THE NEW PRODUCT DEVELOPMENT AND MARKETING STRATEGIES IN THE TATA OIL

MILLS COMPANY LIMITED GHAZIABAD FACTORY AND NEW DELHI SALES OFFICE

DISSERTATION Submit ted in part ial fu l f i lment of the requirements

fo r the a w a r d of the degree of

MASTER OF BUSINESS ADMINISTRATION

BY

JARRAR A. SIDDQU1

Under the supervision of

Prof. NAJMUL HASAN CHAIRMAN

DEPARTMENT OF BUSINESS ADMINISTRATION ALIGARH MUSLIM UNIVERSITY

A L I G A R H.

1 9 8 4

'^

DS690

Chairman

Tel. No. : 6S.41

DEPTT. OF BUSINESS ADMINISTRATION ALIGARH MUSLIM UNIVERSITY

ALIGARH (INDIA)

December 8, 1984

Certified that Mr, Jarrar A. Slc'dlqui

of M.B.A, (Final) has completed his

dlesertatlon entitled "NEW PRODUCT DEVELOP­

MENT AND MARKETING STRATEGIES IN THE TATA

OIL MILLS COMPAfJY LIMITED^ GHAZIAEAD

FACTORY AND NEV; DELHI SALES OFFICE" Under

my supervision.

To the best of my knowledge and belief the

work is based on the investigations made^

data collected and analysed by him and it

has not been sxibmitted in any other Uni­

versity or Institution for any degree or

diploma. 1 am fully satisfied with his work.

( N. HASAN SUPERVISOR

C O N T E N T S

ACKNOWLEDGMENTS

INTRODUCTION

1 . THE PLANNING AND DEVELOPMENT STRATEGIES - 1

2 . THE PRODUCTION STRATEGY - 9

3 . THE PRICING STRATEGY - 1 ^

4 . THE DISTRIBUTION STRATEGY - I S

5 . THE PROMOTION STRATEGY - 2 - ^

6 . FEED BACK - ^ ^

CONCLUSION

To,

My Only ^ister, NIKHAT MUMTAZ

A C K N O W L E D G M E N T S

The topic of my dissertation is new product develop­

ment and marketing strategies. Prof. Najmul Hasan, Chairman,

Department of Business Administration, Aligarh Muslim

University, Aligarh has been kind enough over three months

to give me valuable suggestions regarding this topic and

for the improvement of my work. Also, I thank Mr. K.P. Grover

and Mr. T.S. Duggal, Zonal Manager and Officer 6n Special Duty

in The Tata Oil Mills Company Limited. New Delhi respectively.

They agreed to provide me detail informations about TGMCO

new product Raindrop, the nourishing Soap Oil of almondsand

Oil of spice-planning and development, production, pricing,

distribution and promotion strategies.

I am indebted to my Collegues Mr. Arif Ahmed,

President Aligarh Management Association and Mr. Khurshid Alam

who reviewed this topic and provided insightful suggestions.

My overriding debt is to my only sister, NIKHAT MUMTAZ, who

provided me support, encauragement, and inspiration to

generate this topic of dissertation.

Department of Business Administration Aligarh Muslim University Aligarh.

( Jarrax A. Siddiqui )

I N T R O D U C T I O N

This dissertation contains a new-product develop­

ment and marketing stcategiea in THE TATA OIL MILLS COMPANY

LIMITED. The management of marketing in the TOMCO is a very

challenging task for those who are entrusted with the success­

ful running of Organisation; and this implies considerable

knowledge of various aspects of "marketing management**, in­

cluding that of Customer profile and Market Segmentation,

Marketing Research, Product Planning and Policies;

Sales Forecasting and Planning, Pricing Policies and Practices,

Channels of Distribution, Advertising and Sales Promotion,

Management of Sales Force and International Marketing. The

dicipline of marketing management has gained importance

since professionalisation of management is now regarded

as a must for successful running of a business. In a decade

the TOMCO has introduced four new products to its product

line. The products are 0 K big bath soap, Dubble detergent

Cake, Ria li'we and Ria floral and the latest product.

Raindrop oil of almondsand Raindrop oil of spice. Despite

the difficulties of high and persistent inflation. Oil and

material shortages, economic stagnation, consumerism,

environmentalism, increased government regulation and

changing consumers life styles, the TOMCO tries to satisfy

the consumers' needs and wants. This dissertation has been

divided into six chapters.

Chapter one deals with new product planning and

development, idea generation for Raindrop and before the

commencement of production, the TDMCO top management consi­

dered the consumers' needs and R &, D department helped in

the development of actual product, and it is a better soap

than Competitive product in the market. After a careful

screening several ideas have been reduced for the final

product. Raindrop is a substitute of cream and it is for

the care of skin, the target consumers are young men and

women and teenagers. After a careful business analysis and

test market, Raindrop has been Commercialised all over India

in June-July, 1984.

Chapter two discusses the topic of Raindrop produc­

tion. This shows how, the TOMCO ensures the quality of Rain­

drop, its design and colour, good packaging for the protection

of Raindrop untill it delivered to final users. The TOMCO

designed and printed best lebeling on the package and tried

to maintain brand image.

Third and most important chapter is that of pricing

strategy in the TOMCO for tifew product. The TOMCO decided

the price of Raindrop on the basis of Oil and other material

used in it, however, sometimes the TOMCO decides the price

of its product on the basis of competitive parity method.

Chapter four forms the 'Core* of marketing management

it deals with the distribution of goods by the TOMCO. For the

effective distribution of product, four zonal offices

have been established in the country, namely New Delhi,

Bangalore, Bombay and Calcutta. The products produced by

the TOMCO at nine factories in India has been transported

to various regional Warehouses and from Warehouses to

different agencies, and these agencies under the Supervision

of Company's Sales Reps, are responsible for further distri­

bution to Wholesellers and retailers and from retailers the

product will be delivered to ultimate consumers.

