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SCOPE, OPPORTUNITY, MARKET PENETRATION & SALES OF ALL PRODUCTS (FOOD & BEVERAGE) IN THE INSTITUTIONAL SEGMENT
Submitted By: SUDIP DUTTA PGPM 2010 - 2012 010109131 Under the able guidance of
Prof. Debraj Datta Mr. Suvankar Banerjee Mr. Amitava Munshi Mr. Gagan Sidana
Project Guide (GBS) Senior Lecturer (Marketing) Globsyn Business School Ph. No: +91 90382 77514
Project Guide (HUL) Territory Sales Officer Kolkata Metro Hindustan Unilever Limited Ph. No: +91 - 96744 93489
Area Sales Manager Kolkata Metro & Rest of Bengal Hindustan Unilever Limited Ph. No: +91 90070 56316
Regional Sales Manager (Eastern Zone) Hindustan Unilever Limited Ph. No.:+91 91633 53341
ACKNOWLEDGEMENTS
I express my deep sense of gratitude for co-operation and support of all those people who made me understand what is needed time and again for completing this project. I am thankful to Hindustan Unilever Limited (HUL) for giving me the opportunity to work with them and make the best out of this internship. I thank my company guide, Mr. Suvankar Banerjee, Territory Sales Officer (Cal-Metro) for having constantly guided and supported me throughout the training period. I am thankful to my institution, Globsyn Business School for giving me the opportunity to work with such an esteemed organization. I owe a deep sense of gratitude to my faculty guide, Prof. Debraj Datta, Senior Lecturer (Marketing), for providing me with proper support and guidance for the completion of this project. My heartfelt gratitude also goes out to all those employees at HUL whom I interacted with throughout the two months of my internship period. I take this opportunity to thank my parents and loved ones who have always stood by me and offered emotional strength and moral support and encouragement. Last but not the least; I am thankful to all the customers, who gave their precious time and insights, without which the completion of this project would not have been envisaged.
Sudip Dutta
PGPM 2010 -2012 Globsyn Business School Kolkata
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DECLARATION
Title of the Project: SCOPE, OPPORTUNITY, MARKET PENETRATION & SALES OF ALL PRODUCTS (FOOD & BEVERAGE) IN THE INSTITUTIONAL SEGMENT.
I hereby declare that the report (containing words, data, arguments and ideas) presented for assessment in this Summer Internship Project is my own, and has not been submitted elsewhere for any evaluation.
This project is in partial fulfillment for the award of the diploma of Post Graduate Program in Management from Globsyn Business School, Kolkata.
I hereby declare that the information provided in this report is true to the best of my knowledge.
Sudip Dutta PGPM 2010 2012 010109131 Globsyn Business School, Kolkata
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COMPANY CERTIFICATE
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TABLE OF CONTENTS
Page Numbers EXECUTIVE SUMMARY INTRODUCTION CHAPTER 1: BRIEF OVERVIEW OF HUL & THE INDUSTRY 1.1 Company Profile 1.2 Company History 1.3 Brief Overview of the Indian Beverage Industry CHAPTER 2: ALL ABOUT HUL - OOH DIVISION 2.1 Objective of the Project 2.2 HUL OOH Division 2.3 A Study of HUL Product Prices 2.4 Distribution Network of HUL OOH Division 2.5 Competitor Products 2.6 Competitors Prices 2.7 Financial Aspects Benefits for the Customers 2.8 Key Responsibility Areas 2.9 HUL Vending Business Model 2.10 Stock Taking at RS points at the End of Every Month 6 8 10 11 12 14 15 16 17 26 27 28 30 31 32 36 37
CHAPTER 3: S.W.O.T ANALYSIS, RECOMMENDATIONS & CONCLUSIONS 38 3.1 S.W.O.T Analysis 3.2 Recommendations 3.3 Conclusions APPENDICES: Additional References 39 40 41 42
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EXECUTIVE SUMMARY
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While doing the market mapping, I asked a few questions to the customers like which brand of coffee, tea and vending machines do they use in order to understand the customers purchase decision process so that I can pitch them with the right approach. That often revealed some critical facts about the brand image of the Lipton and BRU brands of HUL. The customer purchase behavior can be largely explained by two components, which were namely, "Life Cycle Cost and Brand Value. This report holds its importance in the sense that these results can be further utilized by the company to design basic packages for different types of industries.
