INTRODUCTION

Global Scenario

Globally, carbonated soft drinks are third most consumed beverages. Per
capita annual consumption of carbonated soft drinks is nearly four times
the per capita consumption of fruit beverages1. Soft drink consumption is
growing by around 5% a year, according to Global Soft drinks 2002. Total
volume reached 412,000 million litres in 2001, giving a global per capita
consumption of around 67.5 litres per year.

North America is the largest soft drinks market with 27 per cent of total
world soft drink sales and a consumption of 48 gallons per person per
year (192 litres/ person / year). The European market accounts for 21 per
cent, with a per capita consumption of 12.7 gallons per year (50.8 litres /
person/ year). The fastest growth in soft drink consumption is in Asia and
South America. Carbonated drinks are the biggest soft drinks sector with
45% of global volume. The five fastest growing soft drink markets
between 1996 and 2001 were from Asia, East Europe and the Middle East.

Major Players-Global

The global soft drink industry is highly concentrated, being largely

controlled by multinational companies. Among the major players are
Coca-Cola Co. and PepsiCo. Coca–Cola leads the carbonated drink market
in most countries in the world with 60% of the global cola market with its
flagship Coca-Cola brand. Other notable players include Cadbury
Schweppes.

Indian Scenario

Market
According to government estimates soft drinks marketed in India were
6540 million bottles in March 2001. The market growth rate, which was
around 2-3% in ‘80s, increased to 5-6% in the early ‘90s and is presently
7-8% per annum. Most of the sales of soft drinks takes place during
summers while just 5-6% of total sales take place in winters. In summers
the high season lasts for 70-75 days, which contributes more than 50% of
the total yearly sales. In terms of regional distribution cola drinks have
main markets in metro cities and northern states of UP, Punjab, Haryana
etc. Orange flavoured drinks and sodas are popular in southern states.
Western markets have preference towards mango-flavoured drinks.

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http://www.cseindia.org/userfiles/SOFTDRINK.pdf, 10-04-2010.
Major Players in India
The two global majors PepsiCo and Coca-Cola Co. dominate the soft drink
market in India. Coca-Cola, which had winded up its India operations
during the introduction of the FERA regime, re-entered India 16 years later
in 1993. Coca-Cola bought local brands-Thumps Up, Limca and Gold Spot
from Parle Beverages and soft drink brands Crush, Canada Dry and Sport
Cola from Cadbury Schweppes in early 1999. Pepsi started a couple of
years before Coca Cola in 1991 has bought over Mumbai based Duke’s
range of soft drink brands.

There are conflicting figures about their market share. According to one
estimate (ORG)- Coca-Cola had 57% of soft drink market and Pepsi had 41
%. While another estimate (IMRB) figures were Pepsi- 49% and Coca-
Cola- 48% during the same period January to May 2000. The soft drinks
segment, dominated by MNCs, accounted for Rs 6,247 crore in sales in
2002. Thums Up, the brand taken over by Coca-Cola, is estimated at Rs
1,350 crore, bigger than Coca-Cola itself in India. Thums Up and Limca,
two key brands that Coke acquired from Parle, account for no less than Rs
1,950 crore in sales for Coke. The Coca Cola Company in India has Rs
3,757 crore of sales of soft drinks, while PepsiCo’s three main brands have
sales of Rs 2,490 crore. (Source: Economic Times presentation, Retail Biz,
25th March 2003)

Industry Analysis: Soft Drinks

Barbara Murray2 explained the soft drink industry by stating, “For years
the story in the non alcoholic sector centred on the power struggle
between Coke and Pepsi. But as the pop fight has topped out, the
industry's giants have begun relying on new product flavour and looking
to noncarbonated beverages for growth.” In order to fully understand the
soft drink industry, the following should be considered: the dominant
economic factors and the five competitive sources.

Dominant Economic Factors

Market size, growth rate and overall profitability are three economic
indicators that can be used to evaluate the soft drink industry. The market
size of this industry has been changing. Soft drink consumption has a
market share of 46.8% within the non-alcoholic drink industry,
Datamonitor (2005) also found that the total market value of soft drinks

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Meghan Deichert, Meghan Ellenbecker, Emily Klehr, Leslie Pesarchick, & Kelly Ziegler, “Industry Analysis:
Soft Drinks.” Strategic Management in a Global Context February 22, 2006.
reached $307.2 billion in 2004 with a market value forecast of $367.1
billion in 2009. Further, the 2004 soft drink volume was 325,367.2 million
litres. Clearly, the soft drink industry is lucrative with a potential for high
profits, but there are several obstacles to overcome in order to capture
the market share.

The growth rate has been recently criticized due to the U.S. market
saturation of soft drinks. Datamonitor (2005) stated, “Looking ahead,
despite solid growth in consumption, the global soft drinks market is
expected to slightly decelerate, reflecting stagnation of market prices.”
The change is attributed to the other growing sectors of the non-alcoholic
industry including tea and coffee (11.8%) and bottled water (9.3%). Sports
drinks and energy drinks are also expected to increase in growth as
competitors start adopting new product lines.

Profitability in the soft drink industry will remain rather solid, but market
saturation especially in the U.S. has caused analysts to suspect a slight
deceleration of growth in the industry (2005). Because of this, soft drink
leaders are establishing themselves in alternative markets such as the
snack, confections, bottled water, and sports drinks industries (Barbara
Murray, 2006c). In order for soft drink companies to continue to grow and
increase profits they will need to diversify their product offerings.

Three leading companies have prominent presence in the soft drink

industry. The leaders include the Coca-Cola Company, PepsiCo, and
Cadbury Schweppes. According to the Coca-
Cola annual report (2004), it has the most soft drink sales with $22 billion.
The Coca-Cola product line has several popular soft drinks including Coca-
Cola, Diet Coke, Fanta, Barq’s, and Sprite, selling over 400 drink brands in
about 200 nations (Murray 2006a). PepsiCo is the next top competitor
with soft drink sales grossing $18 billion for the two beverage subsidiaries,
PepsiCo Beverages North America and PepsiCo International (PepsiCo Inc.,
2004). PepsiCo’s soft drink product line includes Pepsi, Mountain Dew, and
Slice which make up more than one quarter of its sales. Cadbury
Schweppes had soft drink sales of $6 billion with a product line consisting
of soft drinks such as A&W Root Beer, Canada Dry, and Dr. Pepper
(Cadbury Schweppes, 2004).