Chapter five deals thefinal part of marketing mix

'promotion', nearly 70% big business houses in India are

depending on ad and consumers' Sales promotion for their

product awareness among the customers. For the promotion

of Raindrop the TOMCO invested 45 % of its total budget

on telivision and and remaining on other media. Consumers'

Sales promotion which is popular among price-concious

customers, and Scheme has been introduced by the TOMCO to

boost the Sale of Raindrop. On each cake of Raindrop a free

handkerchief will be available till the initial Stock lost.

Chapter six shows the feed back of Raindrop. As the

survey indicates a satisfactory response from the customer

but generally they think that the price of Raindrop is more

as compare to quality.

1

C H A P T E R - O N E

THE PLANNING AND DEVELOPMENT STRATEGIES :

Th« social and economic justification for the

existance of a business is its ability to satisfy its custo­

mers. The TOMCO meets its basic responsibility to society

through its product. Unless it fulfils this mission, the

TQMCO should not exist. And normally the competitive forces

in our socio-economic system do not permit it to exist, at

least not for long. An effective programme in new product

planning aand development is so important to the TOMCO today,

A company cannot success fully sell a product over the long

run, often it is easy to create a demand for initial sales.

But a company like TOMCO needs good product to get repeat

sales, and repeat Sales are needed to stay in business,

TOMCO management must often be 'innovate' and this innovating

attitude has become a philosophy almost paralleling that of

marketing concept.

All Oil based companies in India began to

experience shortages of materials in 1970s, We are finally

realising that the supply of many of our natural resources

is limited and irreplaceable. These two conditions clearly

point up the importance of careful product planning. Environ­

mental factors will increasingly influence product decisions,

because we simply cannot Qffor d to waste our natural resources

2

IDEA GENERATION :

The first stage in the new product development

process is the generation of ideas. The TOMCO identifies

product categories in which to concentrate their search

effort, and in the development of Raindrop the TOMCO relies

on many sources.

1 ) CUSTOMERS :

The marketing concept suggests that customers'

needs and wants are the logical starting point in the search

of new product ideas. As the increase in high quality Soaps

is 18% as compared to 8% increase in case of Janata Soaps.

The increase in high quality Soaps is just double to Janata

Soaps, The main reasons for this magnificent change is because

of tremendous industrialisation took place in India and

increasing rate of urbanisation. This shows high literacy rate

as well as per capita income has gone up. Due to these broad

reasons and facts the TOMCO decided to manufacture Raindrop

Soap to fulfil the market need.

2) SCIENTISTS :

This is an era for the application of technology

in Soap making process. The TOMCO has developed a Research

and Development department for the development of new product

to fulfil the desires of Indian consumers. The TOMCO R &. D

labs carry out applied research in the development of Raindrop

and tries all it best to maintain the quality of this Soap.

3

3) COMPETITORS :

The TOMCO carefully watches the new-product

development work being done by their competitors. To suirvive

in business it is the policy of the company to keep parity

with their competitive firms. The TOMCO also catched certain

glennings by listening to distributors, suppliers, and sales

representatives as what seems to be in the works. However,

the TOMCO tried to manufacture a better soap Raindrop as

compare to other soaps made by its competitors in India.

4) TOP MANAGEMENT :

The TOMCO is a centralised organisation and

the decisions taken by top management in TOMCO is an other

source of idea generation for Raindrop. The TOMCO leaders

take personal responsibility for deriving forward technologi­

cal innovation in their companies. The Raindrop development

ideas are sufficiently researched and supported by the

available datas.

IDEA SCREENING :

The TOMCO has been generated a number of ideas

with careful observation of Indian as well as Foreign Soaps

for the final production of a quality product which afterward

named as Raindrop. The purpose of idea screening is to reduce

the number of ideas. 'Also the job of screening is to stop

4

and drop poor ideas as early as possible. The rationale is

that product development costs rise substantially at each

successive stage of the process, and broad reasons for screen­

ing is that not let poor product ideas get this far.

CONCEPT DEVELOPMENT :

The product idea is a possible Raindrop product,

described in*objective functional terms, that the TOMCO can

see itself offering to the market. A product concept is a

particular subjective consumer meaning that the TOMCO tries

to build into product. The TOMCO gets the idea to produce a

premier soap Raindrop which nourishes the consumers' complexion

to a new radiance because TOMCO thinks that only cream is not

sufficient to protect the human skin, but human skin needs

some extra care and for which Raindrop with Oil of almonds and

Oil of spice comes into reality-

Consumers, however, do not buy product ideas,

they buy product concepts. This product idea turned into a

large number of alternative product concepts. Raindrop be

aimed at teenagers, young people and middle aged adults, who

belong to high income as well as high literacy groups in India.

The primary benefit, the TOMCO built into Raindrop is its

quality because Oil of almonds and Oil of spice used in it.

These Oil of almonds and of spice are good for skin care and

it is a substitute of various vanishing and cold creams.

5

Raindrop stands in a distinct part of the market offering

the buyer suitable cost with compare to its weight and quality.

The name Raindrop has no impact that this is seasonal product

but it is suitable for all seasons and this concept the

TOMCO communicating to market.

BUSINESS ANALYSIS :

The TOMCO management has developed a satisfactory

product Raindrop concept and a tentative marketing strategy

and now it is in a position to do a hard headed analysis of

the business attractiveness proposal. The TOMCO management

has reviewed the future sales, costs and profits estimates

as to whether they satisfy the company's objectives, and then

product concept moved to product development stage. As new

information comes in, some revision will probably have to

take place in the product concept and marketing strategy.

