AppyFizz_ProjectReport

MARKETING PROJECT On

SUBMITTED BY: 1. 2. 3. 4.

AVINASH SHANDILYA 12A KRITIKA KHETARPAL 22A KUNAL SINHA 23A PRINCE JAIN 32A

Beverages

1. Understanding the market and competition

Beverages

Food Processing

Agri Product

Fruits and Vegetables

Beverages

Milk & Milk Product

Diary Products

Meat, Poultry & Marine Products

Meat & Poultry

Fisheries

India Beverage Industry includes 19 individual beverage categories packaged water, carbonates, juice, nectars, still drinks, squash/syrups, fruit powders, iced/rtd tea, iced/rtd coffee, sports drinks, energy drinks, bulk/HOD water, dairy drinks, hot coffee, hot tea, beer, spirits, flavoured alcoholic beverages, wine). The total soft drink (carbonated beverages and juices) market is estimated at 284 million crates a year or $1 billion. The market is highly seasonal in nature with consumption varying from 25 million crates per month during peak season to 15 million during offseason. The market is predominantly urban with 25 per cent contribution from rural areas. Coca cola and Pepsi dominate the Indian soft drinks market. The Indian soft drinks market generated total revenues of $3.2 billion in 2009, representing a compound annual growth rate (CAGR) of 7.2% for the period spanning 2005-2009. The fruit-based carbonated drink segment has a market size of Rs 200 crore at present with products like Parle Agro's Appy Fizz, Pepsi's Nimbooz and Coca-Cola's Minute Maid Nimbu Fresh having a strong presence. FMCG company Dabur has introduced its Burrst Fizz brand to tap the potential in this segment. Burrst Fizz is available in two flavours - apple and lemon.

India's soft drinks sector is forecast to experience bullish growth over our forecast period, with compound annual average volume sales growth forecast at 9.6% between 2011 and 2015. Meanwhile, value sales are forecast to experience ever stronger growth of 11.7%, on a compound annual average basis, between 2011 and 2015. This growth is a consequence of the comparative immaturity of many of the soft drink industry's most profitable sub-sectors, such as health drinks.

There is no general acceptance of the product forms in the fruit drinks market. The consumer is basically concerned that it is a fruit juice and not a synthetically constituted product. Accordingly, the first segmentation is between real fruit drinks and synthetic drinks. The former are based on natural fruit pulp or juice. The others are synthetic products containing fruit flavours. Among the fruit juice beverages are fruit juices (Pepsi's Tropicana), nectars (Dabur's Real) and fruit drinks (Frooti and Slice). All these are real, reconstituted from fruit pulps or concentrates. The leading fruit juice brands include Real. Onius. Tropicana. Frooti. Jumpin. The fruit drinks are mainly based on oranges, mangoes. pineapples. grapes. apples. guava and tomato. They only differ in pulp content: the juices have over 85%, nectars (20% to 85%) and fruit drinks (less than 20%). The branded fruit juices market inclusive of nectars is placed at about Rs 10 bn. The pure fruit juices are the preferred drink among the fruit drinks. This segment is growing at around 10% annually. The market for fruit juices is expected to grow to Rs. 7.50 bn by end 2009-10 from nearly Rs. 4.75 bn presently. Consumption per capita of juices in India is very low. It is estimated at a fraction of a litre 20 ml. China has attained a consumption level of 1500 ml. India's population is comparable to that of China's (the population size of India and China is estimated to be around 1.2bn and 1.3bn respectively in 2010), the value of India's juice market makes up less than 10% of China's currently, underlining the comparative immaturity of the Indian juice sector. The consumption in India is basically an urban phenomenon. Nonetheless. it is gaining slow but steady penetration into the rural areas. This immaturity can be linked to a combination of demand and supply factors. On the supply side, the high costs of juice concentrates, transportation and packaging materials are filtered through to higher prices on packaged juice products, leaving packaged juice producers in a weaker position to compete against the price-competitive informal juice producers (ie, the roadside stall). According to The Economic Times, mango and banana contribute to around 50% of total fruit production in India annually and packaged juice producers have to resort to juice concentrate imports to meet their supply needs for other fruits. This import dependency leaves producers particularly vulnerable to commodity price fluctuations in global markets and threatens profit margins.

Expensive packaging and transportation costs are arguably the other disincentives for packaged juice producers. Laminators make up approximately 27% of the cost of a 200ml package of juice, according to The Economic Times. Producers also face high costs for the distribution of their packaged products, translating into relatively lower profit margins as compared to the informal juice producer. India remains plagued by poor roads and railways and packaged juice producers clearly need to invest heavily in supply chain development for the distribution of their perishable products. In contrast, the informal juice producers, which produce juices through hand-operated machines, face minimal transportation and packaging costs, and their relatively lower product prices have naturally garnered strong appeal among the vast lower-income class in India. Despite this disparity, we do expect the situation to change over the coming decades as rising consumer affluence translates into a larger appetite for packaged juice products and as producers improve on their supply chain efficiencies. Soft drinks giants PepsiCo and The Coca-Cola Company, for instance, have successfully entrenched themselves in the Indian juice sector thanks to their well-established distribution networks. As more packaged juice producers expand their domestic footprint and reap greater economies of scale, production of lower-priced packaged juice should increase rapidly, and when that happens, the Indian juice sector should be poised to witness even more explosive growth. Growth in the soft drinks sector will be supported by continued investment from the industry's leading players -- namely US multinationals The Coca-Cola Company and PepsiCo. Both have committed large sums towards expansion in India in recent years, owing to the potential that the vast market and its rapid economic growth represent. After packed tea and packed biscuits the soft drink segment is considered to be the 3rd largest in the packaged foods industry. Over 100 plants are engaged in aerated soft drinks industry and provide huge employment. It has obviously attracted one of the highest FDI in the country. Strong forward and backward linkages with glass, plastic, refrigeration, sugar and the transportation industry further strengthen the position of the industry. Soft drink segment has a huge potential in the Indian market, as a vast portion of the market is still to cover.

