Victor Case

8/12/2019 Victor Case

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Management Case describes a situation faced, a decision or action taken by an individual manageror by an organization a t the strategic, functional or operational levels.

Victor Brand Simon George

Victor India Ltd (VCIL) was established in1989 as a public limited company for manu-facturing and marketing cocoa-based products,mainly chocolates. The company launched itscocoa-based brown milk beverage brand Victorin 1996 and expected that it would be ableto do well in the market against establishedand aggressive competitors leveraging on thecosting and pricing advantage. However,Victor's sales in the initial year could not reachthe expected target. In 2000, the companyinitiated a brand-building programme to revi-talize the brand by making interventions in the

brand's attributes, benefits, and package lead-ing to. modifications in positioning. The resultswere encouraging but the brand was still

struggling to break even. The company wasreviewing the costing of the product as wellas its promotion strategies. The case focuseson the challenges faced by VCIL in its brand-

building programme.

Simon George is a member of the faculty in the Marketing Area of the T A Pai Management Institute, Manipal.e-mail: [email protected]

Raghavendra, the Managing Director, andSrinivasan, the Executive Director (Marketing) ofVictor India Ltd. (VCIL) were wondering as to whytheir company could sell only 250 tonne of theircocoa-based brown beverage brand Victor Plus.Was it due to the ineffective brand management planor due to its poor implementation by the company?For the past four hours, they had been part of theteam discussing and reviewing the brand manage-ment plan and its implementation proposed by theirconsultants Elite Consulting Co (ELCC) for the

year 2000. Ajay Das of ELCC, who was presentin the meeting, had absolute faith in the soundnessof his plan proposal. Jayant, the Marketing Manager,and the coordinator for the implementation, cryp-tically commented, "I saw to it that the plan whichwas recommended was perfectly implemented.

Nothing more, nothing less." Prabhu, the ExecutiveDirector (Accounts and Finance) sounded positive:"This year will be the start of a turnaround. The

performance in 2001 will be much better if we areable to look more closely at the brand's costs and

pricing, product ingredients, and a few crit ical product strategies."

VCIL's top management was expecting the year2000 to bring in a change of fortune for Victor Pluswhich, in turn, would give a big boost to the salesof their more established chocolate brands. Thecompany thought that they could achieve at least75 per cent of the forecasted sales of 500 tonne ofVictor Plus. But the sales data presented in the reviewmeeting at the end of the year indicated that the

performance was not encouraging. However, thecompany was beginning to show an air of vibrancyand dynamism in the beginning of the year 2000,

primar ily due to two factors. One, the companyroped in a reputed consultant whose knowledge andexpertise in marketing, the company hoped, wouldturn its fortunes for better. Second, the company hadappointed Srinivasan as Executive Director(Marketing) a year back who had about 20 years ofexperience in the industry.

Vol. 27, No. 4, October-December 2002 75 Vikalpa


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Company Background

VCIL was set up in 1989 as a public limited company by the Victor group of companies based inKarnataka. A modern factory was set up in theChickmagalur district of Karnataka with the aim of

processing and marketing cocoa-based products,

especially chocolates, at a cost of around Rs 20 crorewith high capacities of production. In the nineties,VCIL launched its own brand of chocolates in eachof the three categories of chocolates, namely, moul-ded, enrobed, and eclairs, with the intention of takingon the multinational companies (MNCs). Very soon,the company realized that it could not use its

production capacities fully as it had a large installed production capacity (Table 1). This forced VCILto enter into an agreement with a reputed MNC in1993. Under this agreement which was valid for a

period of ten years, VCIL was to manufacturechocolates under the MNC's brand name. The MNC

could also source its additional cocoa requirementsfrom VCIL. This arrangement was in addition tomanufacturing and marketing of VCIL's own brandof chocolates in all the three categories. Thecompany had a turnover of Rs 35 crore in 2000,with Rs 20 crore coming from sales of its consumerand industrial products and the rest from the pro-cessing charge earned from the MNC.

