Professional Documents
Culture Documents
Group 9B
Group 9B Page 1
Vijay Khairnar (B09119)
COMPANY OVERVIEW
The UB Group was founded by a Scotsman, Thomas Leishman in 1857. The
Group took its initial lessons in manufacturing beer from South Indian based
British breweries. United Breweries made its initial impact by manufacturing
bulk beer for the British troops, which was transported in huge barrels or
"Hogsheads". At the age of 22, Vittal Mallya was elected as the company's
first Indian director in 1947. After a year, he replaced R G N Price as the
chairman of the company. Kingfisher, the Group's most visible and profitable
brand, made a modest entry in the sixties. With currently into business of
Spirits (United Spirits Ltd.), Wine, Beer (United breweries Ltd.), Engineering
(UB Engineering Limited), Fertilizers (Mangalore Chemicals and Fertilizers)
company has made its mark and presence in each sector it is in.
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MACRO-ENVIRONMENTAL ANALYSIS
Political Factors
The political forces affect the beer industry to a large extent. The rates of
the beer in various parts of the country are affected by the taxes and duties
applied by the Govt. The political forces also affect the pricing of the beer by
lowering the duties or deregulating the distribution channel. This leads to
lower margins for the distribution channel partners. But, as 75% of the
Indian market is covered by two players, there hasn’t been a reduction in
the margins of the manufacturers. The taxation policies also affect the
consumption patterns.
Economic Factors
India is home to nearly one-sixth of the global population and is one of the
most attractive consumer markets in the world today. The total worth of
Indian Beer Market is Rs 750 crore. This market is expected to expand by
39% by 2010. The beer consumption has been growing at a CAGR of 7%
over last nine years. India provides attractive profit margins due to the
consolidated nature of the industry. Various research studies have shown
that a rise in the income levels has a direct positive effect on beer
consumption. The National Council for Applied Economic Research (NCAER)
projects India's 'very rich', 'consuming' and 'climbers' classes to grow at a
CAGR of 15 per cent, 10 per cent and 2 per cent respectively. Thus, India
gives ample opportunities for the UB Group to grow.
Social Factors
A deep-seated traditional social aversion to alcohol consumption has been a
traditional feature of the Indian society. However, as urban consumers
become more exposed to western lifestyles, through overseas travel and the
media, their attitude towards alcohol is relaxing. Social habits are
undergoing a transformation as mixed drinks are becoming more popular.
The greatest evidence of this trend is the increase in beer consumption
among women. More and more women are consuming beer – the
penetration in metropolitan areas is almost twice as high as the penetration
in other large cities – implying that the greater tolerance towards alcohol
consumption in metropolitan areas facilitates the consumption of beer. With
increasing urbanisation, this acceptance is only going to rise. As a
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consequence of the high birth rates prevalent until the 1990s, a large
proportion of the Indian population is in the age group of 20-34 years. This
age group is the most appropriate target for beer marketers. This population
trend will give a further boost to the growth of beer consumption in India.
Technological
Beer industry is not technology specific. As the UB group is one of the oldest
players in the market, they have achieved economies of scale. Thus,
technological factor is not of great importance for the beer market.
SWOT ANALYSIS
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Due to increasing costs of raw material and decreasing cost of barley
suppliers, bargaining power of suppliers was high but by doing backward
integration, done by acquiring Maltex Malsters Ltd., and shifting their
production of beer on malt the company has achieved a hold on its raw
material and considerably reduced supplier strength and dependency.
Company has also entered into collaboration with Government of Punjab and
Haryana for supply of its raw material.
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PRODUCT PORTFOLIO ANALYSIS
BCG MATRIX
STAR
Stars are high-growth, high-share businesses. Very often, they need heavy
investment for financing their rapid growth. Eventually, their growth slows
down and they turn into cash cows.
• Tajmahal Beer - Taj Mahal Premium Lager beer is prepared with finest malt
made at United Brewery own malt house using premium quality barley. It
has a distinct aroma and unique taste. The demand of this beer is mainly in
abroad (Australia, France, and USA) as it is premium priced and has bitter
taste. The demand outside is very good and it accounts for good market
share in the exported beer in India.
