Marketing Plan for Splash

Submitted by: Nischal Joshi Rachana Dangol

2013

Table of Contents
1. Executive Summary ............................................................................................................................. 4 1.1 Marketing Objectives .................................................................................................................... 4 1.2 Major Marketing Strategies .......................................................................................................... 4 1.3 Investment and resource commitment ........................................................................................ 4 1.4 Expected Result ............................................................................................................................. 4 1.5 Basic Channel Description ............................................................................................................. 4 2 Background .......................................................................................................................................... 5 3. Situation Analysis: ............................................................................................................................... 6 3.1 Company Summary: ...................................................................................................................... 6 3.2 Market Characteristics: ................................................................................................................. 7 3.3. Trends and Drivers: ...................................................................................................................... 8 3.4. Legal, Political and Economic Factors .......................................................................................... 8 4 Market Summary ................................................................................................................................. 8 4.1 Competitors Analysis: ................................................................................................................... 8 4.2 Consumer Market Segment ........................................................................................................ 11 4.3 Business Market Segment ........................................................................................................... 12 5. SWOT Analysis:.................................................................................................................................. 13 6. Marketing Strategy ........................................................................................................................... 16 6.1 Products ...................................................................................................................................... 16 6.2 Pricing Strategy ........................................................................................................................... 17 6.3 Placement ................................................................................................................................... 17 6.4 Promotion ................................................................................................................................... 18 7. Financial Projections: ........................................................................................................................ 18 7.1 Break Even Analysis..................................................................................................................... 19 8. Contingency plan .............................................................................................................................. 20 9. Future of Splash! ............................................................................................................................... 21

List of figures:
Figure 1: Location of Splash manufacturing unit Figure 2: Organizational Structure Figure 3: Market Share of competitors Figure 4: SWOT Analysis Figure 5: Bottle samples Figure 6: Distribution strategy Figure 7: Growth in sales (2012-2016)

List of tables:
Table 1: Global soft drink market segmentation by percentage of share Table 2: Pricing Strategy for Splash Table 3: Cost for promotional activities Table 4: Sales for the next 5 years Table 5: Break even analysis

1. Executive Summary
Splash Drinks Pvt. Ltd. is cold drink Company established in 2012. It is the company which has the extensive knowledge and expertise in the field of the cold drinks. The company aims to be the one of the leading brand in the cold drink business by providing high quality cold drink in reasonable price.

1.1 Marketing Objectives

To establish the splash brand as one of leading brand in the cold drink market through extensive marketing, promotional and distribution strategies.

1.2 Major Marketing Strategies

Splash brand aims to hold the strong grip in the cold drink business through extensive brand awareness and promotional strategy. The product Splash will be marketed through intensive distribution channels. Splash will position itself as a value-for-money brand, which is refreshing and healthy. Its positioning statement will be Healthy and Refreshing drink for everybody. Being a new product in the market, the market strategy would be to make the consumer aware of the brand so different activities regarding brand awareness would be conducted like sponsoring different game activities, game club of different place, conducting marathon walkathon etc. And segmenting the corporate and individual market into different micro levels and target that segment through different schemes like Buy one get one free, distributing gift hampers via lucky draws, event based discounts etc.

1.3 Investment and resource commitment

Splash will make investment to produce a high quality cold drink and through extensive distribution network will distribute the product nationwide.

1.4 Expected Result

Splash aims to become a largest selling brand of cold drinks through its extensive marketing strategy with the minimum sale of Rs. 20million in 2012.

1.5 Basic Channel Description

Splash will distribute the product to retailer via different resellers. Splash presently will sell the product within Kathmandu valley but will distribute the product outside Kathmandu valley in near future.

