identifying distribution gap and planning for route effi
A PROJECT REPORT ON
Identifying Distribution Gap And Planning For Route
HINDUSTAN COCA-COLA BEVAREGE VARANASI
As Partial Fulfillment for the award of MBA degree under
University, Lucknow 2005-07
Under the able guidance of:
Mr. Virendra Dahia.
Ranjeet Kumar Asthana.
INSTITUTE OF MANAGEMENT STUDIES
TO WHOM IT MAY CONCERN
This is to certify that MR. RANJEET ASTHANA roll no.0509870206 of MBA is a
bonafide regular student of INSTITUTE OF MANAGEMENT STUDIES (IMS),
NOIDA for the session 2005-07.
He has completed the summer training project report entitled “IDENTIFYING
DISTRIBUTION GAP AND PLANING FOR ROUTE EFFICIENCY” In the
organization “HINDUSTAN COCA-COLA BEVAREGE PRIVATE LIMITED,
MEHNDINGANJ,RAJATALAB,VARANASI ” as a partial fulfillment for the award of
MBA degree under u.p.technical university,lucknow.
I find the research report is up to standard and original one.
TO WHOM IT MAY CONCERN
This is to certify that MR.RANJEET ASTHANAI roll no.0509870206 of MBA is a
bonafide regular student of INSTITUTE OF MANAGEMENT STUDIES (IMS),
NOIDA for the session 2005-07.
He has completed the summer training project report entitled “IDENTIFYING
DISTRIBUTION GAP AND PLANING FOR ROUTE EFFICIENCY” In the
organization “HINDUSTAN COCA-COLA BEVAREGE PRIVATE LIMITED,
MEHNDINGANJ,RAJATALAB,VARANASI ” as a partial fulfillment for the award of
MBA degree under u.p.technical university,lucknow.
I find the research report is up to standard and original one.
The project work bears the imprint of several people. I have a deep sense of gratitude
and honor towards them. First of all I would like to pay my gratitude thanks to
Mr.B.J.Rishi (Coordinator).I extend my thanks to my project supervisior Mr. Virendra
I would also like to give my sincere thanks to Mr. Sharat Kumar (HR Manager) for
giving me an opportunity to work for their esteemed organization .
I would also like to give my special thanks to Mr. Gaurav Dhar Dubey (sales manager)
who helped me in completion of this training
And, at last but not the least I would like to thank all those distributors and retailers who
provided me necessary information of market and the current scenario and all those
people who are directly and indirectly involved in the project.
It gives me an immense pleasure to put my project on “Identifying Distribution Gap
And Planning For Route Efficiency” with respect to coco-cola in varanasi . this is
made after a through study on specified marketing environment of working
atmosphere in Hindustan coca-cola Beverages Pvt. Ltd. Situated at Mehndiganj Raja
It is difficult for a common man to understand each and every aspect of the
organization. I have tried to present in an a lucid manner through the language of
common man so that every one may understand the complications of project have
been made in a clear by suitable data wherever necessary.
My study is based on the “Identifying Distribution Gap And Planning For Route
Efficiency”. as a lot of effort is made by the sales and marketing department to meet
out obligations apart from my project topic I have tried to chalk out almost every
department of the production plant.
In all my modesty, I wish to record here that a sincere attempt has been made for the
presentation this report. I also trust that this study will not only prove to be academic
interest but also will be able to provide an insight into the area of working in
I RANJEET KUMAR ASTHANA student ofINSTITUTE OF
MANAGEMENT STUDIES , NOIDA of MBA III semester, hereby,
declare that the summer training report having the title.Identifying
Distribution Gap & Planning for Route Efficiency in (LUXA,
DASASHAWAMEDH GHAT, BANGALI TOLA, RAMAPURA
RATHYATRA) Varanasi.There are several things, which are essential and
It is outcome of my own work and the same has not been submitted to any
universityCollegeInstitution for the award of my degree.
Date: RANJEET KUMARASTHANA
(MBA III Semester)
of June, I started my project under the guidance of Mr. Gaurav
dubey (Sales Manager) ,Mr. Ghanshayam Singh (Sales Executive) and Mr. Sivam
pan dey (marketing executive). I have covered all the area which come under
Krishana Enterprise and Om enterprise. The areas I covered are as follows:
Dasashawamedh Ghat, Bangali Tola, Bhelupura,Ramapura, Madanpura, Luxa
,Rathayatra,Kamachha in Varansi city. I had surveyed many retail shops as
possible in the area assigned to me . There I found some positive as well as some
negative image of coke.
I had done two surveys , one was Each dealer survey and
another one was brand and pack availability survey for knowing distribution gap
and route efficiency. I had also filled 100 questionaires from the retailer related to
distribution of soft drink and preference towards soft drinks.
In Each Dealer Survey , I counted the types of channel from
where the cold drink was selling for examples like pan shops , tea stalls , general
stores , restaurant etc and also the average sale of the cold drinks at that shops.
Also we covered each and every retailers at every route and we had to check that all
the brands and packs of coke were available or not or which one was available.
Every where I found the shortage of 200ml and 500ml bottle which was in more
demand. At every route I found some problems related to shortage of brands and
problem of improper visit of company officers to the retailers. I think that another
soft drink like Pepsi was much more stronger inside the city because they give good
margin to the retailers that’s why the retailers prefer to sell Pepsi in comparison
with Coke . And the other problem was that the retailers getting product at cheaper
cost in comparison from what they were getting from distributors.
After completing the survey, I got one more opportunity from
the sales manager in the form of a Market Impact Team . The work of that team
was that the team went to every retailer for right execution daily and to convinced
to buy each and every brand of coke. In the right execution daily, we went to the
retailer and make the cooling system pure and in the brand order. The brand order
of coke is
1. Thumps up
. We arrange it with the norms of coke in daily. In M.I.T. we take
seven steps which are as following:
1. Check the out side signs
2. Make worm display
3. Grid to retailer
4. Check inside signs
5. Check and maintain the cooling agent of Coke
6. Take the order to the retailer and fulfill it
7. Tell him about your next visit and thanks him.
I have completed and submitted my project report on
August. In this organization, I learned more about the sales and the
behavior of the retailer and distributor.
Firm, Brand, and Product Line Objectives
Firm level objectives: It is not enough to simply state a firm’s goal as
maximizing the present value of total profit since this does not differentiate it
from other firms and says nothing about how this objective is to be achieved.
Instead, a business and marketing plan should suggest how the firm can best
put its unique resources to use to maximize stockholder value. A number of
resources come into play—e.g.,
• Distinctive competencies—knowledge of how to manufacture, design, or
market certain products or services effectively;
• Financial—possession of cash or the ability to raise it;
• Ability and willingness to take risk;
• The image of the firm’s brand;
• People who can develop new products, services, or other offerings and
run the needed supports;
• Running facilities (no amount of money is going to get a new microchip
manufacturing plant started tomorrow); and
• Contacts with suppliers and distributors and others who influence the
success of the firm.
Market balance: It is essential that different firms in the same business not
attempt to compete on exactly the same variables. If they do, competition
will invariably degenerate into price—there is nothing else that would
differentiate the firms. Thus, for example, in the retail food market, there are
low price supermarkets such as Food 4 Less that provide few if any services,
intermediate level markets like Ralph’s, and high-end markets such as Vons’
Pavillion that charge high prices and claim to carry superior merchandise and
offer exceptional service
Risk: In general, firms that attempt riskier ventures—and their stockholders—
expect a higher rate of return. Risks can come in many forms, including
immediate loss of profit due to lower sales and long term damage to the brand
because of a poor product being released or because of distribution through a
channel perceived to carry low quality merchandise.
Brand level objectives: Ultimately, brand level profit centers are expected to
contribute to the overall maximization of the firm’s profits. However, when a
firm holds several different brands, different marketing and distribution plans
may be required for each. Several variables come into play in maximizing
value. Profits can be maximized in the short run, or an investment can be
made into future earnings. Product profit can be measured in several ways. If
you sell a computer that cost $950 to make for $1,000, you are making only a
5% gross profit. However, selling a product that cost $5 to make for $10 will
result in a much higher percentage profit, but a much lower absolute margin.
A decision that is essential at the brand level is positioning. Options here may
range from a high quality, premium product to a lower priced value product.
Note here that the same answer will not be appropriate for all firms in the
same market since this will result in market imbalance—there should be some
firms perceiving each strategy, with others being intermediate.
Distribution issues come into play heavily in deciding brand level strategy. In
order to secure a more exclusive brand label, for example, it is usually
necessary to sacrifice volume—it would do no good, for Mercedes-Benz to
create a large number of low priced automobiles. Some firms can be very
profitable going for quantity where economies of scale come into play and
smaller margins on a large number of units add up—e.g., McDonald’s survives
on much smaller margins than upscale restaurants, but may make larger profits
because of volume. Some firms choose to engage in a niching strategy where
they forsake most customers to focus on a small segment where less
competition exists (e.g., clothing for very tall people).
In order to maintain one’s brand image, it may be essential that retailers and
other channel members provide certain services, such as warranty repairs,
providing information to customers, and carrying a large assortment of
accessories. Since not all retailers are willing to provide these services,
insisting on them will likely reduce the intensity of distribution given to the
Product line objectives: Firms make money on the totality of products and
services that they sell, and sometimes, profit can be maximized by settling for
small margins on some, making up on others. For example, both manufacturers
and retailers currently tend to sell inkjet printers at low prices, hoping to make
up by selling high margin replacement cartridges. Here again, it may be
important for the manufacturer that the retailer carry as much of the product
line as possible.