2. Segmentation Targeting and Positioning Parle Agro is credited with creating the sparkling fruit drinks category with Appy Fizz BASES FOR SEGMENTING CONSUMER MARKETS GEOGRAPHIC REGION – Pan India, The popularity of apple drink is low in South India because of the availability and price factor.

DEMOGRAPHIC AGE GENDER INCOME OCCUPATION

- Indian Youth - Unisex - Upper Middle Class and Above - Professionals (Self Employed & Service), Students

PSYCHOGRAPHIC SOCIOECONOMIC CLASSIFICATION – A1, A2, B1, B2, C, D LIFESTYLE - Party Oriented, Fun seekers PERSONALITY - Forward thinking, intelligent and formed his own opinions.

BEHAVIORAL OCCASIONS – Parties, Celebrations, BENEFITS – Quality, USER STATUS – Customers who look for new options ATTITUTDE TOWARDs PRODUCT – Cool Drink to hang out with TARGETING Customers who constantly look for new options POSITIONING BRAND, PRODUCT, COMPANY Appy Fizz, Parle Agro TARGET CUSTOMERS Indian Youth, Party goers, Celebration times, Health Conscious Youngsters BENEFITS Carbonated Real Apple Juice Nectar based drink Health Factor – Low calories Works well as mixers for cocktails/mocktails

VALUE PROPOSITION Real apple Juice with Co2 (Carbonated) for better digestion with wine like taste Ideal for non-drinkers who want to have a fun drink (Golden Coloured Drink) POD & POS : Appy is a heavy drink compared to Fanta or Mirinda.

PARLE AGRO Parle Agro Pvt Ltd is a distinguished manufacturer and exporter of a wide variety of food items which are as follows:Mango Frooti Appy Classic - Made from Juicy Apple Sparkling Apple Drink - Apple Fizz Packaged Drinking Water – Bailley Confectionery - Butter Cup Toffee, Butter Cup Softease and Mintrox with 2SKUs namely Cinnamon Mint Flavor, Pepper Mint Flavour and Butter Cup Toffee. From its rhythmic „Mango Frooti, Fresh and Juicy‟ days to the current attitude-loaded „Why grow up‟, the brand has come a long way. Frooti Mango, which has 85-per cent market share in tetra packs, grew by a modest four per cent in 2001 against an average growth of 18-20 per cent. For better sales and to compete in relevant market, Parle introduced few more products - Grapo Fizz (Juice made from fresh grapes), Saint Juice 100% natural juice, LMN (Lemon Juice, Thirst Quencher), Hippo Baked Chips (By Parle Agro)

3. Product strategy

Product Levels

Core Benifits

Basic Product

Expected Product

Augmented Product

Potential Product

• Thirst Quencher • Apple Juice • Nutritious • Non-alcoholic substitute for beer • Something for everyone

Product Hierarchy Need Family

Product Family

Product Class

Product Line

Product Type

Brand

Item

Thirst Quenchers

Beverages

Carbonated Beverage

Fruit based

Apple based

Parle

Appy Fizz

Line and Brand Extension Brands APPY FIZZ

Product Existing Category New

Existing

New

Appy Fizz

Grappo Fizz

Saint Juice - Apple LMN – Lemon Drink

•

Line Extension

Existing Brand Name for a new Item in the same product Category. Appy line extending to a Fizzy version AppyFizz

•

Brand Extension

Existing Brand Name for a new Item in a totally different product category. GrappoFizz was a new category of Fizzy Grape Drink.

•

MultiBrand Strategy

Marketing of two or more similar and competing products by the same firm under different and unrelated brands. Saint Juice – Apple competes with Appy in the Apple Juice category. Both are Parle Agro products.

•

New Brand

New products are assigned new Names with no obvious connection to existing brands offered by the company. LMN Lemon Drink has no connection with the Appy brand and any harm to the reputation of Appy will not hurt the sales of LMN drinks.

Analysis about the launch of Grappo Fizz –

 Grappo Fizz is a sparkling grape drink similar to the successful Appy Fizz. Grappo Fizz is launched as a cousin of Appy Fizz.  The drink has a unique taste, look and also interesting positioning as „a Cool Drink‟. The brand is targeting the same segment which Appy Fizz is targeting – „The Youth‟ .  The campaign highlights the launch of Grappo Fizz, it also dramatizes the differences between Appy Fizz and Grappo Fizz.  Grappo Fizz has been launched to create another niche like its cousin. Grape is a neglected flavour in the Indian market. Grappo was created to fill in this gap of grape based drinks in India.  Now the brands come together in ads and the tagline is "Two cool drinks to hang out with”.  In the company perspective, it makes sense to put these brands together because the cost of

building a new brand is huge. Grappo could easily ride on the popularity of Appy.

Branding Strategy Appy Fizz was launched in 2005 and ever since it has focussed on being different from the others in its league. Interestingly, the year 2005 was also the year when the consumers were looking for alternatives in the drinks segment. They no longer wanted a product that would just quench their thirst or provide relief from the heat, but were also looking for something healthy. This breed of health conscious customers were partly also driven by the pesticide controversy that took place around the same time and ones that were looking for a change from fizzy colas. These developments in the market made marketers sit up and take note. Most donned their innovative hat in search of that magic drink that would tinkle the Indian taste buds yet maintain the nutritional factor. A rash of new drinks was launched – new iced teas to branded „chais‟, and even flavoured milk. Besides, there were also new variants being launched for the fruit-based drinks including a guava flavoured Frooti by Parle Agro. To grab this opportunity Parle Agro decided to enter the carbonated Apple drink segment and introduced Appy Fizz in the Indian market.

