Sales and Distribution Tropicana and Real Juice

 

INTERNATIONAL INTERNAT IONAL INSTITUTE OF PLANNING & MANAGEMENT, NEW DELHI

SALES MANAGEMENT

COMPARATIVE SALES AND DISTRIBUTION STRATEGY FOR TROPICANA

Submitted by

NAME BATCH

SUHDEEP CHEEMA FW/2010-12

SECTION

FF-5

PHONE NO.

9999915315

 

Sales Management

CONTENTS Abstract

1

Introduction

2

Industry Profile

4

Major Players

13

Tropicana

20

Distribution

27

Promotion

29

Conclusion

31

Recommendations

33

Bibliography

34

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ABSTRACT  The study taken up by the comp comparativ arative e analysis of Corpo Corporate rate sales and distribution strategy for Tropicana in India. Salesmanship is an art of demonstrating the merits of the goods and the service ser ice of an organ aniz izat atio ion n to mak ake e a permanent custo stomer. Salesmanship is the art of understanding, appreciating and influencing other people for mutual benefit. Salesmanship is an effort to convince people peo ple to buy the goo goods ds wit with h ben benefi efitt to the themse mselve lves s and reaso reasonabl nable e profit to the seller.  Thus in totalit totality y I feel that these compani companies es should review its sales and distribution policy with much emphasis on making people aware about the product and patching up the lacunae of distribution channel.  Therefore,  There fore, the com company pany wants to analyz analyze e the prese present nt mark market et share of   Tropicana  Tropic ana and analyz analyze e the reaso reason n for this parti particular cular mar market ket share of  itself and the competitor, so that, it can plan its future strategies. It also wants to knows about the key reasons that prompt the customer to make a purchase of packed fruit f ruit juice.

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INTRODUCTION With attitude shifting towards health, hygiene and all things natural, the fresh fruit juice market has suddenly gained ground. The challenge now lies in making these juices part of daily household consumption. Brand loya loyalt lty y is di dimi mini nish shin ing g as prod produc uctt di diffe ffere rent ntiat iatio ion n is mu mute ted. d. It It’s ’s th the e com co mplet plete e pa pack ckag age e that that wo woul uld d cl clin inch ch the the de deal al fo forr the the re resp spec ecti tive ve companies. A continuous stream of new corporate entrants, the sudden health hea lth-co -consc nsciou ious, s, nat natural ural fed Indi Indian an con consum sumers ers are all con contri tributi buting ng towards bringing the juice industry to the fore. Much is happening and more is due to happen in course of time. Any attempt to ignore this industry and the activity involving it would be quite futile.  This proje project, ct, ther therefore efore,, attem attempts pts to delv delve e into the many facet facets s of this industry – the industry at large, its major players and their respective marketing strategies (remember, there is a struggle for existence and the survival of the fittest: Darwin Theory), the analysis of the same and of course, the consumers’ opinions. The project does not claim to be a research product on the subject chosen, but its does pretend a humble attempt at analysing the marketing environment as also the marketing mix for the packed fresh juices industry.

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INDUSTRY PROFILE Juice drinks (upto 24% juices) will remain the largest market with trade volume of  868.9 million litres litres by 2013, follo followed wed by nectars (24-99% juices) at 184.5 million million litres and and 100% juices at 46.2 million litres. In terms of market shares, the honours are split, although not so evenly. Pepsi’s Tropicana dominate the 100%  juice

category

with

market

shares

of

48.3%

and

42.8%

respectively

(Euromonitor).In terms of volume, processed food accounts for just 2% of 

Clothing and footwear  10%

Others 13%

Food & beverage s 54%

Rent, fuel & power  10% Transport & Communication 13%

the total output. Today time pressured unitary families ensure that the food-processing sector grows at a phenomenal rate. The demand is ever increasing and the supply is constantly evolving new market players. In fact, the research study indicates that most of the money flowing out of  an individual’s purse is spent on food and beverages.