Interrelated objectives: A firm’s distribution objectives will ultimately be
highly related—some will enhance each other while others will compete. For
example, as we have discussed, more exclusive and higher service distribution
will generally entail less intensity and lesser reach. Cost has to be traded off
against speed of delivery and intensity (it is much more expensive to have a
product available in convenience stores than in supermarkets, for example).
Narrow vs. wide reach: The extent to which a firm should seek narrow
(exclusive) vs. wide (intense) distribution depends on a number of factors. One
issue is the consumer’s likelihood of switching and willingness to search. For
example, most consumers will switch soft drink brands rather than walking
from a vending machine to a convenience store several blocks away, so
intensity of distribution is essential here. However, for sewing machines,
consumers will expect to travel at least to a department or discount store, and
premium brands may have more credibility if they are carried only in full
service specialty stores.
Retailers involved in a more exclusive distribution arrangement are likely to be
more “loyal”—i.e., they will tend to
• Recommend the product to the customer and thus sell large quantities;
• Carry larger inventories and selections;
• Provide more services
Thus, for example, Compaq in its early history instituted a policy that all
computers must be purchased through a dealer. On the surface, Compaq
passed up the opportunity to sell large numbers of computers directly to large
firms without sharing the profits with dealers. On the other hand, dealers
were more likely to recommend Compaq since they knew that consumers would
be buying these from dealers. When customers came in asking for IBMs, the
dealers were more likely to indicate that if they really wanted those, they
could have them—“But first, let’s show you how you will get much better value
with a Compaq.”
Distribution opportunities: Distribution provides a number of opportunities
for the marketer that may normally be associated with other elements of the
marketing mix. For example, for a cost, the firm can promote its objective by
such activities as in-store demonstrations/samples and special placement (for
which the retailer is often paid). Placement is also an opportunity for
promotion—e.g., airlines know that they, as “prestige accounts,” can get very
good deals from soft drink makers who are eager to have their products offered
on the airlines. Similarly, it may be useful to give away, or sell at low prices,
certain premiums (e.g., T-shirts or cups with the corporate logo.) It may even
be possible to have advertisements printed on the retailer’s bags (e.g., “Got
Other opportunities involve “parallel” distribution (e.g., having products sold
both through conventional channels and through the Internet or factory outlet
stores). Partnerships and joint promotions may involve distribution (e.g.,
Burger King sells clearly branded Hershey pies).
Deciding on a strategy. In view of the need for markets to be balanced, the
same distribution strategy is unlikely to be successful for each firm. The
question, then, is exactly which strategy should one use? It may not be obvious
whether higher margins in a selective distribution setting will compensate for
smaller unit sales. Here, various research tools are useful. In focus groups, it
is possible to assess what consumers are looking for an which attributes are
more important. Scanner data, indicating how frequently various products are
purchased and items whose sales correlate with each other may suggest the
best placement strategies. It may also, to the extent ethically possible, be
useful to observe consumers in the field using products and making purchase
decisions. Here, one can observe factors such as (1) how much time is devoted
to selecting a product in a given category, (2) how many products are
compared, (3) what different kinds of products are compared or are substitutes
(e.g., frozen yogurt vs. cookies in a mall), (4) what are “complementing”
products that may cue the purchase of others if placed nearby. Channel
members—both wholesalers and retailers—may have valuable information, but
their comments should be viewed with suspicion as they have their own
agendas and may distort information.
We consider direct marketing early in the term as a “contrast” situation
against which later channels can be compared. In general, you cannot save
money by “eliminating the middleman” because intermediaries specialize in
performing certain tasks that they can perform more cheaply than the
manufacturer. Most grocery products are most efficiently sold to the consumer
through retail stores that take a modest mark-up—it would not make sense for
manufacturers to ship their grocery products in small quantities directly to
Intermediaries perform tasks such as
• moving the goods efficiently (e.g., large quantities are moved from
factories or warehouses to retail stores);
• breaking bulk (manufacturers sell to a modest number of wholesalers in
large quantities—quantities are then gradually broken down as they
make their way toward the consumer);
• consolidating goods (retail stores carry a wide assortment of goods from
different manufacturers—e.g., supermarkets span from toilet paper to
• adding services (e.g., demonstrations and repairs).
Direct marketers come in a variety of forms, but their categorization is
somewhat arbitrary. The main thing to consider here is each firm’s functions
and intentions. Some firms sell directly to consumers with the express purpose
of eliminating retailers that supposedly add cost (e.g., Dell Computer). Others
are in the business not so much to save on costs, but rather to reach groups of
consumes that are not easily reached through the stores. Others—e.g., online
travel agents or check printers—provide heavily customized services where the
user can perform much of the services. Telemarketers operate by making the
promotion in integral part of the process—you are explained the benefits of the
program in an advertisement or infomercial and you then order directly in
response to the promotion. Finally, some firms combine these roles—e.g.,
Geico is a customizer, but also claims, in principle, to cut out intermediaries.
There are certain circumstances when direct marketing may be more useful—
e.g., when absolute margins are very large (e.g., computers) or when a large
inventory may be needed (e.g., computer CDs) or when the customer base is
widely dispersed (e.g., bee keepers).
Direct marketing offers exceptional opportunities for segmentation because
marketers can buy lists of consumer names, addresses, and phone-numbers
that indicate their specific interests. For example, if we want to target auto
enthusiasts, we can buy lists of subscribers to auto magazines and people who
have bought auto supplies through the mail. We can also buy lists of people
who have particular auto makes registered.
No one list will contain all the consumers we want, and in recent years
technology has made it possible, through the “merge-purge” process, to
combine lists. For example, to reach the above-mentioned auto-enthusiasts,
we buy lists of subscribers to several different car magazines, lists of buyers
from the Hot Wheels and Wiring catalog, and registrations of Porsche
automobiles in several states. We then combine these lists (the merge part).
However, there will obviously be some overlap between the different lists—
some people subscribe to more than one magazine, for example. The purge
process, in turn, identifies and takes out as many duplicates as possible. This
is not as simple task as it may sound up front. For example, the address “123
Main Street, Apartment 45” can be written several ways—e.g., 123 Main St.,
#123, or 123-45 Main Str. Similarly, John J. Jones could also be written as J.
J. Jones, or it could be misspelled Jon J. Jonnes. Software thus “standardizes”
addresses (e.g., all street addresses would be converted into the format “123
Main St #45” and even uses phonetic analysis to identify a likely alternative
spelling of the same name.
Response rates for “good” lists—lists that represent a logical reason why
consumer would be interested in a product—are typically quite low, hovering
around 2-3%. Simply picking a consumer out of the phone-book would yield
even lower responses—much less than one percent. Keep in mind that a
relevant comparison here is to conventional advertising. The response rate to
an ad placed in the newspaper or on television is usually well below one
percent (frequently more like one-tenth of one percent). (More than one
percent of people who see an ad for Coca Cola on TV will buy the product, but
most of these people would have bought Coke anyway, so the marginal
response is low).
Online marketing can serve several purposes:
• Actual sales of products—e.g., Amazon.com.
• Promotion/advertising: Customers can be quite effectively target in
many situations because of the context that they, themselves, have
sought out. For example, when a consumer searches for a specific term
in a search engine, a “banner” or link to a firm selling products in that
area can be displayed. Print and television advertisements can also
feature the firm’s web address, thus inexpensively drawing in those who
would like additional information.
• Customer service: The site may contain information for those who no
longer have their manuals handy and, for electronic products, provide
updated drivers and software patches.
• Market research: Data can be collected relatively inexpensively on the
Net. However, the response rates are likely to be very unrepresentative
and recent research shows that it is very difficult to get consumers to
read instructions. This is one of the reasons why the quality of data
collected online is often suspect.
There are many obstacles to the growth of e-commerce:
• Reach: Although the majority of U.S. households now have computers
connected to the Internet, a very large minority does not, and
penetration rates are considerably lower in some countries. In foreign
countries, even those households that have computers may be reluctant
to spend time online due to the per minute charges, which discourage
the more leisurely “browsing” American style.
• Concerns about privacy: A number of consumers are concerned about
giving up information to marketers that can easily be collected
electronically. Naturally, few consumers would like information about
their medical status widely collected by firms, but many consumers are
even reluctant to have marketers know the ages of their children and
past book purchase records. R
• eputational issues: Although not as much as a problem before, firms
operating online or through direct mail have often been viewed with
suspicion since consumers may question whether they will be around if
they do not deliver satisfactorily. Transshipments: Although the
Internet should facilitate commerce across boarders, customers
paperwork and ambiguities in duty liability make shipments across
• Costs. During the “boom,” Internet firms were not expected to be
efficient and thus developed bad habits. Although shipping and handling
charges can help cover costs of shipping and administration, these often
take away the attractiveness of Internet shopping. The most successful
e-commerce firms turn out to be the ones that have been successful
doing other kinds of direct marketing (e.g., catalog sales) before and
have developed the discipline and efficiency required there. For
products that have relatively high absolute margins—e.g., computers—
there is more money to cover administrative costs.
• Language. Since the Internet reaches around the world, it is often
difficult to match viewers with their preferred languages. Because U.S.
firms and individuals tended to predominate among those first to occupy
the Web, most sites are in U.S. English. British speakers of English
generally do not perceive American English as American—they tend to
perceive spelling such as “color” rather than their “colour” as
misspellings. French consumers do not like to have to click to get from
an English language to a French language site. It is estimated that by
the year 2007, the majority of web surfers will not be comfortable in
English and will want sites in their own languages.
