8.56 18.80 14.25 23East-Calcutta 13.30 10.25 18 B.G5 12.20 9.65 16South-Kadras 26.40 17.25 30 16.73 23.60 17.60 28All India (Total) 62.70 57 100 54.14 79.78 62.25 100

From the above table we see that sanction for Bombay region has declined from 25% (sanction as % to total sanction) to 21%, that of Ahmedabad has remained constant at 13%, whereas that of Calcutta and Madras has declined by 2% each, whereas in case of Delhi it has significantly increased from 14% to 23%. The reason for this increase is change in distribution arrangement in 1992 for Delhi region. Earlier company had a sole distributor looking after promotional activities of that region and incentive was included in a "margin" given to him. So company was not needed to carry out too many promotonal activities in that region. However, the company changed this system and appointed a new

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distributor in 1993, and it decided to promote on its own and decided to put in well organised effort, by focussing its attention to develop this market. All the above reasons led to substantial raise in sanction to this region.

Tabl*-3List of Schemes in which sanction has been increased >. 100* over 1992

* increase over 1992 sanctionRepaint dealer boardFairs and festivalTemporary sales representative

Black boardsCotton bannersLiquid outlet developmentFilm screening2nd unit (Van subsidy)Rural distribution van

The above table is self-e company has decided to focus activities and hence sanction increased by 100* or more.

100

200

100

100100166.7100100

100

planatory and shows that the its attention to the listed over previous year has been

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T a b l e - 4

List of activities in which sanction has been reduced (over 1992)

% of amount reduced over 1992

CC (Cola Coia/L-up (Lemon up) Pub- Van Dealers Board Wal1 paintings Van paintingStockists sales representatives<Cookery demonstration Van subsidy Door to door

Table-5

24100

31.4 3110.5 50 100

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All IndiaLevel Amount Budgeted for various consumer sales promotion schemes

(Rs. Lacs)Amount

1992 1993Type of Scheme Prop. Sanctioned Used Prop. SanctionedCC/LUP/Pub.Van 0.50 5.00 4.31 4.40 3. 80Liquid Demo. 12.00 11.15 10,96 18. 25 14.23Fairs & Festivals

1.35 0.75 2.27 3.25 2. 25

School Promo. 1.50 '2.00 0,60 2. 10 2.00Cookery Demo. 1.50 1,00 1.69 1.50 0.50Rural Promo. Van

10.70 10.70 7.25 12. 75 10. 95

Door to door 0.70 0.70 0.50 0.50 0.25Film screening 0 0 0.007 0. 10 0. 10

28.25 31.30 27.20 42. 85 34. 08Total S.P. 62.70 57 54. 14 79.78 62. 25.Money 45% 55% 50% 54% 55%

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From Table-5 it is clear that consumer S.P. schemes account for on an average 50% of the budget. Compared to 1992, the budget sanctioned for consumer promotion schemes has been increased and is 55% of total sanctioned budget. Among different consumer promotion schemes, liquid demonstration and rural promotion vans are the two major schemes in which 40% of the money is spent. All players in soft drink concentrate industry have liquid demonstrations during the season. Liquid demonstrations are held inside the store. A girl prepares a drink and offers the customer a free drink in a thermocol throwaway glass. Whenever the company comes out with a new flavour, such liquid demonstrations are held extensively so that trial for new flavour is generated. If people like it, then Rasna is offered at a discount which helps the store to sell the product. Since such demonstrations help moving the stocks of the store, retailers welcome such schemes.

Another important consumer promotion activity is a rural promotion van .which hase been recently started. Facing stagnating growth in urban markets, the company decided to promote its product in rural interiors and hence substantial efforts are put in this activity. These promotional vans go to interior parts of rural areas, show advertisements of Rasna, carry out liquid demonstrations, give the gift articles to people who com© to see ads and taste Rasna. These vans also do sell to them if they wish to purchase Rasna. Such vans also feed the stocks of rural outlets on their route. In the late evening along with movie songs advertisements are shown when rural folks gather to see. So they not only carry out promotional activities like liquid demonstrations and distribution of free gift items but also sell and feed stocks of retail outlets and advertise.

Apart from these two major activities the company also participates in lot of local sponsorship of events at school levels. Children are the target for Rasna's communication and promotional activities as they are considered as major influencers, initiators as well as at times deciders, the company believes in creating awareness among school children. Hence, through permission from schools, liquid demonstrations are held at schools, children are served Rasna free. They are given small gifts like 'he-man' stickers, badges etc. Also debate competition, painting and drawing competition, sports events etc. are sponsored. These activities are done at local levels and regional office, sales officers and salesmen coordinate these activities along with local sales promotional agencies appointed by the area manager. Basically the main objective behind these activities is to increase awareness among school children, act as a reminder to them and create an excitement at local level.

The company also participates in local fairs and festivals by opening up a stall providing free drinks. Whenever the company introduces a new flavour, door to door contact is made

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•5

and Rasna is sold at concessional price or coupons are issued to them and demonstrations for preparing Rasna are held. Thus the company also makes a direct, door to door contact. Besides, cookery demonstrations are held in ladies club and other social groups gatherings, where Rasna is used as an ingrident to prepare dishes like milk shakes, desserts, lemon rice etc. In Southern India. live cookery demonstrations are done significantly compared to other regions where no such activity is carried out as evident from Exhibit-5. In South. 1.69 lakhs were spent for such cookery demonstrations.

The company had tried out a few other consumer sales promotion schemes in past but response had not been encouraging. For example in Delhi they had tried to give in-pack premium with every purchase of Rasna pack during the seasn (but the response was not overwhelming. Similarly in Bangalore consumers were given Rs.2 off they purchased 2 packs but the company found that such a scheme led to preponing the purchase by a housewife and ultimately not increasing the demand. Hence, the company is bit weary in using such promotional schemes for consumers and believes to spend more money on liquid demos and sponsorship of events for school children which generates interest and excitement among them. Also the company enjoys near-monopoly situation in the market and so their objective is to hold on to that position. The company believes to achieve through heavy advertising rather than giving monetary incentives to consumers.

Table-6Amount Budgeted for Dealer Schemes

(Rs.1acs)1992 1993

Proposed Sanctioned Used Prop­ Sanct-osed i oned

Total S.P. Budget 62.70 57 54. 14 79. 78 62. 25Amount budgeted for consumer

26.25 31.30 27.20 42.85 34. 08schemesAm.ount budgeted for dealer schemes

34.45 25.70 26.94 36.93 28. 17

% dealer schemes 55* 45% 50% 46% 45%as to total budget

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From table-6 it is clear that the company spends about 45% of total sales promotion budget in dealer schemes. One of the most important activity is BIDs which is brand image development scheme which forms 21% of total sales promotion budget. This activity is being carried out since inception but recently more money is spent due to increasing competition, brand proliferation, multinational companies’ practices for paying money for window displays, increasing retailer power etc. Essentially in this activity, windows are hired for display of products for specific periods and company salesmen and sales officers arrange the displays and for using the space, the payment is made to a retailer. Earlier retailers on their own used to display the products and it depended on company’s relations with the retailers. But many multinational started hiring, making payment for window displays which led to retailers to ask for thfe payment for display and hence the company spends substantial amount of money in this promotional activity.

/ Table-7

Top 3 Schemes inA11

terms ofIndiaHoney Budgeted (Rs. lacs)

1992 1993P S U * P S

i) Liquid demo 12 11. 15 10. 96 18. 25 14. 23ii) BIDs 22.6 13.'00 19.21 16. 35 13. 29i i i) Rural Promo. Van 10.7 10.7 7.25 12.75 10. 95iv) Tota1 (i+ii+iii) 45. 3 34.85 37.42 47.35 38.47v) Total S.P.Budget 62. 70 57 54. 14 79.78 62.25

(iv) As % of (v) 72% 61% 69% 59% 62%

As the Table-7 indicates liquid demonstrations, Brand Image Development Schemes and rural promotion vans are the three important activities accounting for about 60% of the money budgeted for various sales promotion activities. Except for Ahmedabad region wherein dealers’ board is also an important activity and in Delhi CC/LUP publicity van was also an important activity alongwith these three activities. Thus there are no major regional variations in terms of sales promotional activities.

From Exhibit-5, if the list of activities are looked at, there are many activities which are not sales promotion activities. For example, banners, wall paintings, van paintings,

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van subsidy, black boards, cotton banners, hoardings, film screening etc. are the advertising activities. They are localised pub 1icity/advertising and since responsibility for carrying out the above activities lie with the regional office, hence they are clubbed with sales promotional activities. Similarly, rural distribution vans are distributing and feeding stocks of retail outlets in rural areas, so such activities cannot be strictly termed as sales promotion activities. Cycle sales representatives, temporary sales representatives, liquid outlet development, stockists’ sales representatives’ incentives are personal selling activities. Thus in a true sense only 60% of the total sales promotion budget is used for sales promotion activities. Rest is for advertising and on personal selling.

Review of sales promotion activities!When the season ends, each area manager is supposed to

prepare a detailed report which contains list of activities carried out during' the season. These activities are compared with plans. Any deviations from plans are explained and rationale is given. Also each regional manager gives his views on activities which were successful or unsuccessful. Expectations which are put alongwith planning the schemes and if they are not met with them, reasons are explained. Also some guide 1ines/suggestions are given by the regional manager for future plan. As an illustration, an excerpt of such a report by one of the regional manager is given in Exhibit-6, Looking at the exhibit, the process of review of sales promotion activities become clear. Also problems faced in execution, field experiences, reaction of consumers. retailers etc. are reported. After submission of this report, General Manager Marketing holds a discussion with respective branch managers regarding performance. Deviations from expectations are carefully scrutinised and explanations and discussions are held which become guiding inputs for plans for the next season.

The company carries out extensive research all over India at the end of the season. The main purpose of the research is to know about consumption levels, product categorywise shifts, satisfaction levels, effectiveness of advertising in terms of recall, reception of new flavours, impact of sales promotion schemes if carried out, purchase triggered by a scheme, window display, retailer’s influence, advertising etc. If some special sales promotion scheme is run in some city/(region) for the season, then dummy question for that scheme is included in the questionnaire for that region and thereby response to such scheme is sought e.g. if price off is for Bangalore city then question would be included whether people bought because of price off, how did they come to know about it etc.-for Bangalore. No separate research is carried out to judge the effectiveness of the schemes.

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Participation in decicion pertaining to «alas promotion:

I n p r e v i o u s s e c t i o n p l a n n i n g p r o c e s s o f t h e c o m p a n y i s d e s c r i b e d . I t i s c l e a r t h a t t h e r e a r e many p a r t i c i p a n t s a t v a r i o u s o r g a n i s a t i o n a l h i e r a r c h y l e v e l s who c o n t r i b u t e t o t h e d e c i s i o n m a k i n g w i t h r e s p e c t t o s a l e s p r o m o t i o n a c t i v i t i e s . T h e a p p r o a c h u s e d i s a b o t t o m - u p p l a n n i n g a p p r o a c h . R i g h t f r o m s a I e s m e n / s a 1e s o f f i c e r s t o M a n a g i n g D i r e c t o r , e v e r y o n e g e t s i n v o l v e d i n d e c i s i o n s p e r t a i n i n g t o s a l e s p r o m o t i o n , d i r e c t l y o r i n d i r e c t l y . F o l l o w i n g t a b l e i n d i c a t e s l e v e l o f i n v o l v e m e n t v i z . h i g h , medi um a n d low o f v a r i o u s p a r t i c i p a n t s f o r v a r i o u s s a l e s p r o m o t i o n d e c i s i o n s .

TabIt-8

Participants

Type of Decision

HanagingD irector

Genera1H aiiager Hktg.

Productttanager

Areattanager

Salesparscn/officers

Dealer

i) Budget H H H H L Lill Allocation of budget H H H N L H

iii) Progran Objectives*

iv) Type of scheaes H H H H H Hv) Duration, Tiling L L L H H Lvi) Target Audience H H H H H Lvii) Thene/Hedia support H H H L L Lviii) Prograi Specifics L H H H H Lix) Executation L L L H H Hx) Evaluation H H H H L Lxi) Research L H H L L L

Level of involveaent : H : High

•\

H ; Hediui L : Lov

^ P r o g r a m o b j e c t i v e s n o t s p e c i f i e d b e f o r e h a n d .

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As seen from the table, the top management gets involved in budget, budget allocation decisions. Review and evaluation decisions are taken by General Manager Marketing. Program specifics, timing, execution and review decisions are mainly taken by regional managers and involvement of top is low to medium. Thus, planning process involves number of people from various levels and it is a joint decision rather than one-man decision as clear from the Table-8.

The following Table-9 summarises the consumer and dealer sales promotion activities of Rasna across various dimensions like usage, area, target auidence, media support, duration and evaluation, criteria of various schemes. From that table also it is clear that sampling in the form of liquid demonstration is the only major consumer sales promotion activity of Rasna, Also the company has used variety of contets like drawing, painting, debate etc. contests at local school levels. In case of dealer sales promotion activities, hiring of window displays is the most important activity carried out by Rasna. The target auidence of all consumer sales promotion activities are housewife and children. Mainly evaluation criteria for any consumer sales promotion schemes is sales generated along with other criteria like number of cups given free, response/entries to contests etc. All consumer sales promotion schemes are for a season and duration is not more than 6 months and usually for the period 1 to 3 months.

Each region prepares its own sales promotion plan which is approved by the head office. Hence, this may result into planning of activities on a piece-meal basis, since each region has a separate plan. Many a times situation may warrant to have a common program across nation so holistic approach is needed. But this is taken care of by holding a joint meeting between head office members and all five area managers. Many a times head office may initiate S.F. programs. For known problems for example there might be places/markets which are not yet penetrated, per capita consumption is low, competitor is becoming strong, etc. then company may design the schemes to resolve these problems and ask area managers to implement them.

' Area managers send their proposals for the coming season. These proposals are then sanctioned by the head office. It may so happen that the head office may not sanction the proposed amount or the schemewise breakup of proposed amount which may give rise to discontent among the area managers. This also is taken care of by holding individual discussion of GM Marketing and each area manager in which rationle is given and differences are sorted out. Area managers are responsible for execution of

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Table-9

Dealer Prosotion Schemes

A. filiosances (Reduced Price!

Frequently Not so used Frequently

used

Notused

firea Media SupoortDuration Evaluation Criteria Ongoing

Local Regional N Extensive No

Off Invoice J %

B ill Back J

Count Recount */ j J 3-4 a Units sold

Advertising J -

Free goods J

B. Buying Teres

Quantity Discounts J J J b 0 u

Proapt Paysent Discount J J J y a

Delayed B illing Discounts

Returns

C. Presides

Sealer Loader J J J 3 s H

ferchandise Prizes

Iferdiandise g ifts -

f i . Displays j J J 2 ■

Feraanent J

Rotating J J J 2 s

E. Contests J

Displays contests J J j 2 s Duality of tfisplav/umts sold

Sate contests J

ISA

Table-9

Conswer Prantim Sdieaes

A. Special Factory Pad Usage Area Target Media Support

Duration Evaluation Criteria

F NSF KU N R L 3 3-6

Price Pack J J * J J Sales of premia packs

Praam® Pack J J Delhi Children/ _/ HB

Reusuable Container Pack

Multiple (hit Pad

Trial Size Pack j j JEconomy Pack j J J

B, [ dudkuho

Mailed JMedia Delivered JDoor to Door J J J

C. Saeohno J JHose Delivery J J j HtS x j to. of ftts contacted

to. of packets soldHail in '

In store lt J

- Sift Package

D. Off Pack 1 JBrasilia J J Children _/ J

Trading Staaos j

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Table-9 Cant'd.

A.' Snecial Factory Pack Usage Area Target Redia Support

Duration Evaluation Criteria

F NSF NU N R L 3 3-6

E. Preoiu® Hail Ins J

FreeLiouidating 1

F. Refunds

Sisple Refunds JChannel Refunds

B. Contests J J

Sieole J J HN j Ho. of entires

Hail in J-

Hinner in Every Stare J

Bases J

Schoals J J School children _/ No. of children

156

the plan. For carrying out liquid demonstration and door to door selling they appoint promotional teams, on hiring basis. These teams carry out these activities for which they are briefed by regional office about the company, products and activities to be carried out. Since they are not under direct control at times there may arise problems in implementing the program. Many a times the members of the promotional team who were earlier briefed about the company and the job to be done get changed at the last minute. Coordinating and controlling activities of promotional teams may pose problems.

In case of window hiring unless constant checking is done, the retailer may not display products properly for the period stipulated. Thus there is a need for continuous monitoring of such window displays. Apart from such execution problems, regional office do not face any problems in planning or monitoring sales promomotion activities. In case of redeployment decisions during the season, approval from head office is sought without any delays.Future Concerns;

The company expects tough competition in future. It also expects that sales promotion activities will definitely grow in importance and plan to spend more - allocate budget for such activities. It plans to develop rural areas and emphasises on advertising. Growing health consciousness, entry of Pepsi and likely entry of Coke is going to pose severe competition and threat to level of demand ' for SDC category as a whole. The company expects in future need for more sales promotion efforts to sustain its brands.