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INTRODUCTION
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CHAPTER 1:
BRIEF OVERVIEW OF HUL & THE INDUSTRY
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SUMMER INTERNSHIP PROJECT REPORT 1.3 Brief Overview of the Indian Beverage Industry:
Indian beverage industry has the following types of beverages as: Alcoholic Beverages Non-alcoholic Beverages o Soft Drinks o Fruit Juices o Hot Beverages o Others
This projects scope lies only in the non-alcoholic beverage industry as briefed under: Non-alcoholic Beverages: Ref: http://www.ibef.org/download/Food_Processing_270608.pdf Sec 1:5 Pg. 7 of 28. Non-alcoholic beverages include carbonated drinks, non-carbonated drinks and hot beverages such as tea, coffee and health drinks. It is estimated that the total size of the beverage market is $333 million by value and 85,000 tons by volume. 65% of the market accounts for white beverages whereas remaining 35% is constituted of brown beverages. India is the largest producer of tea in the world and has 28% of the total global production, at 857 million kgs. Tea production in India has been growing at 1.2% per annum and India is the fourth largest exporter of tea in the world. India is also the sixth largest producer of coffee accounting for 4.5% of the total production in the world. Nearly 75% of Indias production is exported. Major companies in this market are as listed under: - (* marked are International Players) Nestle* Hindustan Unilever Limited* Georgia* Tata Global Beverages* Fresh n Honest (LAVAZZA)* Aqua Java (Local players) Caf Coffee Day (ACBCL) Godrej
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CHAPTER 2:
ALL ABOUT HUL OOH DIVISION
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OOH is an arm of HUL that caters to the on-premise F&B requirements, using state-of-the art modern vending machines, with branded product premixes that enable people to sip their favorite drink (either tea / coffee) when outside the comfort of their homes. So whether one is at work, or at mall/multiplex, or in a college cafeteria, or simply waiting at the airport/railway station, they can enjoy their favorite drink at the push of a button. We also supply our products directly to caterers, confectionary manufacturers, ship chandlers and others to meet their bulk requirements. Product Portfolio: Ref: http://www.hulfnbservices.com/chooseyourproduct.htm OOH F&B services are again sub-divided as vending solutions and non-vending solutions. a) Vending Solutions:
Lipton Cardamom Tea: - A classic blend of Sri Lankan and Indian teas with natural cardamom flavors, which is a rewarding treat with its delicious taste and cardamom aroma.
Lipton Hot Lemon Tea: - Delightfully refreshing lemon flavor A whole new way to experience black tea.
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Taj Mahal Tea Bags: - The selection of the finest teas to create a robust, full bodies brew with a lingering aroma.
Lipton Instant Tea: - Simply a refreshing, convenient beverage that is a great tasting, low-calorie, low-sugar alternative to soda.
Lipton Masala Tea: - Masala Chai is an ancient tea brew from the Hindu healing process called Ayurveda. Lipton Spiced Chai is one of the domestic brands that include the black pepper which is absolutely delicious to sip.
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Bru 100% Coffee: - A complete cup of hot coffee with a rich feel to keep you refreshed and energized round the clock.
Bru Fresh Bean Coffee: - 100% purest form of highly aromatic coffee made from crushed beans.
Hot Chocolate: - Hot chocolate (also known as hot cocoa or just cocoa or chocolate milk) is a heated beverage typically consisting of shaved chocolate, melted chocolate or cocoa powder, heated milk or water, and sugar. Drinking chocolate is similar to hot chocolate, but is made from melted chocolate shavings or paste rather than a powdered mix that's soluble in water. HUL OOH divisions hot chocolate is launched this year (2011) only and its just delicious.
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b) Non-vending Solutions: Ref: http://www.hulfnbservices.com/ibs.htm HUL - OOH division also handles large customers for their non-vending requirements and helps them choose from a wide range of products. It also offers bulk packs for the factories/caterers/ship chandlers to provide greater value. OOH division is currently supplying BRU instant coffee to almost all the leading confectionary manufacturers in the country for their confectionary requirements. Besides this, OOH division also provides services to choose products from their food and beverage or home and personal care basket to gift to patrons and customers. It supplies products like Taj Mahal Tea Bags, Lifebuoy Hand Wash, Lakm Skin Care range etc. to pharmaceutical companies at attractive prices for gifting it to the doctors.
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1. Fresh Bean Coffee Machine: Features: Option of 4 ingredients in the nature of coffee beans, dairy whitener, soup etc. Providing 10 drinks option including 6 options of fresh bean coffee. Dispensing rate 2 cup/min of 100ml. Temperature interlocking. Water Source Online / Bubble top. Specifications: Dimensions Weight Power Supply Absorbed Power Pre-mix Canister Capacity Coffee Bean Canister Capacity Height - 665 mm Length - 410 mm Depth - 560 mm 50 kg 230 Volts / 50 Hz 2000 Watts 1 kg 1 kg
Products: - This machine is capable of dispensing 10 beverages, with 6 fresh bean coffee beverages. It has options of dispensing Espresso, Americano, Latte normal sugar, Latte low sugar, Cappuccino normal sugar, Cappuccino low sugar, Cardamom tea, Tea Bag tea (black) and another option of extra sugar for beverages.
