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By the turn of the 20th century, the face of the Indian FMCG industry had changed significantly. With the liberalization and growth of the Indian economy, the Indian customer witnessed an increasing exposure to new domestic and foreign products through different media, such as television and the Internet. Apart from this, social changes such as increase in the number of nuclear families and the growing number of working couples resulting in increased spending power also contributed to the increase in the Indian RNS Institute Of Technology, Bangalore Page 1
Analyzing The Opportunities For Horizontal Expansion consumers' personal consumption. The realization of the customer's growing awareness and the need to meet changing requirements and preferences on account of changing lifestyles required the FMCG producing companies to formulate customer-centric strategies. These changes had a positive impact, leading to the rapid growth in the FMCG industry. Increased availability of retail space, rapid urbanization, and qualified manpower also boosted the growth of the organized retailing sector. HLL led the way in revolutionizing the product, market, distribution and service formats of the FMCG industry by focusing on rural markets, direct distribution, creating new product, distribution and service formats. The FMCG sector also received a boost by government led initiatives in the 2003 budget such as the setting up of excise free zones in various parts of the country that witnessed firms moving away from outsourcing to manufacturing by investing in the zones. Though the absolute profit made on FMCG products is relatively small, they generally sell in large numbers and so the cumulative profit on such products can be large. Unlike some industries, such as automobiles, computers, and airlines, FMCG does not suffer from mass layoffs every time the economy starts to dip. A person may put off buying a car but he will not put off having his dinner. Unlike other economy sectors, FMCG share float in a steady manner irrespective of global market dip, because they generally satisfy rather fundamental, as opposed to luxurious needs. The FMCG sector, which is growing at the rate of 9% is the fourth largest sector in the Indian Economy and is worth Rs.93000 crores. The main contributor, making up 32% of the sector, is the South Indian region. It is predicted that in the year 2010, the FMCG sector will be worth Rs.143000 crores. The sector being one of the biggest sectors of the Indian Economy provides up to 4 million jobs. (Source: HCCBPL, Monthly Circular, March 2008)
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Toiletries, Deodorants and Perfumes, Paper products (Tissues, Diapers, Sanitary products) and Shoe care; the major players being; Hindustan Lever Limited, Godrej Soaps, Colgate, Marico, Dabur and Procter & Gamble.
Household cleaners (Dish/Utensil/Floor/Toilet cleaners), Air fresheners, Insecticides and Mosquito repellants, Metal polish and Furniture polish; the major players being; Hindustan Lever Limited, Nirma and Ricket Colman.
drinks, Staples/Cereals, Bakery products (Biscuits, Breads, Cakes), Snack foods, Chocolates,
Ice-creams, Tea, Coffee, Processed fruits, Processed vegetables, Processed meat, Branded flour, Bottled water, Branded rice, Branded sugar, Juices; the major players being; Hindustan Lever Limited, Nestle, Coca-Cola, Cadbury, Pepsi and Dabur.
Spirits and Tobacco; the major players being; ITC, Godfrey, Philips and
UB.
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COMPANY PROFILE
2.1 BACKGROUND AND INCEPTION OF COCA-COLA:
Coca-Cola, the product that has given the world its best-known taste was born in Atlanta, Georgia, on May 8, 1886. Coca-Cola Company is the worlds leading manufacturer, marketer and distributor of non-alcoholic beverage concentrates and syrups, used to produce nearly 450 beverage brands. It sells beverage concentrates and syrups to bottling and canning operators, distributors, fountain retailers and fountain wholesalers. The Companys beverage products comprises of bottled and canned soft drinks as well as concentrates, syrups and not-ready-to drink powder products. In addition to this, it also produces and markets sports drinks, tea and coffee. The Coca-Cola Company began building its global network in the 1920s. Now operating in more than 200 countries and producing nearly 450 brands, the Coca-Cola system has successfully applied a simple formula on a global scale: Provide a moment of refreshment for a small amount of money- a billion times a day. The Food and beverages sector is witnessing recently large-scale transformation, huge advertisement spending, awareness campaign about the products and brands. Key factors to success are distribution and advertising. the help of thousands of distributors. The Coca-Cola Company and its network of bottlers comprise the most sophisticated and pervasive production and distribution system in the world. More than anything, that system is dedicated to people working long and hard to sell the products manufactured by the Company. This unique worldwide system has made The Coca-Cola RNS Institute Of Technology, Bangalore Page 4 A large MNC in the food and beverage industry may be covering as many as 10 lakhs outlets across the country with
Analyzing The Opportunities For Horizontal Expansion Company the worlds premier soft-drink enterprise. From Boston to Beijing, from Montreal to Moscow, Coca-Cola, more than any other consumer product, has brought pleasure to thirsty consumers around the globe. For more than 123 years, Coca-Cola has created a special moment of pleasure for hundreds of millions of people every day.
