55018888 Sales and Distribution Tropicana and Real Juice

7/31/2019 55018888 Sales and Distribution Tropicana and Real Juice

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INTERNATIONAL INSTITUTE OF PLANNING &MANAGEMENT,

NEW DELHI

SALES MANAGEMENT

COMPARATIVE SALES AND DISTRIBUTION

STRATEGY FOR TROPICANA

Submitted by

NAME SUHDEEP CHEEMABATCH FW/2010-12

SECTION FF-5

PHONE NO. 9999915315


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CONTENTS

Abstract 1

Introduction 2

Industry Profile 4

Major Players 13

Tropicana 20

Distribution 27

Promotion 29

Conclusion 31

Recommendations 33

Bibliography 34

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ABSTRACT

The study taken up by the comparative analysis of Corporate sales and

distribution strategy for Tropicana in India.

Salesmanship is an art of demonstrating the merits of the goods and the

service of an organization to make a permanent customer.

Salesmanship is the art of understanding, appreciating and influencing

other people for mutual benefit. Salesmanship is an effort to convince

people to buy the goods with benefit to themselves and reasonable

profit to the seller.

Thus in totality I feel that these companies should review its sales and

distribution policy with much emphasis on making people aware about

the product and patching up the lacunae of distribution channel.

Therefore, the company wants to analyze the present market share of

Tropicana and analyze the reason for this particular market share of

itself and the competitor, so that, it can plan its future strategies. It also

wants to knows about the key reasons that prompt the customer to

make a purchase of packed fruit juice.

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INTRODUCTION

With attitude shifting towards health, hygiene and all things natural, the

fresh fruit juice market has suddenly gained ground. The challenge now

lies in making these juices part of daily household consumption. Brand

loyalty is diminishing as product differentiation is muted. Its the

complete package that would clinch the deal for the respective

companies. A continuous stream of new corporate entrants, the sudden

health-conscious, natural fed Indian consumers are all contributing

towards bringing the juice industry to the fore. Much is happening and

more is due to happen in course of time. Any attempt to ignore this

industry and the activity involving it would be quite futile.

This project, therefore, attempts to delve into the many facets of this

industry the industry at large, its major players and their respective

marketing strategies (remember, there is a struggle for existence and

the survival of the fittest: Darwin Theory), the analysis of the same and

of course, the consumers opinions. The project does not claim to be a

research product on the subject chosen, but its does pretend a humble

attempt at analysing the marketing environment as also the marketing

mix for the packed fresh juices industry.

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INDUSTRY PROFILE

Juice drinks (upto 24% juices) will remain the largest market with trade volume of

868.9 million litres by 2013, followed by nectars (24-99% juices) at 184.5 million

litres and and 100% juices at 46.2 million litres. In terms of market shares, the

honours are split, although not so evenly. Pepsis Tropicana dominate the 100%

juice category with market shares of 48.3% and 42.8% respectively

(Euromonitor).In terms of volume, processed food accounts for just 2% of

the total output. Today time pressured unitary families ensure that the

food-processing sector grows at a phenomenal rate. The demand is ever

increasing and the supply is constantly evolving new market players. In

fact, the research study indicates that most of the money flowing out of

an individuals purse is spent on food and beverages.

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Food & beverages

54%

Transport &

Communication

13%

Rent, fuel & power

10%

Clothing and

footwear

10%

Others

13%


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BREAK-UP OF PER CAPITA SPEND

Processed food being tokened as convenient and hygienic almost-ready

meals offer a lucrative market especially in the much growing and talked

about beverages sector. Beverages constitute all of cold drinks like Coke

& Pepsi, hot beverages like tea, coffee and milkfood drinks, squashes

and syrups, mineral water, tetrapack drinks. Share of each being:

Hot beverages include tea, coffee and milkfood drinks

Even as the two soft drinks stalwarts Coca-Cola and Pepsi are

slugging it out, Rs. 400 crores tetrapack market is abuzz with activity.

Frooti, the pioneer in the tetrapack market of India began the trend for

fruit drinks. It continues to be the leader with Jumpin, Real and Onjus

following it.

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Cold drinks

49%

Mineral water

2%

Tetrapacks

6%

Hot beverages

40%

Softdrink

concentrates

1%

Squashes &

Syrups

2%


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ParleAgro includes Frooti, Appy, PingoGodrej Foods constitutes Jumpin

Rest include Treetop, Volfruit, Onjus, Real etc.