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BREAK-UP OF PER CAPITA SPEND Processed food being tokened as convenient and hygienic almost-ready meals offer a lucrative market especially in the much growing and talked about beverages sector. Beverages constitute all of cold drinks like Coke & Pepsi, hot beverages like tea, coffee and milkfood drinks, squashes and syrups, mineral water, tetrapack drinks. Share of each being:

Softdrink concentrates Tetrapacks 1% 6% Cold drinks 49% Hot beverages 40% Mineral water  2%

Squashes & Squashes Syrups 2%

Hot beverages include tea, coffee and milkfood drinks Even Ev en as th the e tw two o so soft ft dr drin inks ks stalw stalwar arts ts – Co Coca ca-C -Col ola a an and d Pe Peps psii – ar are e slugging it out, Rs. 400 crores tetrapack market is abuzz with activity. Frooti, the pioneer in the tetrapack market of India began the trend for fruit drinks. It continues to be the leader with Jumpin, Real and Onjus following it.

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Rest 10% Godrej Foods 20%

Parle Agro 70%

ParleAgro includes Frooti, Appy, Pingo Godrej Foods constitutes Jumpin Rest include Treetop, Volfruit, Onjus, Real etc.

 Tetrapacks  Tetrap acks which acco account unt for 10% of the total Rs. 400 4000 0 crore crores s Drink market have been growing at the rate of 20%. It is divided into three segm se gmen ents ts vi viz., z., Fr Frui uitt Dr Drin inks, ks, Jui Juice ces s and Ne Nect ctar ars. s. Ac Acco cord rding ing to the the stipulations by the Government FPO Act, all products containing fruit content less than 20% of total product should be branded as ‘fruit drink’; in the case of oranges, the stipulation is upto 40% of the total content to qualify as a ‘fruit drink’. Fruit content of more than 20% but less than 85% qualifies for the tag of ‘nectar’; in the case of oranges it has to be more than 40% and less than 85%. And finally, to qualify for the tag of 

Others 13%

Orange Mango 59%

28%

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‘fruit juice’, the fruit content has to be more than 85%. Going by this qualification, the bulk of the products in the market fall in the ‘fruit drink’ category, with a few in the ‘nectar’ range and still fewer in the ‘fruit juice’ range. Apart from Parle Agro’s Frooti, Appy, Pingo, Godrej Food’s Jumpin, Lipton India’s Treetop; popular brands such as the Rasna range and Kissan squashes fall in the fruit drink category. Pepsi’s Slice (mango), canned juice segment comprising of brands like NAFED, Noga, Midland, Mohan Meakin’s God Coin and Druk qualify as fruit nectars. However, ETLs Onjus (34% market share) and Dabur India’s Real quality to be the major co conte ntende nders rs in the fruit jui juice ce ma marke rket. t. Oth Others ers includ include e Pineapple, Apple, Litchi, Guava & Mixed etc. Fruit juices are not really an integral part of the typical Indian’s diet. This thought curtailed a major opportunity in the beverages sector till about a couple of years ago. New thinking dawned and sudde suddenly nly a fresh le lease ase of life was granted to the beve beverages rages market, thanks to the fruit juice juices. s. Hence the project concentrates on fruit concentrates…

Hard War of Soft Drinks With the change in the lifestyle of people and modernization getting in vogu vo gue, e, In Indi dian an marke arkett pl plac ace e ha has s be bec cam ame e a ba batt ttle lefi fiel eld d fo forr va vari riou ous s beverage brands. As the weather now is hot and humid, the war seems to be more intense among soft drinks.

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For the last one year or so, Pepsi has been very aggressive. Pepsi’s bottling company here installed pet bottle plant early February 2000 investing one hundred million rupees for it and introduced some of its brands in 1.5 liter and 500 ml pet bottles. Then it introduced 200 ml Phuchhe Pepsi at the right time and the product is doing well in the market. As a result, its earlier market share of 18 percent has gone up by another 4 percentage points to some 22%. Phuchhe Pepsi has also helped in expansion of the market volume of soft drinks.  Till few mon months ths ago, ‘Froot ‘Frooti’ i’ was enjoy enjoying ing the advant advantage age of being the only fruit drink in the market without any competitor. As a result of the new developments, companies are working hard to gain more market share, be it through advertising, merchandizing or consumer schemes. The fruit drink market in India is highly segmented quality-wise as well as market-wise. But general consumers are seen to regard them all as equal in quality. Claimed to be the only carbonated soft drink with fruit juice flavor in India, Tropicna has advantage over all other brands. Content-wise too these fruit drink brands have a lot of  differences. Most of them are mango-basedThese brands are synthetic drinks, dri nks, not rea reall jui juice ce as Re Real", al", says T.K. Gupta Gupta,, Ge Gener neral al Man Manage agerr of  Dabur .But most of the general consumers do not know or don’t care to know about the contents. They regard all these brands to be real fruit  juice..  juice  The fruit drink market has grown by almost 30% this year, according to estimates by the companies. The growth is also there for carbonated