• Government regulations: In the U.S., the government has tried to keep
its hands off the Net as much as possible to foster its growth as a trade
area, and a recently expired moratorium on new sales taxes was even
instituted. However, governments in many other countries are more
forceful in their regulations. In countries such as China, where sites can
be used to spread “subversive” ideas, there is a great deal of
government scrutiny and suspicion.
• Cultural obstacles are often severe. The whole purpose of the web is to
make information readily available. In countries where information is
closely guarded, that is a frightening idea. There is often also a desire
for personal interaction, which may be required to establish the trust
needed to secure a deal.
• Payment issues. U.S. consumers exposed to credit card fraud have very
limited liabilities, but these protections do not exist to the same extent
in Europe or Asia. In China, much of the purpose of the Internet is
defeated with some 80% of transactions being completed off-line,
usually with funding instruments other than credit cards.
There are a number of problems in running and developing web sites. First of
all, the desired domain name may not be available—e.g., American Airlines
could not get “American.com” and had to settle for “AmericanAir.com.” There
is also a question having your site identified to potential users. Research has
found that most search engines have a great deal of “false hits” (sites
irrelevant that are identified in a search—e.g., information about computer
languages when the user searches for foreign language instruction) and
“misses” (sites that would have been relevant but are not identified). It is
crucial for a firm to have its site indexed favorably in major search engines
such as Yahoo, AOLFind, and Google. However, there is often a constant
struggle between web site operators and the search engines to outguess each
other, with the web promoters trying to “spam” the search engines with
repeated usage of terms and “meta tags.” The fact that many computer users
employ different web browsers raises questions about compatibility. A major
problem is that many of the more recent, fancier web sites rely on “java
script” to provide animation and various other impressive features. These
animations have proven very unreliable. Sites may “crash” on the user or
prove unreliable, and many consumers have found themselves unable to
complete their transactions.
Legal issues. There are a number of legal issues associated with the Internet:
• Reach across boarders. Web sites transcend country lines and thus, a
firm may be subjected to legal standards of different countries. It may
be difficult to create advertising that simultaneously complies with rules
for each country.
• Taxation: There is a great deal of ambiguity as to which state and local
governments may collect taxes on merchandise sold on the Internet.
There is also a question as to who has the responsibility for making the
payment—the seller or the buyer?
• Privacy issues. Many foreign governments prohibit the collection of
personal information of consumers (as Amazon.com does), which greatly
reduces the customization opportunities online.
Web site design: The web designer must make various issues into
• Speed vs. aesthetics: As we saw, some of the fancier sites have serious
problems functioning practically. Consumers may be impressed by a
fancy site, or may lack confidence in a firm that offers a simple one.
Yet, fancier sites with extensive graphics take time to download—
particularly for users dialing in with a modem as opposed to being
“hard” wired—and may result in site crashes.
• Keeping users on the site: A large number of “baskets” are abandoned
online as consumers fail to complete the “check-out” process for the
products they have selected. One problem here is that many consumers
are drawn away from a site and then are unlikely to come back. A large
number of links may be desirable to consumers, but they tend to draw
people away. Taking banner advertisers on your site from other sites
may be profitable, but it may result in customers lost.
• Information collection: An increasing number of consumers resist
collection of information about them, and a number of consumers have
set up their browsers to disallow “cookies,” files that contain
information about their computers and shopping habits.
Cyber-consumer behavior: In principle, it is fairly easy to search and compare
online, and it was feared that this might wipe out all margins online. More
recent research suggests that consumers in fact do not tend to search very
intently and that large price differences between sites persist. We saw above
the problem of keeping consumers from prematurely departing from one’s site.
Distribution issues raise significant legal questions, many of which relate to
antitrust law. The main purpose of antitrust law is to enforce fair competition
among firms. There are two different kinds of competition that are relevant
here. Interbrand competition refers to different brands that compete against
each other—e.g., Nike competes against Reebok. On the other hand,
intrabrand competition refers to competition between different channels that
sell the same branded goods—e.g., Footlocker competes against other retailers
that sell Nike products. Often, it may be necessary to sacrifice the one kind of
competition to bolster the other. For example, by introducing exclusive
territories given to some retailers who alone are given the right to sell in one
geographic area, these retailers may have extra incentive to “push” the
product. The theory here, then, is that by reducing the intrabrand
competition among retailers all carrying, say, Guess jeans, the retailer will be
motivated to put up a strong competition against other retailers who carry
Levi’s, thus enhancing interbrand competition.
There are a number of ways in which competition can be threatened:
• Collusion: Retailers and/or manufacturers get together and agree to
limit competition—e.g., the three laundromats in a small town all get
together and agree that no one will charge less than one dollar per
wash. Although blatantly illegal in the United States, this kind of
behavior is accepted in certain parts of the world, although European
countries are now beginning to be less tolerant.
• Discriminatory pricing: Some full service manufacturers may decide to
give better deal to more powerful buyers—e.g., Wal-Mart may negotiate
better prices than Joe’s Grocery Store can. Such differences in prices
paid by competing firms are generally legal only if they are justified by
actual cost savings in selling to the two different firms—obviously, the
average overhead per case of Bandaid will be much lower when selling
to Wal-Mart, which buys in huge quantities.
• Predatory pricing: Firms may attempt to temporarily sell products
below their costs so that competitors are driven out of business, after
which the predators will raise their own prices. This is generally illegal
in the U.S.
• Territorial restrictions (as discussed above) and customer coverage
restrictions (e.g., one firm is designated as the only firm that is allowed
to sell to hospitals, while another one may be designed the sole
authorized seller to gyms). These may or may not be legal, depending
on the courts’ interpretation of their impact on overall market
• Price maintenance. Manufacturers may put pressure on retailers not to
sell their products below or above a certain price. While certain
manufacturers are concerned that some distributors may take advantage
of exclusive distribution deals and set maximum prices, the greatest
concern is about minimum prices. Here, manufacturers may be
concerned that if price competition is too intense, services will suffer.
By trying to ensure that no one sells below a designated floor price, full
service retailers are guaranteed certain levels of profitability.
Generally, it is explicitly illegal for retailers and manufacturers to agree
not to sell below a certain price (in legal terms, that would be a
“conspiracy in restraint of trade). However, it frequently is legal for the
manufacturer to tell the retailer that if he or she sells below the price,
the manufacturer will stop him or her. It would be illegal, however, for
the manufacturer to promise another competitor to “cut off” the
• Tying: Here, a customer may be required to buy two products even if he
or she only wants one. Firms may want to engage in this activity if they
have a monopoly-like situation for one product but face competition for
another (e.g., Intel dominates the market for the newest chips but has
much more competition for the motherboards and modems that the firm
also produces. Thus, the firm might like to buyers of their newest CPUs
to also buy motherboards also. Tying is legal under some circumstances
when it is deemed to be reasonable (the customer cannot expect to be
able to buy a car without tires even if he or she can find cheaper
alternatives elsewhere) but can be illegal if it is abusive and serves no
legitimate purpose (as in the Intel case).
Antitrust law is often rather murky, and it may be hard to find a straight
answer as to whether something is legal or not. In general, courts have
classified various kinds of activities in categories of varying certainty of legality
or illegality. Per se illegality includes practices that are definitely illegal if it
can be proven that they have taken place (e.g., two retailers agreeing not to
sell below certain prices). Under the modified rule of reason, certain
practices are presumed to be illegal, but the courts will hear exculpatory
evidence which may clear a firm (e.g., courts are likely to be suspicious if a
supplier drops a discount retailer after receiving complaints from a full service
retailer, but if the manufacturer can prove that it did not agree with the full
service retailer to stop the supply and that the termination benefits interbrand
competition, the practice may be accepted). Under the rule of reason, the
totality of circumstances are examined to assess impact on competition, and a
decision is made—thus, the law is not as clear (e.g., whether tying—requiring a
consumer to buy two products even if he or she wishes to buy only one—is
subject to significant review). Finally, certain practices are per se legal—i.e.,
they are accepted as legal and no legal action can be taken (e.g., since
consumers do not compete against each other, it is legal to charge different
airline passengers different fares based on advance purchase and Saturday
As we have discussed earlier, firms have to make tradeoffs between different
considerations such as cost of distribution, intensity vs. exclusivity, and service
provided. Some of the services ultimately desired by consumers include bulk-
breaking (as previously discussed), spatial convenience (being able to buy milk
in the supermarket rather than having to drive out to a farmer to get it),
timing of availability (having someone—the retailer and other channel
members—plan to have toothpaste available in the store when the consumer
needs it), and providing a breadth of assortment (the same store will carry
different kinds of food and other merchandise from different suppliers.
Segmentation involves identifying groups of consumers who respond relatively
similarly to different treatments. In general, we want to find segments that
contain people who are as similar as possible to each other while,
simultaneously, being as different as possible from members of other
segments. Thus, for example, members of what we might term a price
sensitive food segment are likely to seek out the lowest priced retailers even if
they are not located conveniently, buy larger packages, switch brands
depending on what is on sale, and cut coupons. The “fussy” segment, in
contrast, may shop either where the best quality is found or at the most
convenient location, and may be brand loyal and not cut coupons. Note that
not all members of each segment will be completely alike, and there is some
tension between precision of description and cutting the segments into too
small pieces. The idea, here, then, is for different channels to serve different
consumers (e.g., price sensitive individuals are targeted by Food 4 Less while
more upscale stores target the price insensitives).