2 Background
Splash Drinks Pvt. Ltd. is a cold drink company established in 2012. As the number soft drinks are increasing rapidly, Splash aims to become leading brand in soft drink market. This cold drink contains green tea extracts and is loaded with anti-oxidants which are a definite health booster. Unlike other cold drinks, Splash! hydrates the body and does not overload it with acidic flavours and preservatives. This drink comes in a great tasting selection of five flavours in an attractive sports water bottle. The soft drink comes in five flavours. They are lemon, cola, orange, mango and canberry. The soft drink is available in 3 different sizes 250ml, 500ml and 1000ml. Splash drinks are made from real fruits that have been picked from the best orchards the world over. They are power packed with a host of essential vitamins and minerals to keep you going all day long. Splash drinks are all-natural juices with no added preservative. Splash products are sold in supermarkets, warehouse clubs, health food stores, schools and convenience stores across the country. We have the latest processing equipment manufactured in New Zealand which ensures that the quality and taste of the fruits are not deteriorated. Splash drinks is always dedicated towards the healthy, nutritive and innovative juices products. Splash Drinks has its head office located in Tinkune and its processing center is located in Balaju Industrial Estate. The industry view of the factory and the satellite view of the location is shown in the figure below.

Figure 1: Location of Splash manufacturing unit

3. Situation Analysis:
The population explosion that Kathmandu has experienced during the second half of the past decade could be the growth driving factor for Splash!. Spalsh drinks Pvt. Ltd. Delivers to the market a drink that is not only cool and refreshing but also one that is beneficial health-wise.

3.1 Company Summary:

3.1.1 Company Goals and Objectives: As mentioned above Splash! is a drink that is refreshing as well as healthy. These are the qualities that consumers today are looking for but none of the available products have been able to offer. Our major competitors Coca-Cola and Pepsi lack the health benefit. Also the other products such as Real, Appy, Frooti etc have only the essence of fruits which again is not very healthy. This said, it will definitely not be easy to survive in the market because of the exceptional penetration and popularity of the multinationals. 3.1.2 Organizational Structure:

President/CEO

VP Marketing

VP Finance

Market Research Manager

R&D Manager

Sales Manager

Financial Manager

Manager Information Technology

Figure 2: Organizational Structure

3.2 Market Characteristics:

The soft drinks market is favored mainly by the young people. Splash! aims at serving not only the young but people of all age groups. Both Coca-cola and Pepsi have four variant front line products each cola, orange, mango and lemon. The cola segment with a 63% market share has the highest market share as compared to the other segments. The per capita consumption of soft drinks is 6-7 bottles.

3.2.1 Current Market Share:

Others, 3.00%

Pepsi, 29.20%

Coca-Cola, 67.80%

Figure 3: Market Share of competitors As we can see from the above figure, Coca-Cola occupies the highest market share with a 67.8% share, 29.2% is occupied by Pepsi and the rest is taken up by other companies. Also, fake products account for a good share of the balance.

3.2.2 Level of Competition: The soft drink market in Nepal has an annual growth rate of about 8% 9%. The majority of such growth is from within the Kathmandu Valley due the enormous population growth. This increase in demand has prompted Bottlers Nepal Ltd., the manufacturers of Coca-Cola, to invest an additional $10 million since 2011. The opportunities in the soft drink market has increased the level of competition from the existing players like Coca-Cola and Pepsi through their extensive marketing and sales promotions and heavy discount from the respective principle as they generate large sales volume. Our strategy would be to offer distributors with significantly low invoice prices helping them penetrate into the market. 7

3.2.3 Dominant Players in the Market: Coca-Cola and Pepsi are the dominant players in the Nepali market, whereby Coca-Cola enjoys a massive share of the Individual Market with 67.8% of the total market share with an investment of over $45 million and an annual production of a million bottles of soft drinks. Also Bottlers Nepal generated a 20% growth in 2011 recording double digit annual growth for the past five years.

3.3. Trends and Drivers:

3.3.1. Growth in sales of soft drinks The market leaders have been recording double digit growth annually with growth rates as high as 20%. this is due to the fact that they are multinational companies and have aggressive marketing campaigns with various offers from time to time. For instance in 2012, Pepsi came up with the offer Grab a Pepsi, Party @ Namche. Also the rising mercury has contributed to increase in demand for cool and refreshing drinks. Increase in standard of living of the people in general has also contributed to the market for off the shelf beverages.