Five Competitive Forces

The soft drink industry is very competitive for all corporations involved,
with the greatest competition being that from rival sellers within the
industry. All soft drink companies have to think about the pressures; that
from rival sellers within the industry, new entrants to the industry,
substitute products, suppliers, and buyers. The competitive pressure from
rival sellers is the greatest competition that Coca-Cola faces in the soft
drink industry. Coca-Cola, Pepsi Co., and Cadbury Schweppes are the
largest competitors in this industry, and they are all globally established
which creates a great amount of competition. Though Coca-Cola owns four
of the top five soft drink brands (Coca-Cola, Diet Coke, Fanta, and Sprite),
it had lower sales in 2005 than did PepsiCo (Murray, 2006c). However,
Coca-Cola has higher sales in the global market than PepsiCo. In 2004,
PepsiCo dominated North America with sales of $22 billion, whereas Coca-
Cola only had about $6.6 billion, with more of their sales coming from
overseas. PepsiCo is the main competitor for Coca-Cola and these two
brands have been in a power struggle for years (Murray, 2006c).

Brand name loyalty is another competitive pressure. The Brand Keys’

Customer Loyalty Leaders Survey (2004) shows the brands with the
greatest customer loyalty in all industries. Diet Pepsi ranked 17th and Diet
Coke ranked 36th as having the most loyal customers to their brands. The
new competition between rival sellers is to create new varieties of soft
drinks, such as vanilla and cherry, in order to keep increasing sales and
enticing new customers (Murray, 2006c).

New entrants are not a strong competitive pressure for the soft drink
industry. Coca-Cola and Pepsi Co dominate the industry with their strong
brand name and great distribution channels. In addition, the soft-drink
industry is fully saturated and growth is small. This makes it very difficult
for new, unknown entrants to start competing against the existing firms.
Another barrier to entry is the high fixed costs for warehouses, trucks, and
labour, and economies of scale. New entrants cannot compete in price
without economies of scale. These high capital requirements and market
saturation make it extremely difficult for companies to enter the soft drink
industry; therefore new entrants are not a strong competitive force
(Murray, 2006c).

Substitute products are those competitors that are not in the soft drink
industry. Such substitutes for Coca-Cola products are bottled water, sports
drinks, coffee, and tea. Bottled water and sports drinks are increasingly
popular with the trend to be a more health conscious consumer. There are
progressively more varieties in the water and sports drinks that appeal to
different consumers’ tastes, but also appear healthier than soft drinks. In
addition, coffee and tea are competitive substitutes because they provide
caffeine. The consumers who purchase a lot of soft drinks may substitute
coffee if they want to keep the caffeine and lose the sugar and
carbonation. Specialty blend coffees are also becoming more popular with
the increasing number of Starbucks stores that offer many different
flavours to appeal to all consumer markets. It is also very cheap for
consumers to switch to these substitutes making the threat of substitute
products very strong (Datamonitor, 2005).

Suppliers for the soft drink industry do not hold much competitive
pressure. Suppliers to Coca-Cola are bottling equipment manufacturers
and secondary packaging suppliers. Although Coca-Cola does not do any
bottling, the company owns about 36% of Coca-Cola Enterprises which is
the largest Coke bottler in the world (Murray, 2006a). Since Coca-Cola
owns the majority of the bottler, that particular supplier does not hold
much bargaining power. In terms of equipment manufacturers, the
suppliers are generally providing the same products. The number of
equipment suppliers is not in short supply, so it is fairly easy for a
company to switch suppliers. This takes away much of suppliers’
bargaining power

The buyers of the Coca-Cola and other soft drinks are mainly large
grocers, discount stores, and restaurants. The soft drink companies
distribute the beverages to these stores, for resale to the consumer. The
bargaining power of the buyers is very evident and strong. Large grocers
and discount stores buy large volumes of the soft drinks, allowing them to
buy at lower prices. Restaurants have less bargaining power because they
do not order a large volume. However, with the number of people are
drinking less soft drinks, the bargaining power of buyers could start
increasing due to decreasing buyer demand (Murray, 2006a).
Porter’s Five Forces Model identifies the five forces of competition for any
company.
The recognition of the strength of these forces helps to see where Coca-
Cola stands in the industry. Of the five forces, rivalry within the soft drink
industry, especially from PepsiCo, is the greatest source of competition for
Coca-Cola.
1.1 STATEMENT OF PROBLEM
RED CONCEPT

RED stands for Right Execution Daily. It is a survey method for the
company to know their position in the market. For this company has hired
Ac Nielson & co. The survey gets done once in a month. RED is a set of
norms divided into outlet wise.

ABOUT RED

 To check the availability of the visi cooler provided by the company

to the retail outlets for their products.
 To check the activation in various outlets.
 To check the branding order of the various products in the cooler.
Survey has done in the four topics-

 Impurity
 Brand Order
 Availability
 Activation

IMPURITY

There should be no impurity in the visi cooler of the company. Impurity

here refers to that brand which is presented in the visi cooler other than
coke’s product. Therefore not other product of any other company may
not be in the cooler.

BRAND ORDER

The company has given a brand order to the market developers to

arrange the different brands in a specific order in the cooler. The order
should be in such a way-

 Thumsup
 Coca cola
 Sprite
 Limca
 Fanta
 Maaza
 Kinley
  Pet & Juice

AVAILABILTY

Availability is done according the type of outlet. There are four type of
outlet mentioned below. According to this market developer has to ensure
the availability of the products in the particular outlet.

ACTIVATION

Activation is important because it helps to boost the sales of the

company. it is done through the Glow sign, DPS, flanges. Combo boards,
Table tops .This boards usually gives to the E&D outlets .It helps to attract
the customers. Rack with header is provided to the grocery stores.

Activation Elements

Market developer must ensure that all these activation elements must
available at all the outlets. Detail of activation elements must available at
GROCERY STORES:

1. WARM DISPLAY RACK

2. SHELF DISPLAY

PURPOSE OF STUDY

 To assess the awareness of RED program by store keepers.

 Non implementation of RED program

1.3 RESEARCH OBJECTIVE

 To assess the concept of RED program.

 To assess the awareness level of storekeeper about RED
program.
 To assess the present situation of these outlets in terms of
RED program implementation.

1.4 RESEARCH QUESTION

 What is the awareness level of storekeeper about the RED

program?
 What is the present situation of these outlets in terms of RED
program implementation?
  What are the methods to create awareness among the
retailers?