Channel Structure and Membership Issues
Paths to the customer. For most products and situations, it is generally more
efficient for a manufacturer to go through a distributor rather than selling
directly to the customer. This is especially the case when consumers need to
have variety and assortment (e.g., consumer would like to buy not just
toothpaste but also other personal hygiene products, and even other grocery
products at the same place), when products are bought in small volumes or at
low value (e.g., a candy bar sells for less than $1.00), or even intermediaries
have skills or resources that the manufacturer does not (a sales force,
warehousing, and financing). Nevertheless, there are situations when these
conditions are not met—most typically in industrial settings. As an extreme
case, most airlines are perfectly happy only being able to buy aircraft and
accessories from Boeing and would prefer not to go through a retailer—
particularly since the planes are often highly customized. More in the "gray"
area, it may or may not be appropriate to sell microcomputers directly to
consumers rather than going through a distributor—the costs of providing those
costs may be roughly comparable to the margin that a distributor would take.
Potential channel structures. Channel structures can assume a variety of
forms. In the extreme case of Boeing aircraft or commercial satellites, the
product is made by the manufacturer and sent directly to the customer’s
preferred delivery site. The manufacturer, may, however, involve a broker or
agent who handles negotiations but does not take physical possession of the
property. When deals take on a smaller magnitude, however, it may be
appropriate to involve retailer--but no other intermediary. For example,
automobiles, small planes, and yachts are frequently sold by the manufacturer
to a dealer who then sends directly to the customer. It does not make sense to
deliver these bulky products to a wholesaler only to move them again. On the
other hand, it would not make sense for a California customer to fly to Detroit,
buy a car there, and then drive it home. As the need for variety increases, a
wholesaler may then be introduced. For example, an office supply store needs
to sell more merchandise than any one manufacturer can produce. Therefore, a
wholesaler will buy a very large quantity of binders, file folders, staplers,
reams of paper, glue sticks, and similar products and sell this in smaller
quantities—say 200 staplers at a time—to the office supply store, which, in
turn, may go to another wholesaler who has acquired telephones, typewriters,
and photocopiers. Note that more than one wholesaler level may be involved—a
local wholesaler serving the Inland Empire may buy from each of the two
wholesalers listed above and then sell all, or most, of the products needed by
local office supply stores. Finally, even in longer channels, agents or brokers
may be involved. This, in particular, will happen when the owner of a small,
entrepreneurial company has more experience with technology than with
businesses negotiations. Here, the manufacturer can be freed, in return for
paying the agent, from such tasks, allowing him or her to focus on what he or
she does well.
Criteria in selecting channel members. Typically, the most important
consideration whether to include a potential channel member is the cost at
which he or she can perform the required functions at the needed level of
service. For example, it will be much less expensive for a specialty foods
manufacturer to have a wholesaler get its products to the retailer. On the
other hand, it would not be cost effective for Procter & Gamble and Wal-Mart
to involve a third party to move their merchandise—Wal-Mart has been able to
develop, based on its information systems and huge demand volumes, a more
efficient distribution system. Note the important caveat that cost alone is not
the only consideration—premium furniture must arrive in the store on time in
perfect condition, so paying more for a more dependable distributor would be
indicated. Further, channels for perishable products are often inefficiently
short, but the additional cost is needed in order to ensure that the
merchandise moves quickly. Note also that image is important—Wal-Mart could
very efficiently carry Rolex watches, but this would destroy value from the
"Piggy-backing." A special opportunity to gain distribution that a manufacturer
would otherwise lack involves "piggy-backing." Here, a manufacturer enlists
another manufacturer that already has a channel to a desired customer base,
to pick up products into an existing channel. For example, a manufacturer of
rhinoserous and hippopotamus shampoo might be able to reach zoos by
approaching a manufacturer of crocodile teeth cleaning supplies that already
reaches this target. In the case of reciprocal piggy-backing, the shampoo
manufacturer might then, in turn, bring the teeth cleaning supplies through its
existing channel to exotic animal veterinarians.
Parallel Distribution. Most manufacturers find it useful to go through at least
one wholesaler in order to reach the retailer, and it is simply not efficient for
Colgate to sell directly to pathetic little "mom and pop" neighborhood stores.
However, large retail chains such as K-Mart and Ralph’s buy toothpaste and
other Colgate products in such large volumes that it may be efficient to sell
directly to those chains. Thus, we have a "parallel" distribution network
whereby some retailers buy through a distributor and others do not. Note that
we may also be tempted to add a direct channel—e.g., many clothing
manufacturers have factory outlet stores. However, note that the full service
retailers will likely object to being "undercut" in this manner and may decide to
drop or give less emphasis to the brand. It may be possible to minimize this
contract by precautions such as (1) having outlet stores located in vacation
areas not within easy access of most people, (2) presenting the merchandise as
being slightly irregular, and/or (3) emphasizing discontinued brands and
merchandise not sold in regular stores.
Evaluating Channel Performance. The performance of channel members
should be periodically monitored—a channel member may have looked
attractive earlier but may not, in practice be able to live up to promises. (This
can be either because of complacency or because the channel member simply
did not realize the skills and resources needed to perform to standards). Thus,
performance level (service outputs) and costs should be evaluated. Further,
changes in technology or in the market place may make it worthwhile to shift
certain functions to another channel member (e.g., a distributor has expanded
its coverage into another region or may have gained or lost access to certain
retail chains). Finally, the extent to which compensation is awarded in
proportion to performance should be reassessed—e.g., a distributor that ends
up holding inventory longer or taking on more returns may need additional
Distribution Gap is that posed by the limits on the distribution of the product or services .
If it is limited to certain geographical regions, as some draught beers are, it cannot expect
to make sales in other regions. At the other end of the spectrum, the multinationals may
take this to the extremes of globalization. Equally, if the product is limited to certain
outlets, just as some categories of widely advertised drugs are limited by law to
pharmacies, then other outlet will not be able to sell them. A more likely outcome is that
percentage of distribution limited. The remedy for this is simply to maximize distribution,
Unfortunately, maximizing distribution is not quite as it sounds, except for the obvious
market leaders. It is true that additional sales force effort, backed by suitable sales
promotional activities, should be able to increase distribution somewhat, although there
will still have to be some balance between the benefits to be gained and the cost to be
incurred. But the prime barrier to distribution will probably be the resistance of the
distribution chains to stock anything other than the best seller. This can partially be
overcome in the short term by offering better terms and higher margin, so that the
distributor make more on each sale. But the distributors have since learned that their
biggest profit come from concentrating on the main brands. They, above all, by the 80:20
What is left represents the gap resulting from the competitive performance. This
competitive gap is the share of business achieved among similar products, sold in the
same market segment , and with similar distribution patterns – or at least, in any
comparison, after such effects have been discounted. Needless to say, it is not a factor in
the case of monopoly provision of services by the public sector.
The competitive gap represents the effect of factors such as price and promotion, both the
absolute level and the effectiveness of its messages. It is what marketing is popularly
supposed to be about.
Market Deficiencies. "Gap" analysis involves analyzing current market
offering to assess the extent to which they meet customer demands. Demand side gaps
involve a market situation where consumers are not satisfied buying what is available—
usually either because the level of service provided is not adequate or because the
offering is too expensive. Supply side gaps, in contrast, involve firms that provide
services that are needed, but ones that can be met elsewhere at lower prices.
Demand Side Gaps. Customer satisfaction abounds, and many consumers
would like to replace their current suppliers. This can happen either generally—there is a
widespread dissatisfaction with banks among consumers, and many would switch if they
found one that they thought to provide better service—or the gap can be with one
segment that is not being well served. As an example of the latter, consider parents who,
if they had not had children, would have been perfectly satisfied with an ordinary Internet
service provider but are now worried that their children can be exposed to inappropriate
material online. Therefore, the PAX Network, which features family-oriented television
programming, stepped in to offer a service that claims to block out most objectionable
sites. Further, one auto parts store owned by a woman ran an advertising campaign aimed
at women, acknowledging that women were often being asked by their husbands and
boyfriends to be "parts runners." The ad then went on to talk about the cleanliness of the
store and non-condescending attitudes of the sales people.
Note that although a gap may exist in the sense that existing firms are not
offering what consumers may ideally want, there is a limit to what buyers would be
willing to pay for. For example, before starting their ice-cream business, Ben and Jerry
considered going into business delivering the New York Times to people’s doors on
Sunday mornings along with fresh baked bagels. A problem here, however, could have
been the cost of this service. Sometimes, a firm may be able to come in and fill a gap, but
may need to compromise on exactly how far to go. There are usually some struggles
between what would be nice to have and what customers are wiling to pay for. For
example, many computer buyers would like to have someone come and set up the
computer, the peripherals, and the Internet connection, but might balk at paying $150 for
this service. Many consumers would like to have their dry cleaning picked up and
delivered, but when push comes to shove, they would not be willing to pay for the extra
In the early 1990s, a firm owning several supermarket chains decided start
Tiangues, a chain aimed at Hispanic consumers in Southern California. Employees were
screened to be fluent in both Spanish and English, and foods that would appeal especially
to different Hispanic groups were emphasized. The chain was very popular when it first
opened, but it soon lost market share as it was found that with time, what mattered most
to customers was low prices.
Wheel of Retailing. An interesting phenomenon that has been
consistently observed in the retail world is the tendency of stores to progressively add to
their services. Many stores have started out as discount facilities but have gradually
added services that customers have desired. For example, the main purpose of shopping
at establishments like Costco and Sam’s Club is to get low prices. These stores have,
however, added a tremendous number of services—e.g., eye examinations, eye glass
prescription services, tire installation, insurance services, upscale coffee, and
vaccinations. To the extent these services can be added in a cost effective manner, that is
a good thing. Ironically, however, what frequently happens is that "room" now opens up
for a "bare bones" chain to come in and fill the void that the original store was supposed
to have filled! New stores can now come in and offer lower prices before additional,
costly services "creep" in. Note that upscaling over time may be an appropriate strategy
and that the owner of the "rising" chain may itself want to start another, lower-service
division (e.g., Ralph’s may want to own another chain such as Food 4 Less).
