EXECUTIVE SUMMARY

The aim of the project was to study the process of planning and implementation of
loyalty programs in Marico. The main objective of the company behind these
loyalty programs is to increase the visibility of its products.

I prepared a questionnaire for retailers of the channel “KEY” & “CHEMIST” who
were enrolled in the loyalty programs MERA, SUPER MERA & UNNATI.
Through the questionnaire I found the strengths and weaknesses of the mentioned
loyalty programs.

The survey was done by interviewing 250 retailers with the help of questionnaire.

The questionnaires were then analyzed and major findings were recorded.

The major findings are:

 DSR’s and the Merchandiser’s are well trained to implement the loyalty
programs.
 Many of the retailers share a long relation with the company.
 As per the survey Marico is the second best company as far as service is
concerned after P&G.
 Four key issues observed in the market are:
o Delay in payments: Research reveals that none of the retailers are
satisfied with the ongoing payment system. This is not only
hampering the good relation they have with the company but also
delaying the current year’s implementation of the program.

o Bulky Dispenser’s & Saffola stand: 43% of the MERA outlets, 36%
of SUPER MERA & 7% of UNNATI did not keep the unpaid
dispenser due to space constraints. 9% of SUPER MERA outlets did
not sport a saffola stand due to its bulkiness.

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 o Cost & Incentive structure: The rentals offered by the company were
low as compared to its competitors which is a potential threat for the
company.

o Products expiring on shelf: It has been found in most of the shops that
the products are expiring on the shelf itself due to lack of
responsibility shown by the merchandisers.

The major recommendations are:

 Payment systems:
o Voucher System.
o NEFT (National Electronic Fund Transfer).

 Dispensers:
o Hang or hook to the wall nearby the counter.

 Saffola Stand:
o Condense the stand.
o Hang empty poly jars from the ceiling of different SKU’s.

 Ageing of Products:
o Age Tracker.

Page 2
 Chapter. 1: INTRODUCTION
1.1 BACKGROUND[14]:

Marico is a leading Indian Group in Consumer Products and Services in the Global
Beauty space. Marico’s Products and Services in Hair care, Skin Care and Healthy
Foods generated a Turnover of about Rs.26.61 billion (about USD 600 Million)
during 2009-10*. Marico markets well-known brands such as Parachute, Saffola,
Sweekar, Hair & Care, Nihar, Shanti, Mediker, Revive, Manjal, Kaya, Sundari,
Aromatic, Camelia, Fiancée and Hair Code. Marico’s brands and their extensions
occupy leadership positions with significant market shares in most categories-
Coconut Oil, Hair Oils, Post Wash Hair Care, Anti-lice Treatment, and Premium
Refined Edible Oils, niche Fabric Care etc. Marico is present in the Skin Care
solutions segment through Kaya Skin Clinics (31 in India and the Middle East), the
Sundari range of Spa skin care products (in the USA & other countries) and its
soap.

Marico’s Strategic Business Unit [15]:

1
* For more information on Q4 results of Marico refer APPENDIX-C

Page 3
Consumer Products Business [11]:

Over the past 17 years, Marico has been continually improvising and building new
brands. Marico's Consumer Products Business houses well-known brands such as
Parachute, Saffola, Sweekar, Hair & Care, Nihar, Shanti, Mediker, Revive, Manjal,
among others, which occupy leadership positions with significant market shares in
most categories- Coconut Oil, Hair Oils, Post wash hair care, Anti-lice Treatment,
Premium Refined Edible Oils, niche Fabric Care etc. Every month, over 70 Million
consumer packs from Marico reach approximately 130 Million consumers in about
23 Million households, through a widespread distribution network of more than 2.5
Million outlets in India and overseas.

Page 4
Page 5
Brands & Their Target Customers [11]:

Page 6
 International Business Group [11]:

The International Business Group of Marico operates in more than 20 countries

spread across Asia, Middle East and Africa and has manufacturing facilities in
Egypt, South Africa & Bangladesh. The International Business group has
witnessed phenomenal growth over the years and contributes to 25% of Marico’s
turnover. The company has fully fledged operations in Egypt, South Africa,
Middle East and Bangladesh. In addition, the International Business group is
actively involved in creating opportunities for future growth and has enabled our
brands to be present in many other markets across the globe.

Kaya [11] [12]:

Kaya Ltd (erstwhile Kaya Skin Care Ltd.) was an entrepreneurial leap of faith
marking Marico's entry into skin care solutions business. It was a true reflection of
uncommon sense for a company in hair care products to move, instead of merely
logical product extensions, straight into skin care services. It attempted to leverage
Marico's strengths in the Personal Care business and in-depth understanding of the
needs of the Indian consumer and her/his desire to enhance her/his natural beauty
with the best cosmetic dermatology procedures available internationally. Kaya Ltd.
has been focused on meeting the emerging needs of the modern day consumers by
providing useful and effective services in the beauty and wellness space. The
pioneering effort has been in the area of skin care with Kaya Skin Clinic. Over the
last 7 years Kaya Skin Clinic has refined the standards and professionalisms of the
skin care industry through innovative, world class treatments and services that
have been tailor made to suit Indian skin Since its first prototype in Bandra in
2002, Kaya Skin Clinics has grown at an unprecedented pace, with over 101 clinics
in India, Middle East and Bangladesh. It is planning to expand its clinics with the
acquisition of Derma, a Singapore based company**.
2

Sales and Distribution System [13]:

2
** For details on Kaya acquisition refer APPENDIX-B

Page 7
Reach [11]:

Page 8
Marico procures one out of every 13 coconuts produced in India. Marico sells over
7 Crore (70 Mio) packs to around 13 Crore (130 Mio) people every month.
Marico’s products reach around 2.3 Crore (23 Mio) households through over 33
Lac (3.3 Mio) retail outlets serviced by its nationwide distribution network
comprising 4 Regional offices, 32 carrying & forwarding agents (CFAs) and about
3600 distributors and stockiest. Marico’s distribution network covers almost every
Indian town with population over 20,000.

The table below provides an indicative summary of Marico's Distribution Network

in India.

1.2 OBJECTIVES OF THE RESEARCH:

Page 9
A new trend of window displays in retail outlets grabbed attention of many FMGC
players off late to display their products so much so that there is a serious drought
of window space. Marico, a leader in coconut hair oil segment wanted to protect
their window space by strengthening the weaker areas of their loyalty programs.
The main objectives of this program are:

 To interact with the retailers and get to know what they feel about
Marico’s loyalty program.
 Understand the process of planning and implementation of these
loyalty programs.
 Identify the weaknesses of the programs and give meaningful
recommendations to overcome the same.
 To check whether the stores selected for the loyalty programs have
good infrastructure.
 Check whether the window offered by the retailer is meeting the
criteria laid by the company.
 To check the effectiveness of the programs in terms of % increase in
sales.
 Note down the number of sores which are not sporting an unpaid
dispenser and a saffola stand (in case of SUPER MERA) and find out
the reasons for the same.
 To ask the retailer whether the DSR has briefed him about the loyalty
program enrolled in.
 To know whether the payments were made on time to the retailers.
 To check the satisfaction of the retailers and their willingness to
continue with the loyalty program next year.