Thus business analysis, which starts in this stage, will be

revised at critical review periods during the product develop­

ment. To estimate what Raindrop sale will be enough to return

a satisfactory profit to the company. The TOMCO obtained some

helpful benchmarks by carefully examining the history of

previous products of the company and surveying market opinion.

The TOMCO placed Raindrop into frequently purchased product,

which means the number of first time buyers first increases

and then decreases as there are fewer left. Repeat-purchase

sales occur soon, provided that the Raindrop satisfies some

fraction of people who become steady customers.

6

MARKET TESTING :

The test markets are the ultimate form of testing

a new consumer product in a situation resembling the one that

would be faced in a full scale launching of the product. For

Raindrop Soap the TOMCO usually work with outside agencies

to locate a small number of representive test cities in which

the company's sales force will try to sell the trade on carry­

ing the product and giving it good shelf exposers. On this basis

TOMCO will put on a full advertising and promotion programme in

these markets similar to the one that would be used in national

marketing. It is a chance to do a dress rehearsal of the total

plan. Test marketing is expected to yield several benefits.

The primary motive is toachieve a more reliable forecast of

future sales. If product sales fall below target levels, the

company may have to drop or modify the product. A second motive

is to present alternative marketing plans. The TOMCO used an

average amount of advertising with special introductory offer.

In case of Raindrop the TOMCO offers a free handkerchief with

each cakes of Raindrop, The TOMCO found that this generated

the best sales and profit level. The TOMCO has selected six

cities at national level. They are New-Delhi, Bombay, Calcutta,

Madras, Bangalore and Kanpur and on this test basis, TOMCO

has launched a nation wide distribution plan for Raindrop and

the exact date of launching has been chosen according to

Monsoon arrival in these cities.

7

COMMERCIALISATION :

At this point TOMCO management presumably has

enough information to make a final decision about whether

to launch Raindrop. Full scale manufacturing started at

TOMCO Ghaziabad factory for all India distribution. The

first decision of TOMCO management concerns the proper timing

of launching programme. Raindrop is a fresh product of the

TOMCO which is suitable for all seasons but because of its

very name of Raindrop which attracts the particular season

in India. 'The top management of TOMCO has decided to launch

Raindrop at the time of Monsoon arrival in India. The next

decision of TOMCO to distribute Raindrop in zone wise market.

For this purpose the TOMCO has divided into four zones. North

zone office is situated in New-Delhi and under this zonal

office two sales offices are operating at Kanpur and Delhi,

Kanpur sales office covers the whole U.P. where as the New-Oelh:

sales office covers the state of Jammu and Kashmir, Himachal

Pradesh, Punjab, Haryana and Rajasthan and the Union Territories

of Delhi and Chandigarh. The selection of areas in New-Delhi

is on the basis of the TOMCO earlier survey for its other

existing product.

Main critera for Raindrop distribution in

New- Delhi is on the basis of higher income and high literacy

areas. Where people are more interested in new-product and

8

they are heavy users of the quality soaps and can also

influence others to buy this product. The final step is

to develop the marketing strategy for introducing the

Raindrop in the target area and from the date of launching

a full advertising starts on Television, radio and selected

magazines and news-papers and publicity started months

before the Raindrop is available.

9 C H A P T E R - T W O

THE PRODUCTION STRftTEGY:-

PRODUCT DESIGN :

The TOMCO can not assert that it has a well

rounded programme for product planning and development

untill it has instituded a company policy on several addi­

tional product attributes: product design, colour, quality,

guarantee and servicing. One way to build an image of its

Raindrop is through design. In fact, a distinctive design

may be the only feature that significantly differentiate

Raindrop. The marketing significance of design has been

recognised for years in the field of consumer products, from

big items like automobiles and refrigerators to small products

like fountain pen and apparel. Good design can improve the

marketability of a product's quality or durability. It can

improve product appearance and lower manufacturing costs.

Raindrop is a well designed soap and capital R has been made

on both sides of the soap,

COLOUR :

Colour often is the determining factor in a

consumer's acceptance or rejection of a product, whether that

product is a dress, a table or an automobile or a soap. Colour

of a soap - by it-self, however, is no selling advantage because

many competing firms offer colour. But marketing advantage

10

comes in knowing the right colour, and knowing when to

change colours, Mar-s'keters must reckon with soap colour as

both psychological and a sociological force. The careful use

of colour can increase sales, workers productivity, reduce

eye strain and generally affect emotional reactions. The

TOMCO offers two types of Raindrop one with oil of almonds

and the other oil of spice. The colour of Raindrop oil of

almond is light almond where as Raindrop oil of spice is

light green,

QUALITY :

The quality of Raindrop is extremly important,

but is probably the most difficult of all the image building

factors to define. Users frequently disagree on what consti­

tutes quality in a product. A marketing executive must make

several decisions about product quality. The product should

reach only that level of quality compatible with the intended

use of the soap. Raindrop is for the care of skin and it is

actually a substitute of vanishing and cold creams.

PACKAGING :

Packaging may be defined as the general group

of activities in product planning that involves designing

and producing the container or wrapper for a product. Packag­

ing is obviously closely related to labeling and branding

because the label appears on the package and brand is typically

on the label.

11

1) A utilitarian reason for packaging Raindrop

is to protect it on its route from the manufacturer to the

final users. Packed goods generally are more convenient

cleaner, and less susceptible to losses from evaporation,

spilling, and spoilage.

2) Special packaging of Raindrop may implement

the TOMCO marketing programme. Packaging help to identify

Raindrop and thus may prevent substitution of competitive

soaps. A package may be the only significant way in which

a firm can differentiate its product. The package serves

as a silent sales persons.

3) TOMCO management packages Raindrop in such

a way as to increase profit possibilities. Raindrop package

is attractive because it clearly indicates the photos of

almonds and spice on the package.