157

Exhibit-1Flavour-wise Performance of Rasna

1988 1992Total 100 100Orange 44, 1 38.9Pineapple 12.7 11.9Lime 8. 7 8. 1Mango Ripe 16. 4 17.2Shahi Gulab 7.7 6.7Co 1a-Co1 a - 7.2Others 10.4 10

158

Exhibit-2Rasna: VoIu m salts, year-tin, tagion-ain

Unit: Kilo litres Period: January-June

Source: ORG Retail Audit

Year North East Vest South All India % increase in volute overpreviousyear

* over previous year value

i960 17724 5997 40640 25995 90539 -11.5 14.41989 16918 5103 34094 23985 80101 -24 21.61990 12342 3961 25682 19082 61068 +7.4 5.41991 15326 4529 25341 20685 65612 -1.3 1.91992 12779 5502 20433 26016 64750

159

Exhibit'dMarketing Organization

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r iRegional ProductManagers (%) Manager

Delhi, Bombay Madras, Calcutta Ahmedsbad

II

Sales 1 per StateOfficers 2 if State is bigger

IIII

talesepresentatives (4-8 assigned to i sales officer)

--- 1I

Management-Trainee

160

Exhibit-4Summary of Ad. Messages

Reasons for drinking Rasnamummy’s kitty party ali through Navratri papa’s promotion party doll party fancy dress party didy’s wedding birthday

• happy Rasna for happy days just after mummy’s shopping when we come back after play while doing homework

- when papa comes back from office just after grand pa’s walk while watching TV/Rasna time

exam time summer songteacher giving me very good ho 1idays

Maximum home prive 60 paise per glass (inclusive of sugar)Storey - Didy’s Wedding

Pap's promotion party

161

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POINT NO.2Exhlbit-6

REVIEW QN LOCAL PROMOTIONS:Thy localised promotional activities were planned with certain objectives in mind, but in few promotional activities we did not get the eiipected results sue ft as in BIDS and Liquid demonstration. For your kind perusal I am giving below the observation noted under each of the activity.

t o j a a t iiiiROiivsKmatifc

BIDS: Effective promotion for creating awareness and tobuild up the retail pressure, but this year it had its advantages and disadvantages too. The main twodisadvantages were:

i) The period of 43 day were found to be less, ii) The amount constraint for window did not fetch us Al­

and A class outlets specially in Metros and class I towns.The main advantages was 'B' class outlets were delighted on beinq enrolled in large numbers.1 suggest we should increase the amount and further cut down the no. of days or else we may not get good windows for our products.We should plan BIDS only when the season picks up and offtake begins,in other words BIDS should be planned a few days before the school vacation .LIQUID DEMONSTRATION: This promotion is not effective i fthe sales girl, or boy do not explain about the product. From 1993 experience we strongly recommend 2 sales girl per counter in return we may cut down the no. of outlets but the team of two is necessary in order to keep the effectiveness of this promotion.If it is not feasible to increase the budget then we can have a dry demonstration with only 1 salesgirl but it should be supported with good consumer offer to ensure a good purchase. We may keep a consumer offer only on purchase of2 or more packets.STOCKIST SR INCENTIVE: A motivating factor for the BR togive h.is best in the market, but it also has .its adverse effect if he fails to achieve, because he is paid incentive only on 100*/. achievement. We have to modify the scheme and ensure incentive on pro-rata basis to boost up’ his morale.RURAL PROMOTION VAN: It is very effective promotionprovided we have our manpower to monitor its activities or else it is very difficult and at times impossible to assess and apraise the work done by the agency. Although we are

/ 163 '

, W

Exhibit-6 Oontd.

recruiting one person through our wholesaler he? does not have any say in the working pattern ofthe van as he is totally ignorant of the area/ou tl ets/sales etc.

FILM SCREENING: We should extend to more and mure towns in the coming year and also the duration should be of minimum 3 months. This definitely help as reminder media and it wilL be fruitful in class III and towns below, where the cable TV/Star plus has not yet reached.CYCLE SALESMAN! This promotion is very effective but. difficult to get’permanent employee, our business being Seasonal.DOOR TO DOOR CAMPAIBN: The main advantage of this promotion is i) Dirject approach to the consumers.

ii) Education about the product and its preparation, iii) Attraction to non-buying consumers.

This promotion is effective or useful only if we are t,o launch or introduce new flavours/producl.BLACK BOARDS! They were distributed only to retailers of 20,000 plus towns and were effectively displayed. We should extend this scheme in the next year also.WALL PAINTINGS! This promotion help as a reminder media. For next year we require new design and size of the wall should be bigger.

REPAINTING OF DEALER BOARDS: Misuse of the dealer boards bv the retailers in most of the places, moreover repainting m certain areas by the agency is found to be difficult.LEMON UP BANNERS: The purpose of putting up Lemon up banners in Bombay city was basically to announce the arrival of Lemon Up. We had asked the agency to put up the banners at vantage points and the total no. of banners displayed in Bombay city were 500. This promotion is effective or useful only if we are to launch or introduce new flavours/product.LEMON UP PUBLICITY VAN: Very effective media to create 'HUNGAMA'and awareness for the flavour. As we had also showed video cassettes and served free drinfs to the consumer. The crowd that gathered around the van was encouraying. As m case of banners this promotion is also needed only for new f1avours/products.

164

Exhibit-6 OonfdUTILISATION Vs BUDGETS JAN--JULY 1993

3.NO. TYPE OF PROMOTION BUDGET SANCTIONED BUDGET UTILISED

1 LU PUBLICITY VAN2 LIQUID DEMONSTRATION

A) KIT PURCHASEDB) FREE SAMPLINGC) GLASSES!167900 PCS)

3 LU BANNERS4 REPAINTING OF BOARDS

(BAL. USED FOR BIDS. TEL. SAN. OF MR PAK ON 23/4/93)

m 5 WALL PAINTINGW 6 BLACK BOARDS

7 INSTITUTIONAL BALES PERSON

B STOCKIST SR INCENTIVE 9 SCHOOL PROM.

<30,000/— TO BE USED FOR BIDS. SAN.FAX DT. 3/3/93 OF MR RKP

10 CYCLE BALES MAN11 RURAL PROM. VAN

# (CLAIMED BY W/S RS.35273.27 & 1,76,500 PAID BY HO)

12 DOOR TO DOOR CAMPAIGN13 BIDS14 RURAL DISTRIBUTION VAN15 FILM SCREENING16 BANDRA STATION

f # (SANCTIONED BY MRNIRANJAN VIDE LETTER DT.18/5/93)

75000.00261000.00

50000.0030000.00

75000.0030000.0020000.00

60000.00 50000.00

16000.00225000.00

25000.00 300000.00

2 0 0 0 0 .0 0 1 0 0 0 0 .0 03000.00

73509.34184106.226630.00 1332.SO

61499.1855000.004080.00

60790.0030000.00

0 . U O

9900.00 0.00

7200.00 211773.27 *

23085.35 336237.00

0 . 0 0 6286.00 2304.00

1250000.00 1081733.16

165

Annexure-IV

Case 2s Priya DrinksSYP Agro Foods Pvt. was set up in 1889. In 1990, the

company came out with a soft drink concentrate with a brand name Priya. The product has 11 different flavours. The shelf life of a product is three years. Orange flavour is very popular and accounts for 50% of company’s turnover. The product is mainly marketed in Gujarat. Priya had a triangular pack design, which is now changed to rectangular shape.

Soft drink concentrate market is dominated by Rasna - a national brand which was introduced in early '80s. Rasna has a strong presence in urban markets. With urban markets, attaining Maturity and facing severe competition Priya drinks concentrated its efforts to tap rural and semi-urban areas of Gujarat.

In initial years, the company set modest marketing objectives in terms of survival in the market. This was because there is severe competition both from local, regional and national brands. Rasna, a dominant brand is also based from Ahmedabad and hence the company has set up above marketing objective. In three years of operations the company has attained Rs.3 crores turnover.

Distribution:The company has penetrated Gujarat by appointing 126

distributors at taluka and district level as against that Rasna has 55 distributors. The company has divided Ahmedabad market into 3 parts namely area across railways bridge, and area on both sides of river - city and this side of the river. In newly developed area of this side of the river which is posh area, the company is not able to break stronghold of Rasna as people in this area are very brand loyal.

The company has a sales staff of 15 salesmen who service 126 distributors. Exhibit-1 gives terms and conditions for the appointment of distributors/stockists for the company.

Since inception the company has carried out both advertising and sales promotion activities. For advertising, creating awareness is the main objective as the company has recently entered SDC market. The company has set following norms for advertising:

Just prior to and during season the company should advertiseon regional TV twice in a week (Rs.30000 per one broadcast).

1 6 6

Local magazine one per month (Rs.80000 per one insertion)VernacularChi tra1ekha(Circulation 3,02,000)

Local daily Daily Gu.iarat Samachar

once a week Cost Rs.450 per

Sandesh (5,51,000column cm, (B&W) per insertion.

c i rcu1 at i on)

So out of total promotional budget, cost for advertising as per the norms are calculated and totalled to get the amount needed for advertising. Then whatever amount is left is spent on varied sales promotion activities, both for trade as well as consumers.

At the time of introduction of Priya the company supplied lot of POP materials to be displayed by retailers at point of purchase. It arranged display contest in Ahmedabad and Baroda. Prizes like TV, Luna etc. were given for best displays. A retailer was required to order minimum 1 box containing 32 packets to participate in display contest. The company arranged dinner for those who participated and prizes were awarded to winner in that function. This event was very successful as the company could penetrate these two markets in the first year itself. In order to reduce discontent among retailers who did not win in display contest, the company gave consolation prizes.

The objective for advertising is to create high level of awareness in Gujarat market. Hence in introductory years 30 to 35% of the revenue is kept aside for advertising and sales promotion. The company is engaged into variety of sales promotion activities like inshop liquid demonstration, displays, contests, door to door selling and window hiring.

Initially, the company set its price Rs.2 less compared to Rasna. But in 1993, the company revised its price and reduced the gap between Priya and Rasna’s price by pricing Priya 75 paise lower than Rasna. The main reason for upward shift in price was that it was felt that price is not an important attribute in brand choice. Lower price may be perceived as a poor quality product. Hence the company revised its price upward which brought in substantial contribution.

In order to motivate consumers to try Priya, the company carried out inshop liquid demonstrations. A sales girl was appointed who would prepare a drink and serve it free to people who visit the store and are willing to taste it. On the counter, products were displayed and if people bought, they were given free gifts like ball point pen. The company also engaged team of 20-50 persons who would visit door to door and sell Priya. Each

167

sales person is expected to make 50-55 calls daily. This was carried out in 4 big cities namely Ahmedabad, Baroda, Rajkot and Surat. If housewife purchased a pack of Priya, she was gifted a ball point pen, handkerchief etc.

Window hiring involves hiring of a showcase of a retailer for specific period of time. In order to display products, the company makes payment to a retailer so that retailer arranges displays of products of the company prominently. Thus over and above the1 margin which the retailer gets on Sales, they get additional financial inducement. The rates for window hiring vary from Rs.50, 75, 100 or 200 per month. The rates depend upon type of retail outlet, season, location of showcases. The distributors in their territory hire windows and they are reimbursed the charges of window firing. Such a window hiring act as a reminder to the customer and reinforce advertising.

The company also undertakes innovative scheme of sending a dummy customer to a retail outlet when displays are arranged. If the retailers have displayed Priya prominently and when dummy customer asks for soft drink concentrate, a retailer pushes and sells Priya, then immediately gift is given to a retailer. The company has found this scheme very beneficial in motivating retailers to push their products.

The company also provides incentive in terms of additional 3% discount to trade if their order exceed targets assigned to them. The company does not believe in dumping their goods to the distribution channel.

For consumers, the company had devised various schemes. E.g. at the time of introduction of Priya, the company had given 25"x4" size advertisement in a local newspaper having 3 1/2 lakh circulation. The company had invited readers to colour the advertisement and send it back to the company. It was announced in an advertisement that first thousand entrants would receive free packs of Priya which will be delivered home. The company had received 3000 entries. The company also gives gifts to children like stickers, etc. inside packets. The main idea behind these activities is to generate interest among kids. The company also had carried out decorated and sent to schools to promote its products.

The company had run another contest by asking five general knowledge questions. In order to participate in this contest, the entrant was required to send 2 box flaps of Priya, Thus it was conditional and required proof of purchase of Priya. First 200 correct answers were given gifts. Consolation prizes were also given.

\

168

The company so far has not tried price off schemes. As it believes that in purchasing such products particularly in urban markets, price is not a major attribute hence price off would not yield any substantial benefit and that is why so far the company has not used it.

In order' to tap rural markets the company has invested in vans. These vans are equipped with VCR, TV and sound system. Alongwith film songs, advertisements of Priya are shown to villagers. The van also serves free drinks to encourage people to try and make sale if they wish to purchase. On its route, it also feeds stocks of rural retail outlets. For sending vans, the company has divided Gujarat into three parts: North, South and Kheda district. Ir\ a day van covers about 6 to 7 villages. During off season, these vans are given to others on rental bas i s.

At local levels, the company participates in various local events like fairs, melas, Navrati. Local distributor arranges such participation. Lot of POP material for displays is supplied and free drinks are served in such events.

As the company is small, Chairman and Managing Director himself looks after marketing activities. in the sales organisation, sales manager is appointed who is assisted by two sales executives. These two executive supervise activities of ten salesmen. MD himself meets his salesforce once in fifteen days. On alternate Sundays a meeting is held at the Ahmedabad, Drive-In Road Office. Based on analysis of sales, feedback of salesforce and information on competitor’s activities, requirements in terms of schemes for each area is decided. Plan for the season is prepared in January. Field problems, suggestions from retailers, stockists etc. are discussed. Initially the company used to announce its schemes at the beginning of the season but now the company has changed its policy. Now it waits till competitors announce schemes.

The company has reporting system as follows. Salesmen are supposed to fill in daily sales report and post to the company. In this report, column is provided for competitors. Thus information is sent on daily basis about competitors. If in any area there is a particular flavour shortage of competitors, salesmen are encouraged to supply such information immediately. The company grabs such opportunity and send stocks of these flavours. The salesmen are given target of 100 boxes. They are also encouraged to appoint new distributors. They are expected to contact distributors once in 15 days or at least once in a month. The distributors mainly finance retailers by way of giving them one month’s credit.

1 6 9

The execution of sales promotion activities rests with sales organisation. Sales managers coordinates and provides support. They communicate schemes to salesmen. Once the plan is made, no change is made. At times local promotional agency are contacted to carry out some activities. Some criteria are set for evaluation of sales promotion activities. If liquid demonstrations are held normally 30-35 packets are used. They are' mainly to create awareness for image building and inducing trial. Sales are also watched but the company believes that all sales promotion activities can not necessarily be correlated with sales.

The company expects that future for soft drink concentrate is not that bright. With increasing number of working housewives, on convenience front, syrups are going to snatch share of SDC markets. Since SDC requires preparation time and effort to make syrup out of it. the housewives are likely to prefer readymade syrups and squashes. With growing trend towards health consciousness, synthetic/artifica11y flavoured beverages are going to be less preferred. Also take away bottles offered by aerated soft drink also have snatched a share of home drinks. So in urban areas, the market for soft drink concentrate in future is not going to be bright. That is why the company has introduced other products like instant foods, spices etc.

Also, the company feels that with increasing competition from MNCs. the usage of sales promotion schemes is going to grow particularly for small and medium companies. Sales promotion is very effective alternative to advertising.

170

}

Exhibit-l /

IgBBS and CBIffilll BBS EBB IHB aEEQIttltjgWI BE BI3IBIBUIQBBZ SIQCKISIS EBB

EBiie §qei mm coasgaiBaigB & ebiyq ibb ib bl b h eqqb EBQBycis.i

1. Esssysi !The product i is a soft drink concentrate available in Eleven ■flavour* under the brand namd “PRJYA" and Instant Mix Food product* available in Seven varieties under, brand name “PRIYA"

2. ARgA« •

The distributors/ stockist* would be assigned a definite area for distribution and marketing of our product and will be expected to regularly distribute the product in his assigned area.only.

3. PRICg £NQ DISCQUNIa) The price structure is enclosed * which is self

explanatory "*'V

The distributor will be expected to distribute theproduct orf the prices suggested' by the CompanyThe prices will be suuject to changes as and when necessary on prior written intimation by the Company

4. SBLgS TA)J AND QSIBSI t

a) The Distributor*/ Stockist wi 1.1 receive the invoice sale* taxpaid but he must have registered sale* tax number to enablehim to redistribut® the stock® in the market without difficulty.. For distributor* outside Gujarat State CST will be borne by Company wherever local Sales Tax has to by borne by distributor. Pricing structure is such that therewill be uniformity in margin for all distributor*.

. « l , ,

b> The Octroi duties wherever'applicable shall be reimbursed by Company. >

i « 1

contd..2

b)

c)

171

5. STOCK PRES§Uk{E AN2 QRDgR eUiGSaEMI*i

a) The l)i stnbutor/ Stockist will be required to keep «t.l«rt&'. 2i days requirement of stocks against his- average monthly sales of this market. Order should not b* less than one carton. For each flavour in softdrink or not less than one carton in each item in Instant Mix.b) The Distributor/ Stockist will be required to send tk \r orders in writing on their respective letterheads indicav .iy

the transport of their preference. -On receiving such orders, despatches will‘be made ex-Ahmedabad F.O.R. Destination.c) Despatches are normally made within 1 week from the date of

Receipt of the purchase order at the marketing officed) Goods once sold will not bo taken back.

b . B5EQSIIThe Distributor/ Stockist wi11 be required to furnish a token deposit with the Company which shall remain with uhe Company till theDistributor/ Stockist continue marketing the Company products. On termination, the deposit shall be returned to the party within three months after mutually settling the accounts. The Company shall pay interest § lb'/, p.a. to the distributor on such deposit.The amount of deposit shall be decided on basis of area as&ig <*ri and expected ualwst volume. .

7. PAYMENT TERMS • .• -The Distributor/ Stockist will be required to pay an advance demand draft along with thn first order that they place with the Company. For the subsequent requirements they will be required tct send IS days post dated cheques along with the order. In case of frequent purchase orders placed by the stockist, he will be allowed to keep only one invoice pending ~ means at any point of time there will be only one invoice due. No order will be valid if it is not accompanied with cheque or draft. Please note that no person of the com pany is authorised to collect cash fromDistributor. For overdue payment, Company will charge interest ft 24/* p . a «

172 contd,.3

/

q. IQS55I * ■The roI a n t a r g e t of t h e r a n , n n & i y n « d »h«J 1 be t e t n u «.i f-l a s s i g n e d . Th« t a r g e t wou ld b s w o r ke d o u t a f t t*i mutunld i s c u s s i o n s and s h a l l be b u s e d on a r e a p o t e n t i a l / t o t a l Hale* of t h e p r o d u c t / m a r k e t s h a r e , e x p e c t e d / m a r k e t i n g i n p u t s e j enura t * d . The d i s t r i b u t o r h a s t o a e b i e v e ' t h e a s s i g n e d s a l e s t a r g e t ? , p u t t i n g a l l n e c e s s a r y e f f o r t s , ",

*>. esdeaNY §yPE2Si 1ft) The s e n i o r and j u n i o r management s a l e s s t a f f of the- Company

w i l l p e r i o d i c a l l y v i s i t t h e m a r k e t s and a c t i v e l y h e l p r-ncl a s s i s t t h e D i s t r i b u t o r / S t o c k i s t i n s a l e s and p r o m o t i o n o f t h e Company’ s p r o d u c t s .

IQ.

* b> The Company w i l l a d e q u a t e l y s u p p o r t t h e t t i U t r i b u t i o n e f f o r t s of t h e D i s t r i b u t o r / S t o c k i s t . by a d e q u a t e p u b l i c i t y ami

i j . a d v » r t i » i p g t i n a l l t h e i m p o r t an t mwdias , d«- tai l*i of winch , s h a l l be ^ s e p a r a t e l y i i n ^ , i m a ^ d .

