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Bottled loot - The structure and economics of the Indian bottled water industry. BY CHANDRA BHUSHAN (Frontline APRIL 21, 2006)
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AT the 4th World Water Forum held in Mexico City in 2006, the 120-nation assembly could not reach a consensus on... declaring the right to safe and clean drinking water - a human right.
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The fortunes of this more-than-$100billion global industry are directly related to the human apathy towards the environment the more we pollute our water bodies, the more the sales of bottled water.
In India, the per capita bottled water consumption is less than 5 litres a year as compared to the global average of 24 litres.
The total annual bottled water consumption has risen rapidly in recent times it has tripled between 1999 & 2004 from about 1.5 billion litres to five billion litres.
These are boom times for the Indian bottled water industry because of sound economics, fat bottom line and because the Indian government hardly cares for what happens to the nations water resources.
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With over a 1000 bottled water producers, the Indian bottled water industry is big by even international standards.
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Out of more than 200 brands, nearly 80 are local. Most of the small-scale producers sell nonbranded products and serve small markets.
It takes about 2-3 litres of groundwater to make one litre of bottled water.
Treatment and purification account for the next major cost. Labour and establishment and marketing costs are highly variable and depend on the location and size of companies.
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Sewage & industrial waste is dumped in rivers and ponds cleaned in massive centralised treatment plants and then supplied to urban households to be discharged again as wastewater into the same water body.
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Bottled water and domestic treatment systems are a hygienic, cheap as well as filland-forget solution for only 30 % of the population.
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Overview OF
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Mineral water HYDRA was first procured from a plant located in Kalol, Dist. Gandhinagar.
The initial products launched were 1 litre PET bottles in October 2nd 2008, by a group of 5 friends.
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The bottled water industry is growing at the rate of CAGR of 25% which is the highest in the world.
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Peach, Cranberry,
Black Currant.
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1. CHLORINATION: Kills micro organisms and removes organic matter. 2.ARKAL FILTER: Removes suspended matter and turbidity.
3.CARBON FILTER: Removes residual chlorine & odours. 4.REVERSE OSMOSIS: Removes organic material. Controls total dissolved solids in the water.
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5. ADDITION OF MINERALS: (only in the variant with added minerals) For the purpose of maintaining a balanced mineral content. 6. MICRON FILTRATION: Additional safety measures to guarantee purity. 7 .OZONATION, ULTRAVIOLET TREATMENT and OXYGENATION: Ensures water remains bacteria free for longer life.
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B.
Marketing Strategy and Analysis Competitive analysis Points of parity: Packaged Mineral water, just like other bottled water companies. Points of difference: Offering bottled water that has been manufactured by completely mechanised procedure. Eco-friendly initiative through which cash back is given to the customers when the bottle is returned to any of the HYDRA outlets. Target market College and School going students, household consumers, Offices etc.
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1. For School and College canteens 2. For grocery stores 3. For household and offices (20 litre bottles)
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Promotional decisions
Television
Local channels - Channel-Surat, and HIND TV. Advertisements shall be given in the wider scrollbar for 1 week, then a break of 1 week shall be given and then again for 1 week the advertisement shall be given. Bulk purchase done.
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Radio My FM and Radio Mirchi Advertisements would be aired for 1 whole month, in two time slots. Newspaper Times of India and Divya Bhaskar & Gujarat Samachar Inserts: Alternate days (excluding weekends) Adv in supplements: Saturday & Sunday.
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Magazine Half page ad for 3 months in Health (Monthly), 1 page ad for 3 months in Bluechip (Weekly), Chitralekha(Weekly) and Abhiyaan (Weekly). Hoarding Prior booking was done and 5 areas were finalised.
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Sales promotion
Promotion to the Final buyer
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The best mineral water at all those places where it is needed, and more hygienic than other options available.
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ie: At college canteens, stall etc - locally made pouches ; at grocery stores - Bisleri, Aquafina, Bailley, Neer, Oxyrich; at offices and households other players in the same segment supplying mineral water in bulk.
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After successful launch in Surat city, the same model would be replicated at State wide level i.e.: Ahemdabad, Gandhinagar, Baroda, Rajkot& Bhuj. Cash back on returning bottles would be the point to be focussed upon. Flavoured water introduced to make it a success with the youth segment (the same promotional technique as that of mineral water shall be used for it).
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Can effective marketing programs be developed to attract & serve the segment identified?
Efforts have been made to design simple advertising which can be easily understood by the general public. According to the reports of the agency hired for the study, all the advertisements are supposed to definitely leave an impact on the general public, strong enough to tempt them to try it out at least once.
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Shaping Procedure
Reinforcement / Applied
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Message structure
1) Order of presentation Visual: Picture comes first, tagline comes later. Vocal: Message comes first, brand name later. 2) Conclusion drawing Open ended statements.
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3) Message sidedness Two sided message. 4) Refutation Supporting as well as comparative statements. 5) Verbal v/s Visual messages Both verbal and visual appeals have been used.
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Message appeal
Only Comparative appeals have been used.
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Channel
Non-personal: Dangler, Newspaper inserts and advertisement, Bottle label, Flex, Hoarding, Radio and Television. Personal: Counter at grocery store.
