Final Project Report on Potential of Vending Machines

GODREJ & BOYCE MFG. CO. LTD.

Project on Potential of Tea/Coffee Vending Machines Vipan Kumar 6/28/2010

This report provides survey results from respondents regarding the vending machines. Specifically, this research identifies the various things related to vending machines like market share analysis, satisfaction level of the customers and their preference for the vending machines

Acknowledgement This report incorporates the contribution of many people and without their support this work would not have come in completion. So I would like to extend my immense indebtness to all of them who have guided and motivated me throughout my project. I sincerely thank to all of them for their valuable contribution without which this project report would have not reached its goals.

I am indeed grateful to Mr. Lok Pati Mishra, for his valuable support & guidance throughout the research project. I would also like to thank Mr.Vikram Walia who gave me this opportunity to undertake the training in Godrej’s Prima department.

Last, but not the least, I would like to express my faith in the Almighty who has given me strength at every phase of life to stand and excel.

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Table of contents

Introduction

5

Executive summary

6

Objective

6

SWOT Analysis

11

Methodology

12

Questionnaire

13

Findings and Analysis

14

Recommendations/Suggestions

19

Limitations of the Project

21

Conclusion

22

Bibliography

23

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Project Topic “Potential of Tea/coffee Vending Machines in Chandigarh, Mohali & IT Park Region” Submitted By: Vipan Kumar IGSM Greater Noida 1/5/2010 – 30/6/2010 Contact No. 09654739396 4

A STUDY ON THE POTENTIAL OF VENDING MACHINES AT GODREJ & BOYCE MANUFACTURING CO. LIMITED

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Introduction Godrej Group is one of the largest conglomerates based in Mumbai, India, involved in various industries that include appliances, precision equipment, machine tools, furniture, healthcare, interior solutions, office equipment, food-processing, security, materials handling and industrial storage solutions, construction and information technology. Its products include security Systems and Safes, Typewriters and Word processors, Rocket Launchers, Refrigerators and Furniture, Outsourcing Services, Machine Tools and Process Equipment, Cosmetics and Detergents, Engineering Workstations, Medical Diagnostics and Aerospace Equipment, Edible Oils and Chemical, Mosquito Repellents, Car perfumes, Chicken and Agri-products, Material Handling Equipments Like FORKLIFT Trucks, Stackers, Tyre handlers, Sweeping machines, access equipments etc. The Group is headed by Mr. Adi Godrej & Mr. Jamshyd Godrej. Traditionally, Vikhroli, a suburb to the Northeast of Mumbai has been Godrej's manufacturing base, but increasingly the group have moved significant production facilities away from Mumbai. The Godrej group also owns vast land in Vikhroli, occupying 3500 acres (14 sq km) of land on both sides of the Vikhroli section of the LBS marg. That makes the Godrej group the biggest private land owner in Mumbai by far . Such vast land can, in theory, be used to create at least 1500 acres of residential floor space, which, at very modest rates (Rs.10000/sq ft), can be sold for USD 16 billion . Thus, the Godrej group is sitting on an invisible cash pile that is envy of other Indian conglomerates.

Godrej, with a reputation for quality and trust built over a period of 100 years has set new standards in the world of vending machines with its innovative designs and passion for quality. Godrej Prima vending machines are designed to give the most reliable vending experience and aim at providing comfort and enhanced efficiency by maintaining a true hygienic environment. The varieties available in their newly launched Vending machines are: Tea, Coffee, Espresso, Cappuccino, Simple Coffee, Mocha, Hot Chocolate, Tomato soup.

Vending Machine: A machine that dispenses small articles such as food, drinks, or cigarettes when a Coin, bill, or token is inserted.

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Executive Summary

This report provides survey results from 50 respondents regarding the vending machines. Specifically, this research identifies the various things related to vending machines like market share analysis, satisfaction level of the customers and their preference for the vending machines The results indicate that companies post recession, are more cost conscious than before. It was also found that companies prefer vending machines rather than hand made Tea/coffee. Results also indicate the preference of the customers towards the various flavours like Ginger tea, Cardamom tea, Masala Tea, Cappuccino, Hot Chocolate, Espresso, Simple Coffee, Tomato Soup, Vegetable Soup etc.From here we can know our which brands are more liked by the customers This report also contains the information about how the companies rate the taste of their present vending machine

Objective 

To find out the potential of tea/coffee Vending Machines.



To find out the market share of various players in the industry.



To find whether companies are cost conscious.



To know the satisfaction level of the customers from their present vendor.