. BIEUBSgHiMXR e p l a c e m e n t w i l l b e g i v e n a f t e r o b t a i n i n g n e c e n n a r yc e r t i f i c a t e f rom Company’ s a u t h o r i s e d r e p r e s e n t a t i v e

)

_ . r Any d e f e c t i v e i t e m w i l l b e r e p l a c e d f r e e o f c o s t , " whe n b r o u g h t t o o u r n o t i c e w i t h i n one month o f r e c e i p t o f t h e m a t e r i a l

11 n ^IFSBIING* P i s t r i b u t o r / S t o c k i s t h a s t o s u b m i t f o r t n i g h t l y r e p o r t of t h e

1 s a l e s w i t h d e t a i l e d b r e a k - u p * s h o p w i s o - f l a v o u r w i a * and * i t e m w i s e ,

12. i In c a s e o f any d i s p u t e , t h e j u r i s d i c t i o n s h a l l be t h a t of Ahmejlabad C i t y C o u r t o n l y .

IS. P u r c h a s e o r d e r s a r e a c c e p t e d w i t h t h e u n d e r s t a n d * ng- ' t h a t tin* ( C l i e n t a g r e e t o a l l t h e s e ljc"rnifs and com) 11 i rms

WE HAVE READ ALL TERMS L CpDITICNS AND AGRLE TO Afllpi: dYSll .

D istr ib u to r 's signature j Marketing Manager.w ith rubber stemp. * i ...

173

DISTRIBUTOR'S BtO-tMTA FORM

• £ 25.

TR1YA1 SOST* DRINK CONCENTRATE (To be completed by Applicant)

Name of Firm : Phone :

Address : / S.T. D.:

Address of Godown: Gram :

Name of Partner : - Phone :Main :

Responsible Person for our work :

Residential Address of Main Purtner : Phone:

S.T, Nuniber :

Oc'.uils of Present Agencies :

1)

2)

3) ,

4)

No.of Salesmen : Name of Area Covered :

Population of the Area: No.of Retail outlets in the area:Frequency of Visits :No.of Delivery Vehicles : Four Wheelers - Auto Rickshaws :

Paddle Rickshaws BicyclesWeekly Holiday s Market Closed on tName tV Address of Bunker :

Name & Address of Transport :

Rate of Octroi : initial Business : Rs.City/Town (Name) :Hate i . Signature with Rubber Stamp

C.S.T. Number:

Products Turnover in Amount

174

T a b l e - 1

U vd of invotvoMnt in various sa lat proaotion decisions by different persons

Participants

Decisions

HD & Chairian Sales Hanager Salessen Distributors/Retailers

Budget H L X X

Allocation of budget H L X X

Prograa Objectives H H ‘ H X

Type of Scheses H H H L

Duration, Tieing H H H X

Target Audience H H L L

Theae/Hedia Support H L L X

Prograa Specifics H H N X

Execution H H X

Evaluation H H H-H L

Level of Invoiveeent: H - High; H = Hediua: L = Lov

T h e a b o v e t a b l e i s s e l f e x p l a n a t o r y a n d d e p i c t s t h a t s e v e r a l p e r s o n s a r e i n v o l v e d i n v a r i o u s s a l e s p r o m o t i o n d e c i s i o n s . R o l e o f t o p m a n a g e m e n t i s r e l a t i v e l y h i g h c o m p a r e d t o a l l o t h e r c a s e s i t u a t i o n s .

175

A p p e n d ix -A

A note on Soft Drink IndustrySoft drinks include all types of non-alcoholic, carbonated,

non-aerated, flavoured or otherwise sweetened beverages, soft drink concentrates, squashes and syrups. The aerated and non- aerated bottled soft drinks are packed in 200 ml. bottles available in variety of flavours, the main flavours being cola, lemon and orange. The total soft drink market is estimated to be around 1300 crores in 1992 which grew from 900 crores in 1988. The following Table-1 gi.ves an idea about share of organised and unorganised sector.

Table-1Total Soft Drink Market

Total market 900 Unorganised sector (33%) 300 Organised sector (67%) 600

1988 1992crores 1300 crores

crores 430 crorescrores 870 crores

The soft drink industry has been undergoing lot of changes with changing consumer demands, government policy and innovation in packaging. Tetrapacks, cardboard cartons has brought about lot of transformations in this industry. Recently many fruit- based soft drinks have been introduced in tetrapacks which has affected demand for bottled soft drinks.

Table-2Share of packet/aerated and non-aerated soft drinks

1988 1992Total soft drink market 900 crores 1300 croresPacked/Format aerated and non-aerated soft drinks

Tetra packs

540 crores 10 crores

750 crores 120 crores

Market Growth: It is estimated that soft drink market is growing at the rate of 10% every year. in 1988, in India the per capita consumption was estimated to be 1-2 bottles which is very less

176

compared to other countries like US 20-25 bottles, Pakistan 7 bottles. With the growing urbanisation and westernised younger generation preferring non-conventiona1' foods and beverages, per capita consumption is expected to go up in future.The pioneer of soft drink concentrate industry in India is Hr. Ariz P. Khambatta, one of the foremost flavour technologist Mr. Khambatta identified the need for economically priced soft drink for masses as so far this thirst need was being satisfied only by expensive squashes and aerated drinks. In 1978, Pioma Industries launched Rasna, a unique soft drink concentrate available in dual format, allowing preparation of syrup through cold process. It was first to offer the real-fruit like flavour and taste with wide range of flavours. Soon upon introduction, Rasna took the market by storm and in a decade established its market sjiare of about 90% in SDC product category.

Aerated bottled soft drinks are mostly consumed in urban markets and used for out of home consumption. These drinks are targeted at younger generation and are positioned as fun, thirst quenching, refreshing, trendy drinks. Whereas soft drink concentrates and tetra packs are promoted as family drinks to be consumed at home. Thus, the market for soft drinks in general can be broadly segregated on the basis demographic variables like age, geographic location of the market, climate, and place of consumption, indoor/outdoor or purpose of usage, namely for thirst quenching, used as appetizers or to' be mixed with alcohol, or to serve guests or used for social occasions. Various product forms of home drinks are aerated soft drinks, tetra packs, juice concentration, dry fruit syrup, soft drink concentrates, squashes and syrups. These products are available in 200 ml, 250 ml, 500 ml, 1 litre glass and PET bottles, and tetra packs. Soft drink concentrates are available in carton packs, containing 12 gtn. powder and 6 gm. of liquid. Required amount of water and sugar needs to be added to prepare syrup.

The major players in non-aerated soft drink market are as fo11ows s

In soft drink concentrate 'Rasna is enjoying almost 90% share. Trinka 1% share, Sudha 1% share, and Priya 1% share. In squashes Kissan, Dipys and Drak are the well-known brands. In syrups Roohafza, Sharbat-e-Azam, Motumai Tanumal (a regional brand in Gujarat) are some of the leading brands. Table-3 gives shares of few brands in non-aerated market as per 0RG Retail Audit for the period January-June 1992.

177

Tab 1#-3Hon-Aerated Market: Brand Shares

Period-January-June, 1992

SDCRasna 72%SquashKissan 6%Dipy * 1%Syrup

Rooh Afza 10%Sharbat-e-Azam 1%

In aerated soft drink market Thums Up, Gold Spot, Limca, Campa, Pepsi, 7-Up, Citra, Miranda etc. are the major brands. In non-aerated bottled soft drinks Maaza and Mangola are major brands.

There are 14 different flavours which are offered to the market by soft drink concentrates. Rasna is available in 11 flavours namely orange, lime, pineapple, kalakhatta, khus, shahi gulab, colacola, grape glory, lemon up, kesar elaichi and mango ripe.

It has been observed that soft drink market in India seems to have attained late-growth, maturity stage particularly in urban India. The rate of growth of various products in soft drink market has slowed down. Variety of reasons are responsible for this scenario. Increasing brand proliferation, very little brand differentiation, inflationary pressures, entry of Pepsi and likely entry of Coca-cola, BVO controversy, entry of fruit based tetrapacks etc. are some of many factors responsible for this trend. Even though per capita consumption is low compared to other countries, preference for hot beverages like tea and coffee may not bring about major upward shift in demand. Hence, many companies in this industry have shifted their focus to rural market which is fast and still untapped.

When Rasna was introduced in 1978, economy was the major benefit which it offered. It enjoyed substantial price advantage as its cost per glass of soft drink was very less compared to aerated bottled soft drinks or squashes and other syrups. Over

170

the years this gap has narrowed down as evident from the following Table-4 as aerated bottled drinks are now available in 500 ml. and 1 litre take away bottles at substantially competitive prices.

Table-4Price Comparison of various products

in Soft Drink Market1988 1992 % Change

Rasna 8.50 Rs. 13.50 Rs, 4 59%

Syrup 700 ml. 17 22.75 4 33%

Squashes 750 m 1 . 19.50 30.00 4 54%

Aerated soft drinks 3.50 4. 0 4 14%(200 ml.)

Thus Rasna’s USP (unique selling proposition) of low cost refreshment drink is no longer true.

BVO controversy;

This controversy sparked off in April 1990, BVO is a brominated vegetable oil which is used as an emulsifier in soft drinks like orange, lemon. pineapple and apple flavoured carbonated soft drinks. The property of BVO is such that it holds the particles of the flavour and other chemicals uniformly in the liquid thereby not allowing separation and dissipation of water and flavours. BVO is extracted from olive, sesame, corn or cotton seed. It gives smoky, cloudy appearance to soft drink in a bottle. But BVO is found to be carcinogenic and causes damage to kidneys and lever. Permissible limit for BVO usage is 15 mg. per 1000 litres. Central Food Technological Research Institute has developed an ultra sensitive test to detect even a very low level of BVO usage of 1-5 gm. Due to BVO controversy and its ill-effects on health which was published, it affected soft drink industry sales. Manufacturers had to shed out substantial money to advertise that their brands did not contain BVO.

There are substitutes of BVO which are locally developed like Mono and Diglycerides. But they are poor substitutes to BVO as they work like second cousins in the bottle giving cloudiness. Through research it has been found that ester gum seem to be an ideal substitute for BVO.

1 7 9

‘ Pi sir ibut i on;

The channels of distribution in soft drink industry are both wholesalers and retailers. The distribution is intensive. Soft drinks are available at variety of retail stores.

The retail prices for aerated bottled soft drinks vary between Rs.4.50 to Rs.7. Retailers offer discounts on bulkorders. Amongst soft drink concentrates Rasna is highest priced brand and others closely following the leader with variations of 50 paisa per packet as evident from Exhibit-1.

In soft drink industry, much of the promotional budget is spent on advertising campaigns. Particularly aerated bottled soft drinks spent major ad. budget on television advertisements portraying youthful ness, adventurous mood etc. Hoardings and printed advertisements are extensively used to convey similar ideas. Of late, many companies have started sponsoring events such as college cultural function, music concerts and plays. Sponsoring of popular television serials is also noticed. Also promotional materials with company’s logo are used to increase opportunity to see (OTS) of the logo. Point of purchase promotions have also substantially increased to activate impulse buying in the form of posters, danglers, stickers, mobile wobbles and streamers.

Analysing addvertisement clippings of various aerated beverages announcing consumer sales promotion schemes as well as soft drink concentrates for the year 1991-92 shows following patterns.

At the end of this Appendix-A, master table is provided/ which presents content analysis of advertisement of soft drink industry announcing various consumer sales promotion schemes.

It is found from that table that out of total 17 schemes, 13 schemes are for aerated soft drinks. 3 for soft drink concentrates and 1 for tetrapack fruit-based drink. Pepsi is the single most brand in aerated soft drink which has offered 11 different schemes in the 2 year period of study (1991-92). In soft drink concentrate all the three offers are for Rasna which enjoys near monopoly in SDC market. Out of these 3 schemes, 1 scheme is for the period 1988. Following table gives usage of different types of schemes in soft drink industry for 1991-92 period.

ISO

Type of SchemeIn pack premiumSelf liquidating premiumConditional premiumContestsSamplingCouponEvent sponsorship.Price off <More quantity at same price

No. of times used 1 3 2 3 2 1

3 1

117

From the table it can be seen that wide variety of schemes are being used. Premium (in pack, se1f-1iquidating or conditional) seems to be the most popular scheme used by the companies. Combination of 2 or mere schemes is also seen as mail in coupon and lottery is used. There are also instances of joint sales promotion i.e. two separate companies joining hands and offering a scheme like Rasna Femina contest or Pepsi and Taj Bengal sponsoring an event together.

It is also possible to infer from the master table is that all these schemes are usually for summer as that is the mainseason for soft drinks, maximum for 1 or 2 months, it can be observed that designed, carefully thought

These schemes are short duration, If the scheme details are examined,

the schemes are very innovatively through and quite exciting.

181

Exhibit-1Flavour-wise prices of different brands

soft drink concentrates marketin

Company Pi oma Industr ies

SYP Products Sarda Chemica1s

Brand Rasna Pr iya SudhaType of pack Ceka Triangular CekaF 1avoursOrange 14 13 13. 50Pineapple 14 13 13.50Koo1khus 15Lime 14 13Kesar Elaichi 14. 50 14Mango Ripe 14.50 13Shahi Gulab (Rose)

15 14.50

Kalafehatta 14Cola Cola 15 16Lemon Up 15Masala Soda 13.50Chocolate 14Fa 1 sa 14Khus 14. 50

182

Waster Table (Appendix-A!

Content Analysis of Sales Promotion Advertisements

Sr. Brand FBI Type of Scheme Scheme Details Area Duration SourceNo, Category

1 Pepsi Aerated Self-liquidating - Hadonna Magic Poster soft drink Premium 6 crown caps + Rs.3

- Fido-dido stickers 6 crown caps + Rs.3

- Magasound Cassette12 crown caps + Rs. 15 (1991 Grammy Hits!

- Cool Fido (Normal is boring! Poster 6 crown caps + Rs.3 only

Select Till gifts Lifecities last Observer

21st April 1991

2 Pepsi Mail in Coupon Write to Kapil Name + Address Ahmedabad ends si+ Lottery Kapil will choose 200 names and knock at the & Baroda 16th day

door- offer lua chilled Lehar Pepsi- win a free subscription to sports channel- get 6 month subscription to India's firs-:

sport video aagazute

3rd May- 1992 Indian Express

Ask any question to Kapil Pose for photograph with you First 200 invitees to get miniature bat autographed by Kapil.

3 Pepsi

4 Citra

ConditionalPremium

A Flair P a set in exchange of 24 stars TN, 25th April (tot knownprinted on the lining under each crown caps Pondiccery to Aug, 15,

Chittoor 1991.’I (tellore District

Contest Citra Etcitra Challenge or How to become fill India No tiae a celebrity overnight duration- 3 dots on Citra logo - one yellow two reds specified

in ad.You have to sake an ad. create an output of the ordinary interpretation of the dots (be witty). You can use camera, a point brush or just a pencil or if you cannot draw simply state your idea. Bet famous best ideas will be published as ads in leading newspaper if it is your idea, your name will appear with an ad1 K m prizes. You can also win one of the hundreds of special Citra mosentos plus a crate of Citra for your ideas.

TOI, 6thSeat,1992

183

Sr. Brand FBI Type of Scheme Scheae Details Area Duration Sourcet o . Category

5 Cams Aerated Combination of Each Caspa crown with flower get 10 paisa Delhi l Till stock HindustanCola soft drink cash reward 4 back OP 10 crowns with flower mark - get part of last Tines

conditional a packet of fun stickers alongwith a note Haryana 18th Aon!premu® book/label/gift card. 1992

6 Pepsi c Event-sponsor- Join us - 'Hirch Masala' turns into 'Shoot Ahsedabad 13th & 14th T0I, 10thLehar ship, Bangla' - reservation available - conditional Nov. 2 days Nov, 1992

Entertainment call 4033407 a a B Welcome Broup Park Sieraton Saturday Might Madras 14th Oct. Hindu,

1 day. Uth Oct. 1991

8 Pepsi s Joint S.P. Unde Sam wants you for all American Burger Calcutta 1 day Telegraph1 Taj Event Sponsorship Boo® and surprise fido-dido gifts for kids. 1st MayBengal 1991

9 Rasna see Preen® in-pad. Free Spiderman sticker in each pack of Rasna Delhi 3 months 1991

10 Basra n Price off Buy 2 packs you Rs.2 off Bangalore 4 months 1992

11 Frooti Tetrapack Contest 4 Frooti/and or Appy pack, side flapps Delhi Open till HindustanAppy fruit based bearing manufacturer's name and address Sept. 83 Times,Parle sail to:All in the fore legiblyFora contains 5 questions, tick the rightanswers, Name® Address, Age, SesSloganI like frooti/apoy because not more than '(use 10 words only/. Write within a week Winner - best slogan + 6 flaos + correct answer Weekly judging4 prizes till contest last x 1st winner - Yamaha motor bike

12 Rasna SDC Contest teat the heat Recipe contest. Use anv flavourFeoina- Joint SP of Rasna to whip up silk shake, a cold drink,Rasna sweet dish or ice cream send us recipe before Aoril 30, 1988.

184

Sr, Braid Ho.

PDICategory

Tyne of Scheme Scheme Details Area Duration Source

13 Pepsi Aerated SB Sampling Taste the magic free today cut out an ad. Go to any dealer - you will'be served Lehar Pepsi free

Bangalore 2 days Successful sales prosotion by Pran Chowtiury

14 Lehar Pepsi,7 IP Lehar Hiranda

Self liquidating Premia

Fido-dido T shifts for 6 crown caps *Rs.25 only,Fido-dido bands for 3 crown cans + (is, 5 only while stock lasts

15 Till stockselected lasts cities

Telegraph 28th Sept, 1991.

15 Lehar Hiranda

" Free sarnies - 4 battles free hose delivery

across the country

Telegraph 11th April 1992

16 Lehar Pepsi

U Self-hquidatingpremuuE

The hottest hits of today.Pepsi beat susic cassette s crow caps + Rs,2a special prosotion price. , Retail value of cassette is Rs.45 available at all soft drink outlets.

across the Upto 31st country Aug. only

(1 eonth)Telegraoh 15th July 1992

17 Lehar Peosi

0 Free good at proaohon

New 500 el. bottle for Rs.6 Introductory offers.

Delhi Till 19thOct. 1992

HindustanTiaes,

price (i aonth) 19th Sept.1992.

18S

Annexure- IV

.3 t ___ N iXJMi

Nirma, the turmeric-yellow detergent powder today is probably the world’s biggest-se11ing single brand of detergent in any one country. The founder of the company - Nirma Chemical Works Ltd. is Mr. Karsanbhai Patel, an unassuming Gujarati from Ahmedabad in Western India. Nirma is the pioneer in phosphate- free detergents and an undisputed market leader in Indian detergent market.