TOMCO recognises the packaging is important

for protection and convenience. Packaging has been production

oriented in TOMCO, however, the marketing significance of

packaging is being recognised, TOMCO, management has given

consta nt attention to Raindrop package desigr» because

packaging competition has been increased. We see new packag­

ing materials replacing the traditional ones, new shapes and

sizes, new closures and other new features. The trend today

is in favour of change, and this trend is gaining momentum.

12

The TOMCO leaders have two reasons for this package of

Raindrop:

To combat a decrease in sales of new->products

and to expand market by attracting new groups of customers.

More specially, the TOMCO wants to present the correct

features of Raindrop in the existing, container. This package

of Raindrop may be well as a major appeal in advertising copy,

LABELING :

Labeling is another product feature that requires

managerial attention. The labftl is the part of a product that

carries verbal information about product or the sellers.

A label may be a part of package, or it may be

a tag attached directly to the product. The label on Raindrop

package identifies the quality of it and the simple descrip­

tion on the package gives objective information about the

use, performance and other features of Raindrop. Raindrop

label looks as :

Raindrop the nourishing soap,

BRANDS :

The word brand is a comprehensive term, and it

includes other narrower terms. A brand is a name, term,

symbol, or design, or some combination of these elements,

that is intended to identify the goods or services of one

seller or a group of sellers, A brand differentiate one

13

seller's product or services from those of competitors.

The American Marketing Association defines a trade mark as

a brand that is given legal protection because under the

law it has been appropriated by one seller.

RAIMDROP :

A TATA PRODUCT = is the brand name of Raindrop.

Brands make it easy for consumers to identify products or

services. Brands also assure purchasers that they are getting

comparable quality when they reorder.

For sellers, brands are something that can be

advertised and that will be recognised when displayed on

shelves in a store. Branding also helps sellers to control

their share of the market because buyers will not confuse

one product with another. Branding reduces price comparision

because it is hard to compare prices on two items with diffe­

rent brands. Finally branding can add a measure of prestige

to other-wise ordinary commodities. Here are some prestigious

product of TATA groups of companies:

TATA SALT, TATA TEA, HAMAM,

MOTI, BUBBLE, RIA etc.

14

C H A P T E R - T H R E E

THE PRICING STRATEGY :

In marketing management, pricing is a very

critical decision. After meeting all the costs involved,

the sales revenue generated must yeild a surplus before

there can be profits. The sales revenue figure is however

materially affected by the prices charged. If the price

of the consumers product is too high, the sales generated

are likely to be low. Therefore, sound pricing policies

must be adopted to ensure that the organisation secures

satisfactory profits. The TOMCO marketing manager has to be

familier with the economic concepts useful in pricing

decisions. He has to consider various factors which influence

pricing a part from costs such as customer characteristics,

the economic product characteristics, competitive environ­

ment and Governmental control where applicable. The price

of a product materially affects the demand for it as well as

the organisation's competitive ability. It also affect

product planning, if the quality of the product is to be

improved, this may be possible only if the customers are

willing to pay a higher price far it. Besides, if the product

is not properly priced there might be reluctance from the

channels of distribution. The price must also provide for

promotional expenses involved in connection with advertising

or personal selling. Pricing is a problem when a company

develops a new-product and muftt set its price for the first tin

15

Pricing strategy is the task of defining the

price range and price movement through time that would

support the sales and profit objectives and marketing posi­

tioning of the product in the target market. The TCHCO starts

production of Raindrop a new premier product to the company's

product line and wants to position this soap in the high

quality range of target market. It is the basic policy of

every organisation to fix high price of its any new product,

but in case of Raindrop it is not true. The TOMCO has used

high quality costly oil of almonds and oil of spice in manu­

facturing of Raindrop.

So naturally the price of Raindrop will be high.

In setting the price of Raindrop the TOMCO management

considered the reaction of various parties affected by the

pricing decision, and they are the suppliers of materials,

funds and labour force of TOMCO.

The TOMCO policy is that to keep the price of

its product constant for the benefits of its customers.

To maintain the price through out the whole year, an inventory

management department was established by the company to look

after the raw materials and oil used for the purpose of soap

manufacturing. With proper sources of finance TOMCO tries

to purchase bulk of oil seeds and other raw material during

the harvesting seasons. The maximum price of each Raindrop

16

Soap of 100 g. is Rs, 4,65 plus local taxes extra. The

company hopes that this price of Raindrop will suit the

concerned consumers. The other interested party in the

Government of India.

India is a social welfare state and producers

may not be able to require retailers to sell their branded

product at desired price but depending upon state laws. At

various times pricing in the steel, auto, meat, drug and

heavy equipment industries has been subjected to government

pressures. The prices of agricultural goods and of imported

goods are affected by agricultural and tariff legislation

respectively.

To respect the religious sentiments of Indian

masses the commerce Ministry has imposed restriction on oil

using companies not to import beef tallow and those companies

found using beef tallow in vanaspati or soap manufacturing

will be liable for punishment under Indian Penal Code and

Essential Commodities Act and their licence will be stand

cancelled. Due to this ban on beef tallow an upward trend in

price rise of soap has become a continuous process because no

other cheep alternative is available to these companies.

There are tuff competition among various Organi­

sations who are producing consumers' goods. So to stand in

target market it must for a company to fallow the competitive

17

prices of other companies offering to consumers, TOMCO

management also follows the pricing pattern on the basis

of competitive market. Therefore, the price of Raindrop is

also based on competitive basis. The distinguishing charact­

eristics of competition oriented pricing is that it does

not seek to maintain a rigid relation between its price and

its own costs and demand, but the firm maintain its price

because competitors maintain their prices. Conversely the

same firm will change its prices where competitors change

theirs, even if its own costs and demand have not altered.