Product Portfolio

VCIL had two broad types of products consumer products and industrial products. Consumer prod-

ucts consisted of three categories of chocolates,namely, moulded, enrobed, and eclair. Industrial products consisted of semi-processed cocoa at dif-ferent stages of chocolate manufacture. These semi-

processed products were sold mainly to organizationsas raw material for making various other end

products in addition to VCIL's own consumption.The industrial products were cocoa mass, cocoa

butter, cocoa powder, and chocolate mass (semi- processed cocoa) and had some established and loyalcustomers. VCIL had eight brands of chocolates.

Moulded chocolates were made out of cocoa butter by melting it and then shaping it using moulds.These chocolates were the bigger multi-bar type

chocolates. Enrobed chocolates were single barchocolates, containing nougat in the centre, coatedwith a layer of caramel and enrobed with creamycocoa mass. Eclairs were modified toffees consistingof an outer caramel with a creamy chocolate browncentre or a milky white creamy centre.

The company also manufactured and marketeda cocoa-based beverage Victor Plus which cameunder the consumer products group. Made out ofcocoa powder, this was a bye-product of the choco-late manufacturing process and was first launchedin the market by the company in January 1996 asVictor. The company felt that it had a price advantagewhile launching the product in the crowded milk

beverage market dominated by big Indian playersand MNCs. It also thought that its brand may have

better acceptance in the B and C class towns becauseof the price advantage arising out of its proximityand bargaining power with the farmers for cocoa

beans. Moreover, the fixed cost for production wasexpected to be very low as it would be borne bythe chocolates and other industrial products. Thefirst year brought a very modest sales of 95 tonnefollowed by an increase of 10 per cent in thesucceeding years.

Manufacturing Process

VCIL bought cocoa beans directly from the farmersthrough one of its sister companies. After clearing,cocoa beans were loaded into a chute having astrainer and then passed into air classifiers wherein

particles like stones, etc. were separated out. The beans were then roasted to remove the husk from

Table 1: Production Capacities and Utilization in 2000

Section Capacity (tonne/year) Remarks ^Utilization (tonne)

Cocoa Bean CrushingCocoa Powder MouldedChocolate Line EnrobedChocolate Line EclairLine Victor Plus

40015001500150015001200

8000 Tonne in Two ShiftsThree ShiftsThree ShiftsThree ShiftsThree ShiftsThree Shifts

1600450140330180270

*This does not include the production figures for the MNC.



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the cocoa nib as well as to reduce the moisturecontent. The roasted nib was crushed into smallergranules and fed into a vibrating separator thatseparated the husk from the granules. The granular,neutralized cocoa beans were fed to an electricfurnace and crushed further in two stages, viz., coarsemilling and fine milling. The resultant product wasin the form of a paste and was called cocoa mass.The cocoa mass thus formed consisted of 55 per centfat. The moisture-free cocoa mass was then passedthrough a hydraulic press. During this process, thecocoa mass split up into cocoa butter and cocoa cake.

The cocoa butter was then deodorized by boiling. The deodorized cocoa butter which was inthe form of a semi-liquid state was then filtered,

packed as blocks, and cooled. This packed cocoa butter was stored in a cool place, or else it wouldmelt at 37C. Some portion of this cocoa butter was

packed and sold in the market to other organizations

and the remaining was used by the company formanufacturing chocolates. Cocoa butter was further processed with the addition of required ingredients

for preparing chocolates. The cocoa cake was thendried and pulverized to form cocoa powder.

While cocoa powder formed the main ingredientfor manufacturing Victor, other ingredients like sugar,Vitamin-C, salt, flavour, glucose, and emulsifierswere added in appropriate quantity to the cocoa

powder by an automatic mixing machine. Thismixing took place in the presence of steam and,finally, the resultant product was whetted to yieldsmall granular or powdery product. The end productwas packed and marketed by the company as Victorhealth beverage. Many of the brands of milk

beve rage /hea lt h beve rage presen t in th e marketvaried in benefits and attributes as a result of thedifferent combination of ingredients added to cocoa

powder (Table 2).