What has helped Appy Fizz achieve ever growing success is its constantly evolving market strategy. In the year 2006, Appy Fizz had to be introduced to the consumers in the most interesting manner possible. With that objective well achieved, the strategy from then on has always been to keep Appy Fizz current. It is this new objective that allows managers at Parle Agro to be flexible in their communication strategy that they adopt and it also becomes convenient to experiment. Some of the aspects that helped Parle in its branding strategies for Appy Fizz were-

 Appy Fizz was positioned for the younger generation of fruit Juice loving customers who prefer soft drinks containing real fruit juice (e.g., Frooti, Real, Tropicana etc), commonly understood as fruit beverages and distinctly different from those soft drinks which are basically artificially flavoured and do not contain any fruit ingredient (e.g Coke, Pepsi etc).

 Though there were many juice brands available in India at that time, but none of them were offering an apple juice as market research showed that apple juice or an apple based drink would not appease the entire country. The idea to have a carbonated touch was another big risk that Parle Agro was taking with its Appy Fizz.

 It was a very niche segment that the company planned to capture and looking back it seems that the strategy worked for Parle Agro has a first mover‟s advantage in this category.

 To catch the fancy of the youth the product was given a sparkling tinge. Also, the bottle of the drink was given the shape of a champagne bottle and the drink a golden colour, so that it would be a huge hit in party circuit, especially amongst the tea-totallers, who feel left out.

 With its tagline „A cool drink to hang out with,‟ and a smart advertising campaign, Appy Fizz was instantly able to create a brand new category and a captured sizeable market share.

 The branding strategy for Appy Fizz is never changing and ever changing. The never changing bit is that Appy Fizz is a mirror of the youth, and the ever changing bit is the fact that the youth and their interests are always changing. Hence, there is a need for this brand to constantly upgrade itself and yet remain the same.

However, one thing that does not change is that Appy Fizz – the character in the ad – continues to be the prankster that he was. As a matter of fact humour has always been a part of the advertising for Appy Fizz.. One cannot overlook the fact that humour is one of the most favourable ways to get the attention of the youth. To appeal to the youth Appy Fizz has left no stone unturned and is looking at exploiting the online media well. Appy Fizz is already available on many social networking forums like Facebook and the official website too has a lot to offer to the generation Y.

The brand ethos is very simple and is reflected in its tagline too. The branding strategy is not saying „Hey, drink Appy Fizz and you‟ll be cool‟, nor is it saying, „Cool people drink Appy Fizz‟. It is saying „Have Appy Fizz and you will have fun hanging out together as equals‟.

Being true to the commitment towards refreshing India, Parle Agro has made a large investment in all its manufacturing units to enhance the premium look of the champagne – shaped Appy Fizz PET bottle which gives the beverage its sparkling youthful appeal. The new packaging, true to Appy Fizz‟s character, is filled with fun stuff – facts, trivia and an invitation to his online pad, Bold, unrestrained,

unabashed and cool that should sum up the look we have created for appy fizz. Regarding the detailing in the new packaging, it‟s about engaging the consumer at the first point of contact and engineering the right kind of start to the relationship.

Following are the characteristics by which Appy Fizz could be accepted by Indian household as a family soft drink.

1. Soft drink like Coke or Pepsi does not contain any fruit ingredient & is artificially flavoured which is not preferred by a segment of customers, who want to ensure „value for money‟.

2. The main USP behind the Coke/Pepsi is that they are carbonated and so served chilled to get the „kick‟ (fizz).

3. Day by day, the customers are becoming more health conscious and there by switching to fruit juice / Pulp containing soft drinks, rather than getting hanged over with Coke or Pepsi.

4. Better packaging of fruit juice ensure long shelf life without deterioration of taste & quality (Pet bottling)

5. The very appearance / get-up of the bottle of Appy Fizz clearly resemble the wine bottle / champagne bottle. It helps out Appy Fizz to get better positioning.

6. Any carbonated drink which contains carbon-di-oxide (Co2) is found to be better for stomach and thereby enhance better digestion. It helps out to reduce acidity also.

7. A big chunk of Indian customers mainly comprising ladies, children and youngsters prefer the wine like taste but avoid the harmful effect of alcohol.

All these above mentioned findings from the market inspired the company Parle Agro to conceptualize a product which could be a fruit – based soft drink with wine like taste and carbonated in nature.

4. Latest advertisement

Appy Fizz has been re-launched as a “Cool Drink to Hang Around With”. With its champagne shaped bottle and smart advertising, Parle has succeeded in creating a Fizz in the segment, which is basically the Indian Youth. Going Appy Fizz has been able to catch the fancy of the early adapters. The ads created by Appy Fizz are cool and projects something unique about this drink that forced them to experience this product. The TV commercial has been conceptualised by Creativeland Asia and directed by Rajesh Krishnan of Sodafilms. The overseas post was supervised and co-ordinated by Crocodile Films, while the animation was done by MFX, Malaysia.