1.5 SCOPES AND LIMITATION OF STUDY

The main scope of the study is:

 To find out the reasons for low RED score in the selected
outletsof Bangalore city.
The study is limited only to East Bangalore and thus there is a lot of
scope for further research to make the findings more accurate. The same
kind of study can be done in the whole of Bangalore as well as the states
where Coca Cola is present

 The sample size selected is limited due to time constraint

 CHAPTER – 2
2.1 Conceptual Review:
2.1.1 Relationship Marketing Strategy:
According to Patricia Sorce3, Relationship marketing is based on
creating a mutually beneficial exchange between business partners. This
often requires personal communication with the customer. Digital printing
with its high speed personalizing capabilities is a logical choice for
advertisers wishing to pursue this strategy. If product manufacturers can
build and maintain relationships with customers through print
communications, then they will buy print media advertising. But
relationship marketing strategy is not a silver bullet. There are many
examples of the failure of marketing programs designed to build loyalty. If
done improperly, the relationship marketing strategy will not achieve the
goals of the client. One strategy is not appropriate for all marketing
programs.

Marketing Strategies that build Customer Commitment and

Loyalty:
The objective of many marketing strategies has been building the
customer’s commitment to a brand or a dealer. This has taken three
forms:
- Creating customer satisfaction
- Building brand equity
- Creating and maintaining relationships.
Success with any of these strategies will result in high levels of repeat
purchase, insulation from price increases and improved responsiveness to
marketing communications by customers.

There has been an evolution of marketing thought and activity over

this last decade. Initially, the quality movement placed customer
satisfaction as the ultimate goal of marketing programs. However, as
satisfied customers were shown to defect to other brands or providers at
relatively high rates, strategists looked to creating a greater commitment

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Patricia Sorce, “Relationship Marketing Strategy.” Printing Industry Center at RIT, September 2002.
with the customer. Two ways to achieve this were to build brand equity
(primarily for consumer products) and to build relationships (primarily for
industrial products.) Brand equity used mass media advertising, corporate
citizenship and public events sponsorship to build a brand image.
Relationship marketing sought to build interdependence between partners
and relied on one-to-one communications, historically delivered through
the sales force. With the growth of marketing databases and the Internet,
the ability to reach customers individually became a viable strategy for a
wide range of firms including consumer products companies.

Knowing the buying motivations of customers has been an

important part of understanding customer loyalty and brand switching
behavior. Brand loyalty has three components - commitment, preference
and repeat purchase. Four levels of loyalty based on these components:
1) Cognitive – one brand is preferable based on superior brand
attribute.
2) Affective – liking towards brand has developed over the course of
multiple purchase situations that were satisfying.
3) Conative – affective stage with the express intention to re-buy.
4) Action – conative stage plus the active desire to overcome
situational influences and marketing efforts that may have the
potential to cause switching behaviour.

Foundations of Relationship Marketing Strategy:

The current conceptualization of relationship marketing migrated
from organizational behaviour and industrial marketing where
interdependence between firms has been the foundation of successful
business-to-business alliances. Morgan and Hunt define relationship
marketing as all marketing activities directed towards establishing,
developing and maintaining successful relational exchanges. Only two
relationships described by Morgan and Hunt involve customers or clients –
the relationship between service providers such as advertising agencies
and their clients and the long term relationships between service firms
and their ultimate customers.
The second type of relationship examined by Iacobucci and Hibbard
is the interpersonal commercial relationships (ICR): the interactions
between a service firm and the final customer. These include business-to-
business relationships (such as those between an advertising agency and
its clients) and retail transactions between a sales agent and a customer.
The third relationship is the business-to-customer relationships. These are
defined as largely technology-driven interactions between a business and
an individual customer.
Relationship Marketing in Practice:
Fournier, Dobsha and Mick present a critical perspective on
relationship marketing practice. They question the actual amount of
interactivity between a customer and a commercial firm. They warn that
the premature death of customer relationship management is likely
because, in exploiting the ability to communicate one-to-one with a
customer, the majority of the firm generated communication with
customers is often one way from the business to the customer. Even if a
customer does communicate with the business, this information rarely
impacts the nature of the future communications from that business.
The notion of a consumer having a relationship with a brand is the
key component in the brand equity. Keller views relationship with a brand
as part of brand equity. These brand relationships are based on the
degree of personal identification the consumer has with the brand and
involve two dimensions of attitudinal strength and a sense of community.
Customer Equity includes:
1) Value Equity – the customer’s objective assessment of the utility
of a brand. This assessment is driven by the product’s quality,
price and convenience.
2) Brand Equity – customer’s subjective and intangible assessment
of the brand built through image and meaning. The assessment
is influenced by brand awareness, consumer’s attitude toward
the brand, and the firm’s corporate citizenship.
3) Retention Equity – the tendency of the customer to “stick with” a
brand above and beyond the objective and subjective
assessments.
There are five drivers of retention equity. They are:
- Loyalty Programs
- Special recognition programs
- Affinity programs
- Community programs
- Knowledge-building programs

2.1.2 Focusing Marketing Strategy with Segmentation

and Positioning:

Marketing Strategy Planning tries to match opportunities to the

firm’s resources and its objectives4. Successful strategies get their start
when a creative manager spots an attractive market opportunity. Yet an
opportunity that is attractive for one firm may not be attractive for
another. Attractive opportunities for a particular firm are those that the

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firm has some chance of doing something about—given its resources and
objectives.

Breakthrough Opportunities are best – Breakthrough opportunities are

opportunities that help innovators develop hard to copy marketing
strategies that will be very profitable for a long time. This is important
because there are always imitators who want to share the innovators
profits. It is hard to continuously provide superior value to target
customers if competitors can easily copy your marketing mix.

Competitive Advantage is needed at least – Competitive Advantage

means that a firm has a marketing mix that the target market sees as
better than a competitor’s mix. A competitive advantage may result from
efforts in different areas of the firm—cost cutting in production, innovative
R&D, more effective purchasing of needed components, or financing for a
new distribution facility. Similarly, a strong sales force, a well-known
brand name, or good dealers may give it a competitive advantage in
pursuing an opportunity. Sometimes a firm can achieve breakthrough
opportunities and competitive advantage by simply fine-tuning its current
marketing mix or developing closer relationships with its customers.

Marketing Strategy Planning Process Highlights Opportunities:

A marketing strategy requires decisions about the specific
customers the firm will target and the marketing mix the firm will develop
to appeal to that target market. There are hundreds or even thousands of
combinations of marketing mix decisions and target markets (i.e.,
strategies) that a firm might try. Rather, the challenge is to zero in on the
best strategy.

Process Narrows down from broad opportunities to specific strategy - It is

useful to think of the marketing strategy planning process as a narrowing-
down process. The process starts with a broad look at a market—paying
special attention to customer needs, the firm’s objectives and resources,
and competitors. This helps to identify new and unique opportunities that
might be overlooked if the focus is narrowed too quickly.