1.3 LIMITATIONS [3][4]:

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  The sample drawn may not be representative of the population as the
survey does not cover the whole of Mumbai.

 Few retailers were not co-operative.

 Deliberate falsification of answers by the retailers due to time

pressure.

 The project was taken as a part of my summer training. As the time

was limited so the survey was confined to few stores only.

 The data collected in my report also contains views and information

provided by the distributor, TSE’s, DSRs. So these observations might
not be fully free from errors.

 The opinions of all the persons are often in opposition, non

cooperating, and causing difficulty in data collection.

 People were hesitant to disclose the true facts.

 Inability of the retailers to answer few questions which caused

difficulty in data analysis.

 Due to time pressure few questions were skipped and were answered
by the DSR’s.

 My lack of knowledge on local language made my interactions with

the retailers difficult which affected the data collection.

 Type I and Type II errors in estimating the results over the entire
population.

1.4 STRUCTURE OF REPORT:

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Chapter. 1 : INTRODUCTION

1.1 Background:
This sub chapter includes the various SBU’s Marico is involved in along with the product
portfolio. It also includes the sales and distribution system and the reach of its distribution
channels.

1.2 Objectives of Study:

This sub chapter includes the main objectives of the project to be achieved.

1.3 Limitations:
This sub chapter includes the limitations of the market research done during my summer
internship and the errors occurred while estimating the results obtained over the entire
population.

Chapter.2 : LITERATURE REVIEW

This chapter gives a brief description on sales promotion and a detailed explanation of the
loyalty programs framed by Marico along with the process of planning and implementation of
the same.

Chapter.3 : RESEARCH METHODOLOGY

3.1 Research Design: Used while conducting the market survey.

3.2 Data Collection Sources: Includes the primary and the secondary sources used during the
research.
3.3 Data Collection Instrument: Mentions the research instrument used for the collection of
primary data.
3.4 Sampling Plan: This sub chapter includes the sampling unit, sampling size and the
sampling procedure followed to conduct the market research.

Chapter.4 : DATA ANALYSIS

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This topic would include the detailed analysis of the survey conducted on the loyalty
programs along with the S.W.O.T analysis based on the same along with the estimation
over the population based on the sample data collected.

Chapter.5 : CONCLUSION

5.1 Summary of Findings: Includes all the major findings and observations made during the
market survey.
5.2 Recommendations: This sub chapter gives a detailed explanation of the suggestions
made in order to overcome the weaknesses of the loyalty programs mentioned in the
S.W.O.T analysis of the same.

Chapter.6 : BIBLIOGRAPHY

This topic includes all the references used while drafting the report.

APPENDIX A: This appendix includes a copy of questionnaire

APPENDIX B: Contains the information on Kaya Derma Rx deal

APPENDIX C: Includes information on the Q4 results of Marico

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 Chapter.2: LITERATURE REVIEW
SALES PROMOTION [2]:

“In a specific, sales promotion includes those sales activities that supplement both
personal selling and advertising and coordinate them and help to make them
effective, such as displays, shows and expositions, demonstrations and other non-
recurrent selling efforts not in regular routine.” ----------------- (AMA 1960)

“Sales promotions are temporary incentives targeted at the trade (called Trade
Promotion) or at the end consumer (called Consumer Promotion). While sales
promotion generally aim to change purchase behavior, they vary in whether they
attempt to persuade trade customers or end consumers to buy a product for the
first time, to buy more, to buy earlier, or to buy more often.” ----- (Philip Kotler)

There are three types of promotions that can be used, singly, or in combination:
 Consumer Promotion
 Trade Promotion
 Sales Force Promotion

 Consumer Promotion [12]: The objectives of consumer promotion are:

 Entice consumers to try a new product.
 Lure customers away from competitors’ products.
 Hold & reward loyal customers.
 Consumer relationship building.

The main consumer promotional tools are [1]:

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  Samples: Offer of a free amount of a product or service.
 Coupons: Certificates entitling the bearer to a stated saving on the
purchase of a specific product.
 Cash Refund Offers: Provide price reduction after purchase.
 Price Packs: Offers to consumers of savings off regular price of the
product. A reduced price pack is a single package sold at a reduced
price. A banded pack is two related products banded together (such as
toothbrush and toothpaste)
 Premiums: Merchandise offered at a relatively low cost or free as an
incentive to purchase a particular product.
 Frequency Programs: Programs providing rewards related to the
consumers frequency and intensity in purchasing the company’s
products or services.
 Prizes (Contests, Sweepstakes, and Games): Prizes are offers of the
chance to win cash, trips or merchandise as a result of purchasing
something.
 Product Warranties: Promise made by the seller that the product will
perform as specified or the seller will fix or refund the customer’s
money during a specified period.
 Point-Of-Purchase (P-O-P) Displays and Demonstrations: They take
place at the point of purchase or sale.

 Trade Promotions [12]: The main objective of trade promotions are:

 Persuade retailers or wholesalers to carry a brand
 Give a brand shelf space
 Promote a brand in advertising
 Push a brand to consumers

The main trade promotion tools are [1]:

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  Price-Off: A straight discount off the list price on each case purchased
during a stated time period.
 Allowance: Amount offered in return for the retailer’s agreeing to
feature the manufacturer’s products in some way. A display allowance
compensates them for carrying a special product display.
 Free Goods: Offers of extra cases of merchandise to intermediaries
who buy a certain quantity.

 Sales-Force Promotion [12]: The main objectives are:

 Motivate salespeople
 Reward customers
 Stimulate purchases
 Generate business leads

The main Sales-Force Promotion tools are [1]:

 Trade Shows and Conventions: Participating vendors get several
benefits, including generating new sales leads, maintaining customer
contacts, introducing new products, meeting new customers, selling
more to present customers and educating customers.
 Sales Contests: Aims at inducing the sales force or dealers to increase
their sales results over a stated period, with prizes going to those who
succeed.
 Specialty Advertising: Consists of useful, low- cost items bearing the
company’s name and sometimes an advertising message that the
salespeople give to prospects and customers. Common items are
ballpoint pens, calendars, key chains, and memo pads.