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Godrej Vending Machines It Offers: TEA, COFFEE, LEMON TEA, CAPPUCCINO, WHITENER, TOMATO SOUP, TEA W/O SUGAR (TEA BAG), CLASSIC COFFEE

Two canister vending Machine (2 CVM)

Dimensions

Height – 642 mm Width – 230 mm Depth – 420 mm

Weight

16 KG

Power Supply

230 V /50 Hz /15 A

Beverage Varient

2 Options Settable (Tea / Coffee)

Option of 2 ingredients options they give Staggered dispensing option for tea bag Dispensing rate - 5 cups/min (90 ml each) Water source - on line / bubble top on m/c

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Four Canister Vending Machine

Dimensions

Height – 632 mm Width – 300 mm Depth – 473 mm

Weight

19.4 KG

Power Supply

230 V /50 Hz /15 A

Beverage Varient

8 Options Settable (Tea / Coffee)

Option of 4 ingredients options they give Staggered dispensing option for tea bag Dispensing rate - 5 cups/min (90 ml each) Water source - on line / bubble top on m/c /Pump

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Data Sheet The data sheet below is the database of the companies where I personally visited .It contains the name of the company, contact person, Contact no., no. of persons in the company, current vending m/c they are using & the number of cups

S.No.

Account's name

Contact person

Contact No.

No. of persons

Current M/C

No.of Cups

1

Hindustan Times

Mr. Gautam

9888340671

250

Ultimate

2

PTC News

M. Kiti Singh

9878665524

35-40

No M/C

750 50

3

Wonder Systems

Kulvinder singh

9814012597

50

No M/C

110

CCD

1110

4

Connect

Vikas Bhandari

9877012630

500

5

Spray House

Rajenda Kumar

0172-3029860

45

6

Tynor orthotics

Rohit Shama

9216908121

70

Lipton

170

7

Vodafone

Anil Kumar

9815679844

600

Lipton

1700

8

Competent

Paan Singh

9876079844

300

Ultimate

600

9

Softage

Rajesh Kumar

9888030013

56

Ultimate

150

10

Net Solutions

Pawan Kochar

9874657373

37

Nescafe

100

100

11

Aakash Institute

Shilpa

0172-4333800

15

No M/C

50

12

Altruist Technologies

Sunil Sandeyar

9814178787

109

Lipton

300

13

Spanco

Pardeep Kumar

9653227384

15

Lipton

40

14

More

Parmod kothari

0172-6620006

25

Nescafe

100

15

Next Gen venturi

Aman Bir

9988736086

35

No M/C

75

16

Altas cospo

Lakshmi Narayan

0172-39349222

50

No M/C

125

17

Heron Health

Manohar singh

0172-4690100

50

Sindhi

160

18

Hyundai

Harpreet Singh

0172-6605000

30

Sipra

60

19

Ericsson

Sukhdev Bhayana

0172-4603100

400

Lipton

900

20

Hero Mindmine

Ramanpreet Singh

9855555998

21

Infosys Technologies

Manmohan singh

22

Gold Finch Mobile sol.

Miss Gunjan

23

Infomatrix software (P) Ltd.

SS Sodhi

9872947778

24

Global Voice

Ashish Nagrath

25

IIFT

Shivam Gupta

26

Rimwea Career foum Ltd.

Namrata

Ultimate

180

1000

50

Lipton

4000

25

No M/C

100

15

Sindhi

35

9815411990

10

No M/C

30

9888999178

9

No M/C

30

0172-5049245

17

No M/C

50

0172-4619191

20

No M/C

75

20

Nescafe

60

27

Great West Alliace

28

Weat Highlande (P) Ltd.

Sunny Rampaul

29

Visa Pro Consultants

Ashutosh Arora

0172-4003739

10

No M/C

30

30

Sahara India Paivar

Narendra Sharma

0172-2645380

10

No M/C

45

31

Reliance Capital Ltd.

Sukhdev Singh

20

Nescafe

60

32

Srei PNB Paidas

Ambar Supta

0172-3017201

12

No M/C

50

33

Amtek Energy Power (P) Ltd

Pallavi

0172-2605899

50-60

Nescafe

160

34

Sushil Fianance Services

Sucheta

0172-4202111

10

No M/C

20

35

New Horizon

Arun Sharma

12

No M/C

29

10

9915999633

9855225332

9464424702

36

Austrich

Geet deep singh

9317510082

20

No M/C

40

37

Hastings Sahsi Buttar

Ashish Gaur

38

Morph Academy

Ajay Sharma

0172-5018004

9417726869

10

No M/C

34

18

No M/C

39

Angel Matrix

Neha

0172-6535111

40

20

No M/C

50

40

Reliance comm. (P) Ltd

Manpreet Singh

41

VLCC Institute

Gargi Kapoor

9317572200

50

Nescafe

200

9317006823

10

No M/C

42

Alpha IT world

Deepak Anmol

60

0172-3018001

20

No M/C

43

Kuoni Academy

Seema

45

0172-4347110

10

No M/C

34

44

ESM India

Rahul Chauhan

45

Antares

Baljit Singh

0172-3291305

12

No M/C

35

10

No M/C

46

Competent Synergies Ltd.