In the previous two seasons, Appy Fizz as a brand had built the reputation of being a witty, opinionated, young and cool drink to hang out with. With the product now getting a stylish new label, it was imperative to announce this with a bang that had added style into its repertoire. The new commercial is just that – funny meets stylish. Its television commercial showcases the Appy Fizz character, the waling talking bottle, surprising everyone with a new look. They maintained the fun quotient Appy Fizz had in the previous campaigns but added a lot of style since it was going to be about the new look. Parle Agro‟s sparkling apple drink Appy Fizz has assumed a new look, and is making a song and dance about it. Following is the sequence of events in the commercial The TV commercial opens with Appy Fizz‟s friends who come to a super store asking for him.  The shopkeeper calls out for Appy Fizz, who yells out from a refrigerator, “I‟m changing”.  When he steps out, he takes his friends by surprise with his new look.  The Appy Fizz bottle then dances his way down the store aisle to the accompaniment of popping champagne bottles and flying potato chips.  As he „flies‟ on a skateboard, he even tells any viewer who might be having thoughts of emulating him, “Don‟t try this at home”.  Appy Fizz then walks out of the store with his friends

Advertising/Promotion/Communication

5. Tracking Promotion

Product Field Broadly Appy Fizz is a beverage served cold and faces competition from   

Cold Drinks – Pepsi, Coco Cola and there related products are the primary competitors of Appy Fizz. Fruit Juices – Tropicana, Jumpin, Real etc pose as very big competition to Appy Fizz as Appy Fizz is promoted as a Fizzy Fruit drink. Other Fizzy Fruit Drinks – Fanta and Dabur Burrst pose as direct competitors in the fizzy fruit drink segment.

Image: At „La Marche‟ Retail store. Overview of the Competitors of Appy Fizz Due to low prices of these beverages they are easily substitutable and hence it is very important for Appy Fizz to grow in its market presence and also availability. The uniqueness of taste makes Appy Fizz a very desired product, but lack of availability can make even the loyal customers turn away.

Freebie‟s Promotion Campaign Appy Fizz‟s marketing team took advantage of the omnipresent global warming hype and realized that they could take advantage of the truth that summers were getting hotter than ever before. Another truth, tied in pretty well. Indian families are large, and most refrigerators in India come with one ice tray, and they run out of ice quickly. An ice tray as a freebie sounded just right. Appy Fizz‟s spirit of activism then took over. They created a mock social campaign against Global Warming to promote the free ice maker trays. They called it the “Make Ice. Not warm” movement. It was a 360 degree Guerrilla campaign in true propaganda style asking people to get the free ice maker and make more ice to keep Global Warming away. They turned Appy Fizz into the Indian Al Gore and the ice makers – his weapon against Global Warming.

What followed was just mind blowing! And the promotion, of course, was a huge success. Consumers stopped looking at the ice tray as a freebie. It had become a collectible and a symbol of the fight against Global Warming. Appy Fizz conquered the freebie war and somewhere contributed at least a wee bit to the fight against Global Warming.

Cashing in on the IPL Hype

Appy Fizz with its brand extended version Grappo Fizz went on an extensive promotion campaign during the IPL season in 2010. The “Two Cool Drinks to Hang Out” acted like cricketing experts on their own fictitious Channel Imaginews TV. This Channel could be followed on Facebook and www.Cricinfo.com. There association with the IPL event is quite interesting. IPL is considered more as a Cricketing Festival rather than a Competition. It is watched by more of the audience the fizzy drinks of Parle Agro want to be aiming at because the event itself is supposed to be “Chilled Out” and Entertaining event with nothing much for a cricketing fan to win or lose. The campaign contained hilarious discussion on topics such as the following – 1. “Gony to be new captain as name rhymes with Dhoni.” 2. “Research proves that Mongoose Bat brings out the animal in you.” 3. “Sachin nominated as a player who most likely with succeed Sachin”. 4. “With so much money, next IPL venue to be the moon.” 5. “Super over to be played out by team owners only.”

Promotions at Point of Contact On our visit to the Local Retail Markets, we spoke to the roadside vendors (Paan Waalas) who served Cold Drinks. The main promotion activity Parle Agro employed at such vendors was to pay them Rs 500 per month to sell Appy products with an incentive to earn higher money if the sales went beyond expectations.

Image: Road Side Vendors (Paan Waalas). Seen here with Appy Fizz The sales at such small vendors which line up 5 to 6 in a row outside the Vasant Vihar market ranged from 4-5 Pieces of the 300ml bottles. The supply was approximately 2 Cases per week. The profit margins for these retailers were about Rs. 2 per bottle.

Improvements: A Ground Reality On our visit to the local vendors, we found clear discrepancies in the supply of Appy Fizz specifically and Parle Agro as a whole. Clear improvements must be made in the distribution chain. The retailers, we met on out visit to the SDA market, informed us that they haven‟t received Parle Agro products for approximately 15 months. It is not due to a lack of demand that the products were not delivered but due to discrepancies in the distribution chain. They informed us that a lot of times customers have come up and asked for the availability of Appy Fizz and see them go with a disappointed look. Parle Agro must remember that it is 5 times cheaper to retain a customer than to attract a new one.

Our visit to „Daily Pick – Exotic Fruits and Vegetables Department‟ indicates that Appy Fizz was not updating its distribution channels. The Managers at the Retail outlet informed us that they had set shop for about 7 months and no salesman from Appy Fizz had approached them till now. What was surprising was the fact that Appy Fizz was on offer at a retail outlet „Modern Bazaar‟ leaving just 2 shops from it. The managers informed us that customers did approach them for the availability of Appy Fizz but had to be turned away. Especially considering that it‟s an Exotic Fruits department it is imperative that Appy Fizz exploits such outlets. What‟s more exotic than a fizzy fruit drink?

Potential Future Promotion Strategies 

On our visit to the RPM bar and the ManUtd bar at Vasant Vihar we realized that Appy Fizz by itself is not used in bars at all. Manager at the ManUtd bar flatly refused that they stocked up on Appy Fizz. We see a clear Scope for Appy Fizz to grow in this area. As liquor advertisement is banned in India, Appy Fizz can try to through unofficial channels promote Appy Fizz as base for Cocktails and Mocktails.