Characteristics of Successful Sales Promotions [2]:

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  Maximum effect minimum cost.
 Motivates consumer to buy now.
 The promotion should be clear and uncomplicated.
 Promotion should be highly visible.
 Promotion should benefit all concerned.
 Promotion should be legal.
 Promotion must be implemented efficiently.

Advantages and Drawbacks of Sales Promotion [2]:

Advantages:
1. Price Discrimination: Producers can charge different prices to different
consumers and trade segments through sales promotions. Those customers
who make special efforts to find and visit shops where the sale offer is valid
take the advantage of buying the product at discounted prices. Such price
discrimination also helps in adjusting to fluctuations in demand and supply
situation without affecting any changes in the list price.

2. Effect on Consumer Behaviour: As sales promotion are mostly announced

for a short period of time, customers feel may feel a sense of urgency and
stop comparing the alternatives. They are persuaded to act now rather than
later.

3. Effect on Trade Behaviour: Short – term promotions present an

opportunity and encourage dealers to forward – buy. As dealers have more
than normal stocks. They think it advisable to advertise in local media,
arrange displays and offer attractive promotional deals to consumers.

Disadvantages:
Page 17
1. Increased Price Sensitivity: Frequently promoted brands in a product
category, especially on the basis of price, make consumers and traders more
price sensitive, not only for the promoted brand, but for other brands, as well
in the same product category. Consumers wait for the promotional deals to
be announced and then purchase the product.

2. Quality Image may become tarnished: If the promotions in a product

category have been rare, promotions could have a negative effect about its
quality image.

3. Dealers Forward – buy and Divert Stocks: Forward buying of excessive

stocks on deals can lead to diversion of some of these stocks in non- deal
areas. Wholesalers do not hesitate in selling these excess stocks in non –
deal areas on prices, which are less than the list price, but keeping a
reasonable margin for themselves. This is likely to have a negative impact
on the price discrimination efforts of the company, as dealers in those areas
would not be buying even their normal requirements from the company.

4. Merchandising support from the dealers is doubtful: In many cases the

dealers do not cooperate in providing the merchandising support, nor do they
pass on any benefits to the consumers.

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PROCESS OF PLANNING AND IMPLEMENTING LOYALTY
PROGRAMS [2]

SET OBJECTIVE

DEFINE STRATEGY TO BE USED

TOOLS TO BE USED ALONG

WITH THE DURATION OF USAGE

CONDITIONS FOR PARTICIPATION

BUDGET FOR PROMOTION

IMPLEMENTATION

EVALUATION

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 1. SET OBJECTIVE:

Objective of Marico: To encourage purchase or sale of Marico’s products through

promotion-mix at a relatively low cost.

Two main promotion-mix tools include:

 Advertising
 Sales Promotion

Difference between Advertising and Sales Promotion [2]:

Advertising Sales Promotion

Timeframe Long-Term Short-Term

Primary Objective Image/Brand Building Sales

Relative Cost High Low

Contribution to Profit Moderate High

It is clear from the above table that companies like Marico who want to achieve
rapid growth in sales at a relatively low expenditure would focus more on Sales
Promotion.

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 2. DEFINE STRATEGY TO BE USED [2]:

“PULL” Strategy:

In case of “PULL” strategy, marketing efforts are directed at the ultimate consumer
and consumer promotions are used. The objective of such promotional effort
would be to create sufficient consumer demand to “PULL” the product through the
channels, i.e. the consumers are encouraged to demand the product from the
retailer who in turn place orders to meet the demand. A “PULL” strategy is
appropriate when the product demand is high, high brand loyalty, or consumers
show high degree of involvement in the product purchase.

A “PULL” strategy can be applied to products such as Revive (Fabric Starch

category) and Mediker (Anti Lice Treatment category) where the demand and the
brand loyalty for these products is high and also very few unrecognized substitutes
are available in the market.

“PUSH” strategy:

“PUSH” promotions go through the resellers to the end-users. If a firm decides to

use “PUSH” strategy, its efforts are directed at resellers and the manufacturer
becomes very dependent on their personal selling abilities and efforts. Resellers
may be required to display, demonstrate, etc. to sell the product.

A “PUSH” strategy is generally appropriate for product categories where there is

low brand loyalty and many acceptable substitutes are available in the market. It
may also be suitable for relatively new products, or when brand choice is often
made in response to the displays in the stores. Manufacturers, who cannot afford to
engage in sustained mass advertising, often use “PUSH” strategy and offer
effective incentives to dealers.

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Brands such as Jasmine, Hair & Care, Shanti Badam and Parachute Advanced
(Value Added Hair Oil Category) are suitable for the “PUSH” category which have
relatively low demand and brand loyalty as compared to other hair oils in the
market such as Dabur’s Amla and Emami’s Navratan cooling oil. Saffola range of
edible oils along with Sweekar is also applicable for this strategy due to immense
competition in the market from Adani Willmar’s Fortune, Cargill’s Gemini,
Godrej’s cooklite and many more. A “PUSH” strategy is best suited for newly
launched products such as Saffola Arise which will help gain acceptance among
the customers visiting the retailer.

Combination of “PULL” and “PUSH” strategies:

When these strategies are combined intelligently, they can produce more powerful
response, compared to any single marketing strategy for two reasons. One, reseller
may not be willing to push the product when the firm is emphasizing customer
pull. Two, the resellers might be willing to push the product but there is no end-
user demand.

Parachute (Coconut Oil category) is best suited for this strategy due to the
following reasons:

 It is applicable for “PULL” Strategy because of its high demand

and high brand loyalty.
 A “PUSH” strategy is also applicable due to immense
competition from other players such as, Raj Oils Cocoraj,
Kamani’s Cocopure, who are offering a retailer margin of 25% as
compared to Marico’s 10% on Parachute. Due to the following
reason it becomes necessary to use “PUSH” strategy as the
retailer is not willing to push the product in spite of the firm
emphasizing on customer pull.

As per the discussions in the above mentioned three types of strategies it

becomes necessary for companies like Marico to focus more on the “PUSH”
strategy.
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3. TOOLS TO BE USED:

Marico introduced the loyalty programs for the retailers and wholesalers
wherein the dealer need to provide a window space to display products of
the company. In return Marico will pay the window allowance along with a
fixed percentage of incentive on achievement of target given to the dealers
by the company.

The loyalty programs of Marico offered to the retailers and the chemists are:

MERA:
The Mera Program will be an Incentive to the “Top” Key Outlets in a
City.