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drinks as people, especially of the new generation, go for it. However,it is estimated that carbonated drinks market is growing slower - between 10 and 15 percent percent a year. Tropicana has become popular popular among school kids who otherwise used to have Frooti and would have gone for other fruit drinks as well. " In the race for catching a respectable market share of the growing soft drink market, there are imported soft drinks as well, which range from different fruit juices to canned cola. The fruit drinks are imported from as far away places as Philippines, USA, Singapore and  Thailand as. They are in Tetr Tetra a Packs, in cans, in pet bottl bottles, es, and in plastic jars. In taste they are in mango, orange, apple, tomato, mixed  juices  juice s and in many flavour flavours s containing nect nectar, ar, 15 percent to 40 percent fruit pulp or 100% natural juice. Though sales volume of imported juices has no record at all, estimation shows that about 20 MT of fruit juice (that includes imports in various packaging). That gives a market share of less than 1%. Sales of canned cola and tonic water are more difficult to estimate as these items are imported from many countries like China, Hong Ho ng Ko Kong ng,, Si Sing ngapo apore re etc. etc. RN RNAC AC an and d Ne Neco con n ai airr al also so im impo port rt th thes ese e products for their in-flight service. Pepsi could have expanded its market share, but the bottling company of Pepsi in India had frequent changes in ownership and management. Simil Sim ilar arly ly,, tryi trying ng to ta take ke al alll re respo spons nsib ibili ility ty for sal sales es an and d dist distri ribu buti tion on direct dir ectly ly and lac lackin king g eno enough ugh adv adver ertis tising ing and pro promo motio tional nal cam campaig paigns, ns, initially the company could not attract more consumers to its brands. Even some very successful promotional campaigns in past could not susta sus tain in th the e in incr crea ease sed d de dema mand nd be beca cause use of lim limit itati ation on in prod produc uctio tion n

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capacity. In recent times the company seems to be more serious. Its marketing has become more aggressive. But that is not going to be enou en ough gh as ye yet, t, si sinc nce e it its s ri riva vall is far stro strong nger er in many resp respec ects. ts. Fo Forr example, Pepsi’s installed bottling capacity here is only 2,250,000 cases per year and that was achieved only after the commissioning of the pet bottling line about six months ago. Of this capacity, the company has been able to sell only about 1,200,000 cases a year whereas Coke’s sales volume is estimated at over 4,300,000 cases a year. Similarly, Peps Pe psii has no pro produ duct ctio ion n fac facil ilit ity y in th the e te terai rai regi region on,, bu butt Co Coke ke do does es.. Beca Be caus use e of th this is the di dist stri ribu buti tion on co cost st of Pe Peps psii is high higher er,, an and d qu quic ick k response to increased demand in some market places is difficult. Still, Pepsi has chances of high growth provided it strengthens its distribution and sales and marketing team.Fruit drinks market is not yet mature enough as that of cola, as the estimated growth rates for these products indicate. Consumption of any product depends on the country’s overall economic condition and also on the habit of the consumers. In also have one on e mo more re adv advan anta tage ge ov over er co cola, la, as the the form former er ca can n use the the lo loca call lly y pr prod oduc uced ed frui fruits ts wh wher ere eas co cola las s are are mai ainl nly y co conc ncen entr trat ates es that that are are imported. While the opponents of consumerism may find strong logic again aga inst st co colas las,, th they ey may be su supp ppor orti tive ve of frui fruitt drin drinks. ks. Pe Perh rhap aps s it is because the industry is still not grown up enough to encourage sufficient fruit production on commercial basis.

MAJOR PLAYERS In India, the rising income levels have changed the consumption pattern of the rich as well as not so rich. At one level, the lower

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end of the middle class is busy emulating the eating habits of the rich by laying greater stress on nourishment and quality while at the other level, as choices increase, the upper end consumer is getting .  This, therefore, makes it imperative to give the Rs.2000 crore fruit juice industry a closer inspection. The natural juices at the roadside  juicewallahs coul uld d ne nev ver giv give cons nsum umer ers s the fu fulll sati sa tisf sfac acti tion on of as assu sure red d qu qual alit ity y an and d hy hygi gien ene. e. Th The e only only ot othe herr alternative was extracting juice pulp at home, which in itself is a cumbersome process. Thus, was identified the need and hence the market for Natural Fruit Juices. 

