55018888 sales and distribution tropicana and real juice
TRANSCRIPT
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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