Defining Mera Outlet:

Top BPM Key outlets in the City: Top Outlet Report [Midas]
For e.g., if the ASM has 100 Mera Outlets allocated to him, he should
take a list of 120 outlets (20% extra) & then choose the 100 based on
‘Qualitative Parameters’

Qualitative (softer) Parameters:

 Sells Range of Products
 High Customer Foot falls

Period:
 1st May 2010- 31st March 2011
 Further the period is divided into 3 phases ;
 Phase I : May-Jul
 Phase II : Aug-Nov
 Phase III : Dec-Mar

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 Program Elements: 2 compulsory Elements of Execution

 Visibility:
1 Window for BIW.
Window should be ideally behind the counter.
 Size of BIW Kit : 17X 24 inch for Vertical and 24X 17 inch
for horizontal.
 Window size to be strictly adhered to else no payout to be
given.

 Multi Product Dispenser:

 Unpaid Male Grooming/Therapie Dispenser for the Outlet.
 Size of the dispenser:
 Therapie: 3X16X8 inches
 Male Grooming: 3X21X9 inches

 Target Based Incentive:

 Target to be given for each period
 1% share gain incentive for achievement of target.

 BIW:
 Rs 450/ month
Total payment of Rs 450 + incentive (if target achieved) will be made at the
end of the phase.

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 SUPER MERA:

Program Elements: 3 Compulsory Elements of Execution

 Visibility :
 2 Windows for BIW per outlet (both windows next to each other
mandatory)
 Window ideally should be behind the counter
 Size of BIW Kit : 17X 24 inch for Vertical and 24X 17 inch for
horizontal
 Saffola Zone :
 To be placed near the edible Oil Category in the Outlet
 Size of Stand : 54 inches (Height) x 26 inches (Width) x 15 inches
(Depth)

 Multi Product Dispenser :

 Unpaid Male Grooming/Therapie Dispenser for the Outlet
 Size of the dispenser:
 Therapie: 3X16X8 inches
 Male Grooming: 3X21X9 inches
 Target Based Incentive:
 Target to be given for each period
 1% share gain incentive for achievement of Target

 BIW1:
 Rs 450/ month

 BIW2:
 Rs 450/month

 Saffola Zone:
 Rs 1000/month

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 UNNATI:

 Program Elements : 2 compulsory Elements of Execution

 Visibility :
 1 Windows for BIW kits per outlet
 Window should be behind the counter
 Size of BIW Kit : 17X 24 inch
 Brands for BIW kit : Communicated to ASMs
 Pay Out for BIW/Month : Rs 400/month

 Multi Product Dispenser [Unpaid] :

 This will be a Therapie Dispenser for the Outlet
 Size of Therapie Dispenser: 3X16X8 inches

 Target Based Incentive:

 Target to be given for each period
 3% share gain incentive for achievement of Target

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 4. CONDITIONS FOR PARTICIPATION:
Marico has categorized the stores into various channels namely:

 Chemist: All outlets that contain chemist, medicals, medico,

and pharma are classified under chemist.
 Modern Trade: All outlets which are open format and have a
BPM of Rs 1 lakh are termed to be modern trade.
 General Trade: Same as modern trade but the outlet should not
be a nationalized store.
 Wholesale: All outlets having a BPM of greater than Rs 5000
and selling to the retailers who cannot be reached by the
distributor.
 Key: Out of the remaining outlets the stores which contribute to
80% of business are termed as “KEY” outlets.
 Others: Similar to the key outlets the stores which contribute to
the remaining 20% are termed as “OTHERS”.

Criteria for enrolling in SUPER MERA

 The outlet should be a “KEY” outlet.
 The outlet should be having a minimum BPM of Rs 35000.
 It should be storing all products of Marico.

Criteria for enrolling in MERA:

 The outlet should be a “KEY” outlet.
 The outlet should be having a minimum BPM of Rs 35000.
 It should be storing all products of Marico.

Criteria for enrolling in UNNATI:

 The outlet should be a “CHEMIST” outlet.

Page 27
  The outlet should be having a minimum BPM of Rs 3000.
 It should be storing all products of Marico except Saffola and
Sweekar brands of edible oil.

5. BUDGET FOR PROMOTION [2]:

There are five important techniques, which are commonly used to allocate
funds to sales promotion:

 Percentage of Sales Method: This is the method which is currently

used by Marico and most of the companies. In this approach, the
budget is determined by taking a fixed percentage of sales. Marico’s
expenditure on Advertising and Sales Promotion (ASP) is 13.2% of
sales in 2009-10 as compared to 10.2% in the year 2008-09. Out of
the allocated budget for ASP the ratio of Advertising to Sales
Promotion expenditure is 40:60, and out of the 60% allocated to Sales
Promotion 40% is spent on Consumer Promotion, 50% on Trade
Promotion, and 10% on Sales-Force Promotion.

A definite advantage of this approach is that the expenditures are

directly related to sales. If the company’s sales increase, it is assumed
that the company would have more funds for promotion budget. This
method is quite simple and calculation is easy and understandable.
This method suffers from serious limitations that it does not consider
the possibility that the sales may decline because too little promotion
or increased competitive activity, or that the sales do not take
advantage of a rising potential. Using this approach to arrive at a
promotion budget may mean under-spending when the market
opportunities are high and over-spending when the market spending is
low.

Page 28
 Unit of Sales Method: This method is generally used for highly
priced goods, or consumer durables wherein a promotion budget is
arrived by multiplying the units of goods sold with a fixed amount.

 Competitive Parity Method: In this method the budget is decided by

what others are offering in the market. If a competitor’s promotion
budget is high, then spending too little on promotion will amount to
wasting money. This method is to use as the only information required
is about the amount of money expended by the competitor’s.

 All-You-Can-Afford Method: In using this approach to budget

allocation, the amount that is left over after all relevant allocations
have been made is earmarked for Sales Promotion. This approach is
used generally by small companies with small budget. It is merely an
availability oriented budget and quite unsophisticated.

 Objective-and-Task Method: In this method the promotion manager

starts by making thorough study of the market, the product,
competition, and consumer behaviour in order to set appropriate
promotion objectives. The next step is to determine how much money
would be necessary to achieve the objectives. If the cost happens to be
more than the money available, then either the promotion objectives
are adjusted or more funds are made available from the contingency
reserve or by reducing the budget from other promotional activities.

Page 29
6. IMPLEMENTATION:

The process of implementation is as follows:

Select Outlets

DSR Training

Book the Window

Brand the Window

 Selecting Outlets: The ASM along with the TSO/TSE list out the
stores eligible for the loyalty programs on basis of the criteria
discussed above.

 DSR Training: After selecting the outlets for the loyalty programs
the TSO/TSE briefs the DSR’s on the same and gives them a live
demonstration on how to book the window space.

 Booking of Window: The DSR then gets the contract form filled
from the retailer and takes his appointment to get the window
branded.

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  Branding of Window: The DSR then communicates with the
merchandiser, who brands the windows of the shop told by the DSR.