18 C H A P T E R - F O U R

THE DISTRIBUTION STRATEGY :

Every producer seeks to link together the set

of marketing intermediaries that best fulfil the firm's

Objectives, A channel of distribution shall be considered

to comprise a set of institutions which performs all acti­

vities utilised to move a product and its title from pro­

duction to consumption.

Physical flow of consumers goods in the TOMCO

is as follows:

Suppliers - Transporters, - Manufacturer -

Transporters, - Dealers - Transporters - Warehouses

Customers.

For the perpose of effective distribution of

various consumer's goods produced by the TDMCO's multiple

plants in different parts of India territory has been divided

into four zonal sales offices and this division is only for

the convenience of the TOMCO and it is not on the basis of

language or race. These four zonal sales offices of TOMCO

are :

NEW-DELHI - North zone

BANGALORE - South Zone

BOMBAY - West zone

CALCUTTA - East zone

19

TOMCO plan for Raindrop distribution in New-Delhi

zonal office, New-Delhi zonal office covers the states of

•Jainmu and Kashmir, Himachal Pradesh, Punjab, Haryana, Rajasthan

and the Union Territories of Delhi and Chandigarh. Uttar Pradesh

comes under the management of New-Delhi zonal office but it

has a separate sales office at KANPUR because of its large e.

areaand most thikly populated State in India, The distribution

pattern of Raindrop is the same as in case of TOMCO's

previously existing products. Uttar Pradesh Sales office at

KANPUR has three warehouses in the State - MEERUT, KANPUR

and GORAKHPUR. From these ware-houses the product Raindrop

is supplied to various agencies at districts and towns level

and these agencies under the supervision of TOMCO's Sales

Representatives are responsible for the distribution of

Raindrop Soap to whole Sellers and retailers in their area,

New-Delhi sales office has a big Warehouse at

Shahadra near Delhi - U.P, border. Six agencies are operating

in Dekhi for the distribution of Raindrop and each agency is

under the charge of sales Representative of the company. These

sales Representatives and agencies are under the charge of

Assistant Managers, who are responsible for the supervision

and control of sale target.

Assistant '''anagers are also responsible for the

promotion of business as well as proper utilisation and

maintenance of company's various investments. He visits each

20

agency assigned to him at least once in a month. While on

the one hand he keeps himself in constant touch with the

affairs of the agency concerned in its various details, he

maintains on the other hand regular contact with the sales

office through his fortnightly business reports and periodi­

cal visits to the Sales Office, The roJ.e of liaision between

management and the field that an Assistant Manager plays a

very important as the successful implementation of the

company's Sales policy is very much dependent on it.

Each zone is under the charge of zonal manage£-s

and administrative machinery of the whole zone is run by him.

The north zone managers, while having his office in New-Delhi,

he also primarily in the field, supervising and guiding the

work of Managers and Assistant Managers,

Coming to the whole sale side of the company's

business. These agencies under the supervision of sales

Representatives contact the whole sellers and distribute the

company's product accordingly. The whole 5die-Srganisation

as a whole is administered and controlled by the same

Assistant Managers, The TOMCO has altogether 57 agencies

at city level in Uttar Pradesh and Six in Delhi alone. Where

as in case of Jammu and Kashmir, Himachal Pradesh, Punjab,

Haryana and Rajasthan some selected cities are alloted for

agency. The distributors and authorised dealers get in

addition to 5% commission on sale, other benefits such as

21

incentives, bonus etc. According to schedule, they have

them fixed quotas to achieve and get the benefit of commi­

ssion and other rebates.

In whole sales department, the company has a

separate section to negotiate with the supply order received

from the Government and other institution like hotels ca nteens

and other corporate bodies. The TOMCO distributes under all

circumtances under the trade name (A TATA PRODuct), The

companies third out lets is export. The company exports to

almost all countries of Asia and Africa, It business mainly,

concentrated in U55R, Canada and all Middle East countries and

it is leading edporters of soaps from ''•ndia. The flow of

production is maintained by the company's factories at Bombay

Calicut, Cochin, Madras, Calcutta, Gauhati, Patna, Jesideeh,

Ghaziabad and Kandla in Gujarat. The TOMCO factory at Kandla

is set-up for the purpose of exports only.

Whatever produced at Kandla is to meet the demand

of export and nothing will be sold in India. Main production

of TOMCO's product at Kandla factory are shampoos, Hairoil,

After Share, Cream, Nailpolish etc. International marketing

requires due care in production and the TOMCO management

tries to main quality, packaging and price of its product

to compete in foreign Markets. The most up to date factory

of TOMCO is situated at Ghaziabad and production started in

22

this factory since 1964. There is a continuous Soap making

plant at Ghaziabad. Some of the important products of TOMCO

produced at Ghaziabad only for all India distribution.

The products are Ria lime and Hia floral, Moti Khus and nf

Moti Gulab and the Latest Raindrop Oil^almonds and Raindrop

Oil of spice.

23

C H A P T E R - F I V E

THE PROMOTION STRATEGY :

Many people consider selling and marketing to

be synonomous terms, when actually selling is only one of

many components of marketing. We shall treat selling and

promotion as synonomous terms, although promotion is pre­

ferred. Selling suggests only the transfer of goods and

its title or only the activities of sales personnel and

does not include advertising or other methods of stimulating

demand. In marketing managements term, promotion includes

advertising, personal selling, and all other selling tools.

However, to most widely used methods of promotion are

personal selling, advertising and other forms of promotions

are sales promotion, public relations and publicity.