Coca-Cola was first introduced by John Syth Pemberton, a pharmacist, in the year 1886 in Atlanta, Georgia when he concocted caramel-colored syrup in a threelegged brass kettle in his backyard. He first distributed the product by carrying it in a jug down the street to Jacobs Pharmacy and customers bought the drink for five cents at the soda fountain. Carbonated water was teamed with the new syrup, whether by accident or otherwise, producing a drink that was proclaimed delicious and refreshing, a theme that continues to echo today wherever Coca-Cola is enjoyed. Dr. Pembertons partner and book-keeper, Frank M. Robinson, suggested the name and penned Coca-Cola in the unique flowing script that is famous worldwide even today. He suggested that the two Cs would look well in advertising. The first newspaper ad for Coca-Cola soon appeared in The Atlanta Journal, inviting thirsty citizens to try the new and popular soda fountain drink. Hand-painted oil cloth signs reading Coca-Cola appeared on store awnings, with the suggestions Drink added to inform passersby that the new beverage was for soda fountain refreshment. By the year 1886, sales of Coca-Cola averaged nine drinks per day. The first year, Dr. Pemberton sold 25 gallons of syrup, shipped in bright red wooden kegs. Red has been a distinctive color associated with the soft drink ever since. For his efforts, Dr. Pemberton grossed $50 and spent $73.96 on advertising. Dr. Pemberton never realized the potential of the beverage he created. He gradually sold portions of his business to various partners and, just prior to his death in 1888, sold his remaining interest in Coca-Cola to Asa G. Candler, an entrepreneur from Atlanta. By the year 1891, Mr. Candler proceeded to buy additional rights and acquire complete ownership and control of the Coca-Cola business. Within four years, his merchandising flair had helped expand consumption of Coca-Cola to every state and territory after which he liquidated his pharmaceutical business and focused his full attention on the soft drink. With his RNS Institute Of Technology, Bangalore Page 5
Analyzing The Opportunities For Horizontal Expansion brother, John S. Candler, John Pembertons former partner Frank Robinson and two other associates, Mr. Candler formed a Georgia corporation named the Coca-Cola Company. The trademark Coca-Cola, used in the marketplace since 1886, was registered in the United States Patent Office on January 31, 1893. The business continued to grow, and in 1894, the first syrup manufacturing plant outside Atlanta was opened in Dallas, Texas. Others were opened in Chicago, Illinois, and Los Angeles, California, the following year. In 1895, three years after The Coca-Cola Companys incorporation, Mr. Candler announced in his annual report to share owners that Coca-Cola is now drunk in every state and territory in the United States. As demand for Coca-Cola increased, the Company quickly outgrew its facilities. A new building erected in 1898 was the first headquarters building devoted exclusively to the production of syrup and the management of the business. In the year 1919, the Coca-Cola Company was sold to a group of investors for $25 million. Robert W. Woodruff became the President of the Company in the year 1923 and his more than sixty years of leadership took the business to unsurpassed heights of commercial success, making Coca-Cola one of the most recognized and valued brands around the world. BOTTLERS: One of the main ways by which the Coca-Cola system throughout the world maintains a global brand with a local approach is its Bottling system. Since the CocaCola Company has over 2,400 products spread over 200 countries, its bottling system has to be the best. Before any Coca-Cola product reaches the consumer in any part of the world, it is produced, sold and distributed by a bottler from that region. The Bottlers form the link between the brand and the customers and their services help the product reach the customers. The bottlers are local companies which assist the business to get an indigenous perspective which will help cater to its consumers in a far better way. Each bottler maintains a different method to serve their respective regions in an appropriate way. RNS Institute Of Technology, Bangalore Page 6
COCA-COLA INDIA
Coca-Cola India has made significant investments to build and continually improve its business in India, including new production facilities, wastewater treatment plants, and distribution systems and marketing equipment. During the past decade, The Coca-Cola System has invested more than US $1 billion in India, making Coca-Cola one of the countrys top international investors and in 2003, Coca-Cola India pledged to invest a further $100 million in its operations. The Coca-Cola System in India includes 24 Company-owned bottling operations and another 25 franchisee-owned bottling operations that directly employ 5,500 local people and create jobs for another 150,000. The Coca-Cola Company and its independent bottlers have been engaged at the international, national and community levels to support programs that protect the environment, conserve water, promote education, and provide healthcare.
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Company Vision
Company vision serves as the framework for company Roadmap and guides every aspect of the business by describing what company needs to accomplish in order to continue achieving sustainable, quality growth.
People: Be a great place to work where people are inspired to be the best they can be. Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs. Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring value. Planet: Be a responsible citizen that makes a difference by helping build and support sustainable communities. Profit: Maximize long-term return to shareowners while being mindful of our overall responsibilities. Productivity: Be a highly effective, lean and fast-moving organization.
COMPANY VALUE
Leadership: The courage to shape a better future Passion: Committed in heart and mind Integrity: Be real Accountability: If it is to be, its up to me Collaboration: Leverage collective genius Innovation: Seek, imagine, create, delight RNS Institute Of Technology, Bangalore Page 8
Analyzing The Opportunities For Horizontal Expansion Quality: What we do, we do well
DIET COKE
Introduced in the United States in 1982 and in Britain a year later, 'diet Coke' or Coca Cola Light as its sometimes known - is now sold in 149 countries across the world, with sales in Britain second only to those of the United States. Whether diet or light, this is the soft drink for those who live life to the full and embrace a healthy lifestyle, and it's deliciously sugar free.
THUMS UP
Thums-Up is a leading sparkling soft drink and most trusted brand in India. Originally introduced in 1977, Thums-up was acquired by Coca Cola Company in 1993. It is similar RNS Institute Of Technology, Bangalore Page 9
Analyzing The Opportunities For Horizontal Expansion in flavor to other colas but has a unique taste reminiscent of betel nut and is promoted as a masculine and a bold drink.
SPRITE
First introduced in 1961, 'Sprite' is now the worlds leading lemon-lime flavored soft drink and the No. 4 soft drink worldwide, sold in 190 different countries! The idea for the name came from Haddon Sundbloms Coca-Cola advertisements featuring the little sprite an elf with silver hair and a big smile. Millions of people around the world enjoy 'Sprite' for its crisp, clean taste.
FANTA
'Fanta' is the soft drink with the vibrant taste of real fruit flavors. 'Fanta' became only the second drink - after 'Coca-Cola' itself - to be marketed by The Coca Cola Company, but was soon available in many different countries. Originally only orange flavored, 'Fanta' is now produced in 70 different varieties worldwide, with flavors often derived from the native fruits of the region where it is being sold. Coca Cola has recently launched the Fanta Apple flavor.