Supply Side Gaps. Supply side gaps come about when a business finds
that the services that it has traditionally offered to customers in the past are now too
expensive to justify the value they provide. For example, in the "old days" (i.e., until the
early 1990s), travel agents provided a valuable service—they would "match" travelers
and airlines, finding a reasonable fare and travel time and issuing the ticket to the
customer who, then, did not have to call all the airlines for a fare and then visit the airport
or an airline office. However, nowadays, it is much more convenient for consumers to
carry e-tickets, and it is frequently easier to go online to compare fares and travel time at
one’s convenience. Therefore, travel agents, to command their commissions, will often
need to provide something extra that the online services cannot. The problem is that, for
most consumers, there just isn’t much that the travel agent can offer other than fancy
coffee or donuts, which you can get more conveniently elsewhere anywhere. Maybe they
can take passport photos or arrange bus transportation to a cruise ship, but is that enough
to justify people coming to them? Online services are starting to offer package deals—air
fare, hotel, and car rental—anyway.
Finding opportunities. Again, it is important to emphasize the need for
market balance. Frequently, there will be room for higher cost services for one segment,
and perhaps a diametrically opposed service for the lower cost service.
Gaps, costs, and performance. Generally, we find that gaps do not exist
when cost and service are "in line" with customer expectations. Thus, for example,
Nordstrom serves a segment that desires high service. Nordstrom incurs a great deal of
costs in this, which are ultimately passed on to the consumer, but Nordstrom’s customers
are willing to pay for this. Similarly, Wal-Mart provides some, but less, service and does
so at a very low cost. Thus, another segment’s preferences are served. Thus, service
output demand is matched with supply. On the other hand, many auto repair facilities
provide less service than is expected and do not adequately make up for this by low
prices. Therefore, an opportunity might exist for someone to offer better service at a not
much higher cost. On the other hand, nowadays people may not be willing to pay the
extra cost for going to a butcher shop and pay significantly more if what they get is only a
little better than what is available in the supermarket meat section.
Closing gaps. Firms may be able to close, or reduce, their gaps by
reconsidering their offerings. A gasoline station that offers an "average" level of service
at prices higher than those of self-service stations might either target the low cost
segment, lowering prices and cutting costs, or targeting a premium service and "beefing
up" service. Similarly, a firm that faces a segmented market might "branch off" into
different units that offer different levels of service to different customers. For example,
Toyota started the Lexus division for consumers who demanded more service than would
have been cost effective to offer to its traditional customers. On the supply side, closing
gaps mostly involves improving efficiency and/or reducing costs in other ways.
Alternatively, existing channels may be reassessed—e.g., airlines have deemphasized
Channel Management and Conflict
Vertical integration. Generically speaking, products may come and reach
consumers through a chain somewhat like this:
Raw materials ---> component parts ---> product manufacturing
---> product/brand marketing ---> wholesaler ---> retailer
Money can be made at each stage in the chain and it may be tempting for
firms to try to get into all aspects. For example, Henry Ford wanted to make all the
components for his own cars, so Ford tried to run its own rubber plantation with limited
success. The temptation to try to expand vertically can be especially strong when an
industry faces limited growth and thus presents limited opportunities for reinvestment
into traditional operations (e.g., if the auto industry is not growing as much as desired,
one way to reinvest profits, rather than having to pay them back to stockholders who
would then have to pay taxes on the dividends, might be to buy steel mills. The problems,
however, is that the management is not used to running such businesses and that
managerial time will be spread among more areas.
Business structures. A business can be squarely focused in just one area
—e.g., Kentucky Friend Chicken is only in the fast food business and prides itself on this.
On the other hand, certain businesses are part of an assortment of businesses that all have
common, or at least overlapping, membership. Sometimes, these businesses can be
related in some way—for example, Pepsico used to own several restaurant fast food
chains, and Microsoft, in addition to being in the software business, used to own Expedia,
the online travel service. Here, expertise and brand equity might be transferred from
businesses to business. In other situations, however, these "empires" may consist of
unrelated businesses that were bought not so much because they "fit" into management
expertise, but rather because they were for sale when the conglomerate had money to
invest. With the tobacco industry currently being relatively profitable but having a
questionable future, a tobacco firm might invest in a software maker. Generally, such
investments are risky because of problems with management oversight. In Japan, many
firms are part of a keiretsu, or a conglomerate that ties together businesses that can aid
each other. For example, a keiretsu might contain an auto division that buys from a steel
division. Both of these might then buy from a iron mining division, which in turns buys
from a chemical division that also sells to an agricultural division. The agricultural
division then sells to the restaurant division, and an electronics division sells to all others,
including the auto division. Since the steel division may not have opportunities for
reinvestment, it puts its profits in a bank in the center, which in turns lends it out to the
electronics division that is experiencing rapid growth. This practice insulates the
businesses to some extent against the business cycle, guaranteeing an outlet for at least
some product in bad times, but this structure has caused problems in Japan as it has failed
to "root out" inefficient keiretsu members which have not had to "shape up" to the rigors
of the market.
Motivations for outsourcing. While firms, as discussed above, often have
certain motivations for trying to "gobble" up as many business opportunities as possible,
there are also reasons for "outsourcing" or contracting out certain functions to others.
Auto makers, for example, have often found it profitable to buy a number of components
from non-union manufacturers. Often small vendors, run by entrepreneurs, are better
motivated to perform certain services—e.g., insurance agents can have an incentive to
build up and service a client base more effectively than an internal staff could. It is also
possible for outsiders to specialize—chemical firms, for example, may be better able to
research and develop paints than auto manufacturers. Smaller independent firms may also
operate more leanly, facing market competition better than large, centralized firms. A
firm specializing in just making nuts and bolts may have greater economies of scale than
Rolls Royce, which makes only a limited number of cars.
Channel Power. Some channel members need others more than others
need them. For example, Wal-Mart has a lot more power, given its large volume
purchases, than many of its suppliers. There are several sources of power. Reward power
involves a channel member being able to positively reinforce another’s performance—
e.g., Coca Cola may be able to give a price break or pay a fee for additional shelf space.
A retailer that meets a certain goal—e.g., the sale of 50,000 cases per month—may
receive a bonus. In contrast, coercive power involves the threat of a punishment. A large
retailer, for example, may tell a small manufacturer that no further orders will be
forthcoming unless a price discount is offered. Expert power includes knowledge. Wal-
Mart, for example, because of its heavy investment in information technology, can
persuasively argue about likely sales volumes at different price levels. "Legitimate"
power involves government or other regulations—e.g., auto dealers have a great deal of
power over auto makers because only they are allowed to sell to end customers in the
continental U.S. under most circumstances. Finally, referent power involves the desire of
the other side to be associated—most manufacturers of upscale merchandise are highly
motivated to ensure their availability at Nordstrom’s.
Channel conflict. We have seen throughout the term that conflict exists
between channel members. For example, Coca Cola would like to increase its sales by
offering a discount on its cans. However, the retailer knows that overall soda sales will
not go up much when Coke is put on sale—consumers who bought other brands will just
switch, for the most part. Therefore, the retailer might like to "pocket" any discount that
Coke offers. Similarly, Bass might like to increase its sales by selling to Costco, but its
full service retailers will object to this competition. A number of approaches to resolution
are available, but none are perfect. Sharing of information may help build trust, but this
can be expensive, cumbersome, and may result in this information being available to
competitors. The two sides might seek outside mediation, with a supposedly neutral party
suggesting a fair solution, or the two sides may try to compromise on their own. One side
may accommodate the other, but may not be motivated to continue to do so in the future,
or the other may try to coerce its way through threats of punishment.
Distribution gap and route efficiency in Varanasi
Distributors in Varanasi :
There are 14 distributor in varanasi city
Distributor under whom I worked
We can take the example of Krishna. it covers the following route
Luxa- Dushawamegh- Bangalitola- Nai-sarak- Lehartara – Sarswati phatak
There are around 350 outlets on this route . in which there are 50 RED outlets.
There are 15 vehicles for distribution one can store around 50 crates each time
and this is sufficient for carrying on the distribution process.
For the coverage of 350 outlets the agency has,
Auto Rickshaw -4
The agency has around 8-10 efficient salesman to cover the above mentioned
WHAT IS RED ?
RED (Right Execution Daily) RED outlets are those who sell the product during off-
80% sales are given by RED outlet which is 20% of whole outlet.
WHY DO WE DO RED SCORING?
1. Company classify the outlet into four categories via.,
1. Diamond outlets– they are those outlets which sell above 800 crates
2. Gold outlets – they are those outlets which sell above 500-799 crates.
3. Silver outlets - they are those outlets which sell 200-499 crates.
4. Bronze outlets – they are those outlets which sell up to 200 crates.
2. On the basis of RED scoring discount and schemes are allotted every year.
To know the performance of market developers (M.D.)
RED is done with the help of MIT (market impact team) in this team of 5 to 7
members are made. It looks after all the outlet of their area.
Through MIT following work is being performed.
1. Outside signage
2. Worm display
3. Great the customer
4. Inside signage
5. Cooler purity
6. Range selling/ order taking
EVERY DEALER SURVEY (EDS)
EDS is a method of collection of data in which each and every outlets of cold-
drinks was to be covered .which was decided through random selection of map of
In this particular area was allotted to each individual in which they had to find
out Distribution gap and draw the map on the basis of which company will plan
for efficient route.