There are two categories of milk beverages/health drinks white beverage and brown beverage.Brands such as Bournvita, Nutramul, Boost, Maltova,Milo, and Victor constitute the brown beverage whichhave about 60-70 per cent of cocoa as their key

Table 2: Ingredients of Various Brands

Bournvita Horlicks Maltova Viva Boost Complan Milo Victor Nutramul

Wheat Flour

Milk Solids

Malted Barley

Malt Extract

Sugar

Minerals

Vitamins

Salt

Cocoa

Leavening Agent

Vegetable Oil

Sodium Bicarbonate

Potassium Bicarbonate

Caramel

Beet Root Juice Powder

Maltodextrin

Added Flavour

Glucose/Sucrose

Emulsifier

Indica tes presence of ingredi ent .



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ingredient. Others like Horlicks, Complan, and Vivafall under the white beverage category as they havemilk solids and malt extract as their key ingredients.The brown beverages are differentiated in a big way

by the nutrients which are added to support thehealth claim (Table 3).

There is another very small category of brown beverages called drinking . chocolates. Cadbury'sdrinking chocolate is the only major player with othersmall regional players like Eagle, Nilgiris, etc. A fewyears back, Nestle had launched a drinking chocolatein the market which did not do well. The majoringredient in drinking chocolate is cocoa. In additionto sweetened cocoa powder, it has sugar and someadded flavour as ingredients. Cadbury's drinkingchocolate is priced at Rs 52 for a 200gm bottle.Drinking chocolate is considered as a snack drinkand is preferred with cold milk. This chocolate

powder can also be used for making cakes.

The Milk Beverage Market

The milk beverage/health beverage market is domi-nated by a few players like Smithkline Beecham,Jagjit Industries, Cadbury's India, Nestle, Heinz's,and Amul. The market has grown by 7-8 per centto become a 90,000 tonne market. Recently, Smith-kline acquired the two brands of Viva and Maltovafrom Jagjit Industries and added them to its stableof Horlicks and Boost. Cadbury's Bournvita and

Nestle's Milo are established brands. Bournvitarecently launched a white (malt) variant while

Complan launched a brown variant (cocoa-based).Figure 1 shows the market share of established

brands.

These brands are considered as milk additiveswhich essentially make milk tasty besides providingnutrition. Hence, milk forms the primary base. Thelargest consumer of these milk beverages is SouthIndia with 46 per cent of the country's consumptionfollowed by West with 23 per cent, East with 18 per

Figure 1: Market Share of Various Brands

WAY THE PIE GOES

Table 3: Composition of Nutrients

Nutr ients (qty in mg in WO gm)

Bournvita Horlicks Boost Milo Nutramul Maltova Victor

Vitamin A 950 1333 670 Da ta No t Data Not 50 mgAvailable Available

Vitamin Bl - 2.33 1.05Vitamin B2 - 2.96 2.67 6.36Vitamin B6 5.34 3.75 3.33 0.60

Vitamin B12 1.5 1.85 1.67 0.70

Vitamin C 70 148 100 17 Folic Acid 350 370 334 1.0

Niacin 33.5 30 6 Iron 26 25.9 23.6 - Vitamin D 130 Protein 7.0 9.7 Calcium 155


Milo3.6%

Viva

3.1%


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cent, and North with 13 per cent. However,consumption of brown beverages is higher in the

North and the West than in the South and the East.

Households constitute 60 per cent of the totalmarket with the rest constituted by the institutionsegment. None of the brands has a differentiated

product for these two segments. Seventy per centof the total household consumption is by the high-income group (Table 4). The study conducted byELCC on households shows that the biggestconsumers of milk are in the age group of 6-16 witha family income above Rs 10,000 per month (Table5). The study also shows that 60 per cent of the high-income households are regular consumers of the

beverage. These families on an average consumeabout 30-40 gm of the product a day. Mothers arethe key influencers in brand choice. Children alsohave a strong say in the brand selection. These

beverages are usually added to warm or cold milk.

In addition to its use as a tasty and nutritious milkdrink, some of the bra nds (esp ecially brown beverages) are also used as an additive in milk tomake it a tasty snack drink in institutional segmentslike restaurants, canteens, juice parlours, etc.