LIMCA
Lime n lemoniLimca, the drink that can cast a tangy refreshing spell on anyone, anywhere. Born in 1971, Limca has the original thirst choice, of RNS Institute Of Technology, Bangalore Page 10
Analyzing The Opportunities For Horizontal Expansion millions of consumers for over 3 decades. The brand has been displaying the leading flavor soft drinks in the country. The success formula? The sharp fizz and lemoni bite combined with single minded positioning of the brand as the ultimate refresher has continuously strengthened the brand franchise. Limca energizes refreshes and transforms.
MAAZA
Maaza was launched in 1976. Here was a drink that offered the same real taste of fruit juices and was available throughout the year. In 1993, Maaza was acquired by Coca- Cola India. Maaza currently dominates the fruit drink category. Mango drinks currently account for 90% of the fruit juice market in India. Maaza currently dominates the fruit drink category and competes with Pepsi's Slice brand of mango drink and Frooti, manufactured by Parle Agro. While Frooti was sold in small cartons, Maaza and Slice were initially sold in returnable bottles. However, all brands are also now available in small cartons and large PET bottles.
MINUTE MAID
The history of the Minute Maid brand goes back as 1945 when the Florida Corporation developed orange juice power. The company developed a process that eliminated 80 percent of the water in orange juice. They branded it minute Maid, a name connoting the convenience and the ease of preparation (in a minute). Minute Maid thus moved from a powdered concentrate to the first concentrate. ever orange juice from
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KINLEY
Water, a thirst quencher that refreshes a life giving force that washes all the toxins away. A ritual purifier that cleanses, purifies, transforms. Kinley water understands the importance and value of life giving force. Kinley water thus promises water that is as it is meant to be. Water you can trust to be safe and pure.
GEORGIA
Georgia was launched by the company to address the competition offered by its substitutes. It is available as tea or coffee and is available in seven sizzling flavors. It promises a great tasting, consistent, hygienic and affordable cuppa made available by vending machines.
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Analyzing The Opportunities For Horizontal Expansion challenging times. We attain global growth by understanding and being a part of local communities. Only the presence and partnership of our bottlers can make that happen. The industrys complexity has led to the evolution of very different organizational models. Many food and beverage companies are still organized along local/regional lines, with a presence in only a limited number of categories, often with a short shelf life. Some have taken a global, multi-category approach, remaining highly diversified in many different categories but with a small number of truly global brands. Coca Cola is one such brand.
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Analyzing The Opportunities For Horizontal Expansion between the two, is that the Private Limited Company cannot legally offers its shares to the general 'public', therefore this form of Company is usually associated with family run businesses. Whilst the Public Limited Company can sell its shares to the general public on the Stock Exchange, providing the potential for far greater finances to be raised. The owners of a limited company are referred to as its members, or shareholders. An individual can become an owner of the business by purchasing shares in that business. When the profits of the business are distributed to shareholders, they are distributed in the form of a dividend. The value of the dividend is decided upon not by the owners, but by the Directors of the business. Some shareholders had invested their life savings and not only lost their money, but their homes, limited liability was designed to protect shareholders from this mistake, but the key motive was to ensure that large projects could continue to raise capital.
PepsiCo: The PepsiCo challenge, to keep up with archrival, the Coca-Cola Company
never ends for the World's # 2, carbonated soft-drink maker. The company's soft drinks include Pepsi, Mountain Dew, and Slice. Cola is not the company's only beverage; PepsiCo sells Tropicana orange juice brands, Gatorade sports drink, and Aquafina water. PepsiCo also sells Dole juices and Lipton ready-to-drink tea. PepsiCo and Coca-Cola hold together, a market share of 95% out of which 60.8% is held by Coca-Cola and the rest belongs to Pepsi.
Nestl: Nestle does not give that tough a competition to Coca-Cola as it mainly deals
with milk products, Baby foods and Chocolates. But the iced tea that is Nestea which has been introduced into the market by Nestle provides a considerable amount of competition to the products of the Company. Iced tea is one of the closest substitutes to the Colas as it is a thirst quencher and it is healthier when compared to fizz drinks. The flavored milk
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Analyzing The Opportunities For Horizontal Expansion Named Strategic Partners in Poland's Responsible Business Forum, Coca-Cola Poland Services (CCPS) and Coca-Cola HBC Polska (CCHBCP), Responsible Business Forum (FOB) (December 2007) No. 2, 2007 Corporate Social Responsibility Study, Coca-Cola Mexico, Exclsior (December 2007) World's Most Accountable Corporations, One World Trust 2007 Global Accountability Report (December 2007). Asia Society Leadership Award (November 2007)
No. 2, India's Most Respected Fast Moving Consumer Goods Company, and No.
7, Most Respected Multinational Corporation in India, Coca-Cola India, Business World, in conjunction with the Indian Market Research Bureau (November 2007) No. 13, World's Most Respected Companies survey, Barron's (September 2007)
No. 1, Food and Beverage Industry Category, Best Ethical Quote Progress and
(July 2007) FTSE4Good Index of Socially Responsible Companies (July 2007) No. 4, Most Respected Companies, Coca-Cola India, Business World (April 2007) No. 8, America's Most Responsible Companies Consumer Index (March 2007)
Best Sustainability Initiative, eKO freshment program, Zenith International
Publishing Beverage Innovation Awards (March 2007) No. 3, Beverage Industry Category, America's Most Admired Companies Survey, Fortune Magazine (March 2007) RNS Institute Of Technology, Bangalore Page 19
Analyzing The Opportunities For Horizontal Expansion Corporate Social Responsibility Award, Mexican American Legal Defense and Education Fund (March 2007) Ethical Brand Awards: No. 1 in the U.S., No. 3 in Spain and No. 8 in France, fivecountry study by market research group GfK NOP (February 2007) "Global 100," unranked list of the world's 100 most sustainable corporations (January 2007) Product Innovation Best Ideas on Social Responsibility Issues, Coca-Cola Spain, Actualidad Economica (2007) Best Companies of the Year, Coca-Cola Spain, Dirigentes (2007)
Best Professional Ethics - 3rd Place, Coca-Cola Spain, Actualidad Economica
(2007).