The Market clearly admitted that Appy Fizz was a very „Liked‟ product but lacked the omnipresence of Pepsi or Coca Cola. Hence we feel that Appy Fizz will do well to promote itself at fast food joints etc.



Even when Grappo Fizz was introduced, we were informed by the Manager at „La Marche‟ retail shop at Vasant Vihar, there were no free samples distributed. He pointed out for example that Red Bull had arranged for free samples to be distributed but no such promotions were held for Grappo Fizz. Weekly sales of Appy Fizz at „La Marche‟ were about 24 SKU‟s of 1 litre bottles, 96 SKU‟s of the 300ml bottles and 24 SKU‟s of the 500ml bottle.

dvertising/Promotion/Communication

6. Channel Strategy

Broadly three strategic issues in distribution management have been considered in our evaluation of the distribution strategy of Appy Fizz: 1. Physical Distribution 2. Channel Management 3. Customer Service Effectively Parle Agro applies a 3 level Distribution Structure for the distribution of Appy Fizz products. It generally uses a Distributor which acts as the middle man in distributing goods from the producer to the retailer from where the consumer can purchase the products.

Level 1 - Producer Level 2 - Distributor Level 3 - Retailer Fig: 3-Level Distribution Structure Keventer Agro is responsible to manufacture, package, distribute and market Parle products like Appy Fizz, Appy and even Frooti. The Supplies are distributed once a week – generally on Sundays. The Departmental Store that we visited did not have Grappo Fizz. The Store, in fact, had never stored Grappo. They claimed the customer demand for Grappo was limited. In hindsight Coca Cola distributers interact with the retailers everyday which allows them to understand the trends much better than Appy Fizz. Most of the retail outlets suggested that the Appy Fizz distributors have never enquired about the Customer needs and suggested a rather disjointed relationship with the retailers and hence even the customers. Volume figures for the Appy Fizz product in comparison with soft drinks at Departmental Store and a Retail Store at Dwarka are given below: PRODUCT

VOLUME PLACE

Appy Fizz

1 ltr Tetrapack 2 ltr 500 ml 1 ltr Tetrapack 2 ltr 500 ml

Soft Drinks Appy Fizz Soft Drinks

FREQUENCY NO. OF BOXES

Weekly Departmental Weekly Store Daily Daily Weekly Weekly Retail Store Twice a week Twice a week

5-6 10 2-3 4-5 1 2 8-10 2-3

UNITS PER BOX 18 30 9 18 30 18 9 18

Shelf Space Parle beverages had never bought any shelf space in the departmental store. In fact the company does not incentivise its products beyond the margins. On an average, a single shelf space is sold for an Rs. 3500-4000/The accompanying picture shows how REAL juice had bought the shelf space at the store and the visible impact it had both on the sales and product promotion.

Fig: Shelf Space – Competitive Disadvantage at Departmental Store at Dwarka

The departmental store had never faced any problem with respect to the distribution of Parle beverages. Most of the times Parle Beverages do not stick on the shelf for more than a week (maximum 2 weeks) before they are replaced with fresh stock from the distributor. Maximum sales registered in between 25th of a month to 10th of next month Rest of the month - lax sales - Mr. Dinkar Pathak (Accounts Manager, Delhi Bazaar)

Erratic Distribution While most of the retail outlets in Dwarka suggested impeccable Distribution, most retailers in SDA market(IIT, Delhi main gate), Priya‟s(Vasant Vihar Market) and Green Park(Yusuf Saria) suggested an erratic distribution. Retailers at SDA market suggested that Parle had not distributed products in that market for the past 16 months. At retail outlets near Priya‟s, Vasant Vihar where Appy Fizz distribution was active in Modern Bazaar, Daily Pick, a retailer stone‟s throw away from Modern Bazaar, which had set shop 8 months ago has had no distributor from Parle approach them since.

2 level Distribution There were certain instances of 2 level distribution regarding Appy Fizz FAIR PRICE SHOP (FUTURE GROUP) The Future group purchases Parle beverages directly from the Company and then sends it to its retail outlets hence getting rid of a middle man and gaining more control over the Distribution Channel. The Fair price shops run their own promotion schemes for each of the products they stock. Eg :Appy Fizz is sold for Rs. 38 or for Rs. 40 instead of Rs. 48 depending upon the Future group policies. This results in heavy sales for that period. Fair price shops registers the maximum sales for Frooti. Weekly Sales – 24 1ltr bottles

ROAD SIDE VENDORS During times when the distributors are not able to meet the demand for the product the retailers end up purchasing the good directly from the producer. Either the Parle Agro informs the distributors of the demand or the retailers have to directly purchase the goods from the company. Profit Margins in case the retailers have to go to the company and purchase are little on the higher side. Note - The margins are the same across all the shops irrespective of it being a retail shop or a departmental shop. The fair price shop is an exception due to company sourcing. Note - One thing which was common all across the stores was that if a customer asks for Appy Fizz/ Appy, he is not satisfied with anything else. If he does not get Appy, he does not go in for a substitute most of the times.

Functions of Marketing Channels 1. Physical distribution: Transporting and storing goods – Keventer’s does this by Trucks and earnings are primarily though the profit margin on each unit of Appy Fizz sold. 2. Communication: Marketing intermediaries promotes the company’s products. Here channel member provide the information regarding the product and pushes it to customer. Mostly carried out through posters etc. at retail joints and through special schemes as observed in the case of Fair Price Shop(Future Group). 3. Information: Retailers and wholesalers collect the information from the customer and provide the same to the company. Mostly Sales and trend information can be conveyed to the distributor in case of Appy Fizz. However no retailer intimidated that Parle Agro has enquired about Customer Information, Most retailers suggested a relative indifference by Parle Agro. 4. Title transforming: Marketing intermediaries purchases the goods from the company and transform the title of goods to next intermediary or customer. In Case of Appy Fizz there were no indications of title transformation.