To provide route efficient structure we first have to analyze distributor’s capacity.
Evaluating distributor’s capacity to execute
-Distributor dependent on our business
- Relationship with retailer
Owner market visit.
-Self managed v/s manager dependent
-Distributor interest and attitude.
Evaluating distributor salesman.
-Contribution of discounted volume to total volume.
-Contribution of sub-distributor / fat dealer volume to total volume.
Need for efficient route
Market changes-number, size, and volume of outlets change.
Product mix in the market changes …....Pricing?
Competition enters the market.
Introduction of new distributor in that period.
Purchasing new vehicle for improving productivity.
Changing analyzing traffic pattern.
Objectives of efficient route design
Limited geographical area of the distributor.
Maximizing daily number of standards –calls and cover more area in the market.
provide the necessary service frequency to increase the daily visit.
Guidelines for sequencing outlets
Avoid traveling the same street twice to avoid wastage of time.
Avoid repeating loop.
Avoid repeating loop and improving efficiency.
Do not skip outlets and trying to increase the efficiency.
Work towards sales depot.
Plan entry and exit point and mapping their route design.
Left-hand traffic rules – make left turns.
Minimize driving time and using shortest route of reaching the retailer.
Minimizing waiting time and trying to visit the smaller outlet first.
Building an efficient route
Work from the edge of the territory towards depot
Work for the farthest outlet towards depot.
Work from largest vehicle size to small.
Steps in creating routes
1. Firstly a database is created every dealer through survey and record is maintained
about dealers. After this we have to analyze the capacity and capability of dealers. So it
will help in further regulating the activity.
2. Then we can easily formulate all the outlet in the area and finding about their daily
sales. If it sales good quantity of unit then that outlet can be segmented as an important
3. Then different zones are to be created and different program is made regarding each
zone and work is assign to each salesman to handle zone in an effective way.
4. Calculate the total time required in all kinds of activities and matching it with the time
available with the salesman and trying to complete all activities in less cost and time.
5 .Then we have to calculate the number of route in a particular territory and we have to
assign activities to salesman. On different route and find the cost involve in the sales
6. Then proper planning is required to build different and trying to achieve proper route
policy through which more and more areas can be explored and maximum outlets can be
There are five main steps in creating route
1. Locate outlets on map.
2. Create zones.
3. Calculate available time.
4. Calculate number of route.
5. Build routes.
This project report has been done for “Identifying distribution gap & planning for
route efficiency” of coca-cola. So this project has lead emphasis on distribution of coca-
cola. Availability of all brands &effective route planning for the distributor.
Coca-Cola is one of the major players in the highly competitive carbonated soft drinks
market. The project includes only the Hindustan Coca-Cola Beverages. Ltd. company of
• Area of the study pertains to Coca-Cola Company only.
• Studies conducted in for the months of May and June only.
• The main purpose was to study the distribution gap in Varanasi city.
Importance of the study
1.To access the organization effectiveness & distribution system of coca-cola plant.
2.The study provides the solution & way to reach out of the ultimate consumer &thus
become market leader.
3.The study provides the plan to minimize the transportation cost &time of distributor.
4.The study provides proper availability of all the brands, demanded by the outlet.
5.To analyze the ratio of the coke & Pepsi outlet.
1.Proper route planning
2.To minimize timing of auto by proper route planning.
3. To minimize the cost of distributor.
4.Identifying all outlet channels as well as brand wise.
5.To build good relation with shopkeeper.
6.To analyze the market coverage & consumer satisfaction.
7.Through study of distributor network.
8.Maximize daily no. Of standards call & cover more &more area in the market.
9.Find the total market share of Coke product in these areas in comparision of others.
10. To measure the satisfaction level of the retailers and dealers in respect of services,
advertisement and promotional activities.
• To measure the availability of Coke products.
• Proper visibility, Fridge Purity, display of Coke products in the different Coke
The following steps are followed to arrive at the research objectives and research
• Ascertain the decision-making objective.
• Understand and the background of the problem.
• Isolate and identified the problems not the symptoms.
• Determine the unit of analysis.
• Determine the relevant variables.
• State the research objective and research questions.
The following steps were involved in the sampling planning.
• Define the population.
• Census vs. sample.
• Sample design.
• Sample size.
• Executive the sampling process.
The first step toward a sample design must include the definition of
the population for the research. The population was defined as the whole
sum of individual living in Varanasi city. It was also determined that a
sample survey will be conduct. The sampling was so designed to cover
all segment of the soft drink market.
An estimation from the sample is not exactly be jthe same as a
census random sapling error is the difference between the resultant the
result of the census conducted by identical processes this error can occur
because of the chance variation in the selection of sampling units.
These are error due to non-sampling factor primarily the nature
of a study design and correctness of execution these errors are not due to
PRIMARY DATA COLLECTION:
Data collection method procedure used by researcher was mostly
by direct interviews the researcher conducted the interviews in an
informal manner in order to get the attention of the respondent. On may
occasion the respondents refuse to answer the question in that case they
have to be probed to answer.
Complete care was taken to record the actual respondents to give
the clear picture while analyzing the questionnaire.
1. The inventory management plays key role in the distribution system.
2. The transportation system is a crucial factor in the effective flow of
3. Competitor awareness is crucial factor in the effective flow of
4. Limited geographic area of the distributor.
5. Provide the necessary service frequency to increase the daily visits.
The sampling frame is Varanasi city (Lahuravir, Pichasmochan, Pandariba,
Beniabagh, Chetgang, Bari piyari, Senpura, Adampura)
For the study it was decided to collect a sample of 250 retailers.
For the purpose of the project Random sampling was undertaken and 250
retailers of soft drinks were being approached.
Instrument for Data Collection-
Collection forms the basis of research project. It is integral part of
research. Keeping in the mind the questionnaire was being designed. It was a
The questionnaire was framed keeping in mind that how this would
provide most relevant and complete information required fulfilling the
objective of the research.
Both quantitative and quantitative analyses were used to link question and
dear combined interference from different questions.
• Coke stated its operation ii India in 1973 and that was closed in late 70’s itself.
• Coke re-entered Indian market in the year 1993 and in the next two years coke
acquired brands of Parle Beverages (Thumsup, etc).due to which company
became market leader within few months.
• Currently Coke is third Largest FMCG Company in India.
• Company’s operation is being governed by HCCBPL and HCCM Co. Pl which
are hundred percent subsidiaries of the Coca- Cola Company.
• Coca- Cola has been divided in India into five zones namely:
• Further, South zone is divided in 2 zones.
• Company’s product are distributed through Direct and Indirect routes
• In direct route products are sold directly from company’s vehicle to retail outlets
(for e.g. Kanpur)
• In indirect routes various marketing intermediaries play their role in distribution
channel (for e.g. Varanasi)
• Coca- Cola has both FOBO ( Franchise owned Bottling Operation )and COBO
(Company’s Owned Bottling Operation)
• The bottling plant is divided into types:
1. Brown Field
2. Green Field
BREIF HISTORY OF COCA- COLA
Coca- Cola is the most popular and biggest selling soft drinks in History as well as
one of the best known brands around the world. The company was created on May
, 1886 by Dr. John Smyth Pemberton in Atlanta. He made world’s favorite soft
drink by mixing carbonated water with caramel colored syrup. The name Coca- Cola
and Trademark was carried by Pemberton’s partner Frank. M. Robinson.
Asa G Candler acquired Coca- Cola in 1891 by an investment of $2300. He was a
druggist and a businessman in Atlanta. Candler sold out the company in 1919 to Atlanta
banker Ernest Woodruff. His son Robert Woodruff was elected as President in 1923.
In 1967, a Minute Maid Company was formed which added fruit juice concentrates and
adds to portfolio. The Coca- Cola was acquired by Columbia Pictures and Belmont
Spring Water Company in 1982.
In 1989, Belmont Spring Water was sold and its stake in Columbia Pictures
Entertainment Inc.A joint venture Company was formed in 1991 with the name of Nestle
SA to manufacture market and distribute Nescafe.
After sometime Coca- Cola moved from carbonated soft drink Company to o total
Beverages Company while presence of Fruit Juice, Coffee and Health Drink or Water.
DIVERSITIES OF COCA- COLA COMPANY
Across more than 200 countries…. More than 100 languages…. A multitude of cultures
and geographies, the Coca- Cola Company strives to be a special part of people’s life.
This privilege comes with a responsibility.
The Company embraces its commitment to diversity in all its forms as a core value.
Diversity of race, gender, sexual orientation ideas and ways of living , culture and
business practice provides the creativity and innovation essential to our economic well
being. Equally important is a highly motivated, healthy and productive workforce that
achieves business success through superior execution and superb customer satisfaction.
In today’s volatile economic environment, this kind of performance requires unprecedent
commitment to the principles of integrity and leadership. The Coca- Cola Company
intents on keeping this commitment.
MISSION OF COCA- COLA COMPANY
The Mission of The Coca- Cola is to increase share owner value over time. The company
accomplishes the mission by working with its business partners to deliver satisfaction and
value to customers through a worldwide system of superior brands and services, thus
increasing brand equity on global basis.
MISSION OF COCA- COLA INDIA
Create consumer products, services and communications, customer service and bottling
system strategies, processes and tools in order to create competitive advantage and
deliver superior value to:
• Consumers, as a superior beverage experience.
• Customers, as an opportunity to grow profits through the use of finished drinks.
• Bottlers, as an opportunity to grow profits and volume.
• The Coca- Cola Company as a trademark enhancement and positive economic
• Suppliers, as an opportunity to make reasonable profits which creating real value
addition in an environment of system- wide teamwork, flexible business system
and continuous improvement.