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Receiver/ Decoding
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Noise
Distortion in radio/TV signal. Untimely delivery of newspapers or its supplements. Misplacing or paper inserts, danglers, flex and misprinting in the newspaper, inserts or magazine.
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Extraneous factors
Advertisement by competitors and claims by competitors.
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Response/ Feedback
Product response coupon. Customer enquiries at Toll-free number starting from January 2009 onwards.
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Persuasion Matrix
Receiver comprehension: Easy Channel Presentation: Media within the budget selected Message yielding: Simple statement explaining its aspects of being eco-healthy. Source/Attention To attract different types of crowds different types of media tactics have been devised.
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Awareness, Interest, Evaluation Advertising through various channels Trial Free samples at grocery stores. Discount coupons on bulk purchases and one consumer response card. Adoption Eco-friendly packaging Cash back scheme
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Source oriented thoughts Since our bottle only speaks for itself and a voice over is used, there are lesser chances of origin of source oriented thought.
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Advertisement execution thoughts We expect a positive response from the viewers and audience since all of our advertisements are designed keeping in the mind the simplicity of our product.
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BUDGETING
Affordable method of Top down budgeting Approximate amount allocated to all promotional expenses: Rs 18,00,000. Approximate amount allocated to Contract Manufacturer: Rs 18,00,000. (depending on the sales growth) Approximate amount allocated for the distribution channel: 2,50,000.
If on completion of 1 month of the aggressive promotion; the sales doesnt boost up then from the 2nd week of 2nd month i.e.: December 2008 new schemes would be formulated for the distributors.
Expenses (Rs)
Counters
Tie-ups
Hoardings
Magazines
Expenses (Rs)
Newspaper Adv.
Newspaper Inserts
Radio
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
RADIO ADVERTISEMENTS
focussing only on the brand Hydra mineral water and its eco-friendly packaging To be given on My FM
9-11am : 2 times - Rs.4000 (Ad 18secs- 2000) 5-7pm : 3 times Rs.7500 (Ad 18secs-2500)
Discount for booking time slot for 1 month (MY FM) - Rs.1,000
[My FM: 11500(per day) x 30] - 1000 = Rs 3,44,000.
Discount given for giving simultaneous advertisements on Divyabhaskar- time slot of 45 seconds during the whole month free of charge
Radio Mirchi: Rs 12800(per day) x 30 = Rs 3,84,000.
NEWSPAPER ADVERTISEMENTS
Newspaper inserts (Times of India {Surat
edition} and Divyabhaskar : Athwa lines, Nanpura, Piplod, Ghod-dod road, Citylight, Ring road and Adajan.)
Times of India
20,000 inserts /day. Rate - 30 paise/ insert. 20,000x 0.30 x 15 = Rs 90,000.
Divyabhaskar
30,000 inserts/day. Rate - 20 paise/ insert. 30,000x 0.20 x 15 = Rs 90,000.
newspaper inserts to be given for 1 month. Times of India 20x20 size advertisement; Rate- Rs
800.
MAGAZINES
Half page advertisement for 3 months in Health (Monthly)
Rs 2500 x 3 (times) = Rs 7,500.
HOARDINGS
For ! Month Area 1 (Ghod dod road)- Rs 40,000. Area 2 (Majura gate) Rs 35,000. Area 3 (Ring road) - Rs.30,000. Area 4 (Piplod) Rs.20,000. Area 5(Adajan) Rs 32,000 Total expenditure Rs 1,57,000.
Dhiraj Sons stores in the city 5 - Rs 500 for 10 danglers for 1 week. (Rs 500 x 5 stores x 3 weeks) + 1500 extra charge taken by
Dhiraj Sons Hyper market = Rs 9000.
CONTRACT MANUFACTURING
to a plant at Kalol, on Abad-Gandhinagar road 1 litre bottle: Rs 2.95; 2 litre bottle: Rs 3.25; 5 litre bottle: Rs 4.10; 20 litre bottles: Rs 5.80; 250 ml cups: Rs 0.75. 200 ml bottle of Flavoured water: Rs 0.99. order shall be reviewed at the end of 3 months and then requisite changes shall be made
75,000 bottles of 1 litre. Total = Rs 2,21,250. 75,000 bottles of 2 litre. Total = Rs 2,43,750. 50,000 bottles of 5 litre. Total = Rs 2,05,000. 1,50,000 cups of 250 ml. Total = Rs 1,12,500. 2,00,000 bottles of 200 ml flavoured water. Total = Rs 1,98,000. 2,50,000 bottles of 20 litre. Total = 5,00,000.
The current order value to the contract manufacturer goes to approximately reaches to Rs14,80,500. Out of the allocated budget the remaining amount is kept for miscellaneous expenditure
ADVERTISEMENTS
1. Radio advertisement: 18 sec dramatic ad 2. Television: Written script to be put up on the scrollbar:
HYDRA Packaged mineral water. Also available in flavours: Lime n lemon, Peach, Cranberry and Black currant. For booking of 20 litre bottles please contact your nearest grocery store.
8) Tie-up with Schools and College canteens (design of Flex to be put up at counters)
HOARDINGS