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The manufacturing unit of HCCBPL, situated at Bidadi, is the third largest plant and one of the bottling operations owned by the company. The plant has one PET line which has the capacity of yielding 210 bottles per minute, and RGB bottles i.e. 600 bottles per minute. It caters to the whole of South Karnataka through a network of more than 80 distributors. There are three depots in Bangalore; North Depot, East Depot, and Mega Depot.
Distributors
Outlets
Outlets
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STRUCTURE:
RNS Institute Of Technology, Bangalore Page 23
AGM/AOD (Unit2) Vice President BSG AGM/AOD (Unit3) Regional Vice President (North) AGM/AOD (Unit4) Regional Vice President Region Finance (Central)
Region cold Drinks RNS Institute Of Technology,Region Legal Bangalore Region BSG
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Region Director/Manager RNS Institute Of Technology, Bangalore Region Capability Region Channel Management Page 25
AGM/AOD
Plant Manager
Route to Market
Finance Manager
Channel Manager
Sales Executive
Marketing
Sales Trainer
Market Developer
Key Accounts
STRATEGY:
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Analyzing The Opportunities For Horizontal Expansion What will drive for the success in the future is not just growth, but sustainable growth meeting short term commitments while investing to meet long term goals. And Coca-Cola company have clear goals to achieve long term growth. The strategies are to build their fundamental strenghts in marketing and innovation, driving increased efficency and effectiveness in interactions with the system and generating new energy through core brands that focus on health and wellness. As Coca-Cola is the worlds most recognised family of brands , they deliver more than 3500 beverages to over 200 countries around the world. Not just soft drinks , but juice and juice drinks, sport drinks, water , coffee and milk. And every day they explore new ways to create and share beverages to energize, relax, nourish , hydrate and enjoy.As Coca-Cola is the worlds largest distributor of non alcoholic beverages, they maintain a trusted local presence in every community.Coca-Cola have increased the annual marketing budget substaintlly, launched many new products, and developed a new model to help retail customers to maximize their sales while we continue to plan for the next one , five and ten years in business.
STAFF:
The people are the face of the brands. They are talented and passionate, and they take immense pride in being a pert of company with a global scale. The Coca-Cola system in India directly employs over 25,000 people including those on contract. The system has created indirect employment for more than 1,50,000 people in related industries through its vast procurement, supply and distribution system. The coco-cola staff strive to ensure that the work environment is safe and inclusive and that are plentiful opportunities for people in India and across the world.
SKILLS:
Working in Coca-Cola company, is going to be working with people who are top of the league at what they do. The slill that is mainly deployed is of training skills. Coca-Cola company has an extensive on the job training program to focus on day to- day needs of the people and in each of the offices across the continent there are number of local training innitatives.
STYLES:
There are four main types of management styles that each business would use. Coca Cola have four principles of citizenship that they would have to incorporate into the management style: * Provide quality in the marketplace * Enrich the workplace * Preserve the environment * Strengthen the community A management style is an overall method of leadership used by the manager. The Coca Cola Company use the following management styles, but each one in different departments. There are three main types of management styles used in businesses:
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Analyzing The Opportunities For Horizontal Expansion Autocratic: Where the leader makes all the decisions, there is no negotiation andis very prescriptive and there is little job satisfaction. However, the job gets done quickly and there is less conflict between different ideas. This style is hardly used among the company as they believe that the lack of input could lead to poor results. Autocratic does: Save a lot of time as quick decisions can be made and there is no timewasted on discussion resulting in the business saving time and money. Democratic: This emphasises on group agreements to generate new ideas. There aretwo types of democratic management styles; democratic and consultative democratic. Democratic is where all the managers, junior managers and employees are involved in the ideas and final decision process. Out of all the workers, no-one has a higher level than the others n this management style. Consultative democratic: This is where the managers allow the employees to make the ideas butthe ideas are forwarded to the executive's or the manager consults their team to make the final decision. Coca Cola applies consultative management style to the company more as there can be less conflict for what the final decision is. The advantage of this is that it helps to motivate staff as they are aware that they have a say in the company to some extent. The disadvantages of this that the process is verytime consuming and effort will be needed by a manager to do this. Management encourages employees to set goals in line within theorganization aims. There are reviewed regularly in performanceappraisals. The advantages of this style are that it will increase efficiency of individuals and help to motivate them and train them so they are productive. The disadvantages of this are that it needs to be well organized and will not work in highly structured jobs. RNS Institute Of Technology, Bangalore Page 29
Analyzing The Opportunities For Horizontal Expansion Democratic style is the management style that Coca cola adopts. Thissort of management style involves empowerment. In this management style individuals and teams are given responsibilities and decisions to make, usually within a given framework. If anything wrong happens then the individuals and teams are then held responsible for the decisions that are chosen. With this type of management style it allows the manager to feel comfortable with other people in the organization making some of the decisions. Democratic managers will often want feed back from their employees on decisions being made. Democratic leaders listen and act on the opinions of the group. This type of management is good as it makes the employees happy and productivity is high. This is a very good method because employee's thoughts and suggestions are listened to by the business. This makes the employees seem as if they are respected and that their thoughts are valid.