7. EVALUATION [2]:

The Sales Promotion Evaluations are:

 Pre-testing:  

How sales promotion is to be communicated and what would be communicated to

the target groups is important and can be pre-tested. It is often quite helpful to
evaluate the responses of resellers before implementing the promotion programme.
The simplest ways to visit several important retailers and wholesalers discuss the
programme and seek their opinion and suggestions. This may prove to be quite
favourable in case the support of resellers is considered to be of paramount
importance for promotion results.
Unfortunately, no pre-testing is conducted by Marico for its loyalty and the result
can be seen clearly in the satisfaction level of the retailers discussed in the next
chapter.
 
 Concurrent testing:

 This testing is done when the sales promotion is in progress. Concurrent

testing permits the promotion manager to modify the sales promotion, if needed.
This type of testing is conducted in terms of sales data which can be obtained on a
weekly or monthly basis or whether the retailers are complying with the rules
given to them by the company.
At this stage the promotion manager of Marico only checks whether the retailers
are sticking to the conditions laid by the company if found not the retailer would be
terminated from the loyalty program.
 
 Post-testing:

Page 31
Post-testing is done after the promotion period is over. The evaluation of the
loyalty programs is done on the basis of the growth in sales. Based on this data the
ASM and the TSO/TSE make the necessary changes in the list of outlets to be
selected for the upcoming period.

Chapter.3: RESEARCH METHODOLOGY

3.1: RESEARCH DESIGN

Exploratory Research [3]: to gather preliminary data to shed light on the real
nature of the problem & suggest possible solutions/new ideas.

As per my objective of the research, the research questions would try to find out
the current situation in the market regarding the satisfaction level of retailers on the
loyalty programs of Marico.

The research work was Exploratory in nature and was meant to provide the basic
information required by research objectives. A preliminary study and findings can
be further consolidated after detailed conclusion study has been carried out. The
major methods employed in research are Survey and Observations.

3.2: DATA COLLECTION SOURCES

Primary Data: The respondents were personally interviewed with the help of a
structured questionnaire.

Secondary Data: Collected from Marico’s DSR’s and TSO / TSE through short
interviews and informal chats.

3.3: DATA COLLECTION INSTRUMENT [3]

: Questionnaire (Structured
non disguised questionnaire) ***

A questionnaire is a set of structured questions to be asked from respondents in a

particular order with appropriate instructions. A questionnaire serves four
functions – enables data collection from respondents, lends a structure to
interviews, provides standard means for writing down answers and help in
processing the data collected.
Page 32
3

The type of questionnaire used was structured non disguised questionnaire in

which:

 Questions are listed in a pre-arranged order.

 Respondents are told about the purpose of collecting information.

14 questions were asked to the retailers and the types of questions are as follows:

Closed-End Questions: (10 questions) Out of which:

 Dichotomous (5 questions)
 Multiple Choice (3 questions)
 Rating Scale (2 questions)

Open-End Questions: (4 questions) Out of which:

 Completely Unstructured (4 questions)

3.4: SAMPLING PLAN [1]

:

3.4.1: Sampling Unit:

Population: MERA / SUPER MERA / UNNATI outlets in Mumbai

Area of research:

Central Mumbai: Kurla-Mulund

Thane: Kalwa

Navi Mumbai: Vashi

Sampling Frame: TSO’s / TSE’s loyalty program planning sheet.

Criteria for enrolling in SUPER MERA

 The outlet should be a “KEY” outlet.
 The outlet should be having a minimum BPM of Rs 35000.
 It should be storing all products of Marico.

3
*** For viewing the questionnaire refer APPENDIX-A

Page 33
Criteria for enrolling in MERA:
 The outlet should be a “KEY” outlet.
 The outlet should be having a minimum BPM of Rs 35000.
 It should be storing all products of Marico.
Criteria for enrolling in UNNATI:
 The outlet should be a “CHEMIST” outlet.
 The outlet should be having a minimum BPM of Rs 3000.
 It should be storing all products of Marico except Saffola and
Sweekar brands of edible oil.
3.4.2: Sample Size: 250 Retailers

Retailer Composition:

Program MERA SUPER UNNATI TOTAL

MERA

No of stores 177 38 35 250

3.4.3: Sampling Procedure [3]: Probabilistic Sampling (Stratified

Sampling)

Stratified Sampling: - is one wherein the population is divided into mutually

exclusive and mutually exhaustive groups, then a simple random sampling is
employed within each subgroup.

Time for Completion: The time taken to complete the project was 54 days. 2 days
for understanding the programs and designing the questionnaire, 38 days for
market survey and filling questionnaire from the retailers, and 14 days for data
coding, analysis and compiling of report.

Page 34
 Chapter.4: DATA
REPRESENTATION &
ANALYSIS

RETAILER COMPOSITION

Page 35
 Program MERA SUPER UNNATI TOTAL
MERA

No of stores 177 38 35 250

Page 36
RESPONDENT ANALYSIS
(MERA OUTLETS)

Years of association with this Loyalty Program

No of New 1 2 3 4 5 Total

Page 37
 years

No of 7 30 57 51 18 14 177
stores

Observation:
47% of the shops surveyed have been associated for more than 2 years. Such a
long association helps build a healthy relation between the company and the
retailers.

Infrastructure of the store

Page 38
 Rating 1 2 3 Total
(Average) (Good) (Excellent)

No of 57 92 28 177
stores

Observation:

68% of the stores selected for the MERA program were above average which is
good enough in a space constraint city like Mumbai. However it was observed
from the market that there were stores with good infrastructure but were not a part
of the program due to low BPM than others.

Page 39
Rating 1 2 3 Total
(Average) (Good) (Excellent)

No of 70 88 12 170
stores

Location of window

Page 40
Observation:

In spite of selecting stores with above average infrastructure it has been observed
that 41% of the MERA stores surveyed have average window locations. The main
reason behind this is HUL occupying 6 – 9 shelves and paying ransom amount.
Not only HUL but many other players like Dabur and P&G are offering more to
the retailers than Marico.

Effectiveness of Program

% Growth -ve 0 – 20% 21- 40% 41- 60% 61-80% 81% + Total

No of 27 61 51 10 9 12 170
stores

Page 41
Observations:

This program is undoubtedly effective as it is quite evident from the graph. 66% of
the retailers reported a sales growth in the range of 0-40%, whereas 11% in the
bracket of 41-80% and 7% reported a growth of over 81%.

Company wants to find out whether the MERA program implemented the
previous year was successful or not. In order to be successful at least 50% of the
shops enrolled under this program should have registered a sales growth of greater
than 20% on Marico’s products [4] [5].