Raj Kumar

30

0172-5002888

15

Ultimate

34

47

SLR Infotech

Harminder Chawla

48

Netmax Technologies

Navdeep Mangal

1072-2615059

30

No M/C

65

30

No M/C

49

Firebox Animation Studio

60

16

No M/C

50

9023492466

9888070008 0172-4607660

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“SWOT Analysis” Strengths           

High quality and safe food products at affordable prices. Strong and well differentiated brands with leading market shares. Strong equity with consumers as a Company with high quality brands. Ongoing product innovation and renovation, to convert consumer insights. Well diversified product portfolio. Efficient supply chain. Customized solutions. Branded Products. Distribution structure that allows wide reach and coverage in the target markets. Hygienic & safe solutions. Integrated and advanced Information Systems.

Weakness  

Complex supply chain configuration. Ability to pass through cost increases in price point Stock Keeping Units.

Opportunities     

Potential for expansion in the smaller towns and other geographies. Development of modern retail formats. Potential for growth through increased penetration. Growing trend for `Out of Home' consumption. Growing per capita income.

Threat   

Competitive environment with diverse players. People attraction and retention. Rising prices of commodities and fuels.

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Research Methodology A very semantic methodology is proposed for the project which shall cover the aspects of primary and secondary data analysis. The research work being done here is exploratory in nature. The key features of the methodology are:Primary Data Sources: One-to one interaction with 50 people is sought to get their purview on the various question being asked to them. Secondary Data Sources: To keep pace with the existing manta I seek to consult various existing data also in the related areas so that a comprehensive study is formulated. The sources to be used include books, journals, researches, internet and even academicians in the related areas. The required information about Godrej will be taken from their website so that accurate information will be gathered which helps in strengthening of the project.

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Vending Godrej provides direct vending solutions to deliver quality products & services. In this regard your valuable information & time is required to help us provide you better vending solution. Kindly help us to fill this form.

1. 2. 3. 4.

5.

6. 7. 8.

 Company (Name & Address)  Contact person  Designation  Phone / Mobile No.  E-mail Address Total no. of employees / Sitting staff do you have………. How many vending m/c do you have………., for how long you are using it……. Is the vending m/c rental or purchased………, If rental, what is the rent per month….. What is the average consumption of beverages in your office Tea Coffee Soup Others Flavours you use (Tick)Tea Coffee Soups  Plain  Cappuccino  Tomato  Ginger  Hot Chocolate  Vegetable  Cardamom  Espresso  Others  Masala  Simple How Tea & Coffee are served (Tick) On Table Self service Both No. of pantry boys do you have….. How do you rate taste & quality of your present tea/coffee/soup. Please tick Just OK Good Very good Fantastic Tea Coffee Soup

9. Who is your present vendor/dealer? …….. 10. Are you satisfied with your dealer’s services  Yes  No If no kindly specify the reason……………

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Composition of 2CVM & 4 CVM vending machines prevailing in the market

As evident from the graph drawn above, 4 CVM machines occupy the major pie. This also shows that companies just not offer only tea & coffee but other flavours also.

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“Tea / Coffee Served to the employees”

We can see from this chart that majority of the companies are serving the tea/coffee to their employees on the table. This thing concludes that most of the companies are cost conscious & provides tea/coffee 2-3 times a day. After that they charge a price for it.

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“Market Share Analysis of Vending Machine”

From this chart we can say that Nescafe is still the market leader in vending solutions followed by HUL’s Lipton. Godrej’s market share is quite less as compared to Nescafe & Lipton, the reason can be that Godrej has only recently entered in Vending Business, but it is growing at a fast rate. The share of others like Tata, Georgia & other local brands like Ultimate, Sipra, and Sindhi etc constitute 22% of the market share.

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“Level of Satisfaction with Dealer’s services”

Though quite a good number of customers are satisfied with the services of their present vendor but still there are customers who are not satisfied with the service. So we should focus on these customers & strive to give them best services so as to make them our loyal customers.

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“Feedback from the Market”

As we can see from the graph that still large share of market for vending M/C’s is untapped. 50% of the corporates surveyed are interested in installing the vending m/c in their respective premises. So the future is bright for the vending business.