• Coca- Cola India Associates, as superior career opportunity.
• The Indian society in the form of a economic and social development.
VISSION OF COCA- COLA INDIA
Provide exceptional strategic leadership in the Coca- Cola India System, resulting, in
consumer and customer preference and loyalty, through Coca- Cola’s commitment to
them and in a highly profitable Coca- Cola Corporate branded Beverages system.
GUIDING PRINCIPLES OF COCA- COLA INDIA
1. We will conduct ourselves and our business activities with high standard of
honesty, integrity and professionalism.
2. We will recognize the positive contribution that we make as individuals and team
members to produce our business success.
3. We will encourage learning environment where people constantly grow, develop
4. We will strive for excellence and seek continuous improvement in everything we
5. We will respect all stakeholders, including employees, partners and suppliers and
instill them with passion, to deliver quality goods and services.
6. We will foster initiative and creativity by empowering individuals to attain well
BOTTLING HISTORY OF COCA- COLA
1886- Coca- Cola originated as a soda fountain beverage in 1886 selling to five cents a
glass. Early growth was impressive, but it was only when strong bottling system
developed that Coca- Cola became the world’s famous brand.
1894- A modest start for a bold idea
In a candy store in Vicksburg, Mississippi, Brisk sales of new fountain beverage called
Coca- Cola impressed the stores owner, Joseph A. Biedenharn. He began bottling Coca-
Cola to sell, using a common glass bottle called` a Hutchinson.
Beidenharn sent a case of Asa Griggs Candler, who owned the Company. Candler
thanked him bit took no action. One of his nephews already had urged that Coca- Cola be
bottled, but Candler Focused on Fountain sale.
1899….The First Bottling Agreement
Two young Attorneys from Chattanooga, Tennessee believed they could built a business
around bottling Coca- Cola. In a meeting with Candler, Benjamin F. Thomas and Joseph
B. Whitehead obtained exclusive rights to bottle Coca- Cola across most of the United
States- for the sum of one dollar. A third Chattanooga lawyer, John T. Lupton, soon
joined their venture.
Three bottling pioneer bottles divided the country in to territories and bottling rights to
local entrepreneurs. Their efforts were boosted by major progress in bottling technology,
which improved efficiency and product quality.By 1909, nearly 400 Coca- Cola bottling
plants were operating and most of them were family owned business. Some were open
only during hot weather months when demand was high.
1916….Birth of Contour Bottle
Bottlers worried that Coca- Cola straight-sided bottle was easily confused with
imitators.A group representating the Company and the bottlers asked glass manufacturers
to offer ideas for a distinctive bottle.A design from the Root Glass Company of Terre
Haute, Indiana won enthusiasm approval.The Contour bottle became one of the few
packages ever granted trademark status by the U.S Patent Office.Today,its one of the
most recognized icons in the world even in the dark.
1920’s ……Bottling overtakes fountain Sales
As the 1920s dawned, more than 1,000 Coca- Cola bottlers were operating in the
U.S.Their ideas and zeal fuel steady growth .Six bottle cartons were a huge hit starting in
1923.A few days later, open top metal coolers became the forerunner of automated
vending machines.By the end of 1920’s, bottle sales of Coca- Cola exceeded fountain
1920’s and 30’s…International Expansion
Lead by Robert W. Woodruff, chief executive officer and chaireman of the board, the
Company began major push to establish bottling operation outside U.S plants were
operated in France, Guatermala, Honduras, Mexico, Belgium, Italy and South Africa.By
the time World War IInd began, Coca- Cola was being bottled in 44 countries.
1940’s……Post War Growth
During the war, 64 bottling plants were set up around the world to supply the troops.This
followed an urgent request for bottling equipment and materials from General
Eisenhower’s base in North Africa.Many of these war time plants were later converted to
civilian use, permanently enlarging the bottling system and accelerating the growth of the
Company’s world wide business.
For the first time, consumer has chosen Coca- Cola package size and type traditional 6.5
ounce Contour Bottle,or larger servings including 10, 12, and 26- ounce versions. Cans
were also introduced, becoming generally available in 1960.
1960’s …..New Brands Introduced
Sprite, Fanta joined Coca- Cola in 1960’s.The 1980’s brought Diet Coke.Today scores of
other brands are offered to meet consumer preferences in the local markets around the
1970’s and 1980’s….Consolidation to serve Customers
As technology leads to global economy, retail customers of the Coca- Cola Company
merged and evolved into bottlers consolidated to better serve gaint international
customers.The Company encouraged and invested in a number of bottler consolidation to
assure that its largest bottling partners would have capacity to lead the system in working
with global retailers.
1990’s……New and Growing Markets
Political and economic changes vast markets that were closed and underdeveloped for
decades.After the fall of Berlin wall, the Company invested heavily to invest in Plants in
Eastern Europe.As the century closed, more than $1.5 billion was committed to new
bottling facilities in Africa.
Century……..Think Local, Act Local
The Coca- Cola bottling system grew up with roots deeply planted in local communities.
This heritage serves the Company well today as consumers seek brands that honour local
identity and the distinctiveness of local markets. As was true a century ago, strong local
based relationship between Coca- Cola bottlers, customers and communities are the
foundation on which the entire business grows.
The manufactory of different types of Brands of soft drink comes
Under the production department . It comprises the process of Water treatment
,Syrup preparation , Container washing , Mixing & proportioning, filling &
Crowning and then the final Inspection of the product.
This department takes is also termed as Dispatch Section . Goods are received
And dispatched from shipping. It works in receiving of Products from other
Unit transferring of full form production , Inventory Management of finished
Products in First out (FIFO) method , dispatch of goods to distribution
Empty received and dispatch to other units.
PLANT LAYOUT AND MACHINERY
Plant has been constructed in a pollution free area and the construction is as per
the construction guidelines by the Coco-Cola company (TCCC) and
meets all the requirements of a food production facility .
As per the Quality standards process areas such as Utilities and admin Toilets etc.
The complete production line is supplied by worlds renowned machinery
Manufacturer for Beverages and Breweries.
The Filler is the machine which fills the beverage in to clean bottles and seals
To the bottles with crown / cap immediately after filling . Following are
Some of the key highlights of this state of art technology machine.
rate filler speed 600 bottles /minute i.e. 1500 cases /hour.
2. Continuous and automatic filling under Co2 pressurized atmosphere with
minimum operator / Human contact.
Complete machine made of SS 304/316 grade stainless steel and food grade
With stand up to 95 C temperature and chlorine sanitation in order to facilitate
proper cleaning and sanitation
5. Facility to seal the bottle immediately after filling to prevent contamination.
Fully guarded and with all safety control which prevent damages to machine
product and personnel.
Fully automated with easy operator controls and access to all function at one
The Mojonnier from Sasib is the machine which blend the syrup , water and
carbonate with Co2 as per the company specifications .
The key features of this machines are :
1 . Capable of producing 11000 liters of beverage per hour .
2. Completely concealed machine and no exposure of nay food
Or food contact surface to external environment.
3. Made of SS304 /316 Stainless steel and food grade material.
4. With stand up 95 0C temperature and chlorine sanitation in
order to facilitate proper cleaning and sanitation.
5. Fully automated with easy operator controls and access to all function at one place.
6. Sanitary design sample valves for Microbiological sample collection.
BOTTLE WASHER :
Another important machine is the bottle washer manufactured by Hilden which
was market returned empty bottles/ new bottles It has the following key features .
Double ended type where the dirty bottle enters at one end and clean
bottles will come to the other end . The clean bottle discharge and meaged
with the bottling hall interior which is concealed and controlled
environment this prevents the contamination of washed bottles with
sections with different temperature ranging from 40 c to 75c and
concentrations of washing compound (NaOH ranging from 2.4% with
additional support of wash additives to enhance the washing) .Rinse
section for mechanical action and to remove the entire trace of washing
3. Bottles comes out of the machine will be of commercial sterilization
4. Soft water used for bottle washer meets portability norms ,IS 10500
specifications as well as WHO specification.
CASER AND UNCASER :
Caser and uncaser are the machines used to put bottles and the conveyors
cases and to put filled bottles back to crates .
This improves the efficiency and reduce losses due to breakage during man
Conveyors are made of SS again and carry the bottles from one machine
another washed bottles are carried from bottle washer to filler by conveyors
Out any human intervention.
All kinds of materials are handled in stores either it can be of raw material
For production or materials used in the office. A proper sequence is followed.
At very first , purchase requisition is prepared by each department and then
Material are purchased from the fixed vendors, after this the material are
Distributed as per the requirement. In broader terms we can say that the
Activities performed in this process are receiving of material ,issuing of
material , rejection handling, scrap handling .
QUALITY ASSURANCE (QA) :-
QA department ensures the total quality in each and every aspect of the
Organization . This quality is not only concerned with individual department
Like production of goods but it is concerned with every functioning of the
Organization such a hygiene in the organization like providing the nutrias
from the canteen cleanliness in the bathrooms not polluting the environment
etc . One of the major functions of QA department is pre and manufacturing
test which ensure zero defect of that consumer can get right quantity and
quality products . As the procured materials have to undergo a rigorous
quality check . Even before procurement the quality of the material has been
ensured by the sample check of material.
QUALITY DRIVES BUSINESS
“Value of Money”
Empowered act like
“place to work”
Consistent Growth Value
“Plant to invest”
Investors find Consistent growth and value addition and feel that this
Organization is the right place to invest.
Customers are delighted , Loyal and feel they got value for money .
Employees feel empowered and act like owners. They feel this is
Right place to work .
Society perceive organization as a responsible corporate citizen .