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2. High Speed Hot Machine: Features: Options of 5 ingredients in nature of coffee, dairy whitener, soup etc. Option of simultaneous dispensing of any 3 drinks. Option of cappuccino. Staggered dispensing option for dairy whitener. Dispensing rate 15 cups/min of 100 ml each. (approx. 250 cups non-stop) Temperature interlocking. Auto cleaning. Water Source Built-in / Online. Specifications: Dimensions Weight Power Supply Absorbed Power Pre-mix Canister Capacity Height - 890 mm Length - 440 mm Depth - 585 mm 60 kg 230 Volts / 50 Hz 2500 Watts 1.2 kg
Products: - This machine has five options along with cappuccino; it dispenses cardamom tea, tea bag tea, soup and hot water for black tea.
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3. New 4-Lane U Cup Machine: Features: Option of 4 ingredients in nature of coffee, tea, hot water, soup etc both in half/full cup. Staggered dispensing option for tea bags. Temperature interlocking. Auto cleaning. Water Source Bubble top / Online.
Specifications: Height - 650 mm Length - 325 mm Depth - 590 mm 25 kg 230 Volts / 50 Hz 2500 Watts 1 kg
Products: - This machine can be used to dispense four beverages, in terms of coffee, tea bag tea, black tea, and any other hot beverage of choice e.g. soup, cardamom tea etc. This machine has also facility of half cup dispensing option, so as to control wastage.
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4. Smart Card Machine: Features: Option of 4 ingredients in nature of coffee, tea, soup etc. Post or pre-paid option through smart card. Option of consumption data downloading to PC for MIS processing. Temperature interlocking. Staggered dispensing option for tea bags. Auto-cleaning. Water Source Built-in tank/Bubble top. Specifications: Height - 645 mm Length - 445 mm Depth - 545 mm 35 kg 230 Volts / 50 Hz 2500 Watts 1.2 kg
Products: - This machine is specially designed for educational institutes and canteens where students and employees are provided with smart card facility post or pre-paid, as per their requirements. This machine can dispense 4 beverages, usual tea, coffee and any other two hot beverages of choice.
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1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.
Bru Instant Coffee Premix Bru 100% Coffee Premix (Crushed Beans) Lipton Hot Lemon Tea Premix Lipton Instant Tea Premix Lipton Cardamom Tea Premix Lipton Masala Tea Premix Lipton Dairy Whitener( Normal Sugar) Lipton Dairy Whitener(Low Sugar) TAJMAHAL TEA BAGS Hot Chocolate Knorr Tomato Soup
Paper Cup Cost (Additional): Re. 0.50 per cup Coffee Grammage Settings: 9gm. per cup Tea Grammage Settings: 8gm. per cup Hot Chocolate/Soup Grammage Settings: 9gm. per cup On an average, all the above SKUs will generate 110 cups of coffee & tea per kg. as applicable (if the serving size is 90 ml).
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SUMMER INTERNSHIP PROJECT REPORT 2.4 Distribution Network of HUL OOH Division: Ref: Company Guide
FACTORY
DEPOT
DEPOT
R.S
R.S
R.S
R.S
CONSUMER
CONSUMER
CONSUMER
CONSUMER
In FMCG business, we generally deal with indirect selling, i.e., we sell the product to someone who then sells it to someone else. There are various reasons for which the company operates this chain through Re-Distribution Stockist (distributor) sales management which can be summarized as follows: The Re-Distribution Stockist (distributors) ability to offer a more complete package of services is not only an inventory support, but also an administrative, technical and logistic support. Re-distribution Stockists provide an increased market share for the manufacturers bringing the company in front of a larger customer base. Some businesses can be too small for the company to handle, or too much trouble because of its location. A strong re-distribution stockist network will take this burden off from the company by changing it into an opportunity. Because the re-distribution stockist is service-oriented, he works with the business regardless of its size or scope. Re-distribution Stockists provide flexibility that manufacturers do not, such as rescheduling the delivery and responding to very small quantity requirements.