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PRICE The Facts: Prices in Rs. BRAND

 Tropicana  Tropic ana

FLAVOUR

QUANTITY   200ml

250ml

500ml

1ltr.

-

12

-

44

-

-

23

42

-

-

30

-

-

-

30

-

Pineapple

-

-

30

-

Apple

9

-

-

-

Mixed

-

-

30

-

 Tomato  Tomat o

-

-

25

-

Orange Orange (Sweetene d) Orange (Unsweete

Real

ned) Mango

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DISTRIBUTION The Facts: Tropicana is aimed at teenagers, young kids, wives, mothers and busy executives. For the sole purpose of in-house consumption, 1 litre packs were we re int introd roduce uced. d. As a co compa mpany ny pol policy icy,, dis distri tribut bution ion asp aspec ects ts is giv given en prece pre ceden dence ce ove overr pro promo motio tional nal one ones. s. As a res result ult the com compan pany y spe spends nds more ore

on stre streng ngth then enin ing g it its s di dist stri ribu buti tion on ne netw twor ork k ra rath ther er than than the the

promotional aspect. The management has spared no effort in spreading its distribution from roadside vendors, dhabawallahs dhabawallahs,, local grocery shops and to sup super er ma marke rkets. ts. Unl Unlike ike Tro Tropic picana, ana, Real is sparse sparsely ly availa available. ble. Positioned Tropicana as an up-market brands, it is available mostly in mid-up market outlets. The absence of small, convenient packs makes  Tropicana  Tropic ana less discrete in on-prem on-premises ises outlets like college canteens canteens and roadside stores. Surprisingly, the already existing distribution channels of Dabur India are not being utilised to reach the general masses. To make mak e mat matter ters s wo worse rse inin-tra transit nsit dam damage ages s to the pac packs ks dur during ing car carton ton handling earned the brand a bad name initially. Thus, distribtuion and logistics posed more of a problem than a solution to this brand.

The Findings: Surprisingly the sales haven’t risen exponentially. Not available makes one more desirable but not in case of a product. In today’s buyer’s market mar ket,, if one bra brand nd is not avai availab lable le the seco second nd

wo would uld conv conveni enien ently tly

take its place. Product differenciation and eventually brand loyalty is

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continuously diminishing in the competitive market of today. As a result servic ser vices es esp espec eciall ially y as tha thatt of dist distrib ributi ution on and log logist istics ics gain cru crucia ciall importance. Inspite of an early launch, Tropicana could not make its presence felt owing to slack distribution network. Apart from getting its lo logi gist stic ics s righ right, t, Re Real al wo woul uld d do well ell by no nott re rest stra rain inin ing g it itse self lf to the the premi pre mium um se segm gmen entt alo alone ne.. It ne need eds s to reac reach h the the po popu pular lar se segm gmen ent, t, because it is they who mark the substantial market.

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PROMOTION The Facts: Tropicana: ‘Squeeze to Please’ Onjus gives gives prim primary ary emp emphasis hasis to print med media ia as agianst the electr electronic onic one. The product, and not the company brand is highlighted. Positioned as a th thir irst st-qu -quen ench cher er,, inor inorde derr to cl clin inch ch grea greatg tger er ma mark rket et sh shar are e th the e company is trying to promote Onjus not just as a beverage but also as breakfast, meal compliment or a mix with vodka. The promotion never fails to underplay the fact that they are made of the finest Valencia oranges from America, posed as naturally rich in Vitamin C with no preser pre servat vative ives. s. The com compan pany y rec recent ently ly int introd roduce uced d a ‘six pac pack’ k’ car carton ton priced pri ced at Rs. 57, to comm communic unicate ate

it as tha thatt ideal for sma small ll fami familie lies s

and/or as a gift pack. Equipped with Rs. 1 crore advertising budget, the promotional material for Onjus is meant for the ‘label literate’. The packs come with tamper proof, hygienecally packed adjustable straws. When Wh en a co com mpa pany ny face faces s stif stifff co com mpe peti titi tion on from from the the othe other, r, it is bu butt impossible for the company to disregard promotion. Advertising seems a forelong marketing variable in the agenda of both Onjus, a fact admitted by the company. Especially on electronic media, the companies have fa fail ile ed to leav leave e a mar ark k on the the cons nsum ume ers. Whi hile le com ompa pari ring ng the promotional efforts it is evident that Onjus is busy projecting itself as young,, enthusias young enthusiastic, tic, fun-lo fun-loving ving prod product uct while it pose poses s a much sedate sedate,, pr prem emiu ium m im imag age e. Th The e pa pack ckag agin ing g in it itse self lf sp spe eak aks s a lo lott ab abou outt the the consumers being targetted by the respective companies. There being negligible difference in both brand’s advertising budgets, yet Onjus has