Null Hypothesis: H0 : P = 0.50

Alternate Hypothesis: H1 : P < 0.50

PH0 = 0.50, qH0 = 0.50, ṕ = 0.48, ǭ = 0.52, n = 170

σ ṕ = √ ((PH0 * qH0) / n) = 0.038

Zcal = (ṕ - PH0) / σ ṕ = - 0.5263

From the Z – Table: Ztab = - 1.65

Zcal = - 0.5263

α = 0.05

Zcrit = - 1.65 0

Page 42
Although the observed sample proportion is below 50%, it is not significantly
below 50% to make us
reject the YES NO Total null
hypothesis. Therefore
the null hypothesis is
accepted and No of 90 80 170 we can
conclude stores that the
MERA program was
successful the previous
year.(Null Hypothesis Accepted)

Unpaid Dispenser

53% (90 out of 170 outlets)

Observations:

A huge chunk of 47% of the retailers did not sport a dispenser in their shop due to
lack of space. 53% of them who kept the dispenser also complained about its
bulkiness.

Page 43
 YES NO Total

No of 126 44 170
stores

Satisfaction and Willingness to continue

Page 44
Observations:

74% of the retailers are willing to continue with the loyalty program as they are
very much satisfied with the service of the company and also due to the friendly
relation they share with the DSR. Having said that 26% of the retailers are not
satisfied with the program due to payment issues and low rentals as compared to
the major players in the market.

Company claims that 80% of the retailers were satisfied with the program and
are willing to continue this year too [4] [5].

Null Hypothesis: H0 : P = 0.80

Alternate Hypothesis: H1 : P < 0.80

PH0 = 0.80, qH0 = 0.20, ṕ = 0.74, ǭ = 0.26, n = 170

σ ṕ = √ ((PH0 * qH0) / n) = 0.030

Zcal = (ṕ - PH0) / σ ṕ = - 2 Zcal = - 2

Page 45
From the Z – Table: Ztab = - 1.65

α = 0.05

Zcrit = - 1.65 0

As can be observed from the graph that the calculated Z value lies in the
rejection region therefore the null hypothesis is rejected. Hence we can conclude
that the result obtained from the survey was defying the claim made by the
company. (Alternate Hypothesis Accepted)

Page 46
RESPONDENT ANALYSIS
(SUPER MERA OUTLETS)

Years of association with this Loyalty Program

No of New 1 2 3 4 5 Total
years

No of - - 9 14 13 2 38
stores

Page 47
Observation:

71% of the retailers have been associated with SUPER MERA for 3-4 years which
is one of the major strengths of this loyalty program.

Infrastructure of the store

Page 48
 Rating 1 2 3 Total
(Average) (Good) (Excellent)

No of 2 22 14 38
stores

Observation:

Only 5% of the stores surveyed have an average infrastructure. The reason could
be that SUPER MERA stores are outlets with higher BPM and larger store size.

Page 49
Rating 1 2 3 Total
(Average) (Good) (Excellent)

No of 12 20 6 38
stores

Location of window

Page 50
Observation:

31% retailers are offering us average window location due to the reasons
mentioned below:

 Delay in payments which create hindrances in the implementation of the

programs.
 Low rentals offered as compared to your competitors.

Effectiveness of Program

% Growth -ve 0 – 20% 21- 40% 41- 60% 61-80% 81% + Total

No of 2 10 14 3 3 6 38
stores

Observation:
Page 51
The growth percentages are better as compared to the MERA outlets due to the
high customer footfalls these stores attract. It can be observed that 16% of the
retailers achieved a growth of over 81% as compared to MERA outlets 7%.

Company wants to find out whether the SUPER MERA program implemented
the previous year was successful or not. In order to be successful at least 50% of
the shops enrolled under this program should have registered a sales growth of
greater than 20% on Marico’s products [4] [5].

Null Hypothesis: H0 : P = 0.50

Alternate Hypothesis: H1 : P < 0.50

PH0 = 0.50, qH0 = 0.50, ṕ = 0.68, ǭ = 0.32, n = 38

σ ṕ = √ ((PH0 * qH0) / n) = 0.081

Zcal = (ṕ - PH0) / σ ṕ = 2.22

From the Z – Table: Ztab = - 1.65

Zcal = 2.22

α = 0.05

Zcrit = - 1.65 0

Page 52
The observed sample proportion is well above 50%. Therefore the null
hypothesis is accepted and we can conclude that the SUPER MERA program
was successful
the previous year.(Null
YES NO Total
Hypothesis Accepted)

No of 24 14 38
Unpaid stores

Dispenser

63% (24 out of 38outlets)

Observation:

37% of the retailers did not keep an unpaid dispenser. This percentage has dipped
from 47% in MERA to 37% in SUPER MERA because as mentioned earlier the
infrastructure in these stores is far superior to the MERA outlets. But still these
figures cannot be taken for granted as there is a serious space constraint in a city
like Mumbai.

Saffola Stand

Page 53
 YES NO Total

No of 35 3 38
stores

Page 54
 YES NO Total

No of 31 7 38
stores

Satisfaction & Willingness to continue

Page 55
Observations:

82% of the retailers are willing to continue with this loyalty program. The
percentage is higher as compared to MERA as they are receiving Rs 1900 / month
plus1% incentive on achievement of target as compared to MERA’s Rs 450 /
month + 1% incentive.

Company claims that 80% of the retailers were satisfied with the program and
are willing to continue this year too [4] [5].

Null Hypothesis: H0 : P = 0.80

Alternate Hypothesis: H1 : P < 0.80

PH0 = 0.80, qH0 = 0.20, ṕ = 0.82, ǭ = 0.18, n = 38

σ ṕ = √ ((PH0 * qH0) / n) = 0.065

Zcal = (ṕ - PH0) / σ ṕ = 0.322

From the Z – Table: Ztab = - 1.65

Page 56
 Zcal = 0.322

α = 0.05

Zcrit = - 1.65 0

As can be observed from the graph that the calculated Z value lies in the
acceptance region therefore the null hypothesis is accepted. Hence we can
conclude that the result obtained from the survey was supporting the claim made
by the company. (Null Hypothesis Accepted)

Page 57
RESPONDENT ANALYSIS
(UNNATI OUTLETS)

Years of association with this Loyalty Program

No of New 1 2 3 4 5 Total
years

No of 2 2 12 10 8 1 35
stores

Page 58
Observation:

89% of the chemists have been associated with UNNATI since the past 2-5 years.

Infrastructure of the store

Page 59
 Rating 1 2 3 Total
(Average) (Good) (Excellent)

No of 4 19 12 35
stores

Observations:

34% of the chemists have excellent infrastructure which means that they have
enough space to keep any additional dispenser if required in future by the
company.

