Hector Beverages’ Paper Boat: Diffusing Innovation Through “Drinks

And Memories”

Presented by :Akash Sharma (0141MBA014)

Objectives of this case study

• Introduction to the process of innovation, diffusion and the role of culture in the product innovation.

• How a company can tap culture to create a new product that can quickly gain acceptance among consumer.

• Factors a company should take into account when developing a product.

Paper Boat advertisementJAB BACCHE THEY…..!!!!!!!!

Company Profile• Hector Beverages Private Ltd is a manufacturer of Energy

Drinks and Fruit Juices• Started by Neeraj Kakkar, Suhas Misra, James Nuttal and

Neeraj Biyani in the year 2009.• It is currently operating with one plant in Manesar, Gurgaon.• It manufactures its products under the brands Tzinga and

Paper Boat.• It currently exports its products to countries like Australia,

United States of America (U.S.A), United Kingdom, Nepal, United Arab Emirates (U.A.E) and Canada.

Introduction to Hector Beverages’ Paper Boat

• Paper Boat, an ethnic drinks brand launched by Hector Beverages in 2013.

• HB increased the consumer base for paper boat by selling its products on airlines and five star hotels.

• USP of paper boat : rekindle memories of one’s childhood with unique design

• No preservatives, no added color

How Paper Boat caught imagination of Indian consumer??

• It is well known fact that we carry a limbic imprint of certain preferences in our brain.

• Paper boat is a result of an amazing insight that urban youth crave for something that is simple, delightful & non-transactional…..

• The success of this brand lies in the combination of catchy naming, very differentiated packaging & the superb recepies

Differences from other companies:• Independent of competition• Purely based on human insights and had no

references in the market.• Clearly a Blue Ocean Strategy

Single aspect used in Paper boat design

…… Desire for Simplicity

Shelf life of this design The point in change is to stay

aligned with the audience while being true to the brand essence.

• since its launch, shape of pouch has been change to feel better grip.

• Cap has recently been changed.

it reminds you of the days gone by.

A look at Paper Boat will definitely tell you that a lot of attention has been paid to the packaging.

Available at all leading food and grocery stores and in supermarkets too.

Part 1

Knowledge- The individual is first exposed to an innovation, but lacks information about the innovation. During this stage the individual has not yet been inspired to find out more information about the innovation

Persuasion- The individual is interested in the innovation and actively seeks related information/details

Decision- The individual takes the concept of the change and weighs the advantages/disadvantages of using the innovation and decides whether to adopt or reject the innovation.

Implementation- The individual employs the innovation to a varying degree depending on the situation. During this stage the individual also determines the usefulness of the innovation and may search for further information about it.

Confirmation- The individual finalizes his/her decision to continue using the innovation. This stage is both intrapersonal (may cause cognitive dissonance) and interpersonal, confirmation the group has made the right decision

consumer adoption:

awareness

interest

evaluationtrial

Adoption/rejection

Yes, there has been a change to the pattern of adoption of new product over the years.

psychological processesTechnological change

Product • Paper Boat created a Pleasant Experience with its unique

combination of ‘Drinks and Memories’.• As most of the ingredients are naturally available spices

and condiments. Paper boat has differentiated itself from the crowded aerated soft drinks(with loads of sugar).

• The flavors, one sweet and other salty, helped it to reach out to diabetic capital of the world and others at the same time.

• By keeping the taste closer to mom’s recipe, the product endeared itself to ipad and no-pad generations.

Part 2

Price

PaperBoat Pepsi Coca-cola Frooti Minute Maid0

5

10

15

20

25

30Price based Analysis of Paperboat

It clearly indicates that Paper Boat is amongst the highest priced beverages as compared to its close competitors.

• Paper Boat is competing with non-branded products, some of which are still prepared in many households in India, especially in smaller cities.

• Paper Boat has to price its products very carefully, so as to be able to justify as to why will consumers pay a premium price for its products which they can prepare by themselves.

• Majority of the players in this industry are competing on freshness, taste and variety. Paperboat distinguishes itself by selling the products with emotional connect.

• As these types of flavors are not available in the market, that’s why they come up with high price as compared to their competitors.

Place

• H.B targeted retail outlets by offering 5 % more profit margin to the retailers as compared to their competitors

• They also collaborated with the Indigo airlines to sell paperboat products on board.

• They also targeted school canteens because their product is considered healthy for children.

Promotion• Paper Boat’s promotional efforts have been relatively

very subdued until now because of the unexpected sales that the brand has had since inception.

• The company’s current marketing efforts are focused largely on advertising in newspapers, digital marketing through their website, social media and most importantly by positive word of mouth communication.

• Its promotional efforts, which include posting images about childhood memories on their Facebook page and website, are in sync with the tagline of the product.

Paper boat flavors

Part 3CHALLENGES FACED BY COMPANIES OPTING FOR NICHE POSITIONING

Because of the smaller market size, this is not suitable for a company that is small and intends to grow in the current market. The smaller market makes it difficult to enjoy a larger profit margin in the market.

1. The niche marketing strategy may not be suitable for long-term marketing, as niches may not give adequate business.2. The niche markets may be invaded by large companies and small marketers may find it difficult to compete.3. A firm’s survival chances may decrease if it depends solely on niche.4. It would be difficult for a product to get known to a very wide audience if it is implemented.

While Hector has a different product portfolio and distinct positioning, it has competition in the segment. Dabur has entered the functional drink market with its aam panna. And, beverage giants PepsiCo and Coca-Cola, which have a presence in the non-carbonated drinks space, are said to be watching the ethnic drinks space closely.

Paper boat has carved a niche for themselves by identifying and nurturing the ethnic beverages market, but percentage of consumers unaware about Paper Boat as a brand is high.

It also faces a paradoxical challenge — that of marketing a better product at lower price!" Blame it also on the lack of a well defined counter culture movement in the country.

CEO Neeraj Kakkar says "A consumer's choices of brands is still based, in large part, on what consumption does for their projected self image rather than on the inherent "goodness" of a product." He adds a tad loftily, "Even though we created the best energy drink formulation from day one, consumer adoption was limited to the truly smart people who bother less about self image