ADVERTISING :

Advertising consists of all the activities in­

volved in presenting to a group a nonpersonal, oral or

visual, openly sponsored message regarding a product,

service or idea. This message called an advertisement, is

disseminated through one or more media and is paid for by

the identified sponsors,

SIZE OF THE ADVERTISING BUDGET :

Each year the TOMCO must decide how much to

spend on advertising and the company selects the budget

24

plan on the basis of percentage of sales method and some

times on competitive parity method.

Raindrop is a fresh product of the TOMCO and

hence the company sets Rs. 20,00000 for its promotion. This

promotion burden will be fulfilled from the sales of TOMCO's

other existing products.

PERCEMTA6E OF SALES METHODS :

For further promotion of Raindrop the company

fixes their advertising expenditure at a specific percentage

of sales of this new-product. The percentage of sales method

means that advertising expenditures are likely to vary with

what the company can offeredr This pleases the more financially

minded leaders of top management of the TOiMCO, who feel that

expenses of all types should bear a close relation to the

movement of corporate sales over the business cycle. This

method encaurages TOMCO management to think in terms of the

relationship between advertising cost, selling price and

profit per unit. This method encaurages competitive stability /

to the extent that competing firms spend approximately the

same percentage of their sales on advertising.

COMPETITIVE PARITY METHOD :

The TOMCO is a consumers products producing

organisation and in case of consumers product there is stiff

competition among various firms in India. Therefore, some

times the company business or a particular product can not

25

survive in the target market, at such crucial state the

company can set its budget on the basis of competitive

parity method. Two arguments are advanced for competitive

parity methods, that competitors' expenditure represents

the collective wisd om of the industry. The next one is

that maintaining a competitive parity helps to prevent

advertising wars,

MEDIA SELECTION :

Media Selection is the problem of finding the

best way to deliver the desired number of exposers to the

target audience.

Presumably the advertiser is seeking a certain

response from the target audience, a certain level of product

trial. Now the rate of producttrial will depends, among

other things, on the level of audiance brand awareness. The

advertising management in the TOMCO is totally centralised

and the head office at Bombay will decide the advertising

programme for the whole India and selection of magazines

and newspapers in case of print media.

PRINT MEDIA :

We have only two broad choices in case of print

media available, that is newspapers and magazines. The

literacy rate in India acfcording to 1981 census is only 22%

and mostly educated people of India are concentrated in urban

26

areas. So due precaution must be taken in selection of

newspapers at the national and regional level and of

magazines in various languages.

NEWSPAPERS i

As an advertising medium newspapers are flexible

and timely. They can be used to cover one city or several

urban cities. A newspaper is typically either a daily or

weekly publication that is regarded, with some exceptions

as a local advertising medium. Newspapers also give an

advertiser's product an intense coverage of a local market

because almost every body reads newspapers. The local feature

also helps in that the ad, can be adopted to local, social

and economic conditions.

Most newspapers quote different rates to national

and to local advertisers and base them on different units

of space. The local rate is frequently lower than the national

one. Media that employ two different rate scales for local

and national advertisers have what is known as a dual rate

structure. This is common in newspapers and broad cast

media, but a single structure is universal with magazine

and out of home media.

The selection of newspapers for the TOMCO new-

product Raindrop and the advertisement plan for initial two

months and details are as :

27

NEW DELHI SALES OFFICE :

Publication Size Col cm Language July August

Hindustan Times 30X4 English 8,22 5

Navbharat Tiroes 30X4 Hindi 8,20 6

KA.MPUR SALES OFFICE :

Daily Jagran

Navbharat Times

30X4

30X4

Hindi

Hindi

12,25

8,20

8

6

10% of the total budget for Raindrop promotion are alloted

to newspapers and magazines advertisements.

MAGAZINES :

Magazines, the second form of publication adver­

tising, offer the advertiser advantages which in many respects

are the opposites of those offered by newspapers. The news­

paper appeals to all people in a particular community'* the

magazine appeals to particular people of all kinds of communi­

ties. The life of a daily newspaper ad is short, rarely more

than a day. A magazine ad continues to 'live* and produced

results fcr a week, a month, or longer, as the periodical is

read and xeared not only by those who buy it, but by others

who come into contact with it both inside and out-side the

home. The other important matter is the selection of maga­

zine i.e. who will be the target audiance to whom TOMCO wants

28

to attract for Raindrop. Some of the selected magazines

for Raindrop ad are :

Filmfare, stars and style, Movie and Stardust

which have the attraction of younger people. Illustrated

weekly of India appeals to both men and women and to many

levels of age, occupation, income and education.

Eve's Weekly and Wama which attract the women

generally the young, educated women of Urban -l ndia. North

India which dominated by Hindi speaking people and the most

strong soap market of India. Some selected Hindi magazines

for Raindrop ad are manorma, Manohar Kahanigan, Filmi Kaliyan

etc.

BROADCAST MEDIA :

We have spent a significant portion of our lives

being entertained and informed by mass media-television,

radio, newspapers, magazines and direct mail. To an advertiser,

however, the media are Vehicles that carry messages to large

groups of prospects and thereby aid in closing the gap bet­

ween producer and consumers. Television and Radio stations

programme their broadcast fare in a manner designed to

attract large segments of public.

TELEVISION :

Television, the newest and fastest growing of

all major media, is probably also the most varatile. It makes

29

its appeal through both the eye and ear; product can be

demonstrated as well as explained. It offers considerable

flexibility in terms of the geographic market covered and

the time of the message presentation. By making its impre­

ssion through the ear, television can take advantage of the

personal, dramatic impact of the spoKen word. Now 30% of

Indian homes contain Television sets, what is more half of

them have two sets and nearly 20% have colour sts. Average

in home viewing how totals nearly Zyz hours per day. But

television popularity is concerntrated in Urban cities only.