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made its presence felt as against Real. This is not simply due to the presence of physical product itself but also because of its promotional material, in the form of outdoors at every nook and corner point-of – purchase displays, thereby killing the impulse buy decisions.

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CONCLUSION Can a company company

who whose se busine business ss for decad decades es has bee been n spinnin spinning g yarn

create a successful successful brand out of a fruit juice overnight ? Y Yes, es, would say the patrons. After 13 years of staying lonely at the top would Tropicna be able to build a crowd crowd aroun around d Parle Agro Agro’s ’s Frooti. Wel Welll yes, and no. Froo Frooti ti is stil stilll un unch chal alle leng nged ed as a fr frui uitt dr drin ink. k.

Bu Butt wh what at Trop Tropic ican ana a

attempted was to create a market of its own - the market of fresh fruit  juices.  juice s.

This low volum volume, e, high growt growth h indus industry try sprang into exist existence ence

three thr ee yea years rs bac back k and ye yett the enorm enormous ous gro growt wth h pot potent ential ial it sho showe wed d duri du ring ng th this is tim time e has en enti tice ced d ma many ny ne new w en entr trant ants s - bo both th Indi Indian an and foreign players . Much has already been achieved and much is yet to be.  The marke markett is ever expa expanding nding ; just that what mar marketer keters s have been trying tryin g to sell earlie earlierr was oft often en per peripher ipheral al to the basic IIndian ndian diet. As a result,, these produ result products cts neve neverr got beyond the no novelt velty y sales leve level. l. What the Indian market Tropicana contributes as much as 85 per cent to the company's topline. It will continue to be an area of focus. It took seven years to make money on fruit juices, thanks to product innovation, expanding market and increased consumer preference for healthy foods. But even as the industry players are upbeat about growth prospects, there is an undercurrent of discomfiture, with talk of the new government thinking of levying eight per cent excise on food products including packaged fruit juice. So, while profit projections are unlikely to go co com mple pletely tely ha hay ywir ire e ju just st ye yet, t, the there might ight ha have ve to be so som me readju rea djustm stment ents s in the tim time e fram frame e wit within hin wh which ich the these se tar target gets s ma may y be achieved. 18

 

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If everything goes the way it should, by the year 2015 the juice industry would wou ld cont contrib ribute ute as muc much h if not

mo more re to the beve beverag rages es indu industr stry y as

aerated drinks today.

 A fresh fresh re respit spite e it woul would d be ...

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RECOMMENDATIONS  To promote promote the produc productt range good consi considerati deration on should be mad made e to wholesalers and retailers.  To maint maintain ain the profit marg margin in logist logistic ic mix should be adopte adopted d by the company  The price price c can an be b brought rought down by cu cutting tting tthe he m manufact anufacturing uring cost.  The distri distribution bution chann channel el should be wide widened ned and made more costeffective. More advertisements be placed on TV and Radio. In order to attract more attention of potential customers any celebrity can be endorsed. More flavour can be added to the product line. Some Som e sal sales es pro promo motio tional nal cam campai paigns gns may be und undert ertake aken n inv involv olving ing retailers and customers to push the product. More hoardings and OTC displays may be placed in order to increase awareness level. Pack may be made more attractive. Consistency of the quality is necessary. More retailers and consumer based schemes should be introduced and an d spe speci cial al em emph phasi asis s sh shou ould ld be gi give ven n ch chil ildr dren en ba base sed d sc sche heme mes, s, because children mainly consume the fruit juices. As a researcher, I observed that for making the distribution channel smooth transfer of goods, the contribution of middlemen is required.

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BIBLIOGRAPHY 

Still, Cundiff, Govoni, Sales Management – Decisions, Strategies and Cases,

Economic Times  The Strateg Strategist, ist, Bu Business siness Standa Standard rd Financial Express Business Line Handbook of Analysis and Quality Control A&M www.indiatelevision.com www.agencyfaqs.com www.domain-b.com

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