3.4. Legal, Political and Economic Factors

3.4.1 Fake Products: As mentioned earlier, there is a huge amount of loss borne by the market leaders due to fake products flooding the market from time to time. This could be the biggest threat for Splash! The anti counterfeit laws are yet to be formulated in the country, hence there are no existing strong mechanisms to curb such products from entering into the market. 3.4.2 Government and Political Stability: Nepal has been under political turmoil since a very long time now and the conditions do not seem to be improving any time soon. Major budget delays are one primary area effecting sales and growth.

3.4.3 Labor Unions: The labor unions going on regular strikes and lockouts has crippled the industries in Nepal. Such labor unions, under the influence of political parties, have threatened major established industries in Nepal leading to the closure of a few (eg. leading garments manufacturer Surya Nepal Pvt. Ltd.). This could be a major challenge that Splash! faces.

4 Market Summary
4.1 Competitors Analysis:
The biggest competitors of Splash are carbonated soft drink (CSD) such as Coca-Cola, Pepsi etc. In 2005, the global carbonated soft drink market generated revenues of over $120 billion, all of which comes from two global powerhouse companies occupying 80% of the market. Coca-Cola and Pepsi, are one and two respectively, in the very competitive CSD industry. Over past decades, the CSD market has been honored with record growth, showing consumption rates that have more than doubled over the last 25 years. In 2004, 10.24 billion cases were sold, while 2005 showed a 0.6% decrease translating to 10.18 billion cases. This 2005 decline came after a small growth in both 2003 and 2004. Coca-Cola lost 8

some market share, Pepsi gained some, and diet drinks seems to be what is fueling the overall category growth. Coca-Cola continues to hold the lead position with a market share of 45%, but Pepsi is not far behind with 32%. People are consuming twice as many beverages as they were 25 years ago. However, while carbonated soft drinks continue to remain the most popular beverage, consumer preferences are changing to include other types of beverages, such as waters, juices, and other drinks perceived to be a healthier alternative. The changes in preferences and overall increases in new alternatives are beginning to bring the total consumptions rates for CSDs down from their 25 year high. Coke and Pepsi concentrated so much on each other that they failed to see the emerging competition from bottled water, iced teas and fruit and energy drinks, all very profitable niches. Splash will also build its brands as the health drinks and compete with all the soft drinks. The following table shows the global soft drink market segmentation by percentage of share. Table 1: Global soft drink market segmentation by percentage of share % Share Category Carbonated Drinks Bottled water Juices Tea and Coffee Functional Drinks Concentrates 47% 18% 15% 8% 8% 4%

Total

100%

In Nepal, Coca-cola has 45%, Pepsi has 35% and others (Real juice, Energy drinks etc.) has 20% market share.

Coca-Cola Strengths a. Most Popular Brand: Coca-Cola is the most popular and well established brand in the soft drinks industry. People buy coke due to its brand strength. b. Brand Loyalty: People are loyal to the brand of coca-cola. They prefer coca-cola and usually do not buy other soft drinks. c. Strong Distribution channel: Coca-cola has strong distribution channel through which it serves all over the world. d. Retailers Trust: Most of the retailers keep coca-cola in their cold store because coke is bought by most people. e. Various Products: Coca-cola has many other products such as fanta, sprite etc. f. Promotion: They do the promotion is most effective way. People in nepal watches Indian channels and they advertise in Indian media which helps them to capture market in nepal. g. Pricing: Coca-cola offers very affordable price.

Weaknesses a. Unhealthy Drink: Coca-cola is categorized as unhealthy drink because it is carbonated drink. There is fair amount of people who dont prefer carbonate drinks. b. Harmful ingredients: Coca-cola contains penicillin. The allergenicity of penicillin in the general population is thought to be at least ten percent. Nearly 25 percent of these individuals will display hives, angioedema, or anaphylaxis upon ingestion of penicillin. c. Unhealthy for children: Coca-cola consumption in children poses a significant risk factor for impaired calcification of growing bones. d. Difficult to manage: As the size of this company is very huge and all around the world, its difficult for them to manage at every market

Pepsi Strengths a. Established Brand: Pepsi is also very established and popular brand of all age group. b. Most loyal brand: Pepsi is the most loyal brand in the soft drinks industry. c. Good Distribution channel and retail: Pepsi also has strong distribution channel all over the world and Nepal. It is distributed to most of the retail store. d. Variety of products: Pepsi also has various products such as mirinda, mountain due etc. e. Pricing: The pricing of pepsi is also very affordable. f. Variety of size: Pepsi comes in various quantity from 250ml to 2 litres.