As a significant advertising medium television is only 14

years old in India. On an average evening during prime

viewing hows between 6.00 p.m. and 10.00 p.m., close to

30% of urban Indian homes watch television chiefly for

entertainment, but also for news and information. Televisions

realistic communication potential, a combination of sight,

sound, motion and emotion make it ideal for product demonstra

tion. Nearly 70% of the nations leading advertisers place

more advertising rupees in T V than in any other medium.

Therefore, the TOMCQ management has decided to demonstrate

its Raindrop on television over national level programme on

each Sunday, 45% of the total promotion budget of Raindrop

are alloted to etelevision advertisement, and only a 30

seconds ad on television costs 12,000 rupees.

30

RADIOa

Radio has the advantages of mass use, high

geographic and demographic selectivity and low cost. Radio

is the only media through which the advertisers can inform

the costumers in interior villages of ^ndia about their

products. Seventy percent of Indian homes have radios and

transistors. In addition 35% cars end buses on Indian roads

are radio equipped and total listening time averages 2 hours

per days. Radio has been an important advertising vehicle

in India for 25 years. Some experts predict this medium

would die after television explusive growth in the late

1970s. Radio audiances actually increased despite the

popularity of Television. TOMCO has allocated 10?'a of the

total ad budget for the advertisement of Raindrop on several

radio programmes.

OUT OF HOME MEDIA :

Among out of home media, the dominant subtype

is out door advertising, some times called the largest

advertising medium in existence. Key characteristics of typical

out of home advertising are :

An easy-to-identify advertiser or product name.

Short simple - legible copy and illustrative material that

is large, bold, and colourful. Most people think of out door

advertising are bill boards that dot commercially zoned city

Q 1

streets and appear along high ways, advising us of manufact­

urers' products,

POSTERS ANB PAIMTINGS :

Posters are also used for the promotion of Rain­

drop, and on selected shops of each town attractive posters

have been placed to attract the consumers. Buses and Trains

which are operating in big business cities of India, and

Raindrop coloured,well plainted boards are also placed on

these buses and trains.

OTHER MEDIA :

CINEMA ;

Cinema is another significant advertising medium

in India. Nearly 65 j population of India are interested to see

films every months. Despite the discovery of V C R and

Television, Cinema is still popular among Indian masses,

and these factors forced the TOMCO management to advertise

Raindrop on the screen.

CONSUMERS' SALES PROMOTION :

Sales promotion comprises a wide variety of

tactical promotion tools of short term incentives nature,

designed to stimulate strong target market response. Among

the popular ones are coupons, premium, and contents of consu­

mer markets, buying allowances, and free goods for distribu-

32

tdoa and dealers, discounts, gifts and sales contents and

special bonuses for members of the sales force. Sales promp-

tion activities have grown rapidly in recent years and sales

promotion expenditures are expected to continue to grow

faster than advertising. Incentive promotions essentially

offers some thing extra to the customer and therefore attract

the more price-concious and premium-concious customers. Sellers

usually think of sales promotion as an activity designed to

break down brand loyality, and ad as an activity designed

to build up brand loyality. Therefore, an important issue of

marketing management is how to divide the budget between promo­

tion and advertising. TOMCO has divided their funds in ratio of

any where from 20 : 80 on sales promotion and advertising

respectively.

This ratio has been rising over the past several

years in response to the consumers' heightened sensitivity

to price.

SALES PROHOTION TOOLS :

The objective of the TOMCO is to generate initial

trial of a new-product that is considered to have distinct

competitive advantages, a scheme programme is an effective

techniques. The TOMCO has launched a fresh product Raindrop

on June 29, 1984 in New-Delhi and a scheme added to this

programme. On each cake of Raindrop a free handkerchief will

be available till the initial stock lost. This scheme is 100?4

for the benefit of consumers only. 15% of the total budget

allocated for consumers' sales promotion scheme of Raindrop.

33 C H A P T E R - S I X

FEED BACK OF RAINDROP :

Literally 'Feed back' means to supply back

to the source or information communicated. In our case we

use this terminology for getting back market information

through sales men as they are in a unique position to pick

up bits and pieces of information, while working in the market

those could be put together to the marketing department for

getting to know the total marketing picture, and marketing

intelligence is a definite extension of marketing research

which concerns with systematic and continuous gathering,

recording and analysing of information about sales, economic

condition likely to affect sales favourably or otherwise

of our own as well as of competitors products.

IMPORTANCE OF FEED BACK :

From the point of view of combating the compe­

titive market, feed back is very important. It gives the

marketing and production departments guide lines to imould

themselves according to need of the market and could tailor

the products or policies in confirmity to demands.

In an organisation like TOMCO it is not possible

to keep everything on verbal level. Things have to be recorded

to provide datas and records for future. It is from these datas

34

on which the company's future planning could be based.

We can learn from previous records the mistakes we have made

in past or the factors responsible for bringing boom to our

business.

Market intelligence also enables the organisa­

tion to monitor the moves of the competitors in the market

and also standing and future of our own products.

Feed-back received in time gives the management

time to plan the changes in price, packaging, product or

policies in time with the market trends and demand or with

competitors. This change or improvements give you more

confidence in the market and makes your job easier.

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market - Patelnagar - Ashram - Bhogal - Greater Kaishal -

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44

ANALYSIS OF FEED BACK :

KAROL BAGH:

From Karol Bagh area the information shows

that the both kinds of Raindrop Oil of spice and oil of

almonds have equal response from consumers, and advertising

on television has given awareness among most of the consu­

mers because the product generally demanded by users.

AZAD MARKET :

In Azad Market the distribution of Raindrop

is not satisfactory and it shows that the company's sales

Rep. and agency concerned are not performing the distribu­

tion of Raindrop properly.