• Kingfisher Strong - spectacular growth of 36% is seen in strong beer (against
a market growth of 16%) was witnessed. Kingfisher Strong has now
achieved the number one position in the strong beer segment.
CASH COW
Cash cows are low-growth and high-share businesses. Such established and
successful business lines require less investment to maintain their market
share. They generate a lot of surplus that a company can use to pay its bills,
or invest in other businesses.
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• Kingfisher Lager Beer - it has witnessed a market growth of 13% in
comparison to the lager beer industry growth of 9.4%.in the lager beer
segment, UBL is the market leader in all the 10 largest states of the Country.
UBL commands a market share of around 40% with 67% of the market share
in the lager beer segment.
QUESTION MARK
Question marks are low-share business units, in a high-growth market. They
require a lot of cash, for maintaining the market share. Any business has to
think between building a question mark into stars or whether they have to
be phased out
• London Pilsner - it has witnessed a market growth of more than 20% and
targeting a market share of 15%. (Indiantelevision.com)
• Kingfisher Draught - this beer has less water in comparison to other beer
type. It has good market growth as it is proving success in its 2nd year still
the market share is less. (thaiindian.com)
• Kingfisher Blue - this is launched around 8-9 months before to tap those
customer who wants less alcoholic beer in comparison to strong beer but
more than mild. It has around 6% alcohol content. Since it has launched
sometime before hence the market share occupied is less as strong beer
and lager beer segment is increasing very fast however market growth rate
main up.
DOG
Dogs are low-growth and low-share businesses. They may generate enough
surplus to maintain themselves, but do not hold out the promise to be a
large source of cash.
• Ub Ice Beer - this beer is launched for trendy people in 330ml can. It was
different from the traditional lager beer as it was made using a unique
refrigeration process which involves the formation of ice crystals which were
filtered out giving the brew a crisp, clear and strong taste. It didn’t get good
response as it has very low market growth instead people are drinking more
the lager and strong beer.
• Kalyani Black Label - one of the oldest brands launched in 1969. It has low
market share as it is only popular in east India and it assumed to be
economical. The market growth for this brand is not good as people are
shifting towards other beers such as London pilsner which is also economical
brand.
ANSOFF MATRIX
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MARKET RESEARCH ANALYSIS
Based upon the features mentioned, we asked the respondents about their
interest in buying MIST. 48% of the respondents said that they are
somewhat interested. 22% were found to be very interested in buying this
product, while 25% said that they are not sure. This interprets how our
marketing strategy should be. We are directing our strategy in such a way
so as to convert the somewhat interested people into interested ones and to
make the people who are not sure to try the product at least once.
➢ Demand determination:
To find out what would be the approximate demand of such kind of product
in the market, we asked people that how often they consume the products
which are somewhat similar to MIST.
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53% of the respondents said that they consume the products similar to MIST
approximately 2-3 times a week. Looking at this statistic we estimated the
approximate demand (considering the cities in which the product is going to
be launched) and evaluated the sales and profit margins. The details are
shown in the profitability analysis.
➢ Willingness to pay:
As we are going with the value based pricing, we surveyed that how
people perceive the comparatively high cost of a soft drink from kingfisher.
We asked people that given the price of MIST as Rs 24, how much they are
willing to pay. 41% of the respondents said that they perceive MIST as a
high value product looking at the associated brand name and features. They
are willing to pay 5-10% more for the product like MIST. This shows that we
have space to increase the price of the product and increase the expenses
on advertising accordingly.
If we see the attributes of Mist, i.e. adventure, energy, fun and the “Hat Ke”
attitude; it is very much in sync with the existing brand image of UB Group.
Mist being a soft drink, it is very necessary to ensure proper distribution of
the product. This is where UB Group can use its core competency of having a
strong distribution network and bank upon its reputation regarding the
stringent quality control measures it follows. Also if we look at the soft drink
market, the only direct competitor of Mist is Mountain Dew and the market
for soft drinks providing the set of benefits as Mist is in a growth stage. That
makes it a perfect moment to introduce a drink like Mist under the Kingfisher
brand name. Considering the sync between Mist attributes and Kingfisher’s
brand image, we can also use the events held by the UB Group like the
Group 9B Page 9
Derby, Kingfisher Calendar, IPL matches , functions like the Incredible India
Party held last year at Cannes and the TV channel NDTV Good Times to
increase awareness about Mist. It can make use of the cricket and Bollywood
stars already associated with Kingfisher brand to endorse the product and
help build a strong connect with its loyal customers. Added to that serving
Mist in the Kingfisher Airlines will be a great way of making future customers
try out the drink.