5. Relationship management: Here marketing intermediaries try to understand the needs of consumer, try to match his needs and satisfy them. Appy Fizz understood the consumer requirement for fizzy health drinks due to the sales volume of Appy Fizz and came out with their brand extended version of Grappo Fizz.

Factors that Influence Channel Selection Market factors: An important factor is how is the consumer going to buy the product? As beverages are mostly purchased at retail shops, restaurants etc. distribution channel would have to decided accordingly. Other factors taken into consideration is buyer behaviour, ability to meet buyer needs, the willingness of channel intermediaries to market a product, the profit margins required by distributors and agents compared with the costs of direct distribution and the location and geographic concentration of customers. Producer factors: Producer Factor observes the available resources currently available with the Producer to select the Channel of Distribution. As Parle Agro has a strong distribution Channel for its products like Frooti, 1500 Wholesalers and close to 4,15,000 retailers throughout the country , it can leverage to rake up the distribution of Appy Fizz. Product factors: Here characteristics of the product themselves have to be taken into consideration to decide the channel of distribution. For example Appy Fizz is a nonperishable beverage and hence can have a larger time frame. Because of this the time between when the good is produced and the good is sold to the retailer can be significantly different as compared to perishable beverages like Vitamin beverages etc. Hence Parle Agro uses a 3 level distribution strategy rather than using a 2 level or even a 1 way distribution strategy.

Evaluation of Channel Design by SCPCA a. Sales(S): The ability of each channel member to generate the sales for company in a given period. b. Cost(C): how much cost each channel alternatives incur? Which one of the alternative provides the optimum solution? c. Profitability (P): various channel alternatives available to the company and their profitability shall be compared. Company with better profitability shall be selected. d. Control (C): Every company would like to have better control over its channel members. Alternative channels can be evaluated on the basis of how much control each channel member desires? And how much control the company is willing to provide? e. Adaptability (A): Marketing is dynamic world. Competition exerts pressure on companies to relook at their practices and supply chain continuously. The channel alternatives should be flexible enough to meet the changing requirements. Whichever channel alternative meets such objectives shall be selected. The Current channel used by Parle Agro is robust can adaptable.

Distribution Intensity Intensive distribution aims to provide saturation coverage of the market by using all available outlets. For many products, total sales are directly linked to the number of outlets used (e.g. cigarettes, beer). Intensive distribution is usually required where customers have a range of acceptable brands to choose from. In other words, if one brand is not available, a customer will simply choose another. Most of the beverage market including APPY FIZZ follow an Intensive Distribution Intensity. Selective distribution involves a producer using a limited number of outlets in a geographical area to sell products. An advantage of this approach is that the producer can choose the most appropriate or best-performing outlets and focus effort (e.g. training) on them. Selective distribution works best when consumers are prepared to "shop around" - in other words - they have a preference for a particular brand or price and will search out the outlets that supply. Exclusive distribution is an extreme form of selective distribution in which only one wholesaler, retailer or distributor is used in a specific geographical area

Profit Margins Broadly the Profit Margins range from about 10-15%. Given below is a table of approximate profit margins based on our interaction with the retail outlets at Dwarka and Vasant Vihar PRODUCT Appy Fizz Frooti Bisleri Soft Drinks

VOLUME 1 ltr 300 ml 2 ltr Tetrapack 1 Ltr 2 Ltr 500 ml

MRP Rs. 48 Rs. 18 Rs 10-12 Rs 14 Rs 60 Rs 25

REGARDING APPY FIZZ Weekly Sales – 60-70 (1 ltr bottles) (Departmental Store) 18-30 (1 ltr bottle) (Retail Store)

MARGIN Rs. 4 Rs. 1-2 Rs. 2 25 paise 50 paise Rs. 1 Rs. 1

Advertising/Promotion/Communication

7. Pricing Strategy

While considering price, the company kept the price above the common soft drinks (Coke / Pepsi) and below the price of beer for the affordability of common mass.

Step 1: Price & Availability Of Substitutes Question: Are there any substitutes for your product? If so, how are they priced? Answer: Appy Fizz is a carbonated apple juice. At the time of its launch in 2005, there was no product catering to such a segment. Hence, Appy Fizz had first mover advantage which it leveraged by quoting a price higher than the carbonated drinks available.

Step 2: Characteristics Relative to Competitors Question: What features do you offer that your competitors do not, and vice versa? Do you customers value these features enough to pay extra for them? Do customers value other characteristics, such as brand, established service levels, reputation, and locality? Answer: Appy Fizz was positioned very uniquely in the consumer minds. It was personified as a cool college going cool kid. With its champagne shaped bottle and smart advertising, Parle has succeeded in creating a Fizz in the segment, which is basically the Indian Youth.

Going by the demand in the College canteen for this drink, Appy Fizz has been able to catch the fancy of the early adapters.