PATEL NAGAR :

Patel iMagar market shows mixed reaction from

all sides. Though both the products have same response from

consumers but few of them are not satisfied with Raindrop

Oil of spice, and it is a costlier product, as well as few

consumers want more ad for this soap.

ASHRAM AND BHOGAL :

The performance of sales Rep. and distribution

agency concerned is nill, though the retailers of thiese

markets are interested in Raindrop.

45

GREATER KAILASH :

Raindrop is a good product from TOMCO and

both Raindrop Oil of almonds and oil of spice have equal

appeals from the consumers,

SOUTH EXTENSION :

Consumers' response are greater in case of

Raindrop oil of almonds* it is a good product but the cost

of the Soap is higher as comparision to its quality,

R. K. PURAM :

Both Raindrop Oil of spice and oil of almonds

have equal impact on consumers, it is good product intro­

duced by the TOMCO but generally consumers and dealers think

that the cost of Raindrop is too much as compare is its

quality.

The general review of Raindrop from these

markets show that it is a good product introduced by TOMCO

to fulfil the long awaited consumers* needs and wants but

its price is too much.

C O N C L U S I O N

More and more organisations are recognising the

advantages, indeed the necessity, of developing new-products

and services. If anythink, their current offerings are facing

shortening life spans and must be replaced by newer products.

iMew product development, however, is not a prime rose path.

The risks of innovation are as great as rewards. A large per­

centage of new products fail in the market place, and a still

larger number have to be dropped before commercialisation. The

key to successful innovation lies in developing better organisa­

tional arrangements for handling new-product ideas and developing

sound research and decision procedures.

The next stage in an organisation is benefited

by marketing planning and strategy based on understanding of

the consumer adoption process. Marketing is challenging and

exiting. The solving of marketing problems require insight,

experience and analytical ability. A company faced with the pro­

blem of increasing its sales. Increase in the sales at the

expense of profits may not be a desirable objective. There are

many ways in which sales can be increased, by finding new

customers, selling more to existing customers by increasing

advertising and by reducing the price. The marketing manager

must decide which strategy or combination of methods he should

adopt for increasing his sales profitability. He must also

keep in touch which the changing needs and desires of the

consuming public as well as the his competitors' activities.

Thus marketing is interesting as it requires the marketing

manager to be dynamic and not complacent for continuous

prosperity of his organisation. It has been always emphasized

that marketing thinking must start even before production

activities are under taken. Besides, even after the product

has reached the custoTnex, marV^eting activities should assure

customer satisfaction.

In India, in view of our limited resources,

we have to be come productivity concious. The process of

ascertaing consumer needs, converting them into products

or services, and then moving the product or service to the

final consumers or users to satisfy such needs and wants of

specific segment or segments with emphasis on profitability

ensuring the optimum use of the resources available to the

organisation.

The Tata Oil mills company limited is producing

different kind of soaps such as Hamam, Jai, Moti, Gold mist,

Ria, 0 K etc. The basic purpose of the TOMCO is to satisfy the

needs and desires of Indian Customers. The TOMCO is keeping

India in the front line of international soap manufacturing

technology and Ghaziabad Factory is a true symbol. During

1970s rapid industrialisation and urbanisation took place in

India and a satisfactory increase in literacy and income have

changed the living styles of Indian people. With in a family,

people are using separate soaps, toothpaste and cream,

specially youngroen, women and teenagers are interested to use

new-products. The TOMCO has added a new-product to its product

line. Raindrop Oil of almonds and oil of spice and the main

aim of this soap to nourish your complexion to a new radiance.

It is a substitute of creams, however Raindrop Oil of almonds

is not a good product as claimed by the TOMCO advertising.

It is a hard Soap and does not dissolve easily with water

Actually, Raindrop Oil of almonds is not meeting the desires of

consumers. It is a sincere suggestion to the TOMCO top manage­

ment to make Raindrop Oil of almonds as soft as Ria floral.

If this change is to be made it would attract more new custo­

mers.

However, Raindrop oil of spice is up to the

mark. The package, lebel on the package and design of Raindrop

is excellent. Pricing strategy and product strategy are inter­

related to a large extent. If a company is desiring to increase

the quality of its product would also want to increase the

quality of its product would also want to increased the ;price

to cover the increased costs involved. The marketing executive's

basic desire is to fix the price in such a way that it results

in the profit to the company flowing from the total sales

volume secured by the business at that particular price. The

price of 100 gm. cake of Raindrop is Rs. 4.65 and it is suite-

ble to target markets. The chief marketing executive has

also be clear as to the nature of distribution that he wants

for his product. The TOMCO management requires selective

distribution of Raindrop, therefore, for a selective distri­

bution management will also have to provide for selective

ad and promotion. The Assistant Marketing Manager of the

TOhCO must be careful about the performance of sales Reps,

and concerned agencies because distribution strategy of

Raindrop is not satisfactory in some important areas of

New Delhi,

The sales promotion policy of the TOHCO in case

of Raindrop is the best one in recent years, the scheme for

sales promotion is totally consumer's oriented. Advertising

department needs decentralisation because zonal managers are

in better position to know about their target markets. The

performance of Raindrop is gradually increasing, however,

more attention needed for the success of this new product

from top leaders of the TOMCO.

S E L E C T - B I B L l 0 G R A P H Y

CHAPTER ONE

PHILIP KOTLER,

CHAPTER TWO

CHAPTER THREE

THE PLAIMiMING AND DEVELOPMENT

STRATEGIES

Marketing Management Fourth

Edition.

Prentice Hall of India Pvt, Ltd.

New Delhi - 110 001. 1982.

THE PRODUCTION STRATEGY

AND.

THE PIRICING STRATEGY.

WILLIAM J, STANTON,: Fundamentals of Marketing

Sixth Edition.

Mc Graw-Hill International Book

Co.