Mr. Patel was a chemist in an ill-equipped government laboratory belonging to Gujarat Minerals Development Corporation. With his ingenious mind, he began experimenting in his kitchen and started making an inexpensive detergent which he started selling to his neighbours. He named this product 'Nirma’ after his then one-year old daughter. The neighbours found this product substantially cheaper than the out-of-reach Surf and it washed clothes reasonably well.

Slowly, sales picked up as word-of-mouth spread. In 1969, Mr. Patel hired 12-square foot shed where he could mix and pack his product in a non-desirpt plastic bag sealed with a candle flame. From this one-man cottage industry in 1972 without power and sophisticated machinery, today Nirma has become a multi- product, 750 crore turnover giant and has become a household name a 1 1 over India.

Mr. Tatel followed a business philosophy rooted by his own middle-class experience - "Provide what a common man wants". He offered consumers a good quality product at an affordable price. He kept very low margins (3 to 4%) by offering basic good at basic prices without any frills. Through his product he dispelled the myth prevailing at that time that higher price means better quality product. It was priced at one-third the price of detergent powders manufactured by large companies and expanded the market for detergent powders. Nirma’s* phenomenal growth in penetration, volume and market share has created marketing history.

Product line;

Today Nirma manufactures and markets wide range of products ranging from detergent powder, cakes, beauty and toilet soaps, Shikakai soap, tooth paste, match box etc. Exhibit-1 gives lists of various products of Nirma and its prices. Exhibit-2 gives turnover of Nirma products state-wise for last 2 years. Backed by continuous Research and Development, Nirma plans to launch

Company’s catalogue

186

wide range of products like tooth-powder, Agarbatti's, Iodised salt. Shaving cream, Talcum powder, Hair oils, Liquid detergent, Beauty soap. Scouring powder, Shampoo, wide range of cosmetics and even consumer durables like electric fans. As a part of backward integration, Nirma has set up plants for manufacturing Oleum and Sulphuric Acid, Fatty Acids, Sulphonates, Glycerin, Oxygen etc. These are vital ingredients necessary for the manufacture of detergents and toilet soaps. it also has plan for setting up soda ash plant project, Linear Alkyl Benzene (LAB) project, power generation project and fertilizer project. To ensure quality, Nirma manufactures all its products in-house and presently its plants for manufacturing consumer products are located at Ahmedabad, Chhatral, Mandali, Kanpur and Indore.

Till 1986, Nirma was a single product company. In 1987 the company came out with a detergent cake - a line extension encashing the same brand name which contributes today about 25% of the turnover. In 1989, pilot plant was augmented to produce toilet soaps which were tested first in Gujarat and then launched nations 1ly.

The key success factor in early years lay in tax advantages which Nirma enjoyed as a small scale manufacturer. But all branded product even from small scale sector no longer enjoys excise relief of 26.5% which it used to enjoy. Hence, in order to continue the price differential between his products and others, Mr, Fatel has consciously kept overheads low by keeping extremely lean top management. The decision-making at Nirma is highly centralised. Mr. Patel believes in direct approach. He does not believe in waiting for the reports. He himself visits his plants every other day, keeps a tab on all matters and takes quick decisions himself. Presently the company has 15000 workers and about 500 executives in various positions.Marketing Organisation;

Nirma uptill now had a despatch section at each of the five factories. No special structure for marketing was created. Each factory used to coordinate activities with each of the 360 distributors. With the growing number of products and distributors, the need was felt to have ordering and despatch at one point and hence on May 1, 1992, Alpa Marketing Company was created. This company buys all the goods from all five factories and handles daily despatch worth 2.5 crores. General Manager (Marketing) heads this marketing company. Under him, there is a sales section which issues debit-credit note. There is a despatch section which arranges despatch. There is an accounts section which keeps tight watch on outstanding. Also GM supervises a sales organisation consisting of 2 sales officers and 50 salesman who service distributors all over the country. As evident from Exhibit-2, it is clear that Gujarat, Maharashtra, UP, Karnataka and M.P. are the important states where company’s

187

volume-wise turnover is high and growing except for Karnataka where it has slipped slightly.

Distribution:

The distribution of Nirma has undergone - various phases. Initially door to door selling was used to deliver goods. Then as the operations expanded, channel members were appointed. The dealings with channel members were informal and trust and faith were the main support to the distribution system.

Today, the distribution network is as follows:«

Nirma

t—IIIIIIIIi\

L

II

Distributors------------ 1

I II t

i

sub-distributorsI

Reta.i 1 srs1 t i I

I 1

Consumers i iBulk Buyer (Hospitals,Coopera t i ves)

All products are handled by distributors. There are about 360 distributors all over India. Supplies to them are made by Alpa Marketing Company and goods despatched from central godown. The distributor handles large volume of sales e.g. there is only one distributor in Calcutta and one in Delhi whereas two in Bombay. In some markets which have high sales potential, there are several sub-distributors who take care of separate geographical areas within the markets. It is the policy of the company to ensure that there is no overlapping of areas marked for various distributors.

188

A!1 Nirma products are distributed intensively in the market. Once the products are stocked adequately by channel members then products are promoted heavily on TV and other media. Company ensures visibility of the products at the counter. The products are despatched to distributors and sent by rail or road. The company fixes the final price of the product and are printed on pack. The retailers are to charge exactly the same amount as printed by the company. The margins for channel members are fixed by the company and all involved are supposed to comply by i t.

The distributors and sub-distributors also contact various institutions like hospitals, cooperatives, hotels etc. for bulk institutional sale. The price is the same as the price to retailers. *

The distributors keep a deposit with the company which is equal to one months’s stock. Normally distributor is supposed to pay alongwith the order - thereby no credit is given. Sometimes when the payment does not come with the order, it is despatched to them against the deposit they have with the company. In case when the order amount exceeds the deposited amount, the company charges an interest on the amount and when the order amount is less than the deposited amount, the company pays interest to the distributors.

The margin of the retailer is about 20%. The distributors give 15 days credit to retailers. He supplies products twice in a month. The final price charged to the consumer is the same all over the country. Freight charges are borne by the company but labour and material handling charges are borne by the distributors. Also local taxes, sales taxes, octroi etc. are borne by the distributors. Legally distributors take possession of ownership of the goods as soon as goods leave the factory godown. However, in case of accident/damages during transit the company bears loss.

The company carries out advertising and promotions. Each distributor caters to 800 to 1000 villages. So he keeps 10 days’ stock and bears inventory carrying costs.

In order to motivate distributors and improve their performance, an award is given to the best distributor of the year in a distributor conference which is organised once a year.

Apart from the feedback given by sales representatives, distributors are encouraged to write to the company about their feelings, and suggestions for changing/improving products etc. For instance, one distributor suggested to reduce the size of Nirma detergent cake from 150 gms to 125 gms to make it competitive in the market place. This suggestion has been implemented by the company.

189

There are 5 lakh retail outlets all over the country stocking Nirma products.

Generally, the company believes to achieve at least 10% growth in sales over the previous year. Thus, marketing objective is specified in terms of percentage increase in sales to be achieved for the next period. Marketing plan is prepared by the Managing Director, Chairman and General Manager (Marketing). Their planning horizon is for 1 year and April to March is the accounting period. Hence by December the details are worked out. The company has achieved Rs. 727 crores turnover for the year 1992-93 and hopes to achieve turnover of Rs.800 crores for the coming year 1993-94,

The company on an average spends 1 to 1.5% of the turnover on advertising from 1980s. The company has a separate advertising company/cell which liaises with the advertising agency - Purnima Advertising Agency. Since inception this agency has handled Nirma’s account. Last year i.e. 1992-93. the company spent about 12 crores on advertising. This budget was spent on variety of media like Doordarshan, Zee TV, radio, Vividh Bharati, Cinema advertising rills, wall paintings etc. As the competition both from organised as wel1 as unorganised sector has increased substantially, the company believes to promote its products heavily through advertising to increase awareness about variety of its products as well as use it as a reminder medium.

As urban markets are maturing and brand proliferation is increasing in urban markets, in order to achieve and maintain growth, the company has started promoting its products in rural areas. For this, promotional vans are sent to rural areas with promotional materials, product demonstrations are held, movie songs are shown in the evening and advertisements are shown thereby creating awareness about Nirma products in rural areas. As evident from ;the industry note on washing materials attached in Appendix-B, still 55% rural folks do not use detergent powders instead they use oil-based laundry soaps. Thus large potential is yet to be tapped in rural areas and Nirma is trying through rural promotion and educating rural consumers about efficacy of detergent powders.

Thus company has emphasised pul 1 strategy. Once distribution is set up intensively and stocks are fed in the channels, the company runs heavy promotion through advertising and thereby motivates consumers to buy products and retai l.ers to stock Nirma products.

190

The total ad. budget for past 3 years is as follows:

1990- 911991- 92

1992- 93

Advertising 9 crores

10.5 12

Sales Promotion 50 lakhs

801 crore

It is believed essential activity, involve themselves advertising budget,

in the company that sales promotion is an Chairman and General Manager (Marketing)

in planning Ihese activities. Alongwithsales promotion budget is also decided for

one year period. When marketing plan is being prepared. e,g. in1992-93 12 crores were apportioned for advertising and 1 crore for sales promotion. Once the budget is set aside, both advertising and sales promotion activities are managed separately i.e. separate company (advertising cell) liaises with Purnima Advertising Agency and General Manager (Marketing), manages sales promotion related activities at distribution level.

It is the policy of the company so far net to run any consumer sales promotion activity. About 2 years back the company had tried a promotion. In every 1 kg. pack of Nirma powder a coupon containing number was put and lucky draw was held and prizes worth Rs.61 lakhs were distributed. Sirce the company has a very wide consumer base, it experienced lot of problems in handling this promotion. Therefore the company has made a policy not to run any kind of consumer sales promotion scheme at national level. As it was found, there are no written, formal policy guidelines for sales promotion activities.

Thus, the main objective of sales promotion Is to motivate distributors to sell more, to motivate distributors to carry out sales promotion activities for sub-distributors, retailers, consumers or to push stocks in the channel.

The company does not carry out any sales promotion activities but encourages distributors to carry out such activities like door to door selling, conference, participation in fairs etc. and partly reimburses the expenses borne by the distributors. Thus, following table shows type of activities and extent of percentage reimbursement of the expenses incurred by the distributors.

1 9 1

Table-i '

Type of activity

Door to door Conference

Me l aWa11 Paintings Shop Display Counter Display

Percentage reimbursement of expenses by the company

75%

50%50%

70%75%

75%

The company suggest these types of activities to be carried out by distributors and informs them about the kind of support which will be given by the company through letters. A copy of such letter is attached in Exhibit-3. Through such letters, distributors are encouraged to carry out varied activities for which part of expenses are borne by the company as shown in the Table-1 above.

Besides these the company also gives direct monetary incentives to the distributors and such expenses are considered as sales promotion e.g. if the distributor is given an annual target and if he exceeds the target he is given 5 paise off per kg. powder on every kg. order exceeding target. The company also arranges lucky draw scheme. For example, last year (1991-92) company had such scheme in which each 100 kg. bags of Nirma powder or toilet soap box carried a coupon on which number was printed. All the purchases during a specified period contained this coupon so a distributor could book as many as he could to get more number of coupons. Then lucky draw was held in Ahmedabad and lucky winners were given prizes. Exhibit-4 gives a copy of the ad. announcing the schemes to the distributors. The company keeps very informal relations with distributors. All distributors are invited for the draw at Ahmedabad and Chairman himself presides over this function.

The company prints lot of POP materials like danglers, letters, posters etc, which are given by sa1esmen/officers to the distributors who in turn distribute to retailers.

The distributors are.allowed extra margin as shown below so that they get additional margin on products provided they exceed the target set for them.

192

Product Margin in Rs.

Powder 1 kg O. 50

Cakes 0 -50

Super Powder 1 kg 1.00Beauty Soap 0.90

Nirma Bath 0. 80

Tooth Paste 2. 30

Thus, distributors get incentive in terms of increased margin which motivates him to push sates in the channel.

Recently, in September 1993. the company has experimented to hire window display in selected shops in Ahmedabad city for a short period for three weeks. The main objective was to create an excitement among consumers, to motivate retailers to display Nirma products and make them visible and to increase awareness regarding all Nirma products. Thus few shops in Maninagar area were selected. A separate display and a counter was set up inside or outside shop where all Nirma products were prominently displayed and those who visited the store and the counter were given some gift articles if they made purchases from that counter. The stocks on the counter were kept from the shop so that it helped the store to move its stocks. Also it motivated retailers to sell more of Nirma products. It was expected that word-of-mouth would spread regarding gift articles and hence more and more housewives would come forward to buy Nirma products. Small gift items like handkerchief or a pencil or an eraser was given if the housewives bought specified quantity. The company found the results of this experiment encouraging and repeated it in Paldi area shortly thereafter. The company plans to conduct these activities on a small/local scale. The main objectives of such activities were creating awareness and excitement at the retai1 counter.

The Table-3 lists various sales promotion decisions and level of involvement of various executives of the company ranging from salesmen to Managing Director. The table is self- explanatory. It can be seen from the table that at Nirma the main person responsible for sales promotion activities is General Manager (Marketing). He is the coordinator and mediator between the top management and the field as well as distribution channel. His involvement is high for all types of decisions pertaining to sales promotion. Top management involvement is high for decisions like fixing budget, allocating budget and deciding main

193

events/activities. Program specification, implementation and feedback etc. is the responsibility of General Manager (Marketing). He liaises with the distributors and his field sales people and keep the top management informed regarding these activities, competitive moves and response of the market.

As no activities are carried out as such by the company and as it is the distributors’ responsibility to carry out the activities and ask for reimbursement not much time is spent on planning and implementing these activities. However, importance of such activities is recognised and hence alongwith the advertising budget, budget for sales promotion activities is set aside.

T a b l e - 3 *

Who within the organization participates in decision pertaining to major aspects of

sales promotion such as

Type of Decisions

Chair­man

MD GM(Mktg.)

SalesOfficers

Sales­men

Di str i -butor

Budget H H H L L XA1location of budget

H M H L L X

Programobjectives

L L H L L X

Type of schemes

H M H M M M

Duration,Timing

M L H L L M

Target Aud i ence

M H H L L L

Theme/mediasupport

M M M L L M

Programspecifics

M L H M M M

Execution M M H H H MEva 1uation L L H H H MResearch

Level of Involvement : H - highM - medium L - 1 ow

194

Exhibit-1

Nirma

Ni rma

Nirma

Nirma<

Nirma

Nirma

Nirma

N i r n Products and its prices

detergent powder

Super detergent powder

Toilet soap

Beauty soap

Shikhakai soap

1iquid-b1ue

match box

Price

Rs.15 per kg.

Rs.36 per kg.

Rs.5.25 Per cake

Rs.5.00 Per cake

Rs.5.50 Per cake

Rs.5.50 per bottle 100 ml.

Rs. 3 per box

195

Exhibit-2S£at«'-wise turnover of Nirma Products

(Vo 1ume in tonnes)

Product/State 1991-92 1992-93 1992-93Cakes+Powder (Cake+Powder) (Toilets)

Gujarat 6145 6640 251Maharashtra 8136 8265 192M.P. 4041 4648 422Rajasthan - 2189 2511 162U.P. 6764 7455 433A. P. 3530 4171 73Karnataka 4449 4140 36Delhi 1593 1515 118Chandi garh 180 174 23Orissa 304 255 10West Bengal 1920 2044 91Assam 403 506 29Bihar 1609 1801 109Punjab 1714 1778 146Haryana 1127 1152 83J&K 180 216 27Kera 1 a 473 462 58Tamil Nadu 1391 1161 15Himachal Pradesh 91 87 13Goa 101 113 2Total about 35000 tonnes of powder

15000 tonnes of cakes2200 tonnes of beauty soap700 tonnes of Nirma bath

Military 760 tonnes per month

196

Dt 8 25/03/1993

Exhibit-3:' -i

Mote to be given to all Distributor's Mho visit Ahmedabad about their working in their own area.

1, All villages having population of 5000 and more should be regularly visited at an interval of 15 day's. Towns and cities should be visited every week. All traders of the villages and towns should be contacted for supply of our products. Tour Route plan according to profprma sent herewith should be prepared by all distributors and a copy of the same should be sent to Head Office. Visits to the villages, cities and towns should be undertaken according to the Tour Route Plan. Salesman of the company,when on tour will visit the places as shown ih the Tour Route Plan. -

j!. Those having more than one district for their area should maintainOffice. Godown, Staff, and Delivery Van for each separate district and should stay in the district H.D. IF the area of the distributor is wide and extensive and if it is not possible to reach the distant places regularly, such distributors should open a branch office and other facilities should be created there. If this is not possible, sub - distributors should be appointed by giving sufficient comission for their work. . ■ • • ;

4.

Each Distributor should maintain sufficient staff and Vecbiles for extensive and regular -sale of all Nirma -products. . . '' -

Earlier, there was no such competition'in 'Detergent^market and disir- -ibutors were accustomed to sell the products to wholesalers* but now this will not do. They should meet smal1 ‘traders also'and they should be given our-products in small quantities also according to their demand. Grocery shops, Pan shops, Cutlery shops, Medical shops, etc should be given toilet soaps. Carbol ic soap *:<Nirma Bath)^Shikakai etc. So efforts should be made to increase'the‘.sale regularly by keeping contact.<With them • <-■ ’• ,ft v _ s F . * > > .'fV!.<••<■ •'t--;-- - -: -• .

.** -y. #1i\i i-.i- a-.--. !•.»• -i ■A Visit .Card .for, all traders of. the ’area should’-be'maintained and all columns should be f i 1 led a t ’'the time ''of »the' vi si t "to-the traders for- supply of our products. Spec!men'copy-of the visit card is enclosed. Salesman when on tour' will check this card regarding its maintenanceetc.

■ r i

K ft' Li. J fast:> ?**•«*. r~6.

7.

With a view to increase the sale of our''products^'aVl-'distributors should organise Door to Door sale through "Sal b e " Girls‘in all cities and towns in thei r - area. 'They should organise'Counter’-Sale outside' good-shops and Shop Di spl ay *. in their bwn area. - Company =.«i 11 share 757. of the expenditure in this regard. t

«• • '• A . - j iM & t c o n f e r VThere are . Industri al-Estates >ir< cities and also;in *-ttral'areas. Prop­rietors of such industrial units should beregular! y'’contacted to sell

Toi let '.-Soap s‘y;* etc -as"a/part 3of undertaking di stributors)shou2 d -keep in tguch ..with

lHinit:E%nd ,‘try’-to increaseifrv-’ » - v - v - J v * ' \i-y~ ‘

TNirma Bath)Carbolic soapwith them. In view of this, proprietors and managers of •• such the "sails in such units;

i ndustrlal r

/jy.19?