Consumers' evaluation of various attributes and benefits of the product while purchasing milk bev-erages is presented in Table 6. A higher percentageof consumers prefer white beverages over brown

beverages. White beverages are used for their thera- peutic benefits while brown beverages are usedmore for their taste. Brand loyalty is low, except forHorlicks and to some extent Bournvita. Many of therespondents do not consider Victor as a national

brand and have not placed it in the considerationset. However, blind taste tests of a few brands have

brought out a more positive evaluation towards Victor.

Table 4: Number of Households in the HighIncome Category in India (in lakh)

Product Features

There were efforts by the company since its launchto upgrade the product. Victor was modified and re-launched as Victor Plus in January 2000 as per therecommendation of ELCC. In addition to the originalcombination of ingredients of Victor (Tables 2 and

3), nutrients like Vitamin A, Bl, B2, B12 as well asminerals, niacin, and iron were added. At the trial production of Victor Plus,-an attempt was also madeto add malt and milk solids. It made the present

powdery form a bit more granular as the granularform was found more acceptable to customers thana pure powdery form. However, the company hadto give up this idea as addition of milk solids andmalt was not possible on a large scale due to the

present machinery constraints. Also, addition of aunit of any ingredient (except sugar and glucose)in a 500 gm bottle of Victor increased the cost by50 paise to 1 rupee. Nevertheless, some of the

ingredients were not considered for addition due totheir incompatibility and machinery constraints. \

Victor was packed in a round plain 500gm pet bottle and the label had a colour combination of blue, white, yellow, brown, red, pink, and black.Victor Plus was packed in the same pet bottle, butwith a new label and the colour combination waschanged to maroon, blue, yellow, red, and white.

The front side of the bottle on the label hadVictor and Plus written in maroon letters in an yellow

background. 'DrinK was written on one side and ''withmilk'on the other side of Victor Plus in maroon letters.VCIL was written in red letters inside the yellowheart in a blue background. The nutritious and tastycocoa health drink was written in maroon letters withwhite border in the blue background. The pictureof a boy and a girl holding a trophy up was placed

Table 5: Consumption of Milk Beverage:Age-wise and Income-wise

High Income Rural

High IncomeUrban

Households for All Income Regions

93-94 98-99 93-94 98-99 93-94 98-99

North 7.14 7.35 6.90 7.40 459.59 495.30 South 1.97 2.42 4.26 5.10 415.01 455.40 East 4.26 4.56 7.07 7.25 320.61 391.55 West 7.07 7.45 4.49 5.30 377.98 423.50 Total 20.44 21.78 22.72 25.05 1573.19 1765.75

Note: * High income group consists of households witha family income above Rs 8,000 per month.

Age (years) % whichConsume Daily

Monthly Income (Rs

'000)

Percentage of Households

which Consume

Regularly 6-8 74 8-10 45 9-11 79 11-13 51 12-14 66 14-16 58 15-17 37 17-19 60 18-60 26 20-22 66 60 and Above 44 23-25 69

25 and Above 70



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Table 6: Evaluation of Brands by Consumers

Attributes Weightageo f

Bournvita Horlicks Victor Boost Complan Milo Nutramul

AttributesW

Maltova

Viva B

Price 0.20 3.2 3.2 3.5 3.4 3.5 2.8 3.5 3 3.7

Taste 0.25 4 3.2 3.7 3.2 3.7 3 2.9 3.3 3.7 Nutrition 0.30 3.5 4 3.7 3 2.1 2.8 4 2.8 3.7Brand Name 0.10 4.1 4.1 3.3 3.4 2.0 3.4 4.5 3 2.7Packaging 0.05 3.1 3.8 3.7 3.6 2.8 3.8 3.5 4 3.2Easy to Mix 0.10 3.7 4.1 3.6 3.8 3.8 3.6 3.7 3.6 3.4Weighted Score 2 WB 3.63 3.65 3.59 3.60 2.97 3.04 3.62 3.12 3.52Total Score 21.6 22.4 21.5 20.4 17.9 19.4 22.1 19.7 20.4

at the left hand corner of the label in a red borderframe. The picture was in maroon and blue colourshades (Figure 2).