SHARED VALUES:
Coca-Cola company is guided by the shared values such a Leadership: The courage to shape a better future. Passion: Committed in heat and mind Integrity: Be real. Accountability: If it is to be, it is up to me. Collaboration: Leverage collective genius. Innovation: Seek, imagine, create and delight. Quality: What we do, we do well.
SWOT ANALYSIS
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Strengths: High Quality Products: The products of Coca Cola are well known for their product quality. Highly Reliable Products: Coca Cola products are highly reliable in the Indian beverages market.
Best Seller Products: Coca cola has two of the bestselling products Thums Up,
Sprite all over India. Brand Loyalist: Coca cola has huge number of brand loyal people. It has been already proved, as the Coca Cola products are the best seller in the beverages segment all over the world. Coca cola has a huge product mix to cater every segment of the market. Availability, Affordability, Acceptability: These additional features of our product give us an added advantage over our rivals in the CSD segment. Weaknesses: Less efficient distribution channel: The present distribution channel lacks penetration because retailer activation involves higher cost. Coca cola needs to become the Hindustan lever of India. Brand killing strategy of coca cola: Coca cola tends to kill the local brand in order to promote its own international brands. Coca cola has done this in past and still follow this strategy. Coca cola has put behind Limca in order to promote its other international brand Sprite and MMPO.
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Analyzing The Opportunities For Horizontal Expansion Horizontal and vertical conflict exists in the distribution channel. Distributors are trying to eat up the profit of the distributors of the adjoining area. Opportunities: Some of the segments are still untouched by coca cola like the juice segment and the milk product segment. Our rival Pepsi has paid attention to this segment and therefore gained a lot from this segment. A vast market of 1200 crores or 500 million cases has been untouched by coca cola.
Every market has its own local needs. People need changes over the season for example people tend to switch over to drinks like Lassi and Neembupani. Coca Cola should come up with drinks which are more local and seasonal.
In metropolitan areas people are becoming more health conscious and therefore prefer drinks which are nutritious and health beneficial. This segment needs attention.
Threats: In the CSD segment there is still a price war between Coke and Pepsi, therefore both the rivals maintain the same price but the way in which the rivals can gain advantage is by influencing the distributor and the retailers by offering them special schemes.
Since retailers are always profit oriented they tend to shift their preferences which can turn out to be a major loss.
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LEARNING EXPERIENCE
Through internship project at Hindustan Coca-Cola Beverages Pvt. Ltd, Bangalore I got an opportunity to learn and get experienced with the principles and practices followed in the company. It also gave me a real time interaction with the market, the marketing concepts followed as well as the real time challenges faced in the market, which directly or indirectly affects the overall operation of the business. It also helped me to know how an organization functions by providing an insight of different departments of an organization and their co-ordination with other departments to achieve the common objective of the organization. While working on project I have learned many crucial things which were very difficult to get through theoretical study. This Project has given me a platform to apply my theoretical background which I have learnt during my academics. During this Project I visited several customers and interacted with corporate people who enriched my knowledge base.
Through this study I got an understanding of the business carried out by the company.
The study helped me to experience the operations and functions of the organization
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Analyzing The Opportunities For Horizontal Expansion The study gave me a real time experiencing on Profiling of the customer bases and segmenting the same into different sectors. The study gave me an overview of procedure of creating a new Customer & retaining them for long term goals. While working on the project I got an exposure to how to develop a strategy plan for increasing present customer base & generating a continuous business from the existing customer The study helped to understand the Porter's Five Forces concept and the method of using the strategic tools.
The project also helped me to know the job profile of employees at different levels in the organization, their job responsibilities and their contribution towards the success of the organization.
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GENERAL INTRODUCTION
Expansion of business capacity through the absorption of facilities or buildings as well as through the acquisition of new equipment to handle an increased volume in sales in which the business is already engaged .In microeconomics and strategic management, the term Horizontal Expansion describes a type of ownership and control. It is a strategy used by a business or corporation that seeks to sell a type of product in numerous markets. Horizontal Expansion in marketing is much more common than Vertical Expansion is in production. Horizontal Expansion occurs when a firm is being taken over by, or merged with, another firm which is in the same industry and in the same stage of production as the merged firm, E.g. Pepsi has adopted strategy of Vertical Expansion by which Pepsi wants to improve its sale from Coke monopoly outlets, means Cokes monopoly outlets are being taken over by Pepsi now in this condition to improve its sale Coke need to open new outlets which is called Horizontal Expansion Strategy. A monopoly created through Horizontal Expansion is called a Horizontal Monopoly. This is the expansion of a firm within an industry in which it is already active for the purpose of increasing its share of the market for a particular product or service.
Horizontal Expansion:
It is defined as expanding a business beyond what is presently known as its core functions. Best illustrated by example, a typical case of horizontal expansion was when ProBlogger decided to introduce their Job Boards. While ProBloggers core functions RNS Institute Of Technology, Bangalore Page 35
Analyzing The Opportunities For Horizontal Expansion was providing bloggers with tips on how to make money through their blogs, the team behind the site identified that a job board could compliment what they already provided their customers (readers) with, and at the same time create a new cash flow and increase their revenue (by charging for the listings on the job board). This is a type of horizontal expansion where you expand on your already existing brand and go beyond your core activity in order to create new and (hopefully) rewarding cash flows that by calculation will, at some point, make your business more profitable. Another type of Horizontal Expansion is to create a completely new section of your company, and only tie them together under an umbrella. In the world of small, independent online publishers a feasible example would be that if you run a popular blog on a certain videogame, you can start a completely new blog on another videogame, and tie them together only by a company/network blog or website. Of course, the other method of expanding horizontally would be to simply extend the topic of your current blog to include the additional new videogame. When developing an market business you will always be looking for ways to maximize your revenue, and expanding your fields of operation is often a possibility that surfaces when you are evaluating the future of your businesses. While common to most of those who have formally studied business management, the concepts of Vertical Expansion and Horizontal Expansion are not always recognized by small time internet entrepreneurs such as myself. Generally when facing the option of expansion, you will have two initial paths to choose from, and the way we usually separate them is by classifying them as horizontal or vertical.