P . C o n t a c t s w i t h H o f . p i t s l f . Nurfcinci Homcf. , H o t e l s . who Us_t' d e t e r g e n t powdei t o i l e t s o a p , c a r b o l i c s o a p tNirma B a t h ) i n t h e i r e-s t abl i ahment s s h o u l d b e r e a u l a r j y ( i i a j n t s m t ' d .

9 . As our d i s t r i b u t o r s know l . F . f l . i s a ' / c r y i m p o r t a n t f a c t o r aboutq u a l i t y o f T o i l e t S o a p . T .F .M . i n Mirioa B a t h . T o i l e t Soap and Nirma S h i k a k a i i s m ore t h a n t h a t i n s u c h o t h e r p r o d u c t s o f o t h e r c o m p a n i e s and t h e r a t e s o f Narnia p r o d u c t i s much l e s s . D i s i r i b u t o r s s h o u l d e x p l a i n t h e s e f a c t o r s t o t h e t r a d e r ' s a n d c u s t o m e r s . M o r e o v e r , d i s t r i b u t o r s s h o u l d a l s o t a k e a d v a n t a g e o f t h e p o p u l a r i t y o f N i rma p r o d u c t s an d a l s o t h e g o o d w i l l o f Nirma among p u b l i c .

5 0 . C r e d i t f o r 8 t o 1 0 d a y s s h o u l d b e g i v e n , w h e r e s a l e s a r e e f f e c t e d i n c a s h , d i s c o u n t a l s o s h o u l d b e g i v e n .

I

5 1 . S a l e o f new p r o d u c t s o f Nirma i . e . T o i l e t S o a p . N irm a B a t h , S h a k a t a i s h o u l d come t o l o t i o f t h e t o t a l s a l e o f P o w d er a n d Cake. Some d i s t r i - - b u t o r s h a v e c r o s s e d t h i s t a r g e t . T h e r e f o r e , - i t c a n b e e a s i l y s e e n t h a t 107. o f t h e s a l e o f t o i l e t s o a p s i s p o s s i b l e . T h e r e ! o r e a i l e f f o r t s s h o u l d b e m ad e t o a c h i e v e t h i s t a r g e t . •

1 2 . A l l d i s t r i b u t o r s s h o u l d a c h i e v e t n e t a r g e t o f m in im um 157. i n c r e a s e .. « s a l e o f N irm a P o w d e r , D e t e r g e n t Cake and T o i l e t S o a p s .

1 3 . E a r l i e r , Company c o n t n b u t e d _ 50X_ of t h e e x p e n d i t u r e f o r Wall P a i n t i n g . Now, we h a v e i n c r e a s e d t h a t l i m i t t o 7 07.. Some d i s t r i b u t o r s h a v e s t i l l n o t d o n e a n y w a l l p a i n t i n g . One w a i l p a i n t i n g c o n s u m e s 1 5 0 t o 2 0 0 s q . f t , a r e a . I t i s n e c e s s a r y t o c o v e r t h e w h o l e a r e a by w a l l p a i n t i n g and t h e r e f o r e t h e y s h o u l d s e n d p r o p o s a l f o r w a l l p a i n t i n g b y t a k i n g q u o t a t i o n s f r o m t h e d i f f e r e n t p a r t i e s . Company w i l l s h a r e 707. o f t h e e x p e n d i t u r e . - .

1 4 . A l l o v e r t h e c o u n t r y , F a i r s S. Mel a s *are h e l d r e g u l a r l y i n a l l s r e a r r M o r e o v e r , d i f f e r e n t t y p e s o f e x h i b i t i o n s a r e a l s o h e l d . Each— • d i s t r i b u t o r s h o u l d s e n d u s . t h e l i s t o f s u c h F a i r s / M e l a s r e g u l a r l y b e i n g - h e l d i n t h e i r a r e a w i t h t h e d a t e s and p l a c e s w h e r e Mel a s arid Fai r ^ - a r e h e l d . D i s t r i b u t o r s s h o u l d t r y t o i n c r e a s e t h e ' s a l e by t a k i n g s t a l l * —i n s u c h F a i r s / M e l a s a n d a l s o by o r g a n i s i n g l u c k y c o u p o n d r a w s s e t c . a t _.t h a t t i m e . • '

15

1 6

1 7

A l l d i s t r i b u t o r © s h o u l d h o l d c o n f e r e n c e o f T r a d e r s i n t h e i r a r e a a t l e a s t o n c e a y e a r . Company w i l l sH a r e 5071 o f t h e e x p e n d i t u r e .

D i s t r i b u t o r s s h o u l d i n f o r m t h e company a b o u t t o t a l num ber o f v i l l a g e s iri t h e i r a r e a a n d a l s o t o t a l number o f c u s t o m e r s t o whom o u r p r o d u c t s a r e g i v e n . . . . . . i •

D i s t r i b u t o r s s h o u l d t a k e p r i o r a p p r o v a l a b o u t t h e w ork w h ere co m pa n y i s t o s h a r e t h e e x p e n d i t u r e - i s ‘i n v o l v e d . -* -- < i i r «. - T O b ' * . ■ : • Vv ' - ; - . ' » v r ; v * y c l r i y ' , » *. . ; - t , - : %

. . - t , • ' 4

Exhibit-4

VS:

........................

. Collect one coupon worth R s.tS kon your purchase from — 11:7-93 to 10-9-93 (of 50 Kgs. NirmaW ashing powder OR 16;Kg¥.

(1 Carton^ o f Nirma Super P o w d ^ Encash th is coupon-fay,^ further purchasing 50 Kgs. Nirma Washing powder OR.16 Kgs.

(1 Carton) o f Nirma Super Powder from 11-9-93 to 10-11-93.

OR (.3 Lj 231 , i ''•0, -v 13^ vC I* ? 3 *- *-?"** n ?r

C o lle c t o n e c p u p o n ^q rth Rsn5/-"fairyocrrparchase from ^1 1 -7 -9 3 to lO -9 -93 .3 ca rt© rt5 irfN irftW e ie?ge ffl Cake~OR ~ Nirma Super C ak& Encash Oitsfbfai/pofi “by M th e r pWtfhitelhg

3 -ca'ftons o f Nirma 0etergent Cak94tr

VS* S ' J *a 3 M«V<* V *« i . 1: * c r < jt-si i**. "c* >

■ --c ' -♦ v*;~ -T.<r s -c**a i do of >r!ph art? ebb-i ynsonwO sriT iOR

Collect one coupon wbrth Rs.15/{'on yduFptjFchaseWqrn a

11-7-93 to 10-9-93.1 Carton (10 K g s jp f Njrroa geauty Soap OR 1 Carton (10 Kgs.) o f Nirma S h il^X a iS P ^A^rton/(15/Kgs») o fT

Nirma Bath. Encash UjisucipppQOfay further^ purchasing .e 1 carton (10 Kgs.) o f Nirma Beauty Soap OR1 la r to n t j f * rs

£.,r ni Nirma Shikakai (10-Kgs.) OR t carton(15 K gs.)o f ««* & ---------- Nirma Bath from 11-9-93 toJO-11-93.

2?. J..*

199

L

Exhibit-4 Cont'df. «, ~iv~

'4 x , i ^ y - . J» * «s -''" i"irj1 c"mmmEach Discount Coupon will carr^ a Lucky The Lucky prizes are as follows' r 5, --x -

__________________________________________________________________________ ‘ " \ U * ( * / ' , t - ’ C 1 • ^

DETAILS PRICE „ : • ; . .P E R , ..TO TA L TOTAL,1 ^ • ~~7 < < APPROX 8 , SERIES ~* PRIZES u ' (RS.)1

MARUT11000 • ' ‘ v 4,00,000 ’ 1 COMMON ' “ * ’ i ‘ ' 4,00,000 KINETIC HONDA (SCOOTER} HT 24,800 ^ ’ 5 COMMON ’ =• C ' • - $ S ' -1 ,24 ,000 WASHING MACHINE '*■ JJ.r - ^ « r j ^ { n r f i& J tX O(VIDEOCON) — .V - ■ = . — —-------------- ---------- ---------------- - - - - •GODREJ FRIDGE (165 LTS.) S ^ . J s f 1 130 11,05,000GOLD CHAIN . ______________ 5 , 0 0 0 ™ . ______ 1 _______ 13 0_____ 6^0,000TITAN WATCHSILVER COIN (25 GMS.) - *. . ISr-st****..** 0 = * ■■ *|300" ltqt\ 000 *

JfCfc- fjswIL" ,J, V . - J j i lu »>ct . j ; i » ^ o t Al 2 34$?1U j 51,00,000 j )

V.- ' .WW :■. . 1 . . • . > < ! . (>1 > v « l ' J . » , . v J w j V i V v • ' : < UI

DRAW ; DATE 25-9-1993 -AT -AHMEDABAD M

je In the scheme;

2. The Company holds the right to glve cas lfor a commodity for prize,

3. T lu c k y Draw 4 p fs h n p o r T r t prizes win be organised at Aim

4. The prize will be given after airslatutory deductions. . „ „

r xt-t-flf 01 es-- rr7 . ° 'Jurisdiction will f e a t k h n ^ b a d f o r a n ^ lh e le g a l m atte rs^ ^ 0 O O lls O f

8. T h f o s c h ^ s W t l v e l t ^ ^ ^ - ^ £ 9 « m i H

9. th e re ard430 SeSes. q S O ? $ U S S 8 S f f n t W lO U q X G * } f lO j l& > T

10. Authorised Distributers: A: Employees pttfielCbmparty* CaHno? take* pari In This

<a| Pft,0_t‘> "ia1 Htgtt - >scheme.

f ^ » **<rl

;ii, ..

200

Annexure-IV... r wm ■ * " ■

Case As Hipolin

Hipolin, a low priced, yellow detergent powder is manufactured by one of the companies of Hipolin Private Limited. The selling and administration is looked after by Hipolin Management Consultancy Private Limited.. The product named Hipolin is in the market since last two decades. It is available in both powder and cake form. Detergent powder accounts for 80% of the turnover and rest is contributed by cake. Recently the company has introduced a toothpaste, a tooth brush, shampoo under the same brand name. It has plans to introduce many more products in cosmetic and oral product category.

Hipolin is priced slightly below Nirma. It is targeted at middle aged middle class housewives. The company believes that its price is dictated by Nirma’s price. Unorganised and small sector brands account for two-third of total low priced detergent market. Beside Nirma, Hipolin faces competition from relatively smaller brands like Vimal, Ojas, Adhunik, Ranjit, Wheel and the latest entrant Sasa.

Hipolin has a strong distribution network in Gujarat, Bihar, Orissa, UP and West Bengal. It has appointed 300 stockists who supply to retailers.

In order to coordinate efforts and facilitate distributors/ stockists the company has employed salesmen looking after various areas. They service stockists and retailers in the area assigned to them. Their activities are supervised by area sales managers, who also move in the field and supervise and direct activities of salesmen. These area managers report to Director Marketing, who device marketing strategy and report to Managing Director.

. The company in 20 years time has attained turnover of 40 crores by 1993. The marketing objectives are specified in terms of volume growth and percentage of market share to be achieved. As the detergent market is growing at 12* rate per annum, the company expects that much minimum growth. The company sets aside 4-5% of total sales as total promotional budget. Out of this 60% of the budget is allotted to advertising.

For advertising, the company has defined target audience as housewives of age group 25 to 45 from middle income families. The communication objectives are increasing awareness and creating awareness in ' areas where the company does not have a strong presence. The company contracts advertising agency for preparing advertising campaign.

ij a P w & A ii201

Sai«s Promotion: Remaining 40% of the total promotional budget is spent on sales promotion activities. The company believes in trade push and device various schemes for retailers so that they are motivated to push Hipolin products. The company has a policy not to have any schemes for stockists. Also the company does not believe in hiring windows at retail points. It feels that for such schemes it should have strong sales force team which would supervise and check whether actually products are displayed in windows hired for specified duration. Otherwise money invested in such activity will be a waste. Instead the company devices various innovative short duration schemes for a period of 3 months for retailers to motivate and push its sales. Thus the company announce schemes for every 3 months. At the end of the term, review is made and the schemes are devised for the next quarter.

Consumer sales promotion schemes are also devised in the same manner for 3 month period. The main objectives of consumer sales promotion schemes are to create excitement, to motivate them, to switch to Hipolin brand, to reward loyal customers etc. Thus various schemes like lucky draw scheme, free gift of a shampoo sachet alongwith a purchase of 1 kg. of detergent powder, contests etc. are devised for consumers. Normally as the company has a strong presence in Gujarat and people are educated in rural areas also, the company allocate upto 50% of the sales promotion budget to various consumer sales promotion activities. However, total amount and the allocation between trade and consumer promotion varies depending on needs of each quarter, area as well as objectives set to be achieved.

The planning as stated is done for 3 months. Before the plan, review is done for the schemes carried out in a last quarter. This review is done by thorough sales analysis, feedback from salesmen, monthly reports submitted by salesmen, suggestions of stockists, retailers etc. Every month a meeting is held at Ahmedabad, between Director Marketing, all area managers and salesmen. In this meeting monthly report submitted by salesmen, is discussed, progress of various schemes of that quarter is also discussed and information on competitors’ various sales promotion schemes are communicated. So feedback and information obtained in this meeting are also considered by reviewing and planning sales promotion activities. Normally plan is prepared by Director Marketing. He takes into consideration all the above information obtained orally as well as in written form while preparing a plan and deciding about allocation of budget across various activities. This written formal plan is then communicated to respective area sales manager and they in turn communicate to salesmen. Thus, through interactive process communication takes place and execution becomes responsibility of area managers. At Hipolin, short duration plan for every 3 months is prepared and is reviewed when next plan for coming quarter is prepared. Depending upon type of schemes to be

202

carried out the budget varies from quarter to quarter. There is no fixed norm for allocation of total budget for sales promotion.

Exhibit-1 gives details of a scheme of display contest announced by a distributor in March 1993 arranged for retailers in his area. Exhibit-2 gives details of a lucky draw coupon scheme for retailers which is in operation recently. In this scheme, > each- 50 kg. bag of detergent powder carries a coupon containing number is issued. A retailer can order as many bags as he wishes. This scheme is open till April end 1994. Then lucky draw will be held on 1st May 1994. Lucky winners will given prizes as illustrated in Exhibit-2. Also the coupons which did not contain lucky numbers could be exchanged for small gifts as given in Exhiibit-2. Thus, even consolation prizes are kept so that retailers are motivated to buy more.

Similarly for consumers, scheme was devised in which 1 kg. pack free coupon was inserted and lucky draw was held and prizes worth 10.5 lakh rupees were distributed. Prizes which were attractive to housewives like gold chain, washing machine, sewing machine etc. were kept. Once the company distributed its shampoo sachet free alongwith purchase of 2 kg. detergent powder. These types of consumer promotion schemes are only for Gujarat market. Outside Gujarat 100% of sales promotion budget is spent on trade sales promotion activities.

Compared to other companies in this industry, the company has given lot of importance to sales promotion activities. The number and nature of schemes offered by Hipolin are many more and innovative. The company is confident about success of its schemes as it is believed that the product with low involvement has low brand loyalty. If quality offered is almost similar and there is not much price difference then it is possible to attract consumers by offering some incentive by way of giving chance to win lucky prize or giving small gifts with every purchase.

In future also the company plan to give same emphasis on sales promotion along with advertising through press and TV. With introduction of new products in future, the company plans to distribute samples free along with company’s other products so that trial is induced.

203

-T«bl*-iLevel of participation by different persons

for various sales promotion decisions

Participants HD DirectorHarketing

Area Hanagers Salesaen Stockists/Retailers

DecisionsBudget H H X X XAllocation of Budget L H H X XPrograa Objectives L H L X XType of Scbenes L H L L LDuration, Tieing L H L X XTarget Audience L H L X XTheae/Hedia Support L H H X XPrograa Specifics L H H L L-HEiecution L H H H nEvaluation L H N M l

Level of Involvesent: High = H, Hediui = H, Lov = L

As clear from above table, several people are involved in various sales promotion decisions. However, involvement of top is high only while determining total budget for sales promotion and not beyond that. Mainly Director Marketing is responsible in preparing plan, allocating budget across various schemes. Execution is mainly the responsibility of area managers. Role of salesmen and stockists and retailers is limited to the extent of giving suggestions, opinions and experience of the schemes. Involvement of salesmen is low to medium extent in execution and review of schemes.

204

Exhibit-1

3915( p f; « /v y jj 3

Vvrdtei ig3& I v . ' v V - - V i*''■ ':: ir V-' * . :- r-. * '

-*ft cartel «rr huts* srfir«fH«imt%gm s<s-?3-<53 tw;

< • .• . • . •n n

S?213C 5 I 5 T O - ^ rcLift faieCl® <$o ,^ 3* jfc

gfrJZC S5RETO: ■ r tf ttM t & fsicll® *o Sit* i

f^cftzc 33:3^ 13; - ‘ . •% £&iM t ^ fs icn^ $o s it* $

sm ksct %zzmz •- %%o $m£t m f 30 s it* $

M ^ffedSTt g tt 3IS <it p i t fc5®fl Elftl <?* 31051JReKgtsitl ;> . ' ' .. '

-. „ . * , , ' * ■ ' - '

8 i f : (?) flea 'M M ep fM & sito l 3 i§ qst 3geft ®88te & v83351 31 SO Rsst 3tf8X3t 31338 053 gt<J3 1 :. .;

< (O 83€fc f^ 3 t f3 l 330 3 ^ 3 0 M& $ 3 3 I ' •(3) g 'C ^R cfT 031^1 ^ 83 STfil gt33 I / • '(V) f? 8 3 l0 3<t fotol3 5338 3 i3 l3 81^3 I

(S) f l 8 3 l0 M 8<$3S0 3 8 t m 3fp3PI8 53381 8 |^ I |

-* 313313 I

-v <:.-• - - ■ • ■ '- -,;~ *1*^535

7. • y y ^ t ‘ - ^.5SVfi®J woBf, ,*§(33 3 .).

fs. 5®, q %:-,':y' • * *>- * -• V*X: . * k y . * . '

205

Exhibit-2For Traderst Lucky Draw Scheme

Operative for purchase upto 30-4-1994 1 Gift coupon will be given with purchase of every 50 kg. Bag

1. Lucky Draw Scheme

Sr .No. Detai1s No. of prizes

Remarks

1. Bajaj Scooter 2 Nos. Only 2 in any series2. Washing Machine 4 Nos. In every series one3. Hero Cycle 12 Nos. In every series three4. Orient Fan 20 Nos. In every series five5. 5 litre Jug 36 Nos. In every series nine6. Wall Clock 360 Nos. In every series ninety7. Eagle Thermos 720 Nos. In every series

hundred eightyone

8. Si 1ver Coin 10 gms.

1440 nos. In every series hundred sixty

three

9. Si l ver Coin 5 gms.

2160 Nos. In every series hundred forty

five

Total No. of prizes ; 4754Draw Date: 15-5-1994

2. Trade Discount SchemeIn above lucky draw scheme, if the coupon does not contain lucky draw name then such coupons can be collected and exchanged for gifts as given in following table.