Step 3: Income Question: Can your customers afford your prices? Are they less able to afford your prices than they once were? Are there times of the year they can afford it, and other times where their purchasing power is constrained? Answer: Appy Fizz can safely be called a niche product. It mainly targets the youth which is bold and outgoing and likes to chill out with friends. Step 4: Price/Strength Of Demand For Related Products Question: What are the associated overheads of owning your product? For example, if case of cars, there are other costs involved that make up the total cost of ownership, including running costs, insurance and maintenance. Answer: There is no overhead cost in owning an APPY Fizz. Step 5 - Market Environment Question: Has your product suddenly become high profile? Has demand increased/decreased considerably in a short period of time? Answer: When Appy Fizz came it was able to shake the Indian market and largely the youth at that with its awesomeness. Hence, the relatively high price of Appy Fizz proved to be a safe bet for Parle Agro. CURRENT PRICES AVAILABLE Appy Fizz Size

Price

1.

Appy Fizz PET 300 Ml

Rs. 18

2.

Appy Fizz PET 500Ml

Rs. 25

3.

Appy Fizz PET 1L

Rs. 46

Such pricing may prove to be a big blow to Appy Fizz, which although is a front-runner in the apple flavoured carbonated drinks segment, yet there isn‟t much customer loyalty to the brand because the audience for the drink is niche and limited. 9 Price-Quality Strategies

PRODUCT LIFE CYCLE

Product life cycle is a series of stages start from introduction of product and end on decline stage. At each stage organization take different strategy according to product nature, environment, profits, revenues and customers. product life cycle change from product to product each company PLC is different from other. Some product move from introduction stage to maturity in a fly like fashion (shoes and clothes) and decline in a short span of time. Products like Coca cola have long life cycle and remain in maturity stage for a long time. Following are the stages of product life cycle. 1-Introduction 2-Growth 3-Maturity 4-Decline Introduction In introduction stage organization put lot of efforts and money because product is just enter to the market it require customer awareness and acceptance. Marketing budget is high due to different promotional strategies; distribution is restricted to limited markets. In this stage organization faces less competition because adopter for the product is not huge. Production capacity is underutilize because demand of the product is low results in high cost per unit and this is transferred to customer in the form of price. Growth In this stage sales start rapidly increasing and product adopted by most of the customer. Organization maintains the quality to build long term relationship with customers. Price for the product is maintained and additional features and support services may be added to gain customer trust. New distribution channels are added for customer reach, most of the time customer is willing to buy the product but due to unavailability he or she might go for competitors‟ products. Aggressive promotional strategies are required to position the brand in the mind of customers and let them feel your product presence everywhere.

Maturity In this stage product sales reach to the saturation level where growth is slow down due to competitor‟s products presence in the market. Distribution and promotion is carried in the same way or even spread more to gain market share. Number of unit produce increase reduces the cost and benefit the customers in the form of price cut. Competitors offer similar products in this case organization must adopt promotional strategies to differentiate its products from competitors. Every organization wishes that there products remains in maturity stage for the long time to generate high revenues and profits. Decline This is the last and critical stage for organization to take critical decision. Competition increase to great extent in this phase result in rapid downward slope graph of sales. Organization might take decision to drop out this product or try to stick with the product and hope for some better results. In this stage organization reduce price, offer discounts and buy one get one sort of offers. Looking for other segments can extend the life of the product like Johnson baby lotion is used as a body moisturizer. Product Life Cycle of Appy Fizz 1. Introduction: One hot day Appy Fizz walks out of the refrigerator into the heart of millions of young people as a chilled out college going apple drink. The cool drink targeted the youth and everything he said was heard and followed. 2. Growth: Leveraging the distribution channel of Parle, Appy Fizz became available in every nook and corner of the country. It managed to become the Top of the mind recall in the apple drink sector. Slowly, competitors of Appy Fizz such as Coca Cola‟s Fanta Apple and Dabur‟s Bursst Fizz. Presently, Appy is at the end of the growth stage. 3. Maturity: Owing to the increasing competition in the market, Appy Fizz‟s sales are expected to saturate in a few years. 4. Decline: This will happen when the sales follow a downward slope.

Advertising/Promotion/Communication

8 New Product Development

After the cool dude Appy Fizz shook the Indian market with its awesomeness it was time for some new entrants. Parle Agro introduced three main products in the beverage market.

1. SAINT APPLE JUICE Parle Agro, a leader and innovator in the food and beverage category, came up with Saint Apple Juice, India's first 100% juice made purely from green apples. According to the company, Saint Apple Juice is made from a single variety of the famous Granny Smith apples. The juice from this unexplored fruit will offer consumers a taste that is unique only to green apples, i.e. delicious, vibrant and crisp. In keeping with the brand promise of a pure and wholesome experience, Saint Apple Juice is claimed to be 100% pure juice with no added sugar, colour or preservatives, said a source from the company. Saint Apple Juice comes with the natural benefits of green apples. Compared to other varieties of apples, Green Apples are richer in Vitamin C and are high on fibre content. They are an excellent source of potassium and antioxidants. The concentrate for Saint Apple Juice is made from carefully selected green apples from the best orchards in Austria and imported to India. The product development has been worked upon in Parle Agro's R&D lab in Mumbai. Kavita Joshi, Head of R&D, Parle Agro, said, "Compared to other juice brands, Saint Juice comes with an 8 months shelf life as opposed to the regular 6 months. The juice is manufactured with state of the art aseptic technology which helps retain a consistent taste throughout the shelf life." Saint Juice is being manufactured out of Parle Agro's Hyderabad plant, which has high capacity lines for manufacturing of one litre Tetra Pak and economy of scale to support the new product. Saint Apple Juice packs are pristine white and uncluttered, featuring stunning shots of real green apples stacked unconventionally on top of each other. The unique and distinct packaging lends an international feel to the product. Available in 1 litre and 200 ml SKU's, the packs are priced at Rs 80 and Rs 15 respectively. Saint Apple will be available across India with a special focus on metros, mini-metros and the top three cities of every state. Nadia Chauhan, Joint Managing Director and CMO, Parle Agro, said, "With rising consumer acceptance of health based foods and beverages, the 100% juice category is seeing rapid growth. The launch of Saint Apple is a strategic step that will help us drive Saint in the 100% juice category further. The apple variant is the largest contributor in the juice category and we look forward to refreshing consumers with the new Saint Apple Juice."