Page 60
Rating 1 2 3 Total
(Average) (Good) (Excellent)

No of 7 19 7 33
stores

Location of window

Page 61
Observation:

In 79% of the stores the locations of the window were above average. At the same
time 21% were average due the same reasons as mentioned for MERA and SUPER
MERA.

Effectiveness of Program

% Growth -ve 0 – 20% 21- 40% 41- 60% 61-80% 81% + Total

No of 6 12 8 7 - - 33
stores

Page 62
Observations:

The growth percentages are low as compared to MERA and SUPER MERA outlets
as the chemists do not sell edible oil brands which form a major part of the BPM
for MERA and SUPER MERA outlets.

Company wants to find out whether the UNNATI program implemented the
previous year was successful or not. In order to be successful at least 50% of the
shops enrolled under this program should have registered a sales growth of greater
than 20% on Marico’s products [4] [5].

Null Hypothesis: H0 : P = 0.50

Alternate Hypothesis: H1 : P < 0.50

PH0 = 0.50, qH0 = 0.50, ṕ = 0.45, ǭ = 0.55, n = 33

σ ṕ = √ ((PH0 * qH0) / n) = 0.087

Zcal = (ṕ - PH0) / σ ṕ = - 0.5747

Page 63
From the Z – Table: Ztab = - 1.65

Zcal = - 0.5747

YES NO Total
α= 0.05

No of 24 9 33
stores

Zcrit = - 1.65 0

Although the observed sample proportion is below 50%, it is not significantly

below 50% to make us reject the null hypothesis. Therefore the null hypothesis is
accepted and we can conclude that the UNNATI program was successful the
previous year.(Null Hypothesis Accepted)

Unpaid Dispenser

Page 64
Observations:

27% of the outlets did not keep an unpaid dispenser due to lack of space in their
stores.

Satisfaction & Willingness to continue

Page 65
 YES NO Total

No of 25 8 33
stores

Observations:

76% of the chemists are willing to continue with this loyalty program as they are
very much satisfied with the service of the company and also due to the friendly
relation they share with the DSR.

Page 66
Company claims that 80% of the retailers were satisfied with the program and
are willing to continue this year too [4] [5].

Null Hypothesis: H0 : P = 0.80

Alternate Hypothesis: H1 : P < 0.80

PH0 = 0.80, qH0 = 0.20, ṕ = 0.76, ǭ = 0.24, n = 33

σ ṕ = √ ((PH0 * qH0) / n) = 0.070

Zcal = (ṕ - PH0) / σ ṕ = - 0.571 Zcal = - 0.571

From the Z – Table: Ztab = - 1.65

α = 0.05

Zcrit = - 1.65 0

As can be observed from the graph that the calculated Z value lies in the
acceptance region therefore the null hypothesis is accepted. Hence we can
conclude that the result obtained from the survey was supporting the claim made
by the company. (Null Hypothesis Accepted)

Page 67
 Service when compared to others

Observations:

Marico second most preferred company by the retailers as far as service is

concerned after P&G which bagged in 123 votes out of 250 shops as compared to
Marico’s 103.

S.W.O.T ANALYSIS
Page 68
Chapter.5: CONCLUSION
Page 69
5.1 SUMMARY OF FINDINGS:

Two main objectives which were laid by the company for the summer project are:

a. Test the effectiveness of the three stated programs:

• MERA: As per the estimation done on the population
(i.e. the whole of Mumbai) on basis of the sample
collected, revealed that the MERA program was effective
the previous year.
• SUPER MERA: The survey concluded that more than
50% of the outlets enrolled in this loyalty program
reported a sales growth of more than 20% on the
products of Marico. Thus, SUPER MERA is said to be
effective.
• UNNATI: Like the other programs UNNATI also was
effective in increasing the sales of the retailer and more
important of the company.

b. Monitor the satisfaction of the retailers on the loyalty programs and

their willingness to continue:
• MERA: The claim made by the company that 80% of the
retailers were satisfied with the MERA program was
defied by the survey conducted as more number of
retailers, than estimated by the company were not
satisfied. The reasons for dissatisfaction are:
• Delay in payments.
• Bulky Dispenser’s & Saffola stand.
• Low Cost & Incentive offered as compared to others
in the market.
There is a possibility of Type I error i.e. the null hypothesis being rejected when it
is true due to high level of significance taken.

• SUPER MERA & UNNATI: Unlike MERA, the retailers

were satisfied with SUPER MERA and UNNATI programs
due to high rentals and incentives paid to these outlets. At

Page 70
 the same time even they voiced out their discontent on the
payment issues and the bulkiness of the dispensers/saffola
stand.

MORE FINDINGS:

WHAT OTHERS ARE OFFERING IN….

“KEY” OUTLETS

HUL:
• Perfect Store:
 Rs 600 / window ( 4 windows )
 1.5% incentive on achievement of target

• Super Store :
 Rs 4000 / rack ( approx 9 windows )
 1.5% incentive on achievement of target

P&G:
 Rs 550 / window
 1% on achievement of target

Dabur:
 Rs 450 / window
 2% on achievement of target

“CHEMIST” OUTLETS

HUL:
Page 71
  Rs 1500 ( 4 windows )
 3.5% on achievement of target

P&G:
 Rs 550 / window
 4% on achievement of target

Garnier:
 Rs 600 / window
 Incentive on achievement of target varies from 2% - 4% every year

Products expiring on shelf: It has been found in most of the shops that the
products are expiring on the shelf itself due to lack of responsibility shown by the
merchandisers.

5.2 RECOMMENDATIONS:

PAYMENTS:

1. Voucher System:

Page 72
  Offer vouchers worth the rent of the window i.e. for phase 1 (May-
July) payment will be in the form of vouchers worth Rs 1350 for
MERA outlets, Rs 5700 for SUPERMERA & Rs 1200 for
UNNATI outlets.
 These vouchers will act as money between the company and the
retailers.

 These vouchers can be used by the retailers to purchase Marico’s

products at any point of time during the year.
 Since we are facing a threat from the competitors regarding the cost
structure of the program we can offer the retailers additional
vouchers (the additional % increase will vary from area to area).
 This will also help the company to increase its sales by offering
them additional vouchers.
 If the retailer achieves the target given, the additional incentive
(1% for MERA & SUPERMERA and 3% for UNNATI) will be
directly transferred to the retailers account by taking his account
number.
 Payment should be done at the end of the phase.

2. NEFT (National Electronic Fund Transfer):

Page 73
  This can be done by taking the account number from the retailer
and transfer the entire amount to his account at the end of the
phase.

DISPENSER’S:

Since the dispenser’s are light in weight they could be hung from the ceiling or be
hooked up to the wall near the counter.