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Recommendations / Suggestions Godrej have competition in coffee and tea, with Nestle, HUL,Georgia, Cafe Coffee Day. Tata is another player which has recently entered this Vending Business. There will of course be a number of players entering this segment soon. But the key factor really is technology and the service mechanism. What we offer our clients is a service solution where we give them a machine and also maintain it. The machines must be programmed to provide data that can be very critical for the companies we deal with as the machine can tell us which product is moving faster and what the consumption pattern is like. So we are in that sense providing comprehensive solutions to our clients. “In order to have a loyal customer base we have to make our brands relevant to our consumers in their lives. Where, when, how, with whom they drink – all of these aspects matter. We should communicate our brands in the right way and make our products available at an arm’s reach. The challenge facing the tea and coffee industry is how we make them a relevant beverage for the rapidly going-out-of-home segment. Tea and coffee as a beverage continues to dominate the in-home consumption, with a penetration of nearly 90 per cent. However, due to lifestyle changes more and more people are spending time out of home and is not exactly seen as a beverage on the move. This is the main area that we should address by developing both superior formats and value. In India, 90 per cent of all hot beverages are consumed at home. Out-of-home consumption in India is very low, which means there is a lot of potential for this market to grow. Godrej, thus, should intend to make all efforts to encourage out-of-home-consumption by offering good quality tea and coffee at affordable prices. To increase this out-of-home-consumption of tea and coffee the company should have plans up its sleeve, which would include 'customizing' tea and making it acceptable to all regions alike. Hence, for North Indians it should offer masala chai with lots of elaichi and milk, while Mumbaiites may be able to even get cutting chai (a product available in the city alone) comprising a small amount, about two sips, of tea. If people in eastern India like flavoured tea, less milk and light tea leaves, Godrej can customize it to match their tastes. Similarly, for cosmopolitan cities like Mumbai and New Delhi, Hul should plan to install single tea-vending machines, which would offer varieties such as masala, cardamom and so on. As a growth strategy, Godrej should plan to populate smaller towns with his vending machines. Speaking about the market dynamics of the different segments, "The price per cup (Rs 3-4) is not a major issue at public places and hotel installations. The daily volume is also high in these places." 20

The most critical aspect is the after sales service as vending machines operate 24 hours. "In the case of hotels the machines have to be up and running 24X7 and the premix delivery is also crucial. The real challenge is catering to the hotels in small towns. Reaching the installations in small towns fast is a challenge, and keeping it running 24X7 is a challenge, and thus Godrej must meets this challenge with its nationwide service network and also by providing substitute machines in case of breakdown. Another important thing which I think can really work in favour of Godrej vending is that the beverage circuit parts are made up of food grade material.Godrej is the first one in the industry which is providing food grade material in its machines. So Godrej should focus more on this feature for selling vending machines These are some of the recommendations which I think would really make a positive mark on the current scenario of the Vending machine business prevailing in the Indian Economy.

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Limitations of the Project The main limitations of the study are:      

The numbers of respondents are limited. As the sample size is less so the responses can be biased. Results may vary from person to person as perception of each individual is different from one another. Sometimes information provided by respondents may be unavailable due to personal problems. Information provided by respondents may be inaccurate. The research had to be completed within a small span of time. This has limited the researcher from choosing a satisfactory number of samples.

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Learning The business is confident of growing its Tea & Coffee business through innovation coupled with an aggressive marketing and rural distribution drive.Out-of-home has been identified as an important channel to drive growth. The current initiatives have helped to establish a strong presence in this segment. Distribution width has been increased with the coverage of Hot Tea Shops and an increased number of vending machines. The domestic coffee business achieved excellent growth in volumes and profits. Expresso, an innovative coffee pre- mix, which delivers a creamy, frothy coffee cup, has also been launched. In order to strengthen its share in the premium segment of the roasted and ground coffee market, a new product, Hot Chocolate, was launched. This product contains 90% premium coffee and 10% chicory, and delivers a superior cup. The pace of innovation was maintained in distribution- related cold chain activity. This resulted in substantial reduction in supply chain costs. Mobile vending continues to receive meticulous attention as it will provide the impetus for further growth in the future. The Business will continue to focus on accelerated growth of the impulse segment, through more focused brands and deliver affordable products through appropriate innovation. This will provide the platform for a stronger performance in the years ahead.

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Bibliography

Books Marketing Management by Phillip Kotler

Websites www.google.co.in www.godrej.com www.scribd.com www.managementparadise.com

Magazines Business World

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