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SUMMER INTERNSHIP PROJECT REPORT 2.5 Competitor Products: Ref: Respective Company Websites
The chief competitors of Hindustan Unilever Ltd in tea and coffee vending business are Nescafe, Tata, Georgia and Caf Coffee Day which have their presence in the market with following products: -
(4) NESTLE
The main competitor of HUL vending products in the market is Nestle. And listed below are some points about Nestle. All about Nestl Nestl was founded in 1866 by Henri Nestl, a pharmacist, who developed a food for babies who were unable to breastfeed. The Nestl Company has aimed to build a business based on sound human values and principles. Nestl is committed to the following Business Principles in all countries, taking into account local legislation, cultural and religious practices: Nestl's business objective is to manufacture and market the Company's products in such a way as to create value that can be sustained over the long term for shareholders, employees, consumers, and business partners. Nestl does not favor short-term profit at the expense of successful long-term business development. Nestl recognizes that its consumers have a sincere and legitimate interest in the behavior, beliefs and actions of the Company behind brands in which they place their trust and that without its consumers the Company would not exist. Nestl believes that, as a general rule, legislation is the most effective safeguard of responsible conduct, although in certain areas, additional guidance to staff in the form of voluntary business principles is beneficial in order to ensure that the highest standards are met throughout the organization. Nestl is conscious of the fact that the success of a corporation is a reflection of the professionalism, conduct and the responsible attitude of its management and employees. Therefore recruitment of the right people and ongoing training and development are crucial.
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NESTLE (Table 3) Ref: Company Guide Product Name Nescafe Coffee Premix Nescafe Classic coffee Everyday Whitener Premix Everyday Dairy Whitener Poly Badam Milk Premix Nestea Lemon Premix Nestea Cardamom Tea Premix Maggie Hot Cup Soup Tomato Tea Bags Creamer 3Gm Paper Beaker 150 Ml Plastic Beaker 150 Ml Sugar Powder Sugar Cube [Economy Pack] Rate 185.00 450.00 112.00 180.00 220.00 98.00 190.00 375.00 0.70 101.83 0.45 0.50 43.50 42.00 SPECIFICATION Per kg (Approx. 80 cups) Per 500 gm. Per kg (Approx. 100 cups) Per kg Per Kg Per 500 gm. (Approx. 15 cups) Per kg (Approx. 80 cups) Per kg (Approx. 170 cups) Per Bag Per Case( 24pkt) Per Beaker Per Beaker Per Kg Per kg
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SUMMER INTERNSHIP PROJECT REPORT 2.7 Financial Aspects Benefits needed to be explained to Customers:
A deal is confirmed and the negotiation ends at that point where both the parties are assured of their benefits. HUL tries to ensure a margin of at least 13% on all of its consumerables to its redistribution stockists. Hence, I tried to analyze the account in the following way: A comparison of cost if consumed from a local vendor vis--vis Lipton vending Machine: Let primary billing = Rs 15000 13% of Rs 15000 = Rs 1950 Here, distributor is in benefit even if he does not charge monthly maintenance charges. Now, the customer doesnt enter into deal unless he is made acquainted with the benefit available Let us consider a firm A having 60 employees and consumption is 120 cups per day (say, 60 cups of tea and coffee each). TEA: 60 cups * Rs. 4 COFFEE: 60 cups * Rs. 5 Total = Rs 240 = Rs 300 = Rs 540 = Rs. 13, 500 = Rs 1, 000 = Rs 100 = Rs 14, 600
For 1 month = Rs 540 * 25 working days Add: Salary of Service boy Add: Breakage Total [Here, each cup of tea and coffee is assumed to be of Rs 4 and Rs 5 respectively]
Now, with Lipton vending machine this cost will minimize as follows: Masala TEA (with paper cups) = Rs. 2.58 * 60 cups = Rs. 154.80 Fresh beans COFFEE (with paper cups) = Rs. 2.75 * 60 cups = Rs. 165 Total = Rs. 319.80 Total for 1 month = Rs 319.80 * 25 working days = Rs. 7, 995 Add: Rent (done for a 4-lane machine) = Rs. 700 Commercial Rate for 1unit of electricity = Rs. 6 per KWh Power Consumption by a vending machine = 2500 W (i.e. 2.5 KW) * 9 working hrs. /day = 22.5 KWh * Rs. 6 per KWh = Rs. 135 /day Monthly electricity bill from machine = Rs. 135 / day * 25 working days = Rs. 3, 375 Total = Rs. 12, 070 Benefit of customer = Rs. 14, 600 Rs. 12, 070 = Rs. 2, 530
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Infrastructural Development R.S. Related Issues a. Primary Sales Monitoring b. Secondary Sales Monitoring New R.S. Appointment Claim Calculation
Market / Business Development Market Mapping Client Generation by making cold calls Client Conversion - Earlier Prospects Negotiation & Deal Closure Post installation Service
INFRASRTUCTURAL DEVELOPMENT:
Primary Sales Monitoring: Primary sales monitoring is done through 2 ways; a. Cheque Party: The redistribution stockist who is assigned as the cheque party, material is sent to the R.S. point every week by the company irrespective of the R.S. giving order or not. e.g.: If secondary sales of R.S. is 8 tons, material will be sent to the R.S. point as PDP (Pre-Determined Primary) billing in 2 tons per week. A closing stock of 4 tons has to be kept every month. Company will prefer to have a cheque party since HUL will have a strong grip on the primary. If HUL has more primary target in any particular month, then they will send 3 tons (i.e. 8+4 = 12 tons / 4week = 3 tons) in that month. b. RTGS Party: If any cheque bounces or is purposely bounced by any R.S. point who is under Cheque Party system, R.S. gets shifted automatically to RTGS (Funds Transfer) system. After 12 successful transactions, the R.S. gets shifted back to the PDP billing system. If 3 successive cheque bounces in 3 months, then that R.S. code is locked and suspended by HUL.