206

Sr.No. Detai1s1 . On 3 coupons2. On 10 coupons

3. On 20 coupons4 • On 50 coupons5. On 100 coupons6. On 200 coupons

Conditions;

1) If claim is made after 30 will not be entertained.

2) If prize is converted into deducted from prize money.

Prize5 gram silver coinTiffin box Stainless Steel 2 boxes5 Litre Eage JugBajaj Electric IronHercules CycleVideo Air cooler or Black & White TV 36 Cm. R.P. 407.

days from date of lucky draw it

cash then income tax will be

Buy More and Try Your Luck.

207

Append i xt-B

A Note on Mashing Products IndustryIndian washing soap industry has drastically changed from

traditional rub wash using laundry soaps to detergents. Synthetic detergents are easy to use detergent powders which require dip culture of bucket-wash. However, upto 1980 laundry soaps which are oil-based soaps accounted for 769* of total washing soap market.

Hindustan lever is the pioneer of synthetic detergents. The brand 'Surf' was -brought to India in late fifties. Slowly synthetic detergents replaced laundry soaps due to better dirt removal because of LAB (linear alkyl benzene), better dirt suspension due to sodium carboxyl methyl in it and the presence of water softener, presence of sodium carbonate in it. It also has a whitener and perfume in it. Till about 1980, Surf enjoyed No.1 position in Indian market. Till then synthetic detergents were manufactured by the big business houses from the organised sector. In 1978, low priced detergent in SSI sector with substantial tax advantage (due to small scale operations) brought about dramatic change in detergent market. Nirma Chemical Works introduced a low priced detergent Nirma at about Rs.6.50 per kg. when Surf and other brands were available at Rs.24 per kg. The success of Nirma resulted into further proliferation of brands in washing powder market.

Market Size: In 1987, the market size for detergent powder was to the tune of Rs.2000 crores or 20 lakh tonnes by volume. In 1992, it has grown to Rs.3000 crores. By 1987, market for laundry soap was reduced to 529* of the total fabric wash market, from the level of 769* in 1980. Thus. synthetic detergents are gaining popularity. Assuming ratio of synthetic detergent and washing soap to be 60:40, the demand for both is estimated as shown in Table-1 below.

Table-1Estimated Demand For Fabric Wash Products

60:40 Ratio for Synthetic Det; Laundry Soaps(in lakh tonnes

Year Synthetic Detergents Laundry Soaps

1990 13.36 8.91

1995 18. 50 12. 30

2000 25.50 17.0

Source: Business Today, March 22, 1993.

208

In " the world, India is the second largest market after U,S. The market is estimated to be growing at the rate of 12 per cent per annum. In 1991 rural market was to the tune of 6,70,232 tonnes whereas urban market was 7,00.931 tonnes. Compared to urban markets, rural markets for synthetic detergents is growing rapidly as evident from' fo 1 1 owing statistics - rural market grew at the rate of 19% in eighties and, 33% in nineties. Several factors are responsible for .such a phenomena 1' growth in rural markets. They are:

gradual development of infrastructural facilities likeroads, transportation, electrification etc.

increasing reach of media due to reach of TV network inrural areas.

rising level of income (agri. income not 'being taxed)andthree successive good monsoons.

increase in population.

Exhibit-1 gives year-wise production of detergent powders from both organised as well as unorganised sectors. As evident in 1988, organised sector has accounted for 24% of the production of detergents.

Competition: the main players in detergent market from organisedsector are Hindustan Lever, Godrej, Swastik, Tata Oil Mills, Karnataka Soaps and Detergents etc. (Exhibit-2 gives market share, strategy and strengths and weaknesses of these various players). With the success of Nirma many small scale units emerged with low priced detergent powders with brands Hipolin, Kety, Vimal, T-Series, Vijay, Fena etc. These units flourished as government gave relief -in excise duty of 26.5% for operating without power and usage of cheaper raw materials.

Detergents are marketed in two forms - cakes and powders. Cakes account for 35% of sales volume and powders account for 65% of total sales volumes. Synthetic detergent cakes were first introduced by Hindustan Lever in 1969 with the brand Rin. In 1985. Nirma detergent cake was introduced and threatened Rin’s No.l position. Several other companies also followed the suit.

Table-2 below shows market share of various brands of detergent powders.

209

T a b l e - 2Market Share of Detergent

1990Powder Brands

Per cent Share

Brand By Volume By Value

Nirma 47 39.2

Whee 1 16.7 13. 4

Surf 7. 5 18. 9

Sun 1i ght 4.0 3. 0

OK ‘ 3.2 2. 2

Others 23.2 20.9

Nirma's share has slipped down from 59.2% in 1988 to 47.3 in 1992 by volumes. Hindustan lever consolidated its position by marketing three different products in three different price segments - Wheel at lower end, Sunlight in the middle and Surf at the top end of the market.

Table-3 below gives share of various laundry soap and detergent cake brands by volume.

Brand % Share

501 Bar 41

OK 6

Sun 1i ght 1 5.6

Chaavi 4.8

Others 52.6

100.0Detergent Cakes; % Share

Nirma 25.0

Rin 19.6

Wheel 13.7"

Others 41.7

100.0

210

West contributes most - 39% of the total detergent powder market as evident from -Exhibit-3,' which gives region-wise contribution to total dejtergent powder sales. Also the contribution of low priced brands’, region-wise is given in that Exhibit, Thus in west 92% of the market is captured bv low- priced detergent powder brands. North account for 31% of the total detergent powder market and low-priced brands snatch 88% share from total detergent powder market. East and South still left untapped contribute 15% each to total detergent powder sales. Low-priced brands share is less - 74% in South and 64% in Eas t.Consumer Behaviour:

The per capita consumption of soaps and detergents in India is 1.6 kg. per annum in 1980 as evident from Exhibit-4, which gives per capita consumption of soaps and detergents of various countries/continent and also world average. West Europe has per capita consumption of 18.9 kg. p.a, America has the highest per capita consumption of soaps and detergents which is 30 per kg. World average is 6.3 kg. per annum. Thus India’s per capita consumption is very low compared to other countries. From that point of view, it can be said that vast potential may exist provided it is supported by purchasing power.

Buying a washing product - a cake or detergent powder is a low involvement decision. It is a frequently purchased item where brand loyalty is not very strong. consumers are found to be more price conscious. Market studies have shown that on an average housewife spend about Rs,36 per month on detergent powder, bars and cakes.

The housewife compares quality and price of detergent powder. When perceived quality of a particular brand is not very different from that of high priced brands, consumers shift to low priced brands. Nirma made inroads by giving economical product with reasonable quality. When consumers found Nirma to be moderately good in terms of cleaning ability, the low price and simple packaging appealed masses and many consumers switched on to Nirma. Hindustan Lever in its advertising campaign emphasised superiority and quality of its product and thus the people who concerned about quality continued to buy Surf particularly top end market (high income segment).Present Market Scenario;

The detergent market is about Rs,30Q0 crores worth presently. India's market is the second largest in the world after U.S. It is likely to grow at the rate of 12% per annum upto 2000 AD.

211

Today, competition in detergent market has become very fierce with entry of Procter and Gamble with the Ariel brand, other competitors are gearing up to fight back. In January 1993, Tata chemicals has introduced first so-called eco-&-skin friendly detergent 'Shudh’. Sample packs were distributed free alongwith 1 kg. of Tata’s salt to induce trial. Swastik Oil Mills relaunched Detergent 'Det’ - the first synthetic detergent ever produced indigenously. Southern Petrochemical Industries CSP1C) is entering the detergent market with a collaboration of German Detergent Giant Henkle. Even Tosco has begun to revitalise its brands like 501 Super, Double Cakes, OK, Powder, Tej, Revel and Revel Plus, powders. Colgate Pamolive is also evaluating possibilities to enter this field with its successful brands abroad P&G with its strategic alliance with Godrej Soaps also is likely to bring about many changes in the market structure. At the Monopolies & Restrictive Trade Practices commission so many suits are filed on each other.

Distribution has become a critical success factor and retailers margins have increased from 8% to 12%. They have gained power and now for display of products retailers get payments from companies. Also they get' cash payment for displaying promotional material for inshop displays.

At the consumer end more discounts, free gifts etc. are offered now and then as evident from Master Table for sales promotion schemes e.g. a Surf-Ultra packet comes free with every 250 gm pack of Leve'rs Surf. P&G offers 75 gm. Cinthol Soap with a 1 kg. jar of Ariel.

According to the study by the National Council of Applied Economic Research CNCAER), the penetration levels of detergent powders are at 44.6% in rural areas as against 70.8% in urban areas. Thus rural consumers C55%) still use cheap oil based laundry soap bars (1992, Production 6,21,925 tonnes) mostly manufactured by unorganised sector.

In recent years, it has been observed that crowded urban market is slowly getting fragmented into smaller niche markets. There are special purpose liquid detergents like Godrej’s Ezee and Swastik Oil Mills’ Genteel for woollens; bleaches by Tomco, washing machine powders like Lever’s Surfomatic and Tomco’s Revel Plus and Fabric Softners - Lever’s comfort and Marico’s fluff. Among detergent powders, future competition is likely to be between concentrates - P&G’s Ariel, Hindustan lever’s Surf Ultra and Triple Powder Rin. Companies convince consumers by stressing usage of smaller quantity of concentrates for bucketful of clothes which ultimately works out economical - value for money.

212

Pricing, promotion and advertising have become main marketing tools to win the competitive battle in washing powder industry. The advertising budget of three companies in 1989 was as follows as reported in Business Today, march 22, 1993.

1889 1992

Hindustan Lever 14.5 crores

Ni rma 4.9 crores 12 croresGodrej 3.7 to 4 croresAriel (1992) 14 crores in both

promotionadvertising

It is believed that clear cut positioning will definitely help the marketer to carve out a niche in a crowded market.Future; By 2000 AD the synthetic detergent powder market is expected to record phenomenal growth. At the same time, competition is also expected to hot up.- Recent trends have shown that small scale sector offering low priced products have also gained foothold in the market. Consumer also has learned to trade off quality and price. Thus for success in this industry, intensive distribution, creative heavy advertising and heavy point of purchase promotion are the critical success factors.

213

s«l«i Promotion ActivitiesitUrfuii i lng WAttlAJ UndMttax

From the content analysis of the sales promotion advertisements compiled from various sources in several interesting observations can be made (Refer to Master Table attached at the end of this Note). Out of the total 19 ads, 10 ads are for detergent powder, 7 ads for toilet soaps and 2 ads are for cleaning powder.

Fo1 lowing schemes used.

table depicts type of consumer sales promotion

Premium (in pack, off pack) Price off

10

5Event sponsorship Dealer S.P. Scheme

1

2Lottery 1Thus, in washing products industry giving premium articles

free is a standard practice. Normally alongwith a pack of detergent powder a toilet soap or shampoo sachets etc. are given free. Another popular consumer sales promotion scheme is to give price-off particularly in toilet soap category. Compared to soft drink industry, gifts/premium articles are free and unconditional and not self liquidating types. Normally for one time purchase only small free gift is given except for the case of soap powder scheme where'a consumer is required to collect 6 packet tops of 1 kg. powder in order to get a plastic bucket free. Thus, not many innovative schemes are being tried out in case of washing products industry. Mainly duration for the scheme is specified to be till the stocks lasts.

Thus, consumer premium schemes seem to be very popular. Only in one case, lucky draw/lottery is used. There also no special skills are required and consumer is required to buy a product which contain a coupon in which number is issued. Then lucky draw is organised and lucky winners are given prizes. Thus unlike soft drink industry, contest is not used in this product category.

214

Waster Table on Content Analysis of Sales Promotion Advertisement in Hashino Products Industry

SI. Products/Brand Type of S.P. Product Details Area DurationNo. Category

1. BNfiT Detergent Ponder Free gift off pack Detergent Powder Free Nirsa Perfumed 5oap All India Till stocks(Premium! lasts

2. Key Blue Detergent In pack premium a 2 Velvette shampoo sachets “ «Powder < packed inside with 1 kg.

pack of key. det.

3. Honey saver Surf Wore goods less price a New NotHoney saver 2 Kg. hag.

specified.

4. Nip Cleaning Powder Off pack grew uffl Utensil cleaning Fena Detergent cake worth North India Not specifiedpowder Rs.3.75 free with Nip

- Family pack 4 kg. (Rs.19.20) Via price compared 2.5 kg. Rs.23.44 introductory offer

5. Biz Cleaning Powder Inpact premium B Free Velvette shampoo sachet “ Till stockswith 1 kg. pack 2 sachets with 2 1/2 kg. pack

last

6. Surf Detergent Powder Price off Detergent Powder Save Re. 1 on carry bag All India Till stocksof 500 gs. lasts

7. T series washing Detergent , Event (radio Dear Listeners tune into All Indiapowder Programs! Vividh Bharati at 8 p.a.

sponsorship every Thursday for ‘Sitarey Bitonkay" 3(3 minutes musical extravagenza. Sponsored Sopal Soap Industries.

8. Niraa Detergent Powder Dealer Coupon Collect a gift coupon free “ Valid onof Rs.S on every purchase purchase fromof 50 kg. Niraa washing powder 11.2.90 to

10.3.90.

9. Ninas H Free gift Attractive 1990 Niraa calender * Valid fromdealers for dealers with every purchase 1.1.90 to

of 100 kg Niraa washing powder 31.1.90.

10. lljala Hashing Soap/Cake Lottery Lucky draw 1st price Haruti Ahssdabad Not specifiedSoap car other 2001 prizes.

215

SI. Products/Brand Type of S.P.No.

11. Surf Detergent Powder

12. Dettol Soap Toilet Soap

13. Surf Detergent Powder

14. Sway "

15. Palwhve Toilet Soap

lb. Palaohve Toilet Soap

'17, Fresca •

18. Iaproved Lux “

19. Kysore Jasame I 0Sansar Soap

29. Cmthol

ProductCategory

Details Area Duration

Price off on different product Joint proaotion

Festive offer when you buy surf any pack. Save Rs.4 or tree top S-pack.

Dinahi

Free off pack Attractive soap case with Select Till stocksprenus a cake of Dettol soap towns last

Free off pack New Lirii with every All India 7th 1993pre«iufi pack of Surf. (3 days

only).

Free off pack premug

Free plastic bucket with purchase of 6 packs lb top proof serial No, listed)

All India 3 aonths

Free off pack preaitia

1 teaspoon free with 1 soap door to door

Madras 4 aonths

Free off oack preaiua

Free Palaolive, any dandruff shaspoo sachet

tot know tot known

e Free Snlpa Bindi with Fresca

1 u

Price off 50 paise off a B

0 b5 paise on Jsanme 35 paise on Sansar

8 B

0 40 paise off All India 2 aonths

216

Exhibit 1

Product ion of Detergents

(in '000 M.T.

Year Organised Unorganized Total

1984 180 280 460

1985 190 350 540

1986 200 410 610

1987 210 490 800

1988 220 700 920

1989 225 NA 1000*1990 NA NA 1100*

* Estimates

217

Exhibit - 2

toaoehtive Structure in Indian Deteroent Industry

Sr. Coapany Brands Harket key strategy Strengths NeatnessesNo. share

I. HI Surf, Rin, iieel 25.6 Surforaatic Surf Ultra Sunlight

Upgrade the aarket on the basis of price and a m for leadership m each niche

- well established brands to cover every subsegsent.

- largest distribution network aaong consuaer product coapames

- financial suscle to gross subsidise loss-aaking brands

- confusion aaong consuaers because of too aany brand extensions

- technolc^ical focus on cost-cutting rather than product innovation

- reacts to rather than creates new product segsent.

2. P46 Godrej Ariel, key, Tnlo

2 Increase volunes by extending reach of its presuua brand into papular segsent.

- Ariel, technologically superior

- synergy of Godrej Soaps extensive distribution network

- financial suscle to cater new product with big budgets and sustain.

- coapany unknown to Indian consuaer (PW5)

- cospared to HI, PSS's financial strength is such lower.

- high tech, hi-pnced product unsuited to rural earket

3. Tata Oil Hills

Super 501, Double 3.6 Focus an presius segsent - brands carrying entire Cakes, Ok, Tej, of the sarket while range of powders and cakesRevel, Revel Plus aaintaining aarket share - distribution network as

in popular group. strong as Godrej andsecond only to Levers brand mage - assault of

- possible affiliation with the aggressive Henkel of fieraany.

- lack of even m e cash cow aaong its detergent brands.

- does not enjoy

aodem products.- weak financial position with sagging sales and profits.

4. Nirea Niraa Det. 37.4 Powder, Cake

Target and convenient launching soap users by reeaphasising cheap pricing through heavy advertising.

- price advantage- highest penetration level

of 67l in rural sarkets- brand equity built up

through sustained ' advertising.

- inability to upgrade product quality to aeet changing consuaer needs

- no presence in saddle and tap level of the earket

- cosplacency despite losing considerable earket share to Levers.

* Adapted froa Business Today, Harch 22, 1993.

218

Exhibit ^ 3

Region-wise Market for Detergent Powder

Region % Market Low-Priced market as % o f total market

North 31.5 88.2

East 14.3 63.7

West 39.22 92. 1

South 15.1 74.0

219

Exhibit zA

World Per Capita Consumption of Soaps & Detergents during 1960-1980 (Kg./per annum

Continent 1960 1970 1980

West Europe 9.7 13.8 18. 9

East Europe 6.5 6.5 8.6i

North America 12.8 20. 2 30. 1Central America 4. 1 6.9 7.8South America 4.6 4.7 7.8Africa 2.3 2.3 3.2Asia 1.6 1.2 2. 1World Average 3. 8 . 4. 6 6.3India 0.99 1.2 1.6

22 0

Annexure-I V

Case 5i Cass on Vadilal ice CreamVadilal was set up in 1923. The founder started out by

making ice cream - in an ancient hand cranked machine. As the demand outpaced supply, in 1954 Vadilal was mechanised. Upto 1972,_ it was a partnership concern. In 1972, it was registered as private limited company. Between 1975 and 1985, Vadilal grew from regional to national brand.