Reason Of Horizontal Expansion? The ultimate objective of coke is to acquire more customer and serve them properly. While doing Horizontal Expansion take care to the competitors strategy. The main competitor is PEPSI, who has opted Vertical Expansion to generate more sell however Coke do not believe on Vertical Expansion because Vertical Expansion
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has limited preview so COKE is great believer in Horizontal Expansion and this strategy helped to the company to maintain its leadership in the soft drink industry. India is a big country having diversified taste and appearance and same character is reflected in their demography. Horizontal Expansion helps the company to serve the more people and more customers touch point because in the waste country many customers commute.
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Analyzing The Opportunities For Horizontal Expansion By horizontal expansion there will be more outlets of our product In the market which will sell our product in more quantity. This will generate incremental revenue for the business.
Helps to Improve Route Productivity.
Analyzing The Opportunities For Horizontal Expansion 1. To understand and explain the concept of Horizontal Expansion to the retailers. 2. To understand how to make the Horizontal expansion process more effective. 3. To Know the Demand in terms of coco-cola products from the Retailers. 4. To enhance the business, and to expand the market coverage 5. To study the distribution system of the company. 6. To enlist the benefits of horizontal expansion for the company at the retail end.
Analyzing The Opportunities For Horizontal Expansion Greater market capability and lesser competition Financial synergy (Improved creditworthiness, enhancement of borrowing power, decrease in the cost of capital, growth of value per share and price earnings ratio, capital raising, smaller flotation expenses Motivation for the managers For attaining economies of scale, there are two methods and they are the following: Increased fixed cost and static marginal cost No or small fixed cost and decreasing marginal cost One example of economies of scale is that if a company increases its production twofold, then the entire expense of inputs goes up less than twofold.
Primary Data: The primary data is fresh information collected for a specified study. The primary data can be gathered by observational, experimentation and survey method. Here the entire scheme of plan starts with the definition of various terms used, units to be employed, type of enquiry to be conducted, extent of accuracy aimed etc.,
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Analyzing The Opportunities For Horizontal Expansion The methods commonly used for the collection of primary data are: 1. 2. 3. 4. Direct personal investigation, where the data is collected by the investigator from the sources concerned. Indirect oral interviews, where the interview is conducted directly or indirectly concerned with subject matter of the enquiry. Information received through local agencies, which are appointed by the investigator. Mailed questionnaire method, here the method consists in preparing a questionnaire (a list of questions relating to the field of enquiry and providing space for the answers to be filled by the respondents.), which is mailed to the respondents with a request for quick response with in the specified time. In this project mailed questionnaire method is used to collect the primary data. Secondary Data: The secondary data refers to data, which already exists. The secondary data collect from internal records, business magazines, company websites and Newspapers. Research instruments: For the collection of primary data a structured questionnaire was prepared covering various aspects of the study. The questionnaire contains closed-ended and dichotomous questions. Sampling Procedure: It is a procedure required from defining a population to the actual selection of the sample. PROCESS The study is based on Primary data and Secondary data. Secondary Data was collected from the Companys website and MDs Sales Presenter as well as Primary Data was collected through structured questionnaire. The questionnaire was designed by keeping all the objectives of the study in mind. RNS Institute Of Technology, Bangalore Page 41
Analyzing The Opportunities For Horizontal Expansion The type of research which is used to conduct survey was. Sample Unit: Sampling units are outlets owners/ shopkeepers selling soft drinks. Sample Size: Sample size of 80 Outlet. Sample Technique: Sample Technique is Simple Random Technique. Method of data collection: Method of data collection is survey method.
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DATA INTERPRETATION
1. What type of outlet do you hold? Type of Outlets Type of Outlets Grocery Store E&D 1- Bakery Convenience Store TOTAL Source Number 15 15 50 80 Primary Data Graph-1: Type of outlets Percentage 19 19 62 100
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Analyzing The Opportunities For Horizontal Expansion ANALYSIS: In this Graph Convenience Stores are 62 in percentage whereas E&D Bakery and Grocery Store are of 19%. INTERPRETATION: By knowing the above graph it is very obvious that the visited area included more number of Convenience Store and hence our more effort was to enroll these stores to expand the business. 2. Do you deal with beverages? Outlets deal with beverages Number Percentage 45 56 35 44 80 100 Primary Data
ANALYSIS: Among 80 Outlets 45 outlets are deal with beverages and 35 Outlets do not deal with beverages. RNS Institute Of Technology, Bangalore Page 44
INTERPRETATION: In the above graph out of 80 visited new outlets 45 outlets are deal with beverages and 35 outlets do not deal with beverages. Here I tried to convince those outlets also which were not interested but only in few cases I got success. If Company comes up with good profitable scheme then may be these outlets can be enroll for the Company. 3. If yes which brand do you keep?
Percentage of Outlets Holding Other Brands Brands Number Percentage Pepsi 31 69 Parle 12 27 Dabur 2 4 Total 45 100 Source Primary Data
ANALYSIS: In Market most the outlets keeps Pepsi Products. Among 45 new Outlets 31 Outlets hold Pepsi Products and 12 Outlets and 2 Outlets keeps Parle and Dabur respectively. INTERPRETATION: RNS Institute Of Technology, Bangalore Page 45
Analyzing The Opportunities For Horizontal Expansion Most of the Outlets were keeping Pepsi products the reason behind it may be Coca-Cola Company have not approached them still or may be that particular area have less demand of Coke Product.