SAFFOLA STAND:

1. Condense the stand by placing only those SKU’s which do not sell much in
a store and by placing a banner of other SKU’s.

2. Hang empty poly jars of different SKU’s from the ceiling.

PRODUCTS EXPIRING ON SHELF:

o Age Tracker:
The merchandiser will educate the retailer on FMFS (First
Manufactured First Sold) wherein the retailer has to sell the
products of older batches.
Then every week the merchandiser will keep a track on the products
kept on the shelf and the batch dates of the products sold by the
retailer.

Chapter.6: BIBLIOGRPHY

Page 74
[1] Philip Kotler, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha;
“Marketing Management”, 13th ed.(Pearson Education, 2009); Pg: 503 – 507.

[2] SHH Kazmi, Satish K Batra; “Advertising & Sales Promotion”, 3rd ed. (Excel
Books, 2008); Pg: 482, 493 – 498, 534 – 536, 549 – 552.

[3] C.R Kothari; “Research Methodology”, 2nd ed. (New Age International);
Pg: 14 – 21, 100 – 105.

[4] Richard.I. Levin, David.S.Rubin; “Statistics for Management”, 7th ed. (Pearson
Education, 2007); Pg: 402 – 451.

[5] S.P. Gupta; “Statistical Methods”, 35th ed. (Sultan Chand & Sons – Educational
Publishers, 2007); Pg: 881 – 951.

[6] Hiral Seth; “Expanding its footprint”; Business India, May 31- Jun 13, 2010;
Pg: 129.

[7] Vishal Chhabria & Priya Pandya, “Marico: Healthy Volume Growth”; Business
Standard, May 01, 2010; Pg: Opinion & Analysis.

[8] Reuters, “Marico Q4 sales sag, profits rise”; Business World, May 02, 2010;
Pg: Corporate.

[9] Vinay Kamath, Aarati Krishnan; “High food prices slow FMCG sales”;
Business Line, May 05, 2010; Pg: 1.

Page 75
[10] M.V.S. Santosh Kumar; “Food inflation inches up to 12.81%”, Business Line,
July 16, 2010; Pg: 20.

[11] www.marico.com

[12] www.management-hub.com

[13] www.knowthis.com

[14] www.wikipedia.org

[15] www.articlebase.com

APPENDIX- A
QUESTIONNAIRE – RETAILER

Page 76
Demographics:
Retail Store Name:

Beat Name:

Distributor Name:

DSR Name:

Loyalty Program Enrolled In: MERA SUPER MERA UNNATI

1. Since how many years have you been associated with this Loyalty
Program?

New
1
2
3
4
5

2. Average BPM of the retailer. (Figures in Rs)

3. Which of the following companies serves you the best?

a. HUL
b. Dabur
c. Marico

Page 77
 d. P&G
e. ITC
f. Godrej
g. Others

4. Infrastructure of the store.

1 2 3

(Poor) (Average) (Excellent)

5. Location of window.

1 2 3

(Poor) (Average) (Excellent)

6. If “3 or below 3” why?

7. To what extent have your sales improved during the period of displays?

0 1 2 3 4 5
(- ve growth) (0-20%) (21-40%) (41-60%) (61-80%) (81% +)

8. Did you keep an unpaid dispenser in your store?

Yes No

Page 78
9. If “NO” why? / Any problems faced.

10. Did you keep a saffola stand in your store? (only for Super Mera)

Yes No

11.If “NO” why? / Any problems faced.

12. Did the DSR brief you about the loyalty program?
Yes No

13.Have you received the payments on time?

Yes No

14. Would you like to continue with our Loyalty Program?

Yes No

Page 79
 APPENDIX- B

FMCG major Marico has added another acquisition to its cap [6]. Recently, Kaya
the wholly owned subsidiary of Marico, acquired Singapore based Derma-Rx, a
chain of skincare clinics based in South East Asia with a turnover of Rs 50 crore in
all cash deal. The deal amount was approximately Rs 100 crore as told by the
officials.

Founded by Dr. S.K. Tan and Janifer Yeo, Derma Rx runs three centers in
Singapore and one in Kuala Lumpur with a customer base of 37000. As a part of
the deal, the Derma Rx clinics will run under its original brand name and the
founders will continue to spearhead the business for the next three years. Over the
time Derma Rx clinic will be integrated into Kaya, as told by the officials of
Marico. Also Derma Rx which has an advanced range of skin care products in its
portfolio will be introduced in Kaya clinics across the globe.

“With this acquisition Kaya is looking at a global footprint. Almost 45% of our
revenues will come from overseas,” says Mr. Milind Sarwate (Chief Finance, HR,
and Strategy). According to him, of the Rs 180 crore turnover the company
clocked in FY09, almost 30% came from the Middle East operations.

APPENDIX- C
Page 80
 Marico: Healthy volume growth:

Marico’s results for the March 2010 quarter are a bit disappointing, given the
subdued revenue growth of 6.7 per cent year-on-year (to Rs 600 crore) and an
uninspiring margin expansion. The subdued revenue growth, however, is
consequent to the company partly passing on the decline in prices of inputs like
copra (down by an average 20 per cent in 2009-10; down 9 per cent in the quarter)
and safflower oil (down 22 per cent in 2009-10) to consumers. The reduction in
input prices led to gross margins rising over 600 basis points. However, the
company raised its advertisement and sales promotion expenditure by 63 per cent,
the benefits of which were felt in the form of higher volumes and gains in market
share in some categories [7] [8]. 

Overall volume growth was healthy at 14 per cent. For Parachute, it stood at about
10 per cent and for Saffola around 13 per cent. Its value-added hair oils business
clocked volume growth of 27 per cent. 

Its international business, which accounts for about a fourth of sales, also
performed well with sales rising 16 per cent. The growth rates would have been
higher at 22 per cent but for the rupee’s appreciation. 

Marico’s Kaya skincare business continued to play a spoilsport. While revenues

rose about 7 per cent due to opening of new clinics, same-clinic sales were down 5
per cent. The company provided Rs 5.7 crore towards withdrawal of Kaya Life
(weight management solution), leading to a loss of Rs 5.3 crore. Going ahead, the
company is taking initiatives to improve Kaya’s performance. Nevertheless, its
breakeven could still be some time away. 

Page 81
Apart from the low input prices which affected Marico’s performance there was
another factor which affected all the FMCG companies, Food Inflation. The effect
can be seen in the table below [9].

Four out of five leading FMCG companies which have so far reported their
numbers showed their March quarter sales growing at a slower pace than over the
preceding nine months.

Currently, the food inflation, based on the Wholesale Price Index, rose to 12.81%
for the week ended July 3 [10].

Page 82