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Submitted By Group 9
Amber Yadav 15/68
3/20/2013
Case Facts!!!
Current Sales trend:
+
Manufacturing in Koratla and Hyderabad (Karimnagar District, AP)
July to December : 128 bags per month (15% drop in sales ) (Lean Season)
Leading beedi manufacturer in Bhadrachalam town area in terms of market share Production facilities in Hyderabad and Koratla in Karimnagar district
Bhadrachalam (83.33%)
3/20/2013
Current Scenario!!!
CUSTOMERS
Average monthly income of Rs. 1000 Purchased beedis in loose for Rs. 1 or Rs. 2 instead of buying in packs Quality, brand and price are critical Target market: agricultural laborers and teenagers
Intense competition
COLLABORATORS
Started off by selling directly to retailer Currently have 2 distributors in Bhadrachalam and Cherla
Counterfeit Products
3/20/2013
Size of the bag 20 beedis made one packet Product sold in 2 sizes : bigsized and normal sized 70% high quality tobacco, 30% lower quality tobacco 20 packets made one bundle 10 bundles were tied together 10 such units made one bag
Tendu Leaves and tobacco sourced from nearby areas : Karnataka, Gujrat, MP, Orissa
Price
Brand Sainand (Normal) PVS (Normal) S beedi (Big) Dost (Big) Manufacturer 36.45 (7%) Distributor (Margin) 39 (2%) Wholesaler (Margin) 39.8 (2.5%) Retailers (Margin) 40.8 (17.6%) Consumer 48 Cost to Consumer (per stick rate)
12 paise
14.4 paise
60.4 (2%)
61.6 (16.9%)
72
64.8 (2.8%)
65.6 (9.75%)
72
18 paise
36.6 (2.7%)
37.6 (27.6%)
48
12 paise
Kismet (Big)
31 (3.2%)
32 (25%)
40
11 paise
The cost per stick is less than the major brands but more than the local players
Place
Selling - Through Retailers - Replenishment once a week - Regular servicing Less stock at retailer
Credit Policy Credit to retailer on first purchase Feedback and request for payment on second purchase In case of an increasing demand it could recover some of the due amount on the pretext of supplying stock Most of the benefits were in the form of kind and not trade discounts
Promotion
P
R M O T E *
Promotion strategy was to focus on high quality of tobacco from Nippani
Cinema slides, wall paintings, shop paintings & audio cassettes with recorded message
Rickshaw decorated with posters and equipped with loud music feedback mechanism- wholesaler had to sign in the locations covered
Consumer promotions Rs 1, 2, 5 denominations in pack Silver coins on completing the brand name Educating consumers against duplicate brands
Issues in 2001
Sustaining
Continue the 5% growth in the Bhadrachalam market Countering competition from PVS beedis and local players
New Markets
Market entry into Kothagudam, Palawancha
Option 1:To enter into new adjacent markets: Kothagudam and Palawancha
Palawancha has a potential of 35 bags per month and Kothagudam 60 bags . Low penetration of Sainand Beedis 3 bags per month in Palawancha
Sainand Beedis manufactures beedis of similar high quality as that of its competitors in Palawancha and Bhadrachalam
PROS
Customers are highly brand loyal and the market is strongly held primarily by few competitors
CONS
Way Forward
EXISTING
Market penetration
Product Development
MARKETS
NEW
Market Development
Diversification
Consumer segment: Agricultural Labourers & Farmers High brand loyalty Price Sensitive Regional and seasonal influences on purchase Summers -> stronger beedis Quality perception: taste & type of ash Loose units preferred over packs
Retailer promotions of much greater significance Need to compete in brand image as well as cost Peer group acts as source of information Low awareness / exposure to news media promotions
Retailer Characteristics
Characteristic Rural Market Spread
Current Situation
Spread over 3 mandals
Distance from Major market Bhadrachalam Regular sales calls on retailers
Implications
High-cost distribution system Good channel promotion Do not prefer to stock Regular supply
Retail Shelf
Channel Behavior
Attributes
Credit facilities to consumers
Current Scenario
Low cost FMCG product Intense competition based on cost Wholesaler: Driven by demand from retailer Retailer: preferred brands with quick stock turnover Wholesalers influence retailers Consumer promotion schemes Awareness about duplicate brands Distributor incentives
Implications
Insignificant influence Sainand beedis favorably placed
Source of Information
Promotions
Recommendations
Use delivery vans as a promotion van for the new areas. This will help reinforce the brand in the minds of the customers
Delivery van can be used as point of sale until retailers gain confidence on the brand/ till demand is created in the market
Trade promotions targeted at wholesalers and not just retailers quantity purchase scheme, discount schemes; wholesalers important influencers for retailers As and when demand increases, we propose to create a new storage point to cater to the needs of Kothagudam and Palawancha
PLACE
Should go for paper ring with transferring the additional cost of 3.6% to consumers - Fight with counterfeited products, Increase brand awareness Launch Farmash Sainand beedis as there is good scope in these market for big beedis (table 1)
Appendix
Remarks Target Sales (No of Bags per month ) No of Bags to be sold per day No of bundles to be sold per day Profit per bundle (Rs2.5 per bundle) Total Cost Per day Total Profit per day Total profit per month Total Monthly Profit after hiring the van (Daily cost 225 per day) (1st month = 10 days, the next 2 months = 5 days each) Overall Profit for both market Month 1 5 0.167 16.7 41.75 66 -24.25 -727.5 Month 2 10 0.34 34 85 66 19 570 Month 3 15 0.5 50 125 66 59 1770
-2977.5 -5955
-555 -1110
645 1290
3/20/2013
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