4. Are you aware of Coca-Cola products? Awareness of Coca-Cola Variable Yes No TOTAL Source Number 80 0 80 Primary Data Graph-4: Awarness of Coca-Cola Percentage 100 0 100
Awareness of Coca-Cola
No 0%
Y es 100%
Analysis: The above table shows that 100% of outlets owners are aware of Coca-Cola products and nil% said No. RNS Institute Of Technology, Bangalore Page 46
Interpretation: So here it can be interpreted that all the outlet owners sre sware of Coca-Cola products.
5. If Yes how did you come to know? Variable Banner Hoarding Television Newspaper TOTAL Source Media which created awareness of coca-cola Number Percentage 8 10 32 40 30 37.5 10 12.5 80 100 Primary Data
ANALYSIS: The above table shows that 10% of outlet owners came to know about the coca-cola products through banner. 40% of outlet owners came to know about the Coca-Cola product through Hoarding 37.5%of outlet owners came to know about the Coca-Cola product through television. 12.5% of outlet owners came to know about the Coca-Cola product through Newspaper RNS Institute Of Technology, Bangalore Page 47
INTREPRETATION: From the analysis of the above data it can be interpreted that advertisement through hoardings and television are the major tool for creating awareness to the consumers. 6. What is the chilling equipment you use? Chilling Equipment Uses by Retailers Pepsi Fridge Own Fridge Ice Box Both Pepsi fridge and own box Total Source Numbers 17 15 2 11 45 Primary Data Graph-6: Chilling equipments used by retailers Percentage 38 33 4 25 100
ANALYSIS: From the above graph it is analyzed that Outlets keep mostly Pepsi and their own Chilling equipment.
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Analyzing The Opportunities For Horizontal Expansion INTERPRETATION: Pepsi fridge holding outlets are more and next is own fridge holding outlets and only 2 outlets are keeping Ice fridge out of 45 outlets & both Pepsi and own ice box are 11 in number. 7. Does outlet fits in Balance 2 criteria? (Pepsi products) Outlets Fits in Balance 2 Criteria Response Yes No Total Source Number 31 49 80 Primary Data Percentage 39 61 100
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Analyzing The Opportunities For Horizontal Expansion INTERPRETATION: In the above Graph among 80 new Outlets 31 Outlets keep Pepsi Products and 49 Outlets they were not having any of the beverages like Coca- Cola and Pepsi. There was a more opportunity to enroll new outlets because most of the outlets do not have any beverages products. 8. How often do you order for the products? Frequency of Placing Order For The Products Days Daily Weekly Monthly TOTAL Source Number 10 29 6 45 Primary Data Percentage 22 64 14 100
ANALYSIS: 29 Outlets order weekly 10 Outlets Daily and 5 Outlets Monthly. INTERPRETATION: RNS Institute Of Technology, Bangalore Page 50
Analyzing The Opportunities For Horizontal Expansion There are 29 outlets which order in weekly basis and only 10 outlets are there which order daily and only 5 outlets are there which order in monthly basis. Commonly outlets order for weekly basis.
9. What do you do if a brand which you prefer is not delivered to you on time? Response of The Retailer If Product is not Delivered on Time Response Go for other brand call to distribute Call to company's Sales Person Stop Selling that Brand Total Source Number 25 8 22 25 80 Percentage 31 10 28 31 100 Primary Data
ANALYSIS: Among 80 new Outlets 55 Outlets said that they will go for other brand whereas 27 said they stop selling the Brand and 23 and 13 outlets said call to Companys Salesperson and Distributor respectively. INTERPRETATION:
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Analyzing The Opportunities For Horizontal Expansion If brand product is not delivered on time then commonly outlets go for other Brand. But if demand is high for the same product then they try to contact company to get the Product on time. 10. Coca-Cola Company does not take empty bottles of Pepsi, but the latter does. Does it have any effect on sales? Effect On Sales If Coca-Cola Does not Take Empty Bottles of Pepsi Response Yes No Can't Say Total Source Number 2 18 25 45 Primary Data Percentage 4 40 56 100
Graph-10: Affect on sales if Coca-Cola does not take empty bottles of pepsi
ANALYSIS: There are 25 Outlets have not given any response for this Questionnaire and 18 and 3 Outlets said NO and YES respectively. INTERPRETATION: RNS Institute Of Technology, Bangalore Page 52
Analyzing The Opportunities For Horizontal Expansion Coca-Cola does not take empty bottles, most of the retailers were not having any idea of this but some said that there is no any impact on sales. 11. Kindly rate the behavior of salesman of the beverages you deal with? Behavior of Salesman of The Company Response Number Percentage Highly Satisfied 4 8 Satisfied 24 54 Neither Satisfied nor Dissatisfied 13 29 Dissatisfied 4 8 Highly Dissatisfied 0 0 Total 45 100 Source Primary Data Graph-11: Behaviour of salesman of the company
ANALYSIS: From the above Graph 24 Outlets were very satisfied with Pepsi services and 4 are highly satisfied. 13 Outlets were not satisfied or dissatisfied and only 4 outlets among 45 Outlets were dissatisfied. INTERPRETATION:
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Analyzing The Opportunities For Horizontal Expansion Pepsi provided better services to the outlets and hence it is required for the Coca-Cola Company to come up with better scheme and provide a better services to the outlets then competitors. 12. If you wish to do business with Coco-Cola, give reasons for it? Reason Behind Keeping Coca-Cola Products Reasons Numbers Brand Value 35 Better Scheme 2 High Demand 41 Good Supply 0 High Profit Margin 0 Good Service Quality 1 Any Other 1 Total 80 Source Primary Data
Percentage 44 3 51 0 0 1 1 100
ANALYSIS: There are 44 new Outlets wants to go for Coca-Cola Products because of their Brand Value and 51 Outlets because of High Demand. Only 3 Outlets for better scheme and 1 outlet for Good Service and any other reason. INTERPRETATION:
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Analyzing The Opportunities For Horizontal Expansion There are 49 outlets they want to do business with Coca-Cola Company and 51 Outlets they do business because Coca-Cola Product have high Demand.