The back side of the bottle on the label had"Victor Plus-Rich taste of nutritious cocoa drink' boldlywritten in maroon in an yellow background insidean oval space. The additional text matter came onthe left and right sides of the oval figure and waswritten in white in a red background.

On the left side of the oval space was written 'Thenutritious and tasty health drink plan.' Beneath this waswritten the benefits and attributes of the product aswell as instructions for use. The right side of theoval space was titled 'Richer, tastier instant cocoa drink.'Beneath it was written the details of the ingredients andother mandatory details (Figure 3).

Milo pack is predominantly green in colour,while Horlicks is blue, Bournvita is orange, maroon,and purple. Boost is red and orange, Viva is red

Figure 2: Front Side of the Label

and white, Nutramul is yellow and brown, Complanis blue and brown, and Maltova is orange and blue.

Victor was first positioned as an energy drink.Later, it was promoted as an instant chocolate drink.On the recommendation of the consultants, the

positioning statement of Victor Plus was made as 'Thetasty and nutritious cocoa drink with milk.' Thecreative statements of the competing brands are asfollows:

Boost - Energy boosters ("Boost is the secret of my/our energy")

Complan - Complete health drink ("I am aComplan boy/girl")

Nutramul - Malted milk food with cocoa

Maltova - Extra malt with extra energy

Bournvita - Balanced formula drink

Milo - Chocolate energy food drink with great taste

Horlicks - Nourishing food drink

Figure 3: Back Side of the Label

Richer tastierinstant cocoa drinkwith milk


The nutritiousand tastyhealth olan


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Product Variant for Institution Segment

ELCC had also proposed another variant of Victorwhich would be offered to the institutional segmentsat a price lower than that of Victor as it had assessedthat a demand existed for the product. This would

be a less nutritious drink than Victor Plus, but closer

to the original Victor. Vegetarian restaurants wereconsidered as good targets. Most of these restaurantswere typically 20-40 seaters in A and B class towns,where people consumed a glass of milk along with

breakfast. Working people and students were thelargest visitors to these restaurants. It was also foundthat juice parlours used drinking chocolate for mixingit with juices and lassi as it enhanced taste. Thoughmanufacturing this variant was not difficult for VCILas it incurred very little additional operating costs,its introduction was postponed by the company asthe consultants felt that marketing of a new productvariant required different distribution and promotionapproaches.

Distribution System VCIL had about 25,000 active retail outlets spreadall over the country. These were retail outlets whichmainly stocked and sold their chocolates (Cadburysand Nestle had over 1 lakh active retail outlets).Eighty per cent of VCIL's retail outlets were C andD class, while 15 per cent were B class. Theremaining presence was in A class outlets with almostnil presence in A+ class. The chocolates reached theretail outlets through stockists/distributors. The com-

pany had about 250 distributors all over India andthe product was first transferred from its factory toits 18 Area Sales Offices (ASOs) based on demand/order. The distributors then took possession of thestock and distributed it to the retailers. In all theASOs other than in the Southern states, the productwent directly to superstockists from the factory whostocked it in their godowns before distributing todistributors. In the Southern states, each ASO hada factory-owned depot which stocked the product.In all cases, the transportation cost from the ASO/superstockist was borne by the respective distributingentities.

Victor Plus was available in only 20 per cent ofVCIL's retail outlets. Many of the retailers were notkeen to stock Victor Plus, even though they felt thatit had a price advantage and an attractive commission

policy. A commission of 6 per cent was given tosuperstockists, 6 per cent to distributors, and 12 percent to retailers. Most of the other companies offereda commission of 8 per cent to its distributors and

8-10 per cent to its retailers. One retailer's commentwas typical and it echoed the views of many retailers:"I feel the brand lacks appeal and visibility and hencemay not move. Moreover, I do not think that I havethe shelf space to give to Victor as there are a lotof other brands to be displayed. Sorry. Display spaceis crucial for movement of these products."