PRODUCT INTRODUCTION
Mist is a soft drink that is being launched by UB group under Kingfisher
brand. It is a citrus flavoured drink and unlike other soft drinks, it is more
carbonated and has high levels of caffeine.
MARKETING STRATEGY
SEGMENTATION
Demographic
Segmentation
a. 16-25 years
b. Teenagers
a. Urban
b. Semi-Urban
c. Rural
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Under this segmentation buyers are divided into
different groups on the basis of personality traits,
Psychographic lifestyle or values. For MIST, on the basis of
Segmentation behaviour, the following segments can be formed:
b. Health Conscious
c. Rebellious
TARGETING
Evaluating the above segments on the parameters like Measurable,
Substantial, Accessible, Differentiable and Actionable, the target segment
for MIST would be:
• Individuals (both genders) in age range 15-29 in urban areas (this is because
the promotional activities would be focused on urban areas only).
• Based on market research data, we decided to target people who embrace
excitement, adventure and fun.
Reasons for choosing this target segment are:
• Our market research showed us that there were primarily five different
target groups in the market. There was considerable presence of other soft
drinks in the other target groups.
• Also in urban areas there are very few individuals in the age group 15-29
years who have not heard of Kingfisher; hence this would be our target age
group. This segment in India is substantial and would be profitable.
• Kingfisher already has large distribution networks for selling its other
products in urban areas. Hence there would be little cost of adding
distribution channels.
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• It is also easier to involve people from the aforementioned age group in
various promotional activities and also they are easily accessible through
internet. So it would be easier reaching across to them.
POSITIONING
• Offer from the Kingfisher brand
• Adventure Seeking
• Thrill
Values • Different from competition
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Media • Extensive promotion schemes across different
Influence media (using teasers, events and web portals)
• Advertisement frequency
• Brand endorsement
Based on the above factors, our positioning of Mist vis-à-vis its main
competitor (Mountain Dew) and other similar lime and lemon flavoured
drinks (Coca cola was also included as a reference) has been quantitatively
depicted in the cobweb diagram below.
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MARKETING MIX
PRODUCT
PRICING
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Cost Based pricing
Cost Based pricing is integral to establish the lowest point of a new product's
price range. By accurately analyzing cost per unit and taking into account a
margin that corresponds to the lowest satisfactory return on investment,
companies can define a new product's floor price. If the market cannot
support this price, then the company must reconsider if the product is
feasible.
If we take the major cost components as manufacturing, advertising and
distribution we can come to a rough estimate of the variable cost of Mist.
This will not include the costs associated with machinery installation, R & D
of the product and other associated capital expenses. This shall be collected
through contribution per can.
Using estimates for the major variable cost components we take:
i. Advertising Cost per can – Rs. 8 – 10
ii. Manufacturing Cost per can – Rs. 4-5
iii. Administrative Costs and other overheads per can – Rs. 2-3
iv. Distribution Costs – estimated to be Rs. 1 per level
Therefore the total cost of producing one can comes out approximately to be
Rs. 17-19.
As shown by the market research, customers are willing to pay more for a
product like Mist. Moreover, considering the aspiration value of the product
and the parent company, we have decided to follow value based pricing.
PROMOTION
1. AWARENESS
Group 9B Page 15
Objective
To create awareness about Mist among its target population
Media Channels
TV: ESPN, Star Sports, Star plus, Sony
Print Media: Autocar, Sportstar, Adventure time, Hoardings
Promotion Strategy
A teaser campaign will be run on TV for creating awareness about the Mist.
