ub export lager case study (1)

7/27/2019 UB Export Lager Case Study (1)

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Mr.Kalyan Ganguly, the. Managing Director of UB, was sitting in the half

year marketing review in October 2000 with a big frown. The Product Manager

of UB Export Lager Beer, Dhananjay was being grilled. The half year sales of thebrand showed a 20% decline despite a major brand relaunch with a spend of Rs 2

crores in Karnataka, its major market.

When the brand plans were presented and approved in March 2000, the

relaunch seemed a logical thing to do. UB Export was once the largest selling

brand in Karnataka. Continued development of the Kingfisher brand, with large

budget national campaigns and sponsorships, had grown Kingfisher nationally as

well as in Karnataka. UB Export was treated like a cash cow with little support

and the decline of the brand was accelerating (Annexure-1 shows sales of UBexport in Karnataka). In the budget plan Dhananjay presented a way forward for

UB Export in the state. Attractive new pack graphics, signing on of a local

Kannada star Upendra, and a new TV commercial in Kannada as well as a slick

visibility campaign at the retails and bars. The idea was to focus on the local

Kannadiga and position UB Export as the local home grown beer, distinct from

Kingfisher which was a national brand for the young fun loving cosmopolitan. "

Majaa maadi" was the campaign line! (Annexure 2 shows the POP of the new

campaign. TVC also available for viewing)

The problems were further compounded by the fact that the beer category

was stagnant/ declining in Karnataka in the last 4-5 years. Within that, the strong

beers (alcohol content of 8%) were the ones making a dent in the market.

(Annexure 3 shows beer industry trends). Prices of beer were at an all time high,

thanks to high excise duties on the category and consumers were moving towards

higher alcohol levels to maximize " bang for the buck" ( alcohol content of strong

beer was 50% higher but price was only 10% higher).

UB Export operated in the mild beer segment and thus faced 3 pressures:

1. Declining beer industry due to high prices

2. Movement out of mild beer

3. Kingfisher dominating the mild beer segment

The marketing team was at a loss in terms of a way forward. The review

meeting was chaotic with various opinions, none too convincing. Some felt the

communication campaign was not effective, others thought the campaign needed


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some time to make an impact. Another school of thought was to offer higher

trade margins to get them to push the brand whilst the fourth thought that the

price of US Export was too close to Kingfisher to make any headway. (Annexure4 shows price of UB Export, Kingfisher and Kingfisher Pint, its small pack).

Suddenly Ganguly's voice cut through the din. "Whats the price of a soft drink?"

Taken aback Dhananjay replied Rs 10/-

"As a consumer I would buy a leer instead of a soft drink if you offer it at Rs

15. Why can't you do that?" asked Ganguly. There was a gasp in the meeting.

Someone smirked at the thought whilst another choked on his glass of water

Ganguly went on "There is no way UB export can compete with Kingfisher. Asleaders we also need to expand the market which is in a slump. I am sitting on large

production capacity which is underutilized. Think about it." Ganguly got up and walked

out.

As he walked out, he mostly saw polite indulgent smiles you don't laugh at the

MD. As he left the room he heard one voice "Guys, there is thought there. Why do our

small packs have to be premium priced?

Dhananjay worked further on the thought :

Soft drinks sold in a typical pack size of 300 ml. To benchmark against soft drinks,

the optimal pack size would be 330 ml (for which moulds and production facilities

were easily available.

The 330 ml pack at Rs 20 (see Annexure 4 for prices of other brands), would make a

gross contribution (sales realization less cost of goods) of Rs 60/-, vs flagship

Kingfisher 650ml of Rs 100/

When he had told Mr. Ganguly that price of others drinks was Rs 10/-, that was the

price of the liquid. If you took the bottle home, you paid an additional deposit of Rs.

3/-. Could a similar system be worked out for beer, he wondered. A quick checkwith key retailers indicated a huge resistance to collecting bottles and returning to

the brewery.

The brewery said that production speed of pints would to 50% of 650 ml packs.

However available capacity was large even in season vis a vis demand.

Given the large scale implication of such a project, Ganguly asked for a management

committee meeting to decide on the issues raised by Dhananjay's analysis. The key issues

as summarized by him were:


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1. Would there be explosion in demand with a low priced small pack. Current sales

projection was 3 lac case

2. Would the pack eat overall profit pool could come

3. Could the trade be pushed to work like the soft return mechanism.

4. Should the available capacity be used for making low contribution volumes

5. Would competition Allow suit and the market could getflooded with low price

packs creating 101her problems or kingfisher

Questions

1. Why did the UB Export relaunch fail?

2. Do you agree with Mr. Gangulys radical thought?

3. If yes, what would be the offering in teems of packsize, price, bottle deposit etc.?

4. How would you market the offering? What would be the positing, the marketing

story etc.

5. What would be your estimated sales of the offering, given the industry trends.

6. If you were top management in charge of the situation, what would your

recommendation be?

ANNEXURE 1

UB Export Sales Over the years

1740

1178.3

830.4

599.5

641.9

1997-1998

1998-1999

1999-2000

2000-2001

2001-2002

Series 1


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ANNEXURE 2


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ANNEXURE 3

Karantaka- Larger Beer

5040

4072.2

3651

3514.3

3446.9

1997-1998

1998-1999

1999-2000

2000-2001

2001-2002

Volume in 000s

Seris 1

Karnataka-Strong Beer Volumes Over the years

2162

1943

2664

2883

2811

1997-1998

1998-1999

1999-2000

2000-2001

2001-2002

Volumes in 000s

Series 1


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ANNEXURE 4

0

10

20

30

40

50

Prices of Beers in Karnataka

Series 1 46 44 30

Kingfisher UB Export Kingfisher

ub export lager case study (1)

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