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Weaknesses a. Carbonated Drink: Pepsi is also carbonated drink. So, people who dont prefer carbonate drink do not buy it. b. Unhealthy ingredients: Pepsi also contains unhealthy ingredients similar to coke which is not suitable to allergic persons and children. c. Hard to manage: Pepsi also do not focus in a particular market. So it cannot be the best for one particular market Real Juice Strengths a. Healthy Drink: Real Juice is a healthy juice. b. Various Flavors: Real Juice comes in many flavors such as mango, mixed, apple, pineapple etc. c. Good Distribution: Its distribution channel in Nepal is good. It is found in most of the retail stores. d. Relatively easy to manage: Real is Indian brand and they also have targeted Nepal as a potentially good market. Weaknesses a. b. c. d. Relatively expensive pricing: It is relatively expensive than coca-cola and Pepsi. Brand yet to establish: It is not well established brands as Coca-cola and Pepsi. Less market share: It has less market share compared to Coca-cola and Pepsi. Competition: There are similar products in the Nepalese market such as Rio, Appy etc. So it has to compete with its similar products in terms of brand, market share, consumer loyalty etc.

4.2 Consumer Market Segment

Most people in Nepal still buy carbonated drinks such as Coca-cola and Pepsi. Thats why the market share of these products is still very high. However, nowadays people are becoming more health conscious. They are consuming healthy drinks such as Real juice, slice, energy drinks etc. The market shares of these products are growing. The introduction of Splash is in the market will give them a complete solution. It is much refreshing as carbonated drinks and much healthier. People in Nepal are very much pricing sensitive. The income level of most people is average and they will buy products which are within their range. If any soft drink intends to capture the larger market size, they should make the price affordable. Nepal is a young country. Most of the people in Nepal are below 35 years old. They will buy such soft drinks which suits them best. To capture large market they should target people between 15-35 years. In Kathmandu, there are almost 80 million people out of which 50 millions lies below 35 years. Splash offers very affordable price and taste suits to the youth. In Nepal people usually buy and consume drinks at the cold store and restaurants. So, Splash will be easily available in every cold store and restaurants.

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4.3 Business Market Segment

There is also business market segment for soft drinks in Nepal. Restaurants, Hotels and event managers buy soft drinks which they can sell to their customers. Restaurants and Hotels buys bulk soft drinks from the distributor and sell to their customers. Event managers also buy large volumes of soft drinks which they distributes during marriage ceremony, birthday party, concerts and other events because soft drink in very popular in Nepal. Splash will also target to distribute its products to the most of hotels, restaurants and event managers.

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5. SWOT Analysis:

Figure 4: SWOT Analysis

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Strengths: a. Healthy soft drink: Splash contains green tea extracts and is loaded with anti-oxidants which is a health booster. It hydrates the body and does not overload it with acidic flavors and preservatives. b. Innovative product: The taste and quality of splash is better than other drinks. Its taste is not like other carbonated soft drinks but is really refreshing. c. Five Different Flavors: This drink comes in a great tasting selection of five flavors in an attractive sports water bottle. d. Low pricing: The pricing of Splash is relatively lower compared to the competitors. e. Competent and Skilled Human Resources: Splash has hired respected scientists who make energy and health drink. Through years of product research, it has developed this high quality drink f. Green Company: Splash manages the waste from its production and keeps environment clean.

Weaknesses: a. New Brand: Splash is a new brand so it needs to be familiarized with proper promotion. b. Low Market Share: This market share is relatively low compared to other popular soft drinks. c. Local Market: Splash is targeting at the Kathmandu city and then to other cities in Nepal. It has not globalized as its competitors like Coca Cola, Pepsi Cola, Real juice etc. d. Less Distribution Coverage: Splash has relatively smaller retail network and distribution coverage. The brand is yet to be established so there are less distributor and retailer compared to its competitors. e. Small scale operational plant and R&D: Splash has very low scale operational plant and research and development center compared to its competitors.