The teaser campaign will be such that it will only give the features of the
Mist and clarify its positioning. This will be aired before 4-6 weeks of the
launch. The TV channels targeted will be sports channels, Star Plus, Sony
etc. The shows during which the advertisement will be aired will be likes of
“fear factor”, “Khatron ke Khiladi”, MTV Roadies etc that goes in tandem
with the value proposition of the Mist. The Mist is for those people who
want thrill in their life. In sports channels, the advertisement will be shown
during sports such as Wrestling, Extreme sports, Formula 1 etc. The
frequency of the advertisements will be 10 times during a day for a channel
i.e for MTV channel, in which the advertisement will be shown during
Roadies, Stripped etc. in a day there will be 10 advertisements. In addition
to the advertisements, print media will also be used to create awareness.
Magazines such as Autocar, Sportstar, Adventure time magazine etc will be
used to show print ads. Hoardings and newspapers ads as one of the target
groups consist of those people who are bored of their lives.
2. INTEREST
Objective
Successful launch of the product and generating interest about the product
Media Channel
TV advertisements, Rock Concerts
Promotion Strategy
The teaser campaign aimed at increasing awareness about the Mist will be
run for 4-6 weeks before launch. The campaign will be changed as per the
time. The steps taken in the awareness stage will create the stage for the
launch of the Mist. The launch will made at an occasion which will create a
situation that will cater to the value proposition of the Mist. A grand Rock
Show is ideal for launch of the Mist. The city targeted will be Bangalore as it
has a huge tradition and rock culture. Rock show is an event where people
are on a high and come for a night that relieves them of all tension. The
Group 9B Page 16
amount of crowd gathered at a Grand rock show is more than 50,000
(figures based on average audience in the rock show of Iron Maiden in India
in last two times). The soft drink will be the official drink of the rock show.
This is just regarding the launch. For further creating interest, the soft drink
will be the official sponsor of the college circuit rock fests in India. This is
aimed to create loyalty customers in addition to generating interest.
Moreover, the soft drink will be sponsoring shows such as fear factor and
Khatron ke khiladi, Roadies etc. The frequency of advertisements will be
increased to 15 times for a channel for a day. It will also sponsor the Force
India team.
3. DESIRE
Objective
Create aspiration value for the product
Media Channels
Print and TV advertisements, interactive web portal
Promotion Strategy
After creating sufficient awareness and desire among customers, the
advertisement will now focus on creating an aspiration value of the Mist.
The Mist is from UB group which already has aspiration value among its
consumers. The motive is to move from interest of consumer to sales of the
Mist. For this, campaigns will be designed to make a connection with the
consumers. For example, a normal college student, who is bored of his
routine life and want some change in his life. The advertising campaign will
be about what the soft drink can do for him. The frequency of
advertisements will be increased to 10 times for a channel for a day. A big
step that will be taken to increase the connection of the consumer with the
Mist will be to create an interactive web portal. This portal will contain
interesting games that will throw out the boredom out of people. In addition,
customers will be able to share their soft drink moments with other people.
It will enable them to share their stories, photographs, songs etc. This will
enable us to create a loyal customer base, top of the mind recall and
manage the needs and demands of each customer.
4. ACTION
Objective
Converting the interest about the product into sales
Media channels
Print and TV advertisements, interactive web portal
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Promotion Strategy
After sufficient desire has been generated in the customer, sales promotion,
celebrity endorsements etc will be undertaken for generating sales. The web
portal will be used for sales promotions. Based on number of times you visit
the site, games won, record set, stories shared etc, winners will be declared.
The winners will get a trip to Grand Canyon, Mount Everest etc. This will
generate more interest, desire etc among customers in addition to
strengthening the proposition of the Mist. The Mist will continue sponsoring
shows which are “out of the box”, thrilling and target the youth.
Measuring interaction
A contest will be run during the shows asking the messages conveyed in the
Mist advertisements. The reward for winning the contests will be kept in a
way so as to motivate maximum number of people to participate in that. The
number of entries received will give us an estimate of number of people
remembering the advertisement and its message and hence the product.
The same kind of estimate will be obtained from web portal also.