2. LMN Parle Agro has rolled out a new fruit-based lemon drink, LMN in the non-carbonated segment. The new brand – LMN is a natural lemon juice drink and the only brand in India with a taste closest to home-made, fresh lime water, also known as nimbu pani. With no artificial flavours and real lemon juice, LMN will provide consumers a healthy, refreshing drink with the goodness of vitamin C. Every summer, the Indian beverage market has seen cola majors battle it out. This summer, the launch of LMN will see the cola wars taking a back seat and the battle spilling over to the non-cola segment, to be more precise in the nimbu paani category. LMN takes a refreshingly fresh take on lemon. With a catchy tagline – “The Emergency Lemon Refresher”, LMN aims to strike a chord with youth and adults alike. In today‟s times of fast food and speed dating, the name LMN is derived from the SMS version of the word lemon. Currently nimbu pani is consumed in vendor stalls by the roadside or at home. While the roadside nimbu pani has hygiene issues, achieving a consistent taste in home-made nimbu pani is a task. LMN will target both these segments of consumers to turn them into branded consumers of nimbu pani. Besides this LMN will also target an emerging segment of consumers who are simply looking for a healthy, refreshing beverage. Packaged nimbu pani will have tremendous growth potential, higher than other packaged drinks in the out-of-home / on-the-go consumption segment, mainly because of a major shift in consumer behavior. Today, the beverage consumer is looking for hygiene, convenience, refreshing taste, affordability and year around availability. With a familiar tasting, healthy, thirst quencher like nimbu paani available as a branded offering, Parle Agro is confident about LMN doing well in the market. LMN is priced at affordable price points and could deliver huge volumes for Parle Agro which aims to touch a turnover of Rs. 3000-3500 Crore by 2011 purely through organic growth. LMN will be available in 110ml Tetra, 200ml Tetra and 500ml PET priced at Rs.5, Rs.10 and Rs.23 respectively. The branding on the pack of LMN is bold and stark and will make consumers relate to lemons instantly. The striking green and yellow colour makes the pack noticeable and increases its shelf appeal. In the PET offering, the unique bottle design of LMN makes it stand apart from the rest. LMN‟s launch was supported by a 360 degree marketing campaign comprising of a TVC, print advertising; point of purchase promotions and BTL activities. The media campaign will kick off by mid-March. A ready-to-drink product like LMN will shake up the Rs. 1500 Crores non-carbonated beverages market, comprising of juices, nectars and fruit drinks. Now consumers will have a choice to choose between a healthy, refreshing lemon drink versus a cola or even water to quench their thirst. The amount of vitamin C present in LMN is equal to two whole lemons! Lemons as such are rich in vitamin C (an anti-oxidant) and potassium, which have the ability to replenish lost essential body

fluids. A lemon drink rehydrates and is light on the stomach. It is a perfect refresher for any situation.

3. GRAPPO FIZZ Parle Agro has added yet another innovative beverage – „Grappo Fizz‟ to its existing portfolio. Grappo Fizz is the new sparkling grape drink in town. It is a first of its kind product with no close competition in the market. Grappo Fizz is trying to create another niche like its cousin. Grape is a neglected flavour in the Indian market. There is virtually no grape based drink in India except for some 100% fruit juice brands. Grappo is trying to fill in such a gap. The launch of Grappo Fizz was announced by Ms. Nadia Chauhan, Joint Managing Director and CMO, Parle Agro. Speaking on the launch, Nadia Chauhan stated – “Grappo Fizz will fill a gap in the market for a quality sparkling grape drink. We are credited at creating the sparkling fruit drinks category with Appy Fizz, which is a major hit with the youth. With this product extension; we aim to recreate the success with Grappo Fizz.” Like Appy Fizz, Grappo Fizz is not just about the brand in a bottle, but an entire brand persona woven around it. The bottle in fact communicates directly with consumers introducing Grappo Fizz as Appy Fizz‟s cousin who has returned from UK after he lost his job at a call center due to the on-going recession. The bottle lists down Grappo Fizz‟s CV in a witty, engaging manner and gives out details about Grappo Fizz. Grappo Fizz is targeted at the youth who are constantly looking for new options. It is purple-red in colour and comes in a premium PET pack shaped like a champagne bottle. The colour of the drink adds to the fun quotient of Grappo Fizz and makes it the perfect party drink. Parle Agro plans to tap into this segment through a series of television commercials, point of purchase promotions and BTL activities. The company also has major sampling plans for Grappo Fizz through mobile vans in colleges and other youth hangout joints apart from modern trade and retail outlets. Grappo Fizz will also share Appy Fizz‟s unique interactive pad dedicated to their friends and fans. Known for its whacky commercials and unique sense of humour, in the forthcoming TVC‟s, Grappo Fizz is introduced as Appy Fizz‟s cousin from London. The TVC will weave an entire brand persona around Grappo Fizz who is introduced as a “youthful rapper”. While it will highlight the launch of Grappo Fizz, it will also dramatize the differences between Appy Fizz and Grappo Fizz. Fans of Appy Fizz now have two cool drinks to hang out with. Grappo Fizz is available in three SKU‟s of 300ml, 500ml and 1 litre PET priced at Rs. 20, Rs. 27 and Rs. 48 respectively. Creativeland Asia is the creative agency behind the conceptualization of the ads while MFX Malaysia is the animation partner. OMD India will handle the media duties of Grappo Fizz.