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Opportunities: a. Health Consciousness: People are becoming more and more health conscious. So, there is large growth in the sales of health and energy drinks. This growth will favor Splash. b. Income Level: There is growth in income level of people. So, they can afford more in buying Splash. c. Young Population: Nepal is young with the maximum population being below 35 years old. This soft drink is targeted to young population and therefore the market coverage area is comparatively large. d. Change in Life style: The life style of people is changing. There is growth in the sales of soft drink during festivals and occasions. Therefore there is overall growth rate in the sales of soft drinks. e. Peak Season: The Company is starting its operation from the peak season. So, it may help to establish the brand. Threats: a. Threat of Substitutes: The direct substitutes of Splash are only energy drinks. But as it falls under the soft drinks, people can easily substitute Splash with popular brands like Coke, Pepsi etc. b. Threat of new Entrants: Due to the demand in the market, there is threat of new entrants entering into the market. c. ghtened Competition: Splash has to face competition from well established brands like Coke and Pepsi in terms of Market Share, Promotion, pricing etc. d. Inflation: Due to inflation, the cost of raw materials, managing the waste and human resource will increase. So, the profit might decrease if we keep the price constant.

e. Political Instability: The political situation is Nepal is very unstable. Due to this, the economical situation in Nepal is changing which may be threat to a newly established company. f. Labor Union: Labor unions have caused lot problems in many industrial sectors in Nepal and Splash can also anticipate similar threats.

g. Electricity Problem: The problem of load shedding is very severe in Nepal which will increase the cost of production.

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6. Marketing Strategy
The product Splash will be marketed through intensive distribution channels. Splash will position itself as a value-for-money brand, which is refreshing and healthy. Its positioning statement will be Healthy and Refreshing drink for everybody.

6.1 Products
Splash will enter the market in 250 ml plastic bottle beginning with the lemon flavor and cola flavor. We will launch other fruits flavored Splash as orange, mango and Cranberry flavor subsequently to our customers. 6.1.1 Brand We are just starting our business. So, customers are not aware about our brand. But we will earn the brand name with the quality of the product we offer with Splash along with its low pricing strategy. 6.1.2 Product Packaging We have not compromised on the packaging of our product Splash. The plastic bottle is locally manufactured and tested according to the WHO standard. The labels are designed considering the every information that the customers need to know. The plastic bottle comes in a variety of colors according to the flavor. The sample of the bottles is shown below.

1000ml

500ml Figure 5: Bottle samples

250ml

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6.2 Pricing Strategy

The maximum retail price (MRP) for each bottle of Splash! 250ml, 500ml and 1000ml Rs. 20, Rs. 35 and Rs. 60 respectively. However, the company sells the bottles to distributors first at Rs. 17.10 for 250ml bottle, Rs. 29.47 for 500ml bottle and Rs. 51.30 for 1000ml bottle. The distributor then sells it to the retailers putting a 5% profit margin and the retailers sell them to consumers at MRP putting a 10% profit margin. The pricing strategy is given below: Table 2: Pricing Strategy for Splash Segment Distributor Price / Bottle Retailer Price/ Bottle (10% Consumer Price/ Bottle (5% Margin) Margin) 17.10 29.47 51.30 18.00 31.50 54.00 20.00 35.00 60.00

250 ml 500 ml 1000 ml

Note: For the distribution channels, we will offer a discount of 5-10% on the regular purchase and if the volumes exceeding 12 cartoons at a time then additional 1 cartoon will be provided on free basis.

6.3 Placement
Initially, we will supply directly to the point of sales. From the second year, the product will be launched under the Splash brand, in a few major cities as Kathmandu, Pokhara, Dharan through dealers and outlets. Since the drink is a health booster, so we will supply our product to pharmaceutical stores and medical clinics as well. Similarly, we will place our Splash in some of the cities of Terai as Biratnagar, Bhairahawa.