13. How you rate the price of beverages you keep other than Coca-Cola? Rate 1 if it is least price and Rate 5 if it is highly priced. Rating of the price of beverages other than Coca-Cola Rate Numbers Percentage 1 1 2 2 14 31 3 17 38 4 9 20 5 4 9 TOTAL 45 100 Source Primary Data Graph -13: Rating the price of beverages other then Coca-Cola
Rating the price of beverages other than Coca-Cola
40 31 30 20 10 0 1 2 3 4 5 2 20 9 38
ANALYSIS: Among the total respondents 2% retailers says that the Coca-Cola products are priced high, 31% says it is priced more then others, 38% have neutral opinion about it, 20% says it is priced lower then others and remaining 9% says that it is priced least. INTERPRETATION:
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Majority of the retailers have an opinion that the products of Coca-Cola is priced cheaper then other beverages. However the percentage of retailers saying that the coca-cola products are rated higher then other products is sufficient enough for the company to consder the revision of the pricing policy.
14. Which type of packaging attracts the retailers to open the outlet? Particulars RGB Pet Bottles Tetra Packs Cans TOTAL Source Packaging attracts the retailers Number Percentage 23 50% 18 40% 1 2% 3 8% 45 100 Primary Data Graph-14: Packaging attracts the retailers
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Analyzing The Opportunities For Horizontal Expansion By knowing above graph, R G B is 50%, Pet bottles is 40%, Tetra packs is 2% and Cans is 8% contribution towards attracting the retailers for opening a new outlet INTERPRETATION: Here R G B is highest percentage and TETRA PACKS having lowest percentage in attracting the retailers to open a new outlet 15. Which of the following promotions affect the opening and retaining of outlets? Promotions affecting the opening and retaining of outlet Schemes Case re-fund Price pack TOTAL Source 32 28 20 80 Primary Data 40% 35% 25% 100
ANALYSIS:
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Analyzing The Opportunities For Horizontal Expansion By knowing above graph, Schemes 40%, Case re-fund 35% and Price pack is 25% effect on the opening and retaining of outlet. INTERPRETATION: Here SCHEMES is having highest percentage and PRICE PACK is having lowest percentage.
FINDINGS
1. In the survey I recognized that there is 51% of demand for the Coca-Cola products than any other products.
2. It is felt that outlet owners are very much interested in supply part. So the company needs to take care of the supply division.
3. Pepsi provided better services to the outlet and hence it is required for the Coca-Cola Company to come up with better service options for the outlets than its competitors.
4.
I found out that around 43.75% of new outlets were not keeping any kind of beverages. Hence there was more opportunity to enroll new outlets.
5. Most of the outlets i.e. around 69% of outlets were keeping Pepsi products. The
reason behind it would be Coca-Cola Company might not have approached them.
6. My survey found that 44% of outlets trust the Coca-Cola brand name and goodwill.
Hence there is a good business opportunity with these new outlets. RNS Institute Of Technology, Bangalore Page 58
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CONCLUSION
In the present competitive world the success of the company depends on satisfying the customers as well as channel members. This is the area of retail business and to win the race and be on the top companies are out Performing by spending more on trade promotions. The channel members play a key role in increasing the sales of FMCG products. So the company has to pay more attention on distribution, promotion and availability of brand to win sales in the market. The study concludes that the Hindustan Coca Cola Beverages Pvt. Ltd has to strengthen its product line by introducing new flavors and new sizes. It also has to increase the stock holding and availability of Coke brands through motivating channel members by offering attractive schemes and incentives.
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QUESTIONNARE 1. Name of Outlet: ________________________________________ 2. Location:______________________________________________ 3. Life Span of Business:____________ 4. Criteria no.s (7 criterias for a new outlet) of the _____________ retailer. 5. What Type of Outlet do you hold?
a) Yes b) No
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Analyzing The Opportunities For Horizontal Expansion 7. If yes which Brand do you keep ?
Analyzing The Opportunities For Horizontal Expansion a) Monthly b) Weekly c) Daily 13. What do you do if a Brand which you prefer is not delivered to you on time? a) Go for other Brand b) Call to Distributor c) Call to Companys Sales Person d) Stop Selling that Brand 14. Coca-Cola Company does not take empty bottles of Pepsi, but the latter does. Does it have any effect on sales? a) Yes b) No c) Cant Say 15. Kindly rate the behavior of salesman of the beverages you deal with? a) Highly Satisfied b) Satisfied c) Neither Satisfied nor Dissatisfied d) Dissatisfied e) Highly Dissatisfied 16. If you wish to do business with Coco-Cola, give reasons for it? a) Brand Value
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Analyzing The Opportunities For Horizontal Expansion b) Better Scheme c) High Demand d) Good Supply e) High Profit Margin f) Good Service Quality g) Any Other 17. How you rate the price of Beverages you keep other than Coca-Cola? a) Rate 1 If it is least price and b) Rate 5 if it is highly priced
18. Which type of packaging attracts the retailer to open the outlet a) R G B b) Pet bottle c) Tetra Pack d) Cans 19. Which of the following promotions affect the opening and retaining of outlets a) Schemes b) Case refund c) Price pack
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Analyzing The Opportunities For Horizontal Expansion Suggestions if any: _______________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________
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Analyzing The Opportunities For Horizontal Expansion Business Research Methods by Prof. S.N. Murthy and Dr. U.Bhojanna Websites
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