Vadilal’s main product line is ice cream. Recently it has diversified into frozen foods and vegetables and industrial gases. Ice cream is available in 200 different flavours and is available in various pack sizes like party packs, family pack, bulk packs, big small cups, candies and novelties like small and big king cones, icemithai and sorbets. 1rf 1993, the company has introduced nove1ty-doodaz-ice cream which is a ball like shape, the company had Rs.5 crore ice cream turnover in 1985 which increased to Rs.25 crores in 1990. In 1991-92, the company’s sales was expected to be 37 crores. The company holds about 25% market share in ice cream industry.

Ice-cream Industry;

From the published sources it is estimated that ice-cream industry has grown from Rs.90 crores in 1985 to 160 crores in 1991-92 and Rs.190 crores in 1992-93. According to CMIE (Centre for Monitoring Indian Economy, Feb. 1993) report ice-cream industry is reported to be worth Rs.250 crores in 1992. By volume, ice-cream market is 45 million tonnes. Estimated growth in value terms is expected to be in the range of 25 to 35%. However, volume growth has not been more than 5% for past few years. As ice cream prices have increased substantially in recent years due to rising input costs of milk, sugar, nuts etc. and defreezers are needed to store ice cream, electricity prices have also affected such rises. All this has inhibited volume growth.

Till 1980s ice cream was reserved for small scale sector. With recent liberalisation move, many multinationals have moved into ice cream field (cold dessert category). Also many companies have gone national like Vadilal, Kwality. Even cooperatives are expected to enter in the field if government permits, Amul is planning to come out with Amul ice cream. Thus, competition in ice cream industry has become very severe.

Exhibit-1 gives major players in ice cream industry on all India and regional basis. On all India basis, Milkfood, Cadbury, Kwality, Vadilal etc. are major players. Regionwise there are strong players in each regional markets. In Western markets,

2 2 1

Vadilal enjoys 45% market shar zones. South and East zones ar and 10% respectively of total i the most about 50%.

e - Compared to Nor th and Weste contributing approx imate1y 15%ce cream sales. West contr i butes

Ewho we expand so f o ingred nat i on desser augmen par 1ou

Smetrop are es

xhibit-2 gives strengths and nt national in 1990s. Multi ing and innovating to make a r enjoyed by small, local,i ents of these new, innovatia 1, i i) to extend the concets and i i i) to set up specitat ion 1 i ke free deli very ofrs are used to attract cli ente

etting up a parlour in pr io 1 i tan citie s require majortimated for a parlour.

weak nessesnati ona 1 sdent in threg ional

ve strategpt of ica 1 i sed pari ce creamI e .

me 1 ocatii nve s tment

of four companies like Cadbury’s are e market which was brands. The key

ies are: i) to go e cream to induce lours. Innovative at home by dealers,

on in one of the . Fo 11 owing costs

Rs.60,000 per month for rent

Rs.40,000 per month for overheads like wages, shop design, maintenance, electricity bills, interest on security deposits, which is placed with the manufacturer for freezing equipment.

A franchise who runs the parlour earns a high margin of 35% on stocks as he is offered bulk discounts. However, to breakeven, he needs average sale of Rs.2.85 lakh per month or Rs.9500 every day. As ice cream has seasonal demand a parlour is encouraged to start fast food joint or bakery shop to spread overheads and earn additional income.

India has lowest cream compared to US consumption per annum, will increase to Rs.500

per capita, 0.54 litre which has 32 to 36 It is expected that

crores in 1995.

consumption of ice litres per capita ice cream industry

For ice cream, distribution is a very critical function. Success of any ice cream will depend upon the cold chain which a company maintains. The product requires 25 degree celciaous temperature and slight variation in this temperature would result into melting,sogginess, loss of consistency and formation of ice particles in ice cream. If such problems arise, it would affect reputation of the company. Hence, maintenance of defreezers in distribution chain is a challenging task. Vadilal retailers get about 20% margin on ice cream.

Vadilal enjoys 70% market share in Gujarat. Gujarat, 34 crore market, is the largest ice cream consuming state. 70 to 80% of sales of Vadilal come from urban markets. Due to

222

requirement of heavy operating them, it f u1ly.

investment in defreezers and maintaining and has not exploited potential of rural areas

ining matur ity, compet ition gettingng costs o f i ce cream ; a 11 theseg vo1ume growth In this mar ketoduced nove 1 ty ice eream 1i ke i cedg frozen f ru i t pulp f or pr emi um

severe in urban markets, r; factors have led to stagnal scenario, the company has ii methai and sorbets contaii markets. It has also introduced dairy fresh range of natural ice cream, another range of upmarket ice cream. To counter competition from organised sectors, it has also opened up Hapinezz Parlours in big cities. Today, Vadilal is a 100 crore company, ice cream contributing 25% of tot^l sales and has 2000 people on payroll.Distribution: Vadilal has 95 stockists and 10,000 retail outletsextending in 8 states. The company supplies ice cream to stockists’ who in turn arranges to distribute to retailers in a specified territory.

Marketing division is headed by GM Sales and Marketing. There are 5 area managers who report to GM sales and marketing. Under these managers there are sales officers and salesmen. These salesmen and officers visit stockists and retailers. The company in last 2-3 years have faced stagnant volumes as reasons explained earlier hence marketing objectives are not specified in terms of_volume growth or in value terms. But maintaining the market share is the objective which is kept in recent years. By bringing innovations in product in the form of introducing dairy fresh natural ice creams, new concepts like iced methai andsorbets frozen fruit pulp and novelty shapes like doodaz, ice cream in cones etc. the company has continued to grow. Even infuture the company wants to introduce ice creams in variety ofshapes, sizes and colour. It is also planning to introducedesserts-vegetab 1e fat based ice creams.

Mainly the company engages itself in retail promotion activities. Hence mainly objectives are terms of:

1 eve 1 sales specified in

1) to increase shop level activity2) to motivate retailers to stock

stock/push slow moving itemsmore variety and/or to

3) to make retail outlet attractive so that attention i s drawn4) to strike out the difference

competitors outlets.between Vadi 1 a 1 ’s and

223

are

incurred in past

These objectives generated.

not specified in terms of sales to be

The company makes an usually done two months

annual sales promotional plan. It is in advance. For carrying out these

activities management sets aside total ASP (Advertising and Sales Promotion budget) from which budget is allocated to sales promotion activities. Usually 10% of sales is the norm which is applied to determine advertising and sales promotion budget.

The company does not have formal written policy guidelines. However, top management believes to concentrate on pull strategy at consumer end and to give variety of incentives to retailers to motivate him to stock and push products. Thus at consumer level heavy advertising on TV and Press is done.

Salesmen and sales officers send daily report to area managers. Copy of such daily report form is attached in Exhibit- 3. Also every month sales officers are supposed to prepare a monthly report which provides detailed report on competitors (see Exhibit-4) and their sales promotion activities. Even anonymous telephones or retailers are also encouraged to lend in information of any sales promotion schemes. All these things are brought to the notice of area managers who in turn inform to GM Sales and Marketing. GM Sales and Marketing hold a discussion with the area managers in which competitive actions, suggestions of stockists, retailers etc. are discussed. Required sales promotion activities carried out last year are reviewed and proposal is prepared. This proposal is discussed with acommittee. A committee consisting of MD, heads of variousdepartments like production and works, finance, and sales and marketing reviews this proposal, sets budget and allocates to various activities. Once the plan is finalised it iscommunicated to regional area sales managers who are briefed by GM in a meeting. The execution of the of regional sales managers. They in discussions with the sales officers and tasks to be carried out.

plan is a responsibility turn hold meeting and salesmen and brief about

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Year 1991-92

Retailer related act i vitiesShop paintingAcrylic BoardsPromot i onsConsumer scheme, DefreezeMaintenance

i

•Total

19.11.00024.25.000 51,000

14,00,000

57.87.000

1992-93

26.00, COO 29,33,00030,00C10.00. 000

65,63,COO

1993Apr i1 to November)

21,00,00027,00,0008.40.000

i

5.64.000

As indicated in the above table, the company mainly carries out retail level sales promotion activity. lnv order to make retail shops attractive and with the change in the logo, Vadilal took up shop painting activities so that the company’s logo becomes known to the public. The competition became severe with the entry of Gocool in 1991-92 and Dullops in 1992-93, the company geared up this activity to make ice cream parlours and retail shops attractive and eye catching. Money is spent on Acrylic Boards which are supplied to retail points - about 6000 retailers which are fed ice cream from Gujarat factory. These are supplied to catch the attention and generate traffic. Colourful glow signs, catchy hoardings at retail points are kept to attract customers. Lot of POP materials in the form of posters, danglers etc. are supplied. The company spent 14-15 lakhs rupees in 1991-92 on defreeze maintenance. If defreezers are not maintained properly, quality of ice cream would suffer which would give bad image for the product and company. In 1992- 93, the company has reduced expenditure to 10 lakhs and planning to reduce it further in future.

The company carries out variety sales promotion schemes for consumers. it may sponsor Navrati show at local levels, may have Vadilal parade on December 31st or use mailers suppliers, posters etc. to school canteen and may participate in local fairs. But these activities are very insignificant compared to retailer level activities.

When the company started a parlour in Bombay, it was inaugurated by preparing a Mount Sundae of 15x5x4 feet. In preparing this ice cream, 3000 litres of vanilla, strawberry and chocolate ice cream was used. For topping 50 kg. cashewnuts and 360 litres of pineapple strawberry and butterscotch sauces were used. this was sufficient to serve 20,000 people of 200 ml.

225

(double scoop) helping. This was done on Juhu road in May 1992. Street rock show was organised when Vadilal parlour was opened in Ahmedabad (C.G. Road).

In 1992-93, the company came out with the collection point scheme which was called "Thundoo Fundoo" scheme (See Exhibit-5 & 6). The company spent about 8 lakhs on this scheme. The duration o f the scheme was two months. This scheme was operative in 6 states namely Gujarat, Rajasthan, Madhya Pradesh, Uttar Pradesh, Haryana and Delhi. The consumer was asked to collect slogan written on cup or cone covers or behind candy boxes and collect points. If consumer collected suggested points they could exchange for gifts like fancy hanger, toy gun, jungle book glass, pocket torch etc. Exhibit-6 gives copy of the advertisement announcing the scheme. The main target for this scheme was children and it expected to create excitement among them to eat more ice cream, collect points and exchange for attractive gifts. It was also to counter similar scheme by dullops. The response to the scheme was overwhelming. The company expected redemption for 40,000 glasses but about 80,000 glasses were demanded which led to further order to the supplier. This resulted into delay in redemption. However, irritation level was not that high as conveyed by redemption centres because people waited till the next stock of glasses came and redeemed for points.

The company does not have any sales promotion schemes for stockists. However, they are encouraged to carry out such activities in their territory. Exhibit-7 gives details of a scheme for retailers evolved by a stockist in Jaipur to serve as an illustration.

The company also at times device schemes to move slow moving variety of ice creams by giving them free or at a discount with fast moving variety. Earlier the company used to give free samples of new variety, flavours etc. but that practice is completely being stopped at retail level e. g. 2 cups free with every carton order. Exhibit-8 gives idea about recent sales promotion activities for consumers for various icecream brands which illustrates wide usage of innovative sales promotion schemes in icecream industry in last summer (1993), compiled from various schemes.

For reviewing the activities of sales promotion carried out, no systematic research is done to measure effectiveness of S.P. efforts but suggestions, complaints, experiences, problems of field sales people are sought as well as reactions from distribution channel members - sotckists, retailers are sought which become guiding inputs for future plan.

The plan is prepared for a period of one year and usually two months in advance. When schemes of giving gifts are planned then six months in advance activities to locate and finalise

226

suppliers start. Normally regional sales managers send monthly reports to the head office. These reports are task based, hence sales promotion efforts also are reported in it. The company has stsrt©d since last two vears to do research mainly in the area of retail and advertising audit. Sales personnel activities are reviewed by each area manager.

Roles Played:For deciding schemes, ideas, suggestions are welcomed from

everybody in an organisation. So idea generation is open. They are communicated to GM Sales and Marketing. Rest of the decisions of sales promotion, several people in an organisation are involved with differing level of involvement as indicated in Table-2 below:

S.P. DecisionsParticipants H.D. _ GM Sales it

MarketingRegionalManagers

Salesforce

FinanceManager

Budget H H L X H

A1 location of Budget H H L X LProgran objectives M H M L ' LType of Scheses L H H H LDuration, Tilling L H H L XTarget Audience H H L X XThene/Hedia Support H M X X LPrograa Specifics L H M L XExecution X K H H XEvaluation H H H M X

Thus it is clear from the table that involvement of top management and other departmental heads is only while sanctioning budget. Program details execution, coordination review is entrusted to GM, who in turn delegate execution and evaluation and feedback responsibilities to area managers.

Future: The company hopes to continue with the S.P. efforts that it is carrying out presently. It also plans to come out with variety of schemes for consumers along with that for retailers. In 1995, the company plans to come out with container premium plan in which press-on-button type reusable acrylic jars wi11 be given. Ice cream will be packed in these reusable jars with

227

Vadilal logo and name which will serve as housewives. These reusable pack willconsumers. Also in future the company f will necessitate many more efforts to be promotion.

a durable reminder to be partly paid by

oresees changes which put in area of sales

<

228

Vadi1 a 1 lce Cream

Year

1984

1990-91

1992-93

Vo 1ume

Exhlblt-1

Ma 1or P 1 avers In Icecreatn Industrv

Size of icecream industry

Rs,90 crores

Rs.90 crores

Rs.190 crores

45 Million tonnes

Estimated growth in value terms: 25 to 35%

Malor Players Minor Players

Company Market share Company Market

Kwality Groups 34.9 Arun Ice cream 2.3

Vad i1 a 1 27 Joy Ice cream 3

Cadbury’s 8.8 Rollicks 0.2

Milk" Food 5.5 Gocoo1 NA

Zonewise share of some companies!

Western Zone North

Company

Vadilal

Kwality

Gocoo1

South

Cadbury

Joy

Market share Company

45

24

3.5

22

20

Milk Food

Kwality

East

Rollick

Market share

22 53

South zone and East zone contributes 1514 and 10% respectively to national markets.

Source: Business and Political Observer, 9th Sept., 1991.Business Today, July/August 6, 1993 Financial Express, 3rd July, 1993.

229

Exhibit-2Strengths and Weaknesses of companies which went nationa1

Strength Weaknesses

Kwa1i ty Established brand in the No coordination betweennational market. companies in different

zones.Vadilal Long experience in retail Inability to match

marketing in West. , financial muscle oftransnational.

Do 11 ops High decibel sales Prices too high topromotion schemes ' increase market share

dramatics 11y.

Milk Food Manufacturing facility Low brand awareness Inin every zone markets outside North

India.

Source: Business Today, July 22-August 3, 1993.

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233

E xh ib it-5 Oont'd • w m j v U iDELHI - V; * V i. \ X " UTTAR PRADESH

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1. . M/s. R. R. Marketing Compan/ . 1. ' M/s. Kaveri Disributors' Ga!i No. 15 Plot No. 17, . Begum Bridge

Bawana Road, Sameypur Badii, S V Meerut.Delhi.

O < • M/s Universal Marketing ' Niharika II,

2. M/s. Mahavir Corporation Flat No. 2, 1st Floor, 10/468-A,317, Zakir Nagar, Khalasi Lines,Near New Friends Colony, New Delhi.

Kanpur.

' 3. M/s. Tirupati Foods3. M/s. Neeiam Enterprises

Plot No. 167, 14/397, Gwalior Road, Balugunj, Agra.

Village Mandoli,(Nand Nagari) Nr., Bank of Baroda, Delhi. MADHYA PRADESH

1. M/s. Choudhary Distributors4. M/s. Nirmal Enterprises 31, Bhadbhada Road, .

D-2.S.C. 2nd Mansrover Garden, T. T. Nagar,Delhi. - Bhopal. •

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19/1, Race Course Road, Indore.-

1. M/s. Himalaya Ice & Ice-cream Factory 3. M/s. Gurumukh Kirana Bhandar8/101, Sarai Hussaini, 39, Mukadam Gunj,Faridabad. Jabalpur.

2. M/s. Vasisht Ice & Cold Storage Pvt. Ltd. 4. M/s. Tulsi AgencyGanga Bhavan, Sadar Bazar, C/o. Adarsh Restaurant,Gurgaon (Haryana) Mukherji Chowk,

Mandsaur.

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Exhlbit-8 .

Var i ous sales prompt i on schemes used by var i ous brands

Cadbury - The company believes in forceful marketing strategy. They believe in innovation and differentiation and continuous excitement for consumers. In space of just 3 months, Dullops has undertaken over 100 sales promotion schemes. Some of the innovative scheme details are:

a tie up with Diners Club cardholders of Citibank whereby cardholders could win points for every Dollops purchase and gifts on reaching certain magical numbers.

, - sponsorship of the screening of film Roopkirani & Choron ka Raja.

theme parties held at parlours.

Sources Business Today, July 22-August 3, 1993.

Sub Zero: - a mini metro brand growing at the rate of 55%.

In addition to advertisements, Subsero depends on colourful glowsigns and hoardings to lure customers.

Main business of the company is through party orders.

Source: Financial Express, 20th June, 1993.

237

Exhibit-6 Coni’d.

Arum Icecream -

Scheme Details:

Madras based brand:

Timing 19th August till end of September

lakh of entries from Madras telephone directory o a computer. All offices and factories d. Computer drew one-in-five sample, was 25000. Next step was to call people

list and ask for the telephone number of Arun

Over a i akhwere f ed intwere ex c 1 udeFinal 1i St !f rom t h i s 1 i sIce 'Cream Parlour closest to their place answered correctly they would be gifted ball worth Rs.95. This scheme was widely newspapers. A house was rented for Marketing and promotion selected 7 gift calls daily. Those who could not answer still given information on Arun’s product

1f they a cassette

pub 1icised in this purpose, s to make 75 correctly were s on telephone.

Obiective of this campaign ^ good word of mouth

Also as part of its sales promotion organised icecream melas in these two Bangalore parlours advertised that one much icecream as one could in 25 minutes paying Rs.25.

efforts, Arun states. The

could eat as

Source: The Hindu, Thursday, September 16, 1993.