INTEREST
AWARENESS
ACTION
DESIRE
d aspiration basedshow
Launch at Rock
Teaser
Sales promotions
TV ads
Sponsoring
web TV shows
campaign
Celebrity
portal-games, and Force
share stories, moments, songs
India endorsements
Print ads
Sponsoring college
Hoardings
Contests festivals
on web
TV ads portals
Sponsoring shows
Organize sports
events
Group 9B Page 18
PLACE
THI FEEL DO
PLACE
PROFITABILITY ANALYSIS
Expenses
1. Manufacturing Costs – Variable Cost
2. Advertising and Marketing Budget – Fixed Cost
3. Administrative Overheads –
4. Distribution – Variable and Fixed
Revenues
Right now the only revenues are to be derived from the selling of cans. The
market for carbonated drinks in India is estimated to be worth US$ 1.5
billion which is approximately Rs. 6900 Cr. We hope to capture about 2% of
this market in the first year. Also we assume our growth rate to be at the
rate of 10% which is in line with the market growth rate.
Also we have assumed that there will be no Cap-Ex since the company can
use its existing capacity to bottle cans. If it is required to set up a bottling
plant then approximately Rs. 20 Cr. plant can be set up and it will have a
capacity worth Rs. 200 Cr. This will be depreciated on a straight-line basis
and will increase the costs by 2 Cr per year.
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Year 1 Year 2 Year 3
1,38,00,00,00 1,51,80,00,000. 1,66,98,00,00
Revenues 0.00 00 0.00
Manufacturin 34,50,00,000. 37,95,00,000.0 41,74,50,000.
g Costs 00 0 00
Advertising
and
marketing 58,00,00,000. 55,90,00,000.0 54,69,50,000.
costs 00 0 00
Distribution 37,25,00,000. 38,97,50,000.0 40,87,25,000.
Costs 00 0 00
Administrativ 15,00,00,000. 15,00,00,000.0 15,00,00,000.
e Overheads 00 0 00
2,00,00,000.0 2,00,00,000.0
Depreciation 0 2,00,00,000.00 0
-
Operating 8,75,00,000.0 12,66,75,000.
Income 0 1,97,50,000.00 00
We see here that our break-even year is Year 2 and payback period is
approximately 2 years 6 months.
Assumptions
Initial Sales 2% of market
Growth of sales 10% of market
Trial Rate 0.05
Frequency 10.00
Rate per 30 sec spot 1,00,000.0
Advertising
ad. 0
Assumptions
Reach to target
audience 0.10
Target Audience 0.03
Print Ads + Hoardings 5,00,00,000.00
Rs. 3 per can + fixed cost of
Distribution 200000000
Other Promotion
Activities 25,00,00,000.00
10,00,00,000.00 first year
Second
Website Development
5,00,00,000.00 year
and maintenance
subsequent
1,00,00,000.00 ly
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Advertising and Marketing Costs
These costs constitute the major part of a soft drink company. Here these
costs include advertising, website development and maintenance, print ads
and other promotional activities carried out each year like in order to
increase sales such as conducting sporting events etc.
The costs break up is already given in assumptions and the costs for
advertising in Rs. 18 Cr. which would include air-time and all other costs
such as fees of agencies etc.
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ANNEXURE
Mist is the soft drink that is being launched by UB group under the kingfisher
brand. It is citrus flavored drink and unlike the other soft drinks it is more
carbonated and has high levels of caffeine. Mist is not just any ordinary cola
drink but it is the symbol of thrill, passion and fun.
Nutrition Info:
Per Serving(240 %
ml) DV*
Calories 140 -
Total Fat(g) 0 0
Sodium(mg) 40 2
Total 35 10
Carbs(g)
Sugar(g) 27 -
Protein(g) 0 -
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Not a significant
1. Below are lists of features that are part of source of other
Mist. How important is each for you? nutrients.
Extr Imp NeutrDaily
*Percent unim Extr
Values
m (DV) al p
are based onunim
a
imp 2,000 calorie diet p
a. Citrus flavor
c. High level of
carbonation
1. Please mention the name of the particular product(if any) that you recall
based on the description above
2. What is it that you like most about the Mist(mention as many items as
you can)
3. What is it that you like least about the Mist?
4. How often do you feel the need of this kind of product?
a. More than once a day
b. Once a day
c. 2-3 times a week
d. Once a week
e. 2-3 times a month
f. Once a month
1. Given the price of a MIST can (240ml) as Rs 24, how much you are willing
to pay?
a. 20-30% more
b. 5-10% more
c. No more or no less
d. 5-10% less
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e. 20-30% less
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