Segmentation helps pinpoint the target - A key objective of marketing is

to satisfy the needs of some group of customers that the firm serves.
Broadly speaking, then, in the early stages of a search for opportunities
we’re looking for customers with needs that are not being satisfied as well
as they might be. Of course, potential customers are not all alike. They
don’t all have the same needs—nor do they always want to meet needs in
the same way. Part of the reason is that there are different possible types
of customers with many different characteristics.

Narrow down to a Superior Marketing Mix - A marketing mix must meet

the needs of target customers, but a firm is not likely to get a competitive
advantage if it just meets needs in the same way as some other firm. So,
in evaluating possible strategies the marketing manager should think
about whether there is a way to differentiate the marketing mix.
Differentiation means that the marketing mix is distinct from that of a
competitor. Differentiation often requires that the firm fine-tune all of the
elements of its marketing mix to the specific needs of a distinctive target
market. Sometimes the difference is based mainly on one important
element of the marketing mix. Differentiation is more obvious to target
customers, though, when there is a consistent theme integrated across
the four Ps decision areas. That emphasizes the difference so target
customers will think of the firm as being in a unique position to meet their
needs.

SWOT Analysis Highlights Advantages and Disadvantages - A useful aid for

identifying relevant screening criteria and for zeroing in on a feasible
strategy is SWOT Analysis - which identifies and lists the firm’s strengths
and weaknesses and its opportunities and threats. A good S.W.O.T.
analysis helps the manager focus on a strategy that takes advantage of
the firm’s opportunities and strengths while avoiding its weaknesses and
threats to its success. These can be compared with the pros and cons of
different strategies that are considered.

Types of Opportunities to Pursue:

Some alert marketers seem to be able to spot attractive
opportunities everywhere they look. It is useful for marketers to have a
framework for thinking about the broad kinds of opportunities they may
find. Four broad possibilities are market penetration, market
development, product development, and diversification.

Market Penetration means trying to increase sales of a firm’s

present products in its present markets—probably through a more
aggressive marketing mix. The firm may try to strengthen its relationship
with customers to increase their rate of use or repeat purchases, or try to
attract competitors’ customers or current nonusers.
Market Development means trying to increase sales by selling
present products in new markets. Firms may try advertising in different
media to reach new target customers. Or they may add channels of
distribution or new stores in new areas, including overseas.
 Product Development means offering new or improved products
for present markets. By knowing the present market’s needs, a firm may
see new ways to satisfy customers. Computer software firms like Microsoft
boost sales by introducing new versions of popular programs.
Diversification means moving into totally different lines of
business—perhaps entirely unfamiliar products, markets, or even levels in
the production-marketing system.

Positioning as part of Broader Analysis:

A positioning analysis helps managers understand how customers
see their market. It is a visual aid to understanding a product market. The
first time such an analysis is done, managers may be shocked to see how
much customers’ perceptions of a market differ from their own. For this
reason alone, positioning analysis may be crucial. But, a positioning
analysis usually focuses on specific product features and brands that are
close competitors in the product-market. Premature emphasis on product
features is dangerous in other ways as well. It’s also important to realize
that the way consumers look at a product isn’t just a matter of chance. If
customers treat different products as substitutes, then a firm has to
position itself against those products too.

2.1.3 Competitor Analysis and the Development of a

Brand:
As per the book on Developing the Marketing Mix5, Marketing is a
dynamic process of ensuring a close fit between the capabilities of an
organization and the demands placed upon it by its external environment.
It follows that what a company offers to a market will need to evolve
continually over time in order to meet changes in the company’s internal
objectives and in its external business environment. It is not good enough
for a company to develop a marketing plan that works for a short period,
but then fails to make good long term profits for the company because the
plan is not sufficiently responsive to changes in its marketing
environment. A company may have found a very high level of sales in the
short term, but failed to earn sufficient profits over the longer run. It may
be that such a company has underpriced its products, leaving it an
insufficient margin to cover its fixed costs. Many companies that have
been hailed as successful market-led businesses have not managed to
achieve a sustainable long term success.

Who are a company’s competitors?

Any plan to develop a competitive advantage must be based on a
sound analysis of just who a company’s competitors are. At first sight, it
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may seem obvious who the competitors are, but as Theodore Levitt
pointed out, a myopic view may focus on the immediate and direct
competitors while overlooking the most serious threat posed by indirect
and less obvious sources of competition. Even without considering the
possibility of new market entrants appearing, it is possible to identify
direct and indirect competitors. Direct Competitors are generally similar in
form and satisfy customers’ needs in a similar way. Indirect Competitors
may appear different in form, but satisfy a fundamentally similar need.
A sound analysis of the direct and indirect competitors of a firm is
crucial in defining the business mission of an organization. The useful
framework for analyzing the competition facing a company in a market
has been provided by Michael Porter. His model illustrates the relationship
between existing competitors and potential competitors in a market and
identifies five forces requiring evaluation:
- the threat of new entrants,
- the threat of substitute products,
- the intensity of rivalry between competing firms,
- the power of suppliers and
- the power of buyers.

Branding:
Traditional economic theory has been based on assumptions of
perfectly competitive markets in which a large number of sellers offer for
sale an identical product. All suppliers’ products are assumed to be
perfectly substitutable with each other and, therefore, through a process
of competition, prices are minimized to the level that is just sufficient to
make it worthwhile for suppliers to continue operating in the market.
Perfect competition may at first sight appear very attractive for the
welfare of society as a whole, but it can pose problems for sellers. In a
perfectly competitive market, an individual firm is subject to considerable
direct competition from other firms and must take its selling price from
the market. An implication of perfect competition is that firms will be
unable to make a level of profits that is above the norm for their market. If
they did achieve higher-than-normal profits, this would act as an invitation
to new market entrants, whose presence would eventually increase the
level of competition in the market and drive down profits to the minimum
level that makes it attractive for firms to continue in the market. The co-
existence of a limited monopoly power with the presence of many near
substitutes is often referred to as imperfect competition.

Create a Distinctive Brand:

 Branding creates a product with unique physical, functional, and
psychological values and can help to transform commodities into unique
products. To be successful, a brand must have a competitive advantage in
at least one aspect of marketing, such that it meets the complex needs of
consumers better than competitors.