Tetrapacks which account for 10% of the total Rs. 4000 crores Drink

market have been growing at the rate of 20%. It is divided into three

segments viz., Fruit Drinks, Juices and Nectars. According to the

stipulations by the Government FPO Act, all products containing fruit

content less than 20% of total product should be branded as fruit drink;

in the case of oranges, the stipulation is upto 40% of the total content to

qualify as a fruit drink. Fruit content of more than 20% but less than

85% qualifies for the tag of nectar; in the case of oranges it has to be

more than 40% and less than 85%. And finally, to qualify for the tag of

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Parle Agro

70%

Godrej Foods

20%

Rest

10%

Mango

59%

Orange

28%

Others

13%


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fruit juice, the fruit content has to be more than 85%. Going by this

qualification, the bulk of the products in the market fall in the fruit

drink category, with a few in the nectar range and still fewer in the

fruit juice range. Apart from Parle Agros Frooti, Appy, Pingo, Godrej

Foods Jumpin, Lipton Indias Treetop; popular brands such as the Rasna

range and Kissan squashes fall in the fruit drink category. Pepsis Slice

(mango), canned juice segment comprising of brands like NAFED, Noga,

Midland, Mohan Meakins God Coin and Druk qualify as fruit nectars.

However, ETLs Onjus (34% market share) and Dabur Indias Real quality

to be the major contenders in the fruit juice market. Others include

Pineapple, Apple, Litchi, Guava & Mixed etc.

Fruit juices are not really an integral part of the typical Indians diet. This

thought curtailed a major opportunity in the beverages sector till about

a couple of years ago. New thinking dawned and suddenly a fresh lease

of life was granted to the beverages market, thanks to the fruit juices.

Hence the project concentrates on fruit concentrates

Hard War of Soft Drinks

With the change in the lifestyle of people and modernization getting in

vogue, Indian market place has became a battlefield for various

beverage brands. As the weather now is hot and humid, the war seems

to be more intense among soft drinks.

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For the last one year or so, Pepsi has been very aggressive. Pepsis

bottling company here installed pet bottle plant early February 2000

investing one hundred million rupees for it and introduced some of its

brands in 1.5 liter and 500 ml pet bottles. Then it introduced 200 ml

Phuchhe Pepsi at the right time and the product is doing well in the

market. As a result, its earlier market share of 18 percent has gone up

by another 4 percentage points to some 22%. Phuchhe Pepsi has also

helped in expansion of the market volume of soft drinks.

Till few months ago, Frooti was enjoying the advantage of being the

only fruit drink in the market without any competitor.

As a result of the new developments, companies are working hard to

gain more market share, be it through advertising, merchandizing or

consumer schemes. The fruit drink market in India is highly segmented

quality-wise as well as market-wise. But general consumers are seen to

regard them all as equal in quality. Claimed to be the only carbonated

soft drink with fruit juice flavor in India, Tropicna has advantage over all

other brands. Content-wise too these fruit drink brands have a lot of

differences. Most of them are mango-basedThese brands are synthetic

drinks, not real juice as Real", says T.K. Gupta, General Manager of

Dabur .But most of the general consumers do not know or dont care to

know about the contents. They regard all these brands to be real fruitjuice.

The fruit drink market has grown by almost 30% this year, according to

estimates by the companies. The growth is also there for carbonated

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drinks as people, especially of the new generation, go for it. However,it

is estimated that carbonated drinks market is growing slower - between

10 and 15 percent a year. Tropicana has become popular among school

kids who otherwise used to have Frooti and would have gone for other

fruit drinks as well. " In the race for catching a respectable market share

of the growing soft drink market, there are imported soft drinks as well,

which range from different fruit juices to canned cola. The fruit drinks

are imported from as far away places as Philippines, USA, Singapore and

Thailand as. They are in Tetra Packs, in cans, in pet bottles, and in

plastic jars. In taste they are in mango, orange, apple, tomato, mixed

juices and in many flavours containing nectar, 15 percent to 40 percent

fruit pulp or 100% natural juice. Though sales volume of imported juices

has no record at all, estimation shows that about 20 MT of fruit juice

(that includes imports in various packaging). That gives a market share

of less than 1%. Sales of canned cola and tonic water are more difficult

to estimate as these items are imported from many countries like China,

Hong Kong, Singapore etc. RNAC and Necon air also import these

products for their in-flight service.