Organization manage business ethically good transparent corporate
Governance . It has policies to maintain quality of the environment .
Marketing strategy of coca-cola
As million of rural Indians reach for a cold soft drinks in the hottest summer in
years, coca-cola India seems to have discovered the consumers who could rescue its
dismal sales record. Coca cola India totally misjudged rural India home to two third of
the country’s 1 billion population, when it re-entered the country a decade ago.
Yet the company’s new strategy of smaller bottles, price cuts and advertising that
straddles cities and villages pushed turnover last year up by a quarter to nearly Rs.5000
crore. And thumbs up, a local brand that Coca-Cola bought and then ran down, is also
recovering spectacularly. The success of Thumbs Up, whose market share is now roughly
equal to that of market leader Pepsi at 23%, is an embarrassment for Coca-Cola, which is
in third place with 16.5% (from 12% three years ago) in India’s Rs.8000 crore soft drinks
market. Coca-Cola returned to India after being kicked out by the government in the mid-
1970s. It paid a high price for the then market leader, Thumbs Up, and tried to kill it off
in the mistaken belief that this would pave the way for Coca-Cola’s rise. Extravagance,
an optimistic and naïve reading of the market and mismanagement of its new bottling
assets led Coca-Cola to write down Rs.2000croreof its Indian assets in 2000. The greatest
indignity is that India is one of the few markets where Pepsi has outsmarted Coca-Cola.
That makes its recovery all the more remarkable, says Mr.C. Srinivasan, chairman of
business consultant AT Kearney India. Coca-Cola in India management, now stable
after recent flurry of departures, persuaded the US parent to persist with India, and won
$100m to fix problems such as poor distribution. Its Atlanta headquarters was won over
because of India’s potential. India’s per capita consumption of carbonated drinks is less
than hall the level in Pakistan and about 8% of China’s. Mr. Gupta argued that closing the
gap would only come by chasing the rural consumer.
“We had to address the 75% (that lives in rural areas) and not just the 25% in
cities and that meant using small pack innovations” says Mr. Gupta.The only consumer
goods companies that make it in India are those that sell micro-sized products at low
Coca-Cola’s 200 ml bottle (down from 300 ml) sells for Rs.7, half the price of a
conventional sized bottle to achieve a return on this “low margin, high volume” strategy.
Coca-Cola had to shrink its ballooning costs, while raising output in a market growing at
just 8-9%per year. Coca-cola added 30 assembly lines, including five plaints, cut costly
staff, revamped transport, shrunk bottles and made them lighter and packed in smaller
crates to increase a truck’s carrying capacity, added distributors and expanded the
number of outlets in towns and villages by a fifth to about 1 m. Coca-Cola’s aim was to
“lock in” retailers in villages of at least 1,000 people connected to usable roads. One
method was to help those with no saving or access to formal credit to buy their costliest
asset: a fridge. The company negotiated big discounts from fridge producer, placing an
order equivalent to two months output of the domestic fridge industry. Discounts were
passed on to the retailers, cutting the average purchase price by Rs.3, 000 more than three
month’s wages in a village.
Finally, Coca-Cola dumped a global advertising campaign that was irrelevant to
the Indian market and adopted one featuring Bollywood stars. “The campaign is finally
speaking to the right market” says marketing consultant Mr.Jagdeep Kapoor.The adverts
also loudly proclaimed the Rs. 5 price benchmark, meaning retailers could not
The re-localization of Coca-Cola:
A glance at the 1999 Annual report of The Coca-Cola Company leaves you with a
strong impression of two words that seem to be very deeply etched in every statement
made by the company –Consumer and Localization. The Chairman Douglas Daft states
in his address to shareholders that, “If there’s one thing that I have learned in my 30 years
at Coca Cola it is –Think locally and act locally”. Coca-Cola’s localization drive appears
to be partly spurred by the adverse impact on the image of the company, due to the
various issues that cropped up last year in different parts of the would. Like the product
contamination in Belgium and France, the problems with regulators in Europe, the racial
discrimination lawsuit in United States.
In a recent article in The financial times, Mr. Daft talks of how Coca-Cola whose
basic success emanated from its strength of being a multi-local business relying heavily
on the insight of local business partners, quite forgot the secret of its success and veered
on the path of centralization. He has stated in this article that Coca-Cola wandered off the
right path and endured a year of dramatic setback, by ignoring the changing global
scenario and continuing to believe that a strategy that was once successful will always
yield results. As he puts it. “As the Century was drawing to a close, the world had
changed, and we had not. The world was demanding greater flexibility, responsiveness
and local sensitivity, while we were further centralizing decision making, standardizing
practices and were moving away from our traditional multi-local approach”.
The company in 80’s and 90’s had focused on centralizing its operations for
enabling effective management of a vast global enterprise that was being spread over 200
countries. It has now woken up to the fact that the would is changing very fast today and
that a localized management that can quickly respond to the challenges and needs of the
relevant marked will be critical to success, rather than a unified management at the
center. And that is precisely what Coca-Cola has set out to do. It appears to be handing
out a greater degree of freedom and responsibility to the frontline managers in their
respective areas of operations. It has decided to cut jobs and convert itself into a leaner
structure. In India too, the complex holding structure has been broken down and
converted into a simplified structure. A single holding company Hindustan Coca-Cola
Holdings Pvt. Ltd and one downstream subsidiary- Hindustan Coca-Cola Beverages –
formed by the merger of 4 bottling subsidiaries of Coca-Cola and that of Schweppes now
operate in India. The parent has performed a comprehensive review of its Indian bottling
operations and has announced that it will be writing off $400mn worth of assets in
India in the first quarter of this year.
The meeting hosted last week by the company to update investors on its business
strategies and outlook for the future also sang tune of how members of the global. Coca-
Cola management teams are implementing their “Think Local, Act Local” philosophy.
The company’s focus, according to the management, will be to encourage higher
consumption of non-alcoholic beverages and the coca-cola brands in every country. This
will be achieved through an intense focus on consumers, communities, customers, the
Coca-Cola system and Coca-Cola people. The Consumer focus strategy involves using
innovative and tailored marketing programs based on local consumer insights to enable
the company to keep growing. “We want to ensure that we have a tailored nonalcoholic
beverage portfolio in every community that touches consumers in locally relevant ways”
states the annual Report of the company. It gives the example of the company’s
innovative marketing strategy in India, which leveraged on the Diwali Festival and the
entrenched family values in the Indian society to connect to the Indian consumer at a
personal level. In Mr. Draft’s words “The 21st
Century has taught us one important
powerful- that the next big evolutionary step in going global has to be going local”.
Soft drink business is built on two piollars-brands and Dostronitopnm. We present
below comprehensive conceptual coverage of these and other key marketing concepts.
2.Valuation of brands
6.Market segmentation and positioning
7.Advertising and promotions
What is a brand?
A brand is name, term, sign, symbol or design or a combination of them which is
intended to identify the goods or services of one seller or group of sellers and to
differentiate them from those of competitors.
A Trademark is “a brand or a part of brand that is given legal protection because it
is capable of exclusive appropriation.”
Manufacturers can use their own brands (known as Manufacturers brands) or
brands of their distributors (Distributors brands).
Manufacturersdistributors use brand names for a verity of reasons from simple
identification purposes to having legal protection for unique features of the products from
imitations and help consumers recognize contain quality parameters. In some cases,,
brands are lust used to endow the product with unique story and character which itself
can be a basis for product differentiation.
Special importance of brands for soft drink products
While brands can represent all types of goods or entities, they have special importance
for products. Brand equities are stronger in soft drink products as the consumer is
reluctant to try unknown brandsunbranded products for the following reasons.
These products individually account for a small part of household spending.
Most of these products are personal use.
In many cases, it is difficult to differentiate a product on technical or functional
grounds and therefore the consumer is reluctant to switch to an unknown brand.
Successful brands generate strong cash flows, which enable the owner of the
brand to reinvest a part of it in the form of an aggressive
advertisementspromotions. This reinforces the perceived superiority of a brand.
How a brand is created?
Soft drink companies spends enormous sums on building a brand equity by way of
Low entry price
Promotions (schemes for dealers, consumers etc.)
Advertisement and promotion can induce trials but for sustained loyalty the manufacturer
has to offer superior quality and value for money. Most successful brands are founded on
a chance discovery of a new productprocess or assiduous research and development
work. Major players invest in R&D on their existing brands and improve the product
quality continuously to maintain their edge over competitors.
a) Individual brands Vs Umbrella brands
Individual brand has its own identity and the corporate or common name is not used to
promote its equity. In case umbrella brand, there is a generic brand with association of
some values. For instance, Hindustan Lever follows individual branding strategy and has
several brands in the same category such as Lux, Liril, Rexona soaps etc. Competitor
Norma has mainly followed the umbrella branding strategy such as Norma Bath, Norma
Beauty, Irma Super, Norma Shikakai soap etc. Only recently, the company for the first
time diverted from its strategy of umbrella branding with the launch of Nima.
Advantages of Individual branding strategy are :-
Some of the products, which flop ion the market, do not have negative spill over
impact on other brands. For example, Nirma is associated with popular end of products,
which becomes a major deterrent for its expansion in the premium segment.
The same manufacturer offers consumers looking for change distinctly new brands.
But individual branding requires expensive advertisements and brand building
exercise. Also, each new brand does not benefit from the positive perceptions of earlier
In umbrella branding, manufacturers have advantage of-
Establishing a new product quickly witch association of quality/benefits of the mother
brand (a classic case in Indian context has been Godrej).
No. Need for name research, expensive advertisement for creating brand names,
recognition and preference.