Choice of Name - A brand is more than a name. Nevertheless, a name is

usually vital to the identity of a brand and can be the most difficult to
change. Many products have been redesigned and relaunched as they
have gone through their life-cycle, yet their brand name has remained
unchanged. Companies frequently engage specialist firms to develop
brand names for their new products. This is often a wise investment, in
view of the possible downside costs of getting a name wrong and the
difficulties of subsequently changing it. A brand naming team may be
made up of linguists, psychologists, sociologists, and media analysts,
among others. The following are some of the factors that previous
experience shows should lead to a brand name being successful.
- The name should have positive associations with the
benefits and features of the product
- There should be no negative associations with words that
sound similar.
- The name should be memorable and easy to pronounce.
- The name must be in a tone of language that is
understood and appreciated by the product’s target
market.
- The name must be checked my legal experts to ensure
that it does not infringe on another company’s brand
name.

Distinctive Product Features – Sometimes the distinctive features of a

product don’t really require a brand name to prompt immediate
recognition. Distinctiveness can be based on the physical design of a
product or distinctive service processes.

Creation of Distinctive Brand Personality - It will be recalled that a brand

possesses functional and emotional attributes. The emotional attributes
are of particular importance in contributing to a brand’s personality. This
can best be described as the psychological disposition that buyers have
towards a particular brand. Brands have been variously described as
having personalities that are ‘fun’, ‘reliable’, ‘traditional’, and
‘adventurous’. There has been some debate about whether the emotional
aspects of a brand are becoming more or less important in consumers’
overall evaluation of a product.
Distinctive Visual Identity - Companies often go to great lengths to invest
their brands with a distinctive visual identity. Sometimes this can be
achieved simply on the basis of a colour. The extent to which a company
can legitimately ‘own’ an identifying colour is questionable. Many
suppliers of generic products have copied the colours used by their
branded competitors. Colours have often come to be associated with
certain product features. To achieve maximum effect, corporate visual
identity should be applied consistently. For a typical service based
company, this would mean applying a design and colour scheme to the
company’s advertising, buildings, staff uniforms, and vehicles. Logos are
an important part of corporate visual identity. The aim of a logo is to
encapsulate the values of a brand and to provide an immediate reminder
of the brand each time it is seen by customers and potential customers. A
good logo should:
- give some indication of the business which a company is
in, or the product category to which its output belongs
- stress particular advantages of a product or organization
- Not be over-complicated. The simplest logos tend to
stand the test of time best
- be updated to keep it in tune with styles and fashions of
the time.

Branding Strategy:
Once a firm has decided on a distinctive brand identity for a
product, the next issue is to have a strategy for developing the brand. A
number of alternative strategic routes are explored which each lead to a
company differentiating its products from those of its competitors. One
strategy is to develop a single strong brand. As an alternative,
differentiated brands or brand families may be developed.

Development of a Single Strong Brand - One approach to branding is to

apply the same brand name to everything that a company produces. The
big advantage of this approach is the economies of scale in promotion
that this can bring about. Instead of promoting many minor brands
through small campaigns, a company can concentrate all of its resources
on one campaign for one brand. This approach has been used successfully
by many large multinational companies, such as IBM, Kodak, and
Cadburys, who, with a few exceptions, put their single brand name on
everything they sell. The main disadvantage of this approach is that it can
pose significant risks of confusing the values of a brand. If a company
positioned its product range as premium priced, top quality, confusion
may arise in consumers’ minds if it applied the same brand name to a
budget version of its product.

Differentiated Brands - To overcome the problem of confused brand

values, firms often develop different brand names to serve different
market segments.

Brand Families - A brand family occurs where a company uses a number

of brand names, but identifies each product range or market segment
served with a different brand name. The range is then developed to
include a line of products. In this way, the Colgate Palmolive company has
developed a number of product ranges, including soap, shampoos, and
toothpaste, each with its own brand name. Very often, companies
promote brand names at a number of levels. As well as the corporate
brand name, the name of the product category might be promoted. In
addition, a special package offer within the basic product category may be
developed with its own brand name. The danger of brand proliferation is
confusion in the minds of consumers about what each brand stands for.

Brand Extension - Where a company has invested heavily in a brand so

that it has many positive attributes in the minds of buyers, it may feel
tempted to get as much as possible out of its valuable asset. Given the
increasing costs of developing strong brands, many companies have
attempted to extend their brand to new product ranges. The attraction is
quite clear. Rather than having to start from scratch with a new product
and a new name, the company can at least start with a name whose
values buyers are familiar with. Of course, extending a brand to new
products poses dangers as well as opportunities. If the extension goes too
far into unrelated product areas, the core values of the brand may be
undermined.

Co-Branding - Opportunities often arise for the owners of two quite

different brands to work together jointly to develop a new product that
carries the brand name of both partners, resulting in an otherwise
unattainable gain to both. Co-branding is increasingly common in the food
sector.

2.1.4 Marketing’s Four P’s – First Steps for New

Entrepreneurs:
According to Cole Ehmke et al6, is about how you position it to
satisfy your market’s needs. There are four critical elements in marketing

6
http://www.ces.purdue.edu/extmedia/EC/EC-730.pdf, 09-05-2010.
your products and business. They are the four P’s of marketing.
1. Product – The right product to satisfy the needs of your target
customer.
2. Price – The right product offered at the right price.
3. Place – The right product at the right price available at the
right place to be bought by customers.
4. Promotion – Informing potential customers of the availability of
the product, its price and its place.

Product: Product refers to the goods and services you offer to your
customers. Apart from the physical product itself, there are elements
associated with your product that customers may be attracted to, such as
the way it is packed. Other product attributes include quality, features,
options, services, warranties and brand name. The product bundle should
meet the needs of a particular target market. Customer research is the
key element in building an effective marketing mix. Starts up businesses
are most successful when they concentrate their efforts on one product or
one market. A different type of growth would be a diversification of
products, with the business offering related products. Offering a whole
range of products is most successful if the raw materials, production
processes and distribution methods are similar which means there is no
requirement for acquiring new suppliers, skills and equipment, and
distribution methods.

Price: Price refers to how much you charge for your product or service.
Determining the product’s price can be tricky and even frightening. Many
small business owners feel they must absolutely have the lowest price
around. This may be a signal of low quality and not part of the image they
want to portray. The pricing approach should reflect the appropriate
positioning of the product in the market and result in a price that covers
the cost per item and includes a profit margin.