Each ASO was headed by an Area SalesManager (ASM) who reported to the MarketingManager stationed in their corporate office inBangalore. The Marketing Manager reported to theExecutive Director (Marketing). A marketingassistant, who had just completed his managementdegree, was appointed a year back and was workingunder the Marketing Manager. Each ASM had threesales representatives (SR) under him, whoseterritories were clearly demarcated. Most of the SRsgot a salary of around Rs 4,000-5,000 and weregraduates familiar with the local language. The orders

were mainly booked by the distributors and the tasksof the SRs were mainly to supervise distribution andto coordinate between the company and thedistribution entities in their territory. They alsooccasionally collected feedback from the market andattended to complaints by retailers. Each SR wasresponsible for all VCIL products. The performanceof each ASO varied (Table 7).

Cost and Price Structure

For the purpose of costing, the factory was dividedinto three main departments, namely, Production,Service Department, and General Department.

The following were the fixed costs for thecompany, including salary,during the year.

General Department

Service Department

Production Department = Rs 261.37 lakh

Corporate Office inBangalore

The above costs were in addition to the costsat the ASOs. The company followed a principle ofallocating 20 per cent of all the above costs to thatof Victor in its price computation. The price of Victor

Plus was determined after considering the above costsand the other cost heads (Table 8). The original Victorwas priced at Rs 65. Despite adding the extraingredients, the price of Victor Plus was the lowestin the market (Table 9).


= Rs 77.1 lakh

= Rslll.9 lakh

= Rs 42.5 lakh


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Table 7: ASO-wise Product Sales and Costs (Year 2000)

Location Sales QuantityChocolates(tonne)

Sales ValueChocolates(Rs lakh)

Sales QuantityVictor Plus(tonne)

AdministrativeCosts (Rs lakh) Salary

DistributionCosts (Rs

lakh)

Cochin 32.8 41.52 19.50 2.22 4.35 1.49Calicut 28.04 37.63 19.60 1.07 0.81 1.94

Bangalore 35.55 54.12 26.30 4.09 5.77 5.72Hubli/Goa 25.48 39.60 21.50 2.67 2.09 1.87Hyderabad 60.22 78.84 29.00 7.63 4.70 0.42

Madras 23.49 32.89 20.50 0.78 1.42 0.60Man gal ore 27.23 30.24 21.50 1.34 0.54 1.25

Mumbai 20.15 28.55 12.50 0.31 1.21 8.07Jammu 5.65 8.30 1.45 0.40 0.23 0.52Jaipur 34.79 44.72 9.40 3.74 1.20 1.16Chandigarh 60.38 92.88 16.50 8.49 3.04 3.26Delhi 78.78 111.68 16.20 12.69 6.83 6.69Ghaziabad 122.81 162.62 20.50 15.99 2.63 5.98

Indore 3.85 5.39 2.12 0.35 0.72 0.10Patna 10.5 15.40 2.40 0,53 0.85 0.25Calcutta 8.96 13.46 3.50 1.56 3.78 4.17Cuttack 7.66 11.42 1.90 0.81 0.49 0.78Ahmedabad 30.74 44.18 6.50 1.43 1.0 4.24Tota l 617.08 853.44 250.87 66.1 41.68 48.51

Note: The ASOs at Patna, Calcutta, Cuttack, and Jammu were opened only recently.Administrative costs included costs of rent, electricity, water, stationery, etc. Distributioncosts included costs of transportation, incentives, regular retail promotion efforts,

etc.

Promotion VCIL had spent about Rs 8 lakh on advertising andsales promotion in 1999 for Victor. In 2000, thecompany raised the advertisement budget to Rs 30lakh. In addition, it decided to spend on promotionof the brand through events. Though magazines wereused by many of the other brands for advertising,VCIL did not use them. Even the television mediumwas not considered as the tariff was thought to betoo prohibitive by the decision makers.