Pepsi could have expanded its market share, but the bottling company

of Pepsi in India had frequent changes in ownership and management.

Similarly, trying to take all responsibility for sales and distribution

directly and lacking enough advertising and promotional campaigns,

initially the company could not attract more consumers to its brands.

Even some very successful promotional campaigns in past could not

sustain the increased demand because of limitation in production

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capacity. In recent times the company seems to be more serious. Its

marketing has become more aggressive. But that is not going to be

enough as yet, since its rival is far stronger in many respects. For

example, Pepsis installed bottling capacity here is only 2,250,000 cases

per year and that was achieved only after the commissioning of the pet

bottling line about six months ago. Of this capacity, the company has

been able to sell only about 1,200,000 cases a year whereas Cokes

sales volume is estimated at over 4,300,000 cases a year. Similarly,

Pepsi has no production facility in the terai region, but Coke does.

Because of this the distribution cost of Pepsi is higher, and quick

response to increased demand in some market places is difficult. Still,

Pepsi has chances of high growth provided it strengthens its distribution

and sales and marketing team.Fruit drinks market is not yet mature

enough as that of cola, as the estimated growth rates for these products

indicate. Consumption of any product depends on the countrys overall

economic condition and also on the habit of the consumers. In also have

one more advantage over cola, as the former can use the locally

produced fruits whereas colas are mainly concentrates that are

imported. While the opponents of consumerism may find strong logic

against colas, they may be supportive of fruit drinks. Perhaps it is

because the industry is still not grown up enough to encourage sufficient

fruit production on commercial basis.

MAJOR PLAYERS

In India, the rising income levels have changed the consumption

pattern of the rich as well as not so rich. At one level, the lower

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end of the middle class is busy emulating the eating habits of the

rich by laying greater stress on nourishment and quality while at

the other level, as choices increase, the upper end consumer is

getting

.

This, therefore, makes it imperative to give the Rs.2000 crore

fruit juice industry a closer inspection. The natural juices at the

roadside juicewallahs could never give consumers the full

satisfaction of assured quality and hygiene. The only other

alternative was extracting juice pulp at home, which in itself is a

cumbersome process. Thus, was identified the need and hence

the market for Natural Fruit Juices.

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PRICE

The Facts:

Prices in Rs.

BRAND FLAVOUR QUANTITY

200ml 250ml 500ml 1ltr.

Tropicana Orange - 12 - 44

Real

Orange(Sweetene

d)- - 23 42

Orange

(Unsweete

ned)- - 30 -

Mango - - 30 -

Pineapple - - 30 -Apple 9 - - -

Mixed - - 30 -

Tomato - - 25 -

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DISTRIBUTION

The Facts:

Tropicana is aimed at teenagers, young kids, wives, mothers and busy

executives. For the sole purpose of in-house consumption, 1 litre packs

were introduced. As a company policy, distribution aspects is given

precedence over promotional ones. As a result the company spends

more on strengthening its distribution network rather than the

promotional aspect. The management has spared no effort in spreading

its distribution from roadside vendors, dhabawallahs, local grocery shops

and to super markets. Unlike Tropicana, Real is sparsely available.

Positioned Tropicana as an up-market brands, it is available mostly in

mid-up market outlets. The absence of small, convenient packs makes

Tropicana less discrete in on-premises outlets like college canteens and

roadside stores. Surprisingly, the already existing distribution channels

of Dabur India are not being utilised to reach the general masses. To

make matters worse in-transit damages to the packs during carton

handling earned the brand a bad name initially. Thus, distribtuion and

logistics posed more of a problem than a solution to this brand.

The Findings:

Surprisingly the sales havent risen exponentially. Not available makes

one more desirable but not in case of a product. In todays buyers

market, if one brand is not available the second would conveniently

take its place. Product differenciation and eventually brand loyalty is

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continuously diminishing in the competitive market of today. As a result

services especially as that of distribution and logistics gain crucial

importance. Inspite of an early launch, Tropicana could not make its

presence felt owing to slack distribution network. Apart from getting its

logistics right, Real would do well by not restraining itself to the

premium segment alone. It needs to reach the popular segment,

because it is they who mark the substantial market.