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Figure 6: Distribution strategy

6.4 Promotion
The best starting promotional route will be distributing sample trial packs of 250ml. Similarly putting attractive danglers placed near check-out counters to make customer know about the product. Another starting promotion will be organizing the open concerts to inform the customers about our product. Another way will be maintaining efficient supply chain management, visiting the outlets regularly to ensure the proper handling of the product, taking feedback from the distributors and retailers.

The estimated cost incurred in the promotional activities is as follows: Table 3: Cost for promotional activities

Promotional Activities
Hoarding Boards (in 5 places) Live Concerts Sample packs (100,000) Total

Cost
Rs. 500,000 Rs. 400,000 Rs. 1,500,000 Rs. 2,400,000

7. Financial Projections:
The financial projection and the breaks even analysis for the next five years is given below.

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Table 4: Sales for the next 5 years Year 2012 2013 2014 2015 2016 Sales (Liters) 333,190 499,785 624,731 780,914 976,142 Sales (Rs.) 20,000,000 30,000,000 37,500,000 46,875,000 58,593,750 Sales Growth Rate 50% 25% 25% 25% 250 ml (40%) 8,000,000 12,000,000 15,000,000 18,750,000 23,437,500 500ml (35%) 7,000,000 10,500,000 13,125,000 16,406,250 20,507,813 1000 ml (25%) 5,000,000 7,500,000 9,375,000 11,718,750 14,648,438

Studying the market trends as mentioned above, the following assumptions were made for the sales till 2016. 1. Sales increases by 50% in the year 2013 and by 25% thereafter 2. The sales mix consists of 40% 250 ml, 35% 500ml and 25% 1000ml.

7.1 Break Even Analysis

Table 5: Break even analysis Revenue/liter Variable cost / liter Contribution/ liter Fixed Cost Break-even volume (liters) Break-even sales (Rs) 60.81 45.61 15.20 10,440,000 686,707 41,761,373.41 (Average revenue of all segments) (Average variable segments) cost of all

From the sales table and the breakeven analysis table, we can infer that the breakeven point will be achieved by 2015. From then on, the company will see a profit in the years that follow.

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Growth in Sales (2012-16)

70,000,000 60,000,000 50,000,000 Sales (Rs) 40,000,000 30,000,000 20,000,000 10,000,000 0 2012 2013 2014 Year 2015 2016

Break-even point

Figure 7: Growth in sales (2012-2016)

8. Contingency plan
Splash anticipates pressures on price due to competitive activities and strong buyer power. Its impact will be felt on profitability and break-even volume. Even with a sufficient cushion at present, Splash envisages tight cost controls consisting of a lean organization and efficient use of resources. However, in dire circumstances, Splash is very well insured and financially cushioned, that it can if not grow, but can survive until the market recoups. However, in the event of a disaster or other circumstances which bring about the need for contingency operations, the normal organization of the Splash will shift into that of the contingency organization. The focus will shift from the current structure and function of business as usual to the structure and function working towards the resumption of time-sensitive business operations. In this plan, the Splashs contingency organization will operate through phases of response, resumption, recovery, and restoration. Each phase involves exercising procedures of the Splashs Contingency Plan and the teams executing those plans. The teams associated with the plan represent functions of a department or support functions developed to respond, resume, recover, or restore operations or facilities and its affected systems. Each of the teams is comprised of individuals with specific responsibilities or tasks, which must be completed to fully execute the plan. Primary and alternate team leaders, who are responsible to the plan owner, lead each team.

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9. Future of Splash!
Splash has a lot of growing potential and is expected to grow in the soft drink industry as a tasty and healthy drink. Extensive promotion in the major cities of Nepal will eventually lead to brand recognition and hence, Splash intends to grow through market penetration in the larger markets of India and China by 2020. For this, the revenue generated by operating in Nepal will be re-invested and larger machineries and manpower will be hired. The prices will be adjusted according to the inflation rate and the market rate of competitors. Distributors will also be hired in India and China and promotional activities will be carried out mainly by advertising in the local media.

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