The company finally decided to advertise its product in newspapers in the four Southe rn state s

of Kerala, Tamil Nadu, Andhra Pradesh, andKarnataka. The advertisements were inserted as20cm* 6col in colour and in the back pages. OneEnglish and one regional language newspaper wasselected for each of the states of Kerala, Tamil Nadu,Karna t aka , and Andhra P radesh . The se l ec t edEnglish newspapers had an average advertisementtar i ff ra te of Rs 1575/cm/col and the se lec tedregional newspapers had a tariff rate of Rs 950/cm/col for a single insertion (Over and above this rate,

the newspapers charged a premium of 25 per centfor advertising in back page and 50 per cent forcolour in the regional newspapers and 40 per centfor back page and 50 per cent for colo ur in theEnglish newspapers). The advertisement layout wasin some way an extension of the Victor Plus bottle 'slabel design. The punch line of the advertisement was"Be a Victor with Victor Plus the tasty cocoa-basedh e a l t h d r i n k . D r i n k w i t h m i l k . " The advertisements

prominently displayed the picture o f a boy and agi r l holding a t rophy a lof t . The

Table 8: Cost Details of a 500 gm Bottle of

Victor Plus

Cost Heads

Material 22.00Bottle 7.00Label 2.5Exci se (16% of 65% of MRP) 7.28Stockist/Wholesaler Commission (6%) 4.2Retailer Margin (12%of MRP) 8.40


Value (Rs)


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Table 9: Prices of Competing Brands (500 gmBottle)

Brand Price (Rs)

Bournvita Malt 98Chocolate 97

Horlicks 94

Maltova 92Viva 89Boost 93Complan Neutral 99

Chocolate 145Milo 89

Nutramul 75

company was also planning to come out with anadvertising campaign for the Western and Northernstates next year. It was also thinking of advertisingthrough a few popular magazines in the South, West,and North regions.

The sales promotion in the Northern andWestern states was through sponsored events. Thecompany identified 100 good schools in B class townsand sponsored their cultural and sports events forthe year on behalf of Victor Plus. In addition, itdistributed prize money and certificates to three beststudents for their academic excellence costing thecompany Rs 10,000.

Brand-building Programmes of Competitors

The leading players in the market frequently under-took brand-building interventions through improve-ments in attributes, benefits, package, advertising,and sales promotion in order to enhance brandequity. The small players found it hard to undertakesuch frequent brand-building programmes.

Brands such as Horlicks and Bournvita haveeffective brand-building programmes. Bournvita had

been rapidly losing its market share to the whitesegment led by Smithkline Beecham's Horlicks forthe last two years. One of the company's managers

remarked: "Our brand Bournvita had becomea tired brand and needed something new." In 1999,the company repositioned Bournvita on thenutritional plank as it felt that the main reason whythe brown drinks segment had been losing steadilyto the white drinks segment was because they were

positioned as taste enhancers. The consumers

responded favourably to this effort and the marketshare rose up. This was further supported by packagemodification. Bournvita also sponsors various eventslike quiz for school children. In 2000, Cadbury Indiaspent 10 per cent on advertisement and 4 per centon marketing of all their products out of a total salesof Rs 571.14 crore.

Boost, with a market share of 10 per cent, alsomodified its package by adding more colour to thegraphics. Moreover, Boost has, over the years, usedthe celebrity endorsement of Sachin Tendulkar tosustain its market share. The leader of the market,

Horlicks, had been relying on nutrition through itsheavy advertising targeting the housewife andchildren. In 2000, Smithkline Beecham spent 7 percent on advertisement out of a total sales of Rs 903crore.

The Challenge

At the end of the discussions, Srinivasan seemed to be more optimistic and confident. He could nowclearly see the flaws in the performance of the brandduring the year. He was glad that Ajay Das andJay ant could identify them. He remarked: "Wellgentlemen, we are on the right track. I endorse mycolleague Prabhu's statement that this year was thestart of a turnaround. Let us all accept our short-comings and move forward. Now, I request mycolleague Jayant to prepare a new brand manage-ment plan which we can implement quickly inconsultation with Ajay (Tables 10 and 11). I wouldlike you to present it in a month's time, i.e., towardsthe end of March (2001). We would be happy toretain Ajay's services as a consultant till then." BothJayant and Ajay nodded their heads approvingly.



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