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PROMOTION

The Facts:

Tropicana: Squeeze to Please

Onjus gives primary emphasis to print media as agianst the electronic

one. The product, and not the company brand is highlighted. Positioned

as a thirst-quencher, inorder to clinch greatger market share the

company is trying to promote Onjus not just as a beverage but also as

breakfast, meal compliment or a mix with vodka. The promotion never

fails to underplay the fact that they are made of the finest Valenciaoranges from America, posed as naturally rich in Vitamin C with no

preservatives. The company recently introduced a six pack carton

priced at Rs. 57, to communicate it as that ideal for small families

and/or as a gift pack. Equipped with Rs. 1 crore advertising budget, the

promotional material for Onjus is meant for the label literate. The packs

come with tamper proof, hygienecally packed adjustable straws.

When a company faces stiff competition from the other, it is but

impossible for the company to disregard promotion. Advertising seems a

forelong marketing variable in the agenda of both Onjus, a fact admitted

by the company. Especially on electronic media, the companies have

failed to leave a mark on the consumers. While comparing the

promotional efforts it is evident that Onjus is busy projecting itself as

young, enthusiastic, fun-loving product while it poses a much sedate,

premium image. The packaging in itself speaks a lot about the

consumers being targetted by the respective companies. There being

negligible difference in both brands advertising budgets, yet Onjus has

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made its presence felt as against Real. This is not simply due to the

presence of physical product itself but also because of its promotional

material, in the form of outdoors at every nook and corner point-of

purchase displays, thereby killing the impulse buy decisions.

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CONCLUSION

Can a company whose business for decades has been spinning yarn

create a successful brand out of a fruit juice overnight ? Yes, would saythe patrons. After 13 years of staying lonely at the top would Tropicna

be able to build a crowd around Parle Agros Frooti. Well yes, and no.

Frooti is still unchallenged as a fruit drink. But what Tropicana

attempted was to create a market of its own - the market of fresh fruit

juices. This low volume, high growth industry sprang into existence

three years back and yet the enormous growth potential it showed

during this time has enticed many new entrants - both Indian and

foreign players . Much has already been achieved and much is yet to be.

The market is ever expanding ; just that what marketers have been

trying to sell earlier was often peripheral to the basic Indian diet. As a

result, these products never got beyond the novelty sales level. What

the Indian market Tropicana contributes as much as 85 per cent to the

company's topline. It will continue to be an area of focus.

It took seven years to make money on fruit juices, thanks to product

innovation, expanding market and increased consumer preference for

healthy foods. But even as the industry players are upbeat about growth

prospects, there is an undercurrent of discomfiture, with talk of the new

government thinking of levying eight per cent excise on food products

including packaged fruit juice. So, while profit projections are unlikely to

go completely haywire just yet, there might have to be some

readjustments in the time frame within which these targets may be

achieved.

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If everything goes the way it should, by the year 2015 the juice industry

would contribute as much if not more to the beverages industry as

aerated drinks today.

A fresh respite it would be ...

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RECOMMENDATIONS

To promote the product range good consideration should be made to

wholesalers and retailers.

To maintain the profit margin logistic mix should be adopted by the

company

The price can be brought down by cutting the manufacturing cost.

The distribution channel should be widened and made more cost-

effective.

More advertisements be placed on TV and Radio.

In order to attract more attention of potential customers any celebrity

can be endorsed.

More flavour can be added to the product line.

Some sales promotional campaigns may be undertaken involving

retailers and customers to push the product.

More hoardings and OTC displays may be placed in order to increase

awareness level.

Pack may be made more attractive.

Consistency of the quality is necessary.

More retailers and consumer based schemes should be introduced

and special emphasis should be given children based schemes,because children mainly consume the fruit juices.

As a researcher, I observed that for making the distribution channel

smooth transfer of goods, the contribution of middlemen is required.

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BIBLIOGRAPHY

Still, Cundiff, Govoni, Sales Management Decisions, Strategies and Cases,

Economic Times

The Strategist, Business Standard

Financial Express

Business Line

Handbook of Analysis and Quality Control

A&M

www.indiatelevision.com

www.agencyfaqs.com

www.domain-b.com

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