Place: Place refers to the distribution channels used to reach the product
to the end customers. Businesses that create or assemble a product will
have two options: selling directly to consumers or selling to a vendor.
Direct Sales – As a producer one must decide if supplying direct is
appropriate for the product, whether it be sales through retail, door-to-
door, mail order, e-commerce, on-site, or some other method. Direct sales
may be good place to start when the supply of your product is limited or
seasonal.
Sales through Intermediary – Instead of selling directly to the consumer,
one may decide to sell through an intermediary such as a wholesaler or
retailer who will resell the product. This may provide a wider distribution
than selling direct while decreasing the pressure of managing an own
distribution system.
Market Coverage – One must decide on the coverage required in
distributing the product. There are three types of distribution – Intensive,
Selective and Exclusive Distribution.
- Intensive Distribution: It is widespread placement in as many
places as possible, often at low prices. Large businesses often
market on a nationwide level with his method.
- Selective Distribution: It narrows distribution to a few
businesses. Often, upscale products are sold through retailers that
only sell high-quality products. Products that people shop around for
sell better with selective distribution.
- Exclusive Distribution: It restricts distribution to a single
reseller. Specialty products tend to perform better with exclusive
distribution.

Promotion: Promotion refers to the advertising and selling part of

marketing. The purpose of promotion is to get people to understand what
your product is, what they can use it for, and why they should want it. A
key channel is advertising. Advertising methods to promote the product or
service include the following:
- Radio
- Television
- Print
- Internet
- Word of mouth
- Generic

2.1.5 Market Entry Strategies - Pioneers Versus Late

Arrivals:
According to Gurumurthy Kalyanaram and Ragu Gurumurthy7,
today’s strategic planners, having created as much value as they could by
cutting costs are looking now to grow domestic markets as well as build
new markets and revenues. New entrants can take advantage of gaps in

7
Gurumurthy Kalyanaram and Ragu Gurumurthy, “Market Entry Strategies: Pioneers Versus Late
Arrivals.” Third Quarter, July, issue 12, 1998.
the offerings of these aging pioneers or find innovative ways to market
their product or service. Pioneers with a distinctive presence in the
marketplace need to be in a position to react, or even better, anticipate
potential entrants and increase the barriers to their entry. Whether a late
entrant or a pioneer seeking to foil newcomers, it helps to have a thorough
understanding of the entry and defensive strategies available, a good
sense of timing and a game plan for decision-making.
Basic Strategic Planning: Competitive Strategies typically depend on
the market environment and the positioning and product portfolio of the
existing players. These are the basics:
- Reduce price to penetrate an existing market.
- Improve a product or service, with focus on a niche market.
Companies can compete by being innovative in the marketplace.
- Target new geographical markets for existing products.
- Develop new channels of distribution to access new markets or
better penetrate existing ones.

Agility needed for Late Entrants: The picture is not always rosy for
pioneers and bleak for late entrants. In some industries and some
geographic areas, pioneers have lost market-share advantage relatively
quickly. This can happen for the following reasons:
- An entrenched pioneer may not be offering a superior level of
customer service.
- A new technology may have changed the cost equation, so
that a new entrant can offer similar or better service at a lower cost.
- The new entrant may have developed a new way to access the
market, with an innovative distribution system.
- The latecomer may simply be pricing aggressively, targeting
selected segments by taking advantage of incumbent’s tendency to
average pricing across all segments.

Defense Strategies for Pioneers: Even as new entrants attempt to

redefine the business or formulate niche strategies to attack profitable
industries and market segments, pioneers can fight back to retain their
competitive advantage. The major strategies for the pioneers are:
- Increase the barriers to entry for later entrants.
- Innovate faster than the latecomers.
- Build a market-responsive and flexible organization.

2.2 Empirical review:

2.2.1Growth Strategies in Soft Drinks - A management
report from Business Insights:
In spite of growing competition in the soft drinks market8, many
companies, ranging from multinationals to niche specialists, continue to
see volume growth well in excess of the market average. Much of their
success can be attributed to progressive attitudes to their competitive
environment and by exploiting new production, packaging and distribution
technologies, they are able to meet consumers' needs more accurately
and immediately than ever before.
With leading players such as The Coca-Cola Company driving the
battle for share of throat, soft drinks manufacturers of all sizes need to
equip themselves with a wide variety of innovative strategic tools if they
are to remain competitive.
Business Insights’ report, the Growth Strategies in Soft Drinks
highlights emerging opportunities in the industry, and examines the ways
that companies can best exploit them. From the emerging markets of
Asia-Pacific, Eastern Europe and South America, to fast-growth niches in
the developed world, this latest study is the definitive guide to innovation,
main players, market sizes and growth prospects.

Research methodology

• The authors conducted a qualitative industry opinion survey of over

500 executives in soft drinks companies across the globe to ascertain
their current and future strategies and obtain their opinions and
projections on the future of the market.

• The report provides inter-category and international comparison of

growth rates and degrees of consolidation to identify key market entry
opportunities.

• It provides analysis of over 350 soft drinks launches on the basis of their
competitive positioning and consumer appeal indicating underlying
current trends and forecasting future developments.

• The report evaluates the markets for bottled water, carbonates, dairy
drinks, energy and sports drinks, juices, New Age beverages, powered soft
drinks and squashes and cordials.

8
Richard Robinson, “Growth Strategies in Soft Drinks.” Business Insights, 1999
2.2.2 Developing Inclusive Business Models- A Review of
Coca-Cola's Manual Distribution Centers in Ethiopia and
Tanzania:
This research forms part of an ongoing series of studies and
dialogues being undertaken by the Corporate Social Responsibility
Initiative at the Harvard Kennedy School and the International Finance
Corporation (IFC)9, in partnership with other development agencies,
companies, civil society organizations and alliances such as the
International Business Leaders Forum, the World Business Council for
Sustainable Development, the Growing Inclusive Markets initiative, and
the Business Call to Action. It aims to provide a more empirical basis for
understanding and enhancing the development contribution of large
companies through their core business operations and their partnerships
with other development actors. In addition to this report, the participating
organizations are working together in Africa and elsewhere to engage with
key stakeholders, test recommendations on the ground, and implement
practical new approaches that combine both business benefit and
development gains.

During 2008, IFC worked with the Corporate Social Responsibility (CSR)
Initiative at the Harvard Kennedy School to review the operations of the
MDC model implemented by Coca-Cola Sabco, one of the Coca-Cola
Company’s bottling partners, in Dar es Salaam, Tanzania and Addis
Ababa, Ethiopia.

The project aimed to explore two sets of questions:

1) How is the MDC business model in these two countries structured

and implemented, including the relationship between the owners
and employees of the MDCs and the managers in Coca-Cola Sabco?

2) How is the MDC business model contributing to expanding

economic opportunity and human capital development?