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Primary Sales Monitoring Monitoring sales between the company and R.S. Secondary Sales Monitoring Monitoring sales between the company and the customers.
New R.S. Appointment Searching for prospective distributors and their appointment. Area Expansion Expansion of the area of sales.
Making Cold Callings in the corporate sectors and finding out prospective clients.
In General Trade and Modern Trade, the margin for Re-distribution stockists is 5%. The target in General and Modern trades is in terms of Gross Sales Volume whereas in the Institutional Business, the target is in terms of tonnage. In Modern Trade, there are risks involved such as Undercutting and Less Re-Ordering quantity. PGPM 2010 2012/GBS/010109131/SIP Page 36
SUMMER INTERNSHIP PROJECT REPORT 2.10 Stock Taking at RS points at the end of every month: Ref: Company Guide
The Territory Sales Officer visits the R.S. points every month ends and physically counts the number of cases present at the inventory of the distributor. Each box/case of any normal product contains 12 kgs, whereas each case of tea bags has 6.48kgs. (1case = 36 tea bags each of 0.18 kg). Each case of diet products contains 9kgs. of premix. The no. of cases are counted and multiplied with their weights as mentioned above and hence the CLOSING STOCK is calculated. The formula used is: OPENING STOCK + PRIMARY SALES CLOSING STOCK = SECONDARY SALES
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CHAPTER 3:
S.W.O.T ANALYSIS, RECOMMENDATIONS & CONCLUSIONS
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WEAKNESSES:
Absence of one or three lane machines. High priced as compared to competitors. Limited success in changing the consumption habits of people. Hot beverages are less preferred during summers. Stock-out in case of much advertised flavors of premixes acts as a major barrier.
OPPORTUNITIES:
Penetrate locations around Kolkata like New Town, Rajarhat where new offices are built recently for the growth of business. Launch cold beverage solutions also like other players (Nestle, CCD) and expand the reach in the market. Lowering the price marginally in order to sustain & capture the market in the long run. Bring new types of machines (i.e. 1 lane and 3 lanes) in the market.
THREATS:
Nescafe has created the image on the customers mind that Coffee means Nescafe. New one lane machine called, Nano is introduced by Nestle. Lowest rate provided by many competitors to grab the market of the major eateries around the city. Different variations in flavors are introduced by the competitors to grab the market.
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3.3 Conclusions:
Based on the experiences gathered during the tenure of this internship, I am able to draw the following conclusions: The customer purchase decision behavior largely depends on the way the representative pitches the product to them. The benefits should be made clear to them in terms of cuppage, cost per cup and efficiency of the machine. The representative has to critically analyze the problems that exist in the company at present before he/she pitches the HUL product. The representative has to always portray HULs brand larger than life. Indians are gift lovers; so the representative of HUL should be able to pitch the products in such a way without affecting the margin that there is at least something to gift to the customers. The HULs representative has to be thorough with the companys business policies so as to perform better. The representative has to develop a great client-customer relationship with every customer so that it helps in strengthening the brand image.
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APPENDICES
ADDITIONAL REFERENCES: http://www.hulfnbservices.com/ http://www.nestle.in/ http://www.cafecoffeeday.com http://www.fresh-honest.com/ http://www.godrejcp.com/ http://www.ibef.org/ http://www.teaboard.gov.in/ http://www.indiacoffee.org/ Research Methodology & Techniques C.R.Kothari
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