238

Annexure-1VCast 61 Ua|h>Btkrl Th

The pioneer of Wagh Bakri Group of companies in tea-business was Shri Narandas Desai. He was from Mehmedabad. He was originally connected to tea trade. With an inborn knack of business and spirit of adventure, he went to South Africa and bought a tea estate there in 1892. In 1915, due to a racial discrimination policy he had to leave South Africa. When he came to India, he had nothing but a certificate of merit from Mahatma Gandhi as a capable and experienced tea-estate owner.

On 1919, Narandas started his business in Ahmedabad and opened a shop on Richie Road (now Gandhi Road) for retail and wholesale dealing in tea. In 1925, he got trade name and trade mark of Wagh Bakri brand of tea. In 1935, he opened up a branch at Kalupur. In 1937, the company came up with branded tea named "Good Morning Tea". Subsequently he opened up 4 branches in the span of 21' years at Relief Road, Khokra Mehmedabad, Manekchawk and Rakhial. In 1976, the company began large scale distribution of Good Morning Tea. In 1989, Wagh Bakri Group was converted into Gujarat Tea Processors and Packers Private-Limited and from that year the company began distribution of sealed packets all over Gujarat. In 1985 one more branch was opened up near Gujarat College. In later eighties the company introduced special blend 'Dibis Tea’ for Diabetics and Darjeeling tea, a special high quality Darjeeling tea. In 1991, it launched a brand of tea bag called 'Tea Quick’ 1992 was a Centenary year for Wagh Bakri Group. Today it has eight retail shops in Ahmedabad and it has more than 20,000 provision stores all over Gujarat stocking Wagh Bakri brands of tea. Exhibit-1 gives different varieties of tea sold by the company.

Wagh Bakri Group consists of three companies. 1) The Gujarat Tea Depot looking after tea retail business in Ahmedabad city, 2) Gujarat Tea Processors and Packers Ltd. dealing in sealed packets. It has "appointed more than 100 agents in different towns who in turn supply to more than 20,000 provision stores all over Gujarat and 3) Standard Tea Processing Company Ltd. which has installed an ultra modern blending unit. The Group sells more than 40 lakh kg. tea to the people of Gujarat which is indicative of its wide popularity and excellent quality. It sells exclusively in premium segment and offers a uniform high quality. In 1990, the company introduced poly pack.

The company has a dominant market share in Gujarat and Saurashtra. It has started exports to US about 2 years back. The company’s marketing organisation is looked after by Managing Director Mr. R.R. Desai himself. He has a consultant Mr. Ajitbhai Naik who advise in formulating sales strategy and sales force related decisions. Mr. Sanjaybhai Shah, a senior sales executive directly reports to MD and is assisted by senior sales

239

supervisor who is given a special assistance to promote a new brand and another senior sales supervisor who looks after Saurashtra and South Gujarat territory. About 11 field sales representatives are appointed who look after different territories of Gujarat. Duties performed by senior salesexecutive are:i) correspondence, preparing sales-tour programmeii) deciding on marketing strategyiii) appointing dealers in various marketsiv) holding and, handling sales conferencev) analytical study of sales figures of all districtsvi) proper study of marketing channels (representatives as well

as dea1ers).The company has set for

long term profits and 2) to providing fresh and consistent population is growing. Itparticularly holding 60-70% markets. The Group had made one-and-half years back. The consumer loyalty towards its brand of tea. consumers in Ahmedabad 7 use Wagh Bakri tea.

itself marketing objectives as 1) deliver consumer satisfaction by

quality tea. It expects growth asis a market leader share in Ahmedabad efforts to tap Surat company claims to

Out

in Gujarat and Baroda market about have strong of every 10

Distr ibution; The company has about 140 to 150 distributors who are to abide by rules and regulations of the company very strictly. The company does not believe in dumping the distribution channels. The company distributes its product once in a week to remote places whereas twice in a week in nearby places. Sales representatives are expected to contact distribution twice in a week and retailers in once in a month in the assigned territory.

The company till recent years did not either believe in advertising its products or doing any sales promotion activities. Since tea is a very high involvement personal product and behaviour is a habitual behaviour the company believes not to give any kind of incentives either to consumer or retailer but make sure that the consumer gets fresh and consistent quality tea. Recently the company has started to give advertising on TV and press on a local and small scale. During festival seasons like Navrati and Diwali, and during winter advertising is done. Sometimes the company sponsors an event where tea sold at discount rates to organisers. In Music shows or cause related activities where tea is served to people and lot of POP material is placed. The company also sponsors serials on local TV, where

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advertisements are shown. But the ad. expe of sales. Thus advertising is done on ad brands of tea are advertised. Freshness emphasised and young couple is shown i1 lustration.

ture is not even 196c basis and var i ousstreng th of tea i sinking tea as an

The company had tried various sales promotion schemes in spite of the philosophy of not carrying out such activities. Two years back, in Rajkot the company had arranged a display contest. But such types of contests generate discontent among those who do not win prizes and that leads to lack of interest, enthusiasm and creates unpleasant relationships between company and retailers. Thus no budget is assigned to sales promotion activities. But whenever senior sales executive feels the neegl of such schemes then at local level sanction are made which are very insiginificant when compared to sales. In Surat, when the company decided to penetrate the market with full thrust, it gave free samples to retailers as well as consumers. These samples were distributed to distributors. In Surat market thecompetition from a local supplier was very high the company adopted free sample approach to generate trial and make retailers interested in stocking its products. Thus except for such ad hoc activities, the company does not carry out any other sales promotional activities and not likely to do so in near future. The company believes in delivering fresh stock twice in week which requires less stocking and less utilisation of shelf space of distributors and less investment in inventories. Also by giving 496 margin the company believes giving no incentives in any form. It does not believe in generating stock pressure through trade discount. Instead it visits the distributor twice in a week basis unlike weekly and fortnightly visits made by others. Therefore the stock turnover is higher and the retailer earns more on amount invested in stock. Even distributors are not encouraged to carry out organised schemes. Since the company enjoys strong brand loyalty in Gujarat, such a state of affairs is working out quite well' for the company. But the company --ex.pe_ct.s_ their sales representatives to be vigilant and supply informatTo'n—prompjtiy about the schemes offered by competitors. Every month a report "i s compiled at central office wherein brand sponsoring a scheme, for consumer or retailer is specified and scheme details are given. copy of one such report is given in Exhibit-2. This gives an idea about extensive use of variety of schemes offered by various tea brands* in Ahmedabad and Gujarat market. In spite of pressures from retailers and stockist for demand for such type of schemes, the company is very confident about its policy and somehow convinces them not to ask for such

believes in no special schemes, no or any form of compensation for

higher margin and low investment inschemes. Thus the company free issues or incentives promotion, it believes that

A note on tea industry is attached at the end of the case.2 4 1

stocks due to frequent supplies (twice in a week) - the strategy- will generate dealer push. This strategy seems to be working. This policy the MD expects will continue for near future. Depending on the needs and proposals for some sales promotion schemes from field staff, ad hoc sanctions will be made. Thus, the company does not plan such schemes but whenever such proposal is put forth after careful review sanction is given.

A note on Tea Industry;India is the largest producer and exporter of tea in the

world. In 1990, India accounted for 25* of world’s teaproduction.

Tea can be processed in variety of ways. However, there are three major forms of classification for differentiating tea:1. Processing: CTC and orthodox are two distinct methods of

processing tea.CTC stands for crush, treat and curl. In this method tea leaf is basically mechanically treated. It producesstronger tea but loses out on flavour. There has been a gradual rise in the production of CTC type from 34.2* in 1961 to 73.5* in 1989.Orthodox: It is an older method of processing. Tea is handrolled rather than blended mechanically. This tea has more flavour but is costlier. Over the year, production of this tea has declined.

2. Grades: Tea leaves are graded on the basis of their shapes:

a) leaf - tea consists of full or partial leavesb) Fannings - leaves are of smaller size

/

c) dust - tea powder, since this offers the maximum surface area, it gives the strongest brew.

3. Qua 1ity: the tea on each of the grades is classified intothree qualities - premium, popular and economy.

Retail sales of tea is in the form of loose and packet tea. In 1990, India had an internal consumption of nearly 644.1 million kg. which is increasing at the rate of 4* every year. A chart as shown below gives a channel flow in Tea-Marketing.

Source: Majumdar Ramanuj, "Product Management in India".

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Key

SKSwEI flow of loose tea ► flow of packed tea

Channel Flow of Tea Marketing

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It is estimated that 65% of tea was sold in loose form and 25% in packets and the rest being sold in poly packs under some brand name. However, the proportion of loose tea to packet tea (65-35%) varies from state to state e.g. in states like West Bengal, loose tea accounts for 95% of total tea sales.

It has been observed that loose tea dealers or retailers are generally shops specialising in tea alone. Sometimes such shops sell other beverages too. Packet tea on the other hand, is sold at the above loose tea shops and also at general and provision stores.

In loose tea trade, retailers and other channel members get very high margin leading to considerable amount of dealer push. Packet tea is costly as it involves high cost of packaging and distribution. To compete with loose tea, packet tea manufacturers have relied on pull strategies. They have tried to create brand image through mass media advertising. Following table gives margin structure of different intermediaries for loose tea and packet tea.

TableMargin Structure

Type of intermediary BrokerLoose tea tradersSecondary wholesales (loose tea)Loose tea retailersPacketers and blenders costDistribution cost for packet teaRedistribution stockistPacket tea retailer

1in Tea Trade

Margin (Per cent) Loose tea Packet tea

2 24.5 3. 517.5

22. 517.5 35.5

27.5 50.5

Tea market can be divided into i) household market and ii) tea shops, and other institutional buyers.

Tea shops demanded CTC tea especially dust blend tea. It is difficult to gauge household preferences. Orthodox blends are preferred in Bengal and Punjab. The upper class in urban cities prefer orthodox teas. On cost factor, many households prefer CTC tea blends. All major hotels, restaurants', airlines and other prime institutions purchase "tea bags" and other packaged leaf

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> *

blends. Loose tea market is very fragmented. Each major town or city in the country has its major tea traders, who buy in bulk from the various auction centres or from the gardens directly as private sales. This stock is subsequently despatched to the various retail units which are owned by the major traders themselves or they are disposed of through a secondary level of dealers. Marketing has a limited role in loose tea segment.

Quite contrast to loose tea market, packet tea is organised and extremely competitive since 1985, Most tea companies have been flooding the market with new brands. There are nearly 100 brands of packaged tea in the market. Some of the popular brands are Brooke Bond’s A-l leaf, Tata Tea’s Prestige, Lipton’s Taaza, Nestle’e Taster’s Choice and Apajaj’s Flary’s.

In tea market the most visible factor is change in packaging. Now many brands are available in poly packs. Earlier soft packaging was regarded as the "Janata" tea and card board meant for premium brands. Tata in 1984 launched poly pack and reversed its 'Janata’ image. After that many companies introduced poly packs.

Following table gives sales and market share for various leading companies.

Company Market Share Sales in 1990 (Rs.Crores)

1. Brooke Bond India Ltd2. Tata Tea Ltd.3. Lipton India Ltd.4. Duncan Agro Ind. Ltd.5. Goodrick Group Ltd.

2. 02 45511.2 2519.5 2134.4 1003. 0 69

In domestic market, upward trend has been observed in per capita consumption. It rose from 381 gms in 1970-71 to 600 gms. in 1987-88. Also share of packet tea to loose tea has declined from 69% in 1953-54 to 27.7% in 1987-88. Poly pack also has revolutionalised tea market. Also preference has shifted from dust to leaf tea as upgradation in consumer preferences particularly in North India.

Sales Promotion Practices in Tea Industry:Many big tea companies have devised variety of innovative

sales promotion schemes for distributors, retailers and consumers. For distributors incentives are offered on fulfilment and achieving more against target set. For retailers also incentives are offered for high performance. This helps in

2 4 6

V ,

providing push for its products'. As against the norm of paying 5% margin to retailers Tata Tea is the only company paying highest margin 1 0 % to its retailers. ' To counter this many companies came out with incentive schemes thereby giving added incentives to push their products. At consumer level, the consumers are given gifts like spoons and sugar cubes or sieve. Sponsorship of tournaments and sports events and giving trophy are prevalent in this category.

i

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Exhibit-1 H

Wagh Bakri offers following brands of tea in the market:

Varieties Available1. 'Good Morning Tea:

'Good Morning Tea’ is a unique gift from Wagh Bakri Group to the people of Gujarat. It is available in the form ofmedium size broken leaves. It is moderately strong tea with superb taste for those who prefer sweet strong tea. Sometimes it has a fruity flavour alongwith its unique .flavour which tempts you to ask for more than one cup. This special blend is prepared from the selected 'Flavoury’, varieties of the best tea gardens of Assam and Nilgiri. 'Good Morning Tea’ is truly extraordinary.

2. Good Evening Tea: (Service Tea):

This is the Orthodox variety. It is in the form of dried long leaves and is available in sealed packets.

'Good Evening Tea’ is for those who prefer the natural flavour of tea. It is a mild variety and not at all harmful even if taken in large quantities. To enjoy Good Evening Tea to the maximum, just a little sugar and milk should be added. 'Good Evening Tea’ gives about 300 cups of tea per kg.

3. Wash Bakri 'Patti’ Tea: 1

Wagh Bakri 'Patti’ tea (CTC Bromens) is a special strong- sweet variety to refresh your mind. Just one cup of this thick golden reddish Patti tea in the morning gives you extraordinary alertness and verve. It is also helpful to those who want to keep awake at night. This is the most suitable tea for day-to-day use in the middle class households. Available in the leaf form in market this tea gives about 400 cups per one kg.

4. Assam leaf Tea:

Assam leaf tea is a good quality leaf tea for those who want to economise in cost. Normally it costs about 4 Rs. less than Wagh Bakri leaf tea per kg.

*frrom Company’s catalogue.

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5. Wagh Bakri *Dano’ Tea:Wagh Bakri 'Dano' (CTC Fannings) is a, special high quality tea in granular form. It is somewhat bright in colour and strong in taste specially suitable for those who like strong tea. This tea gives nearly 400-425 cups per kg.

6. Dust Tea:Dust tea is the tiniest form of broken tea-leaves. It is the strongest variety of 'Wagh Bakri Group’ teas. The flavour is, of course, limited but the taste and strength are both high and strong. It is favoured by hoteliers and lovers of 'strong’ tea. It gives about 400 to 45® cups per kg*

7. Dibis Tea:This is an 'Orthodox’ variety of tea in the form of long dried leaves. It is an ideal blend of taste and flavour. Light in colour and mild in taste this tea is suitable for those who prefer 'mild’ tea.Dibis tea is a more palatable alternative for diabetics

, because even if prepared with just a little sugar, it does not take bitter. As the milk and sugar used are minimum, it is safer for health. One kg. of 'Dibis’ tea gives upto 200 cups.

8. D*1ine Tea:

Grown at the height of 6000 to 10,000 ft. from sea level, Darjeeling Tea is the best quality tea. there is always a keen competition between Germany and Japan for the purchase of this tea. The special feature of this tea is its aroma. The aroma spreads and fills the room as soon as the tea is brought in. Of course, it is mild in taste and milk and sugar are used to the minimum to enjoy it to the utmost. Darjeeling tea is sold at the rate of Rs.100/- to Rs.1,000/- per kg. at the auction centre in Calcutta. Two years back one lot of Darjeeling tea was sold at Rs.2,700/- per kg. in Calcutta. It is a high priced variety rarely used in Gujarat. But Wagh-Bakri' Group has made it available for its exclusive customers in 100 gm. and 250 gm. packing. The brand name is D’ling.

9. Tea Quick Tea Bags;This tea is available in small bags made from special paper. Ideal for any occasion or to carry during travel. Gives great pleasure and saves valuable time. Available in pack of 25 tea bags.

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Exhibit-2

Details of schemes offered by competitors durino January 1994

District Coapany/Brand Name Scheae details for Retailers Scheee details for consumers

AhoedabadLocal

Lipton Tazza Display of 200 packets Rs.2 per packet to be given,Display of 150 packets 1.50 Rs, per packet

Assaat Bold For purchase of 11 kg, tea 2 Rs. less per kg. For purchase of 30 kg, tea 3 Rs. less per kg. 1

AhoedabadDistrict

Lipton Tazza For purchase of 24 kg. tea 10 packets of 100 gram free.

Hahesh' For purchase of 5 kg. tea 1 packet of 250 graa free.

Hehsana Lipton Tazza For purchase of 5 kg. 1 packet of 100 gra# free.For purchase of 6 kg. 1.25 Rs. less per kg.

Assao Bold For purchase of 30 kg. Rs.5 less per kg.

Banaskantha ' — No SdiEies--

Sabarkantha Linton Tazza For purchase of 1 kg. 2 Rs. less per kg. For purchase of 24 kg. 10 gra® silver coin free ~

Lipton Tiger For every 50 gran packet 1 Rs, less

Brooke Braid Red Label

For purchase of 1 kg. Rs.3 less per kg. For purchase of 12 kg. 1 canvas cap free.

C, Sosabhai For purchase of 1 kg. Re. 1 less.

Kheda Lipta Tazza For purchase of 3 kg. 150 gra® 1 Lux soap free.For purchase of 8 kg. 3 Lux soap of 150 gras free.

Assas Bold For purchase of 12 kg. 4 Rs. less per kg.

Boodrick Tea 1 ball point pen free for 250 gra® packet.

Lipton Tazza For purchase of 24 kg. 10 gra® silver coin free.

250

District Crapany/Brand fere Schese details for Retailers Schese details for considers

Pancheahal

Vadodara

Surat/Brauch

Saurashtra

Brooke Bond Red For purchase of 12 kg. Rs.lB less.' Label

Lipton Tana

Brooke Bond Red LabelLipton Tazza

Brooke Bond Red Label

For ourchase of 24 kg. 10 gram silver com free.

For purchase of 12 kg. Rs.IS less.

For purchase of 24 kg. 12 Lux soap free For purchase of 12 kg. 1 cap free.

Assas Bold Forttobanlal ForBrooke Bond RedLabel

Swagat ForC. Bosabhai For

purchase of 1 kg. Rs.4 less, purchase of 1 kg. IX sore tea,

purchase of 1 kg. Rs.4 less, purchase of 1 kg. Rs.3 less.

For 500 gras pack 1 note bool- free.For 250 gras pack 1 sieve free For 100 gras pack 1 coeb fra.

Daokan Sarga® For purchase of 24 kg. 10 gras silvercoin.For purchase of 25 bags 300 gras silver coin free.

0. Souabhai For purchase of & kg. Rs.6 less.For purchase of 12 kg. Rs.lB less.

Brooke Bond Red For purchase of 12 kg. 1 cao free. Label

Lipton Tazza' For purchase of 4B kg. Rs.100 less and10 graa silver com free.

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