The project focused exclusively on a sub-set of Manual Distribution

Centers and their owners and employees in Ethiopia and Tanzania. It did
not look at other small and micro-enterprises in the company’s value
chain, such as retail outlets or suppliers. Nor did it attempt to assess the
company’s overall social, environmental and economic development
impacts or the poverty alleviation footprint in these two countries.
9
Jane Nelson, Eriko Ishikawa and Alexis Geaneotes, “Developing Inclusive Business Models- A Review of
Coca-Cola's Manual Distribution Centers in Ethiopia and Tanzania.” Harvard Kennedy School and
International Finance Corporation, 2009
Ethiopia and Tanzania were selected for the fi eld work because they are
countries in which the Coca-Cola Sabco MDC model has been in operation
for over fi ve years and has been implemented in different ways.

The project involved field-based data collection and interviews undertaken

during July and August 2008 with Coca-Cola managers and a sample of
owners and employees at 48 MDCs (representing 7% of the total number
of MDCs in Addis Ababa and 12% of the total in Dar es Salaam at the
time). These 48 MDCs were selected to ensure the representation of a
range of performance levels (i.e. high, average and low sales) and
geographic locations, because of the impact location can have on
business performance (i.e. road conditions, accessibility of retailers, outlet
density, access to power or water, and consistency of supply). Interviews
were conducted either in the local language, through a translator, or in
English.

2.2.3 An empirical investigation of Turkish cola market:

The purpose of this study10 is to present a broad view and analysis
of brand switching attitudes of cola consumers in Turkish cola market. The
study presents the results of a questionnaire, conducted with 855
university students. Brand preferences and loyalty towards cola drinks
were investigated by frequency distributions, T-tests and cross-
tabulations, using particular factors such as purchasing frequency of the
brand, brand preference, repurchase intent, searching for the brand, price
and promotion tolerance. Cola Turka, the new cola brand, has captured
almost one-quarter of the market. It has the potential to create loyal
consumers. Despite Coca-Cola preserving its dominance, Pepsi-Cola has
been surpassed by this new product.

Although special attention was spent in constructing a sample with high

presentation ability, university students, selected from three different
cities, may not reflect the whole picture of the cola market. Cola Turka is a
newly-born brand and it is hard to identify whether consumers are loyal or
not to such a brand. Origin, advertising and image of the product may
foster its preference, as in the case of Cola Turka. Men and women have
different buying motives and this can be used for attracting new
consumers. This research paper is unique in its field, which aims to depict
brand loyalty in the Turkish cola drinks market. It has a particular
importance since the research was carried out after the launch of the new
Turkish cola brand “Cola Turka”.

10
Dilber Ulas, H. Bader Arslan, "An empirical investigation of Turkish cola market."
British Food Journal, Vol. 108, Issue 3, 2006, pp.156 – 168.
2.2.4 Empirical study on Chinese coke export market
power:

The purpose of this paper11 is to empirically study whether China could

achieve strong export market power considering its highly decentralized
coke production and trade. By using time series data, this paper
econometrically estimates the coke export market power with the Hall
model; then, through analyzing micro trade data and public policy, tries to
explain the co-existing dilemma of China's highly decentralized coke
production/export and its strong market power in the world market; lastly,
by using Stigler's survival technique, it explores the optimum size of
China's coke production and export.

The paper finds that the market power of Chinese coke export is quite
strong, even if its micro market structure is highly decentralized; the main
explanation for the expanding of China's coke export market power comes
from its oligopolistic position in the world coke market, its strong industry
policy and trade policy restriction. Also it is found that the optimum size in
the coke industry should be the market share below 0.5 percent, or in 1-
10 percent, while other market sizes are of diseconomies of scale. This
paper highlights the co-existing issues of micro competitive structure and
nationally oligopolistic position in an industry. This study is the first try to
combine market power and economies of scale, through empirical
analysis and optimum size estimation, to generate implications for optimal
government public policy. Such findings provide evidence for China's
policy adjustment regarding maintaining strong coke export market
power, while eliminating economic distortions and negative production
externality.

2.3 Contextual Review:

2.3.1 Marketing Strategies of Coca Cola:

As per the study conducted by Sami Ullah Khan, Coco Cola enjoys
the largest market share. The company controls about 60% of the world
market. Some of the major brands of Coca Cola are Coke, Sprite, Fanta,
Diet Coke, etc. The major competitor of Coke is Pepsi. The local marketing
strategy enables Coke to listen to all the voices around the world asking
for beverages that span the entire spectrum of tastes and occasions.
Market Positioning
11
Zesheng Sun, Xiangdong Xu, "Empirical study on Chinese coke export market power",
Journal of Chinese Economic and Foreign Trade Studies, Vol. 2 Issue 2, 2009, pp.131 –
141.
Product Range: The total range of Coca Cola Company includes Coke,
Sprite, Fanta, Diet Coke. And the company offers their products in
different bottle sizes.
Price Strategy:
Trade Promotion – Coca Cola company gives incentives to middlemen or
retailers in a way that they offer them free samples and free empty
bottles, who in turn push their product in the market. They do agreements
with a shop keepers and stores to exclusive sale in those stores. These
stores are called as KEY accounts in their local language. And Coke also
invest heavy budget on these stores and offers them free samples and
free bottles and some time cash incentives.
Different Price in Different Seasons – Sometimes Coca Cola Company
change their product prices according to the season. Summer is supposed
to be a good reason for beverage industry. In Winter, they reduce their
prices to maintain their sales and profit.

Promotion Strategies: Some of the important promotional strategies of

Coca Cola are purchasing shelves in big departmental stores, place the
freezers in eye catching position, sponsor sports events.

Distribution Channels: Coca Cola Company makes two types of selling:

Direct Selling and Indirect Selling. In direct selling they supply their
products in shops by using their own transport. In this type of selling
company have more profit margin. In indirect selling, the company has
their wholesalers and agencies to cover all area.
Advertisement – Coca Cola company use different mediums like Print
Media, Pos Material, TV commercial and Billboards and Holdings.

Sales Promotion activities

Some of the Sales Promotional Activities are:
• Coca-Cola Cricket
• Coca-Cola Concerts
• Coca-Cola Food Mela
• Coca-Cola GO-RED
• Coca-Cola Party in a Park
• Coca-Cola Shopping Festival
• Coca-Cola & Nokia
• Coca-Cola & Mc Donald’s
 After thorough research, the author come to the conclusion that the
marketing strategy of Coca Cola is working for them and the product is
gaining popularity among youth day by day. Some of the
recommendations by the author are as follows:
1. Coca Cola Company should try to emphasis more on providing
their infrastructure in the market to facilitate their customers.
2. According to the survey, different countries have different
tastes. So Coca Cola company should produce their product
according to the local demand.
3. Marketing team should try to increase the availability of Coke
in rural areas.
4. They should also focus the old people.

2.3.2 Estimating Coke and Pepsi’s Price and Advertising

Strategies:
As per the research conducted by Mr. Amos Golan et al12, the paper
presents two methods of estimating oligopoly strategies. The first method
allows strategies to depend on variables that affect demand and cost. The
second method adds restrictions based on a game-theoretic model. They
used the above methods to estimate the pricing and advertising strategies
of Coca-Cola and Pepsi-Cola. In the application to Coca-Cola and Pepsi-
Cola, the authors assume that the firms’ decision variables are prices and
advertising. They divided each firm’s continuous price-advertising action
space into the grid over prices and advertising. They estimated the vector
of probabilities – the mixed or pure strategies – that a firm chooses an
action within a rectangle in the price advertising grid. The main
advantages of using the method are that they can flexibly estimate firms’
strategies subject to restrictions implied by game theory and test
hypotheses based on the estimated strategies.
The problem requires including a large number of possible actions in
order to analyze oligopoly behaviour and allow for mixed strategies.
Instead they used a generalized-maximum-entropy (GME) estimator. An
important advantage of the GME estimator is its computational simplicity.
The main objective is to determine the strategies of oligopolistic firms
using time-series data on prices, advertising, quantities and variables that
affect cost or demand, such as input prices or seasonal dummies.
The authors developed two methods of estimating the strategies of

12
Golan, Amos, Karp, Larry S.; Perloff, Jeffrey M, “Estimating Coke's And Pepsi's Price And Advertising
Strategies.” October, 2000.
firms, which are the probabilities of taking particular actions. In the
application to the Coca Cola Market, the actions are price – advertising
pairs. Both methods are parametric assumptions about distributions and
ad hoc specifications such as those used in conjectural-variations models.
The simplest approach is to use generalized maximum entropy (GME) to
estimate the strategies for each firm using only sample information. This
method is more flexible and efficient than the standard maximum
likelihood multinomial logit estimator. Both the traditional ML and the GME
estimators ignore restrictions imposed by economic theory and some
information about demand and costs.
The generalized-maximum-entropy-Nash (GME –Nash) approach
estimates firms’ strategies consistent with the underlying data generation
process and the restrictions implied by game theory. The application to
the coca cola market demonstrates that both the GME and GME-Nash
models can be used practically. Tests showed that the profit – maximizing,
Nash restrictions are consistent with the data but that, because they
contain information, allow the estimates of firms’ strategies. They are able
use their estimates to show how changes in exogenous variables such as
income or factor prices affect the firms’ strategies.

2.3.3 Cadbury Snaps – New Product Development with a

twist:
As per the article in THE IRISH TIMES - Business 200013, Cadbury
prides itself on its market leading brands such as Dairy Milk, Snack and
Crème Egg. The Company continually strives to drive innovation within the
confectionary category and offers its brands in a variety of formats and
pack sizes, relevant to today’s changing consumer environment.
Market Research:
Market Research is the gathering, recording and analyzing of
information about markets and their probable reaction to product, price,
distribution and promotion decisions. Market Research is critical for
successful NPD and marketing mix planning. There are various ways of
carrying out market research:
• Do it yourself – For small companies with limited resources
• Market Research Department – Very large organizations may
have their own dedicated market research department.
• Market Research Agencies – These companies specialize in
market research. Research may be done with the collaboration of
the company’s marketing department, but fieldwork will be carried
out by the agency.

13
http://www.business2000.ie/pdf/pdf_10/cadbury_10th.pdf, 21-06-2010.
Stages in the marketing research processes:
1. Problem Definition – This is the realization that a marketing
problem needs information to find its solution.
2. Research Design – This defines what form of research will take
and what will be achieved. It encompasses objectives of the
research.
3. Data Collection – This involves the actual carrying out of the
research. There are two main categories of market research –
Qualitative and Quantitative Research.
4. Data Analysis – This form of analysis will depend on the type of
research used. Eg: qualitative analysis will generally involve
identification of some major issues and present the nature of the
comments made on them.
5. Report Writing – The final report will summarize the objectives
of the research and give detailed analysis. This is presented in
graphic form. It’s important that the information is clearly presented
so that managers can draw clear conclusions from the report.

The Launch Campaign:

The main objective of the launch campaign was to build awareness
of the new brand. Cadbury approached this mainly in three ways:
advertising, sampling and PR.

Advertising: A TV ad campaign was devised illustrating one of the

important consumption occasions. Generally advertisement reached 85%
of the market.
Sampling: From experience, Cadbury knew that in-store sampling was vital
for a successful launch of a new product.
Public Relations: One of the most underestimated areas of the marketing
mix, PR is invaluable for awareness building of an intended usage
occasion. PR can reach consumers when they are least expecting it.

2.3.4 Growth Strategies in Wholesale Distribution:

As per the global survey by Mr.Adam J Fein, the worldwide wholesale
distribution is going through a period of remarkable top-line revenue
growth. Total sales of wholesale distributors continue to increase, once
again discrediting forecasts of widespread disintermediation and the so-
called death of middleman. Over-hyped developments, such as B2B
exchanges, failed to displace wholesale distributors from their role as
valuable service providers in the supply chain. Employment growth
continues to lag far behind revenue growth as wholesaler-distributors
benefit from technology led productivity improvements. This report
compares how wholesale distribution executives around the world plan to
maintain growth at their companies.

The Challenge of Growth

Top-line revenue growth in wholesale distribution is derived from a
deceptively simple combination of selling more products or services,
achieving higher prices for those products or services, or a fortunate
combination of both factors. All volume based growth strategies ultimately
derive from either:
• Selling more to current customers, or
• Adding new customers.
Most Wholesale distribution executives around the world view
current customers to be their most important source of growth over the
years.
Growing Sales with Current Customers – Wholesale distributors must build
deep relationships with customers based on an understanding of the true
value created by their services and activities. Success is not measured by
delivery times or fill rates, but rather by customer productivity gains,
labour-savings, ergonomic improvements, or a faster time-to-market.
Growing Sales with New Customers – A clear majority of the wholesale
distribution executives targeting new customers will focus on their
geographic markets. Adding new customers within a current geographic
market is particularly challenging because these customers already have a
preferred vendor. Therefore, service levels and performance must be
superior to change a customer’s buying behaviour.
Some of the key findings of the research are:
1. Distributors around the world will be looking to their current
customers for growth – seven out of ten wholesale distribution
executives view current customers as their most important source of
growth over the years.
2. Distribution in European Countries identifies fee-based
services as a much more important factor in their revenue growth
plans than North American.
3. Growth strategies will emphasize operational improvement
over acquisition.
4. European executives still see growth challenges in managing
multi-country, multi-location distribution companies.