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Twin Cities Bottling Company

Twin Cities Bottling Company

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FORE School Of Management

Case-3: Twin Cities Bottling Company

CASE # 3± Twin Cities Bottling Company Twin Cities Bottling Company is assessing the results of a recent promotional program aimed at increasing sale of its soft drink in the market area which it serves. The company bottles the second leading cola in its market territory, and had hoped to move the brand (with a 30% share before the promotional program) into the lead in the Twin Cities. Its major competitor had maintained a steady 40% share for a number of years. The southern city served by Twin Cities has a population of approximately 250,000 in its market area, of which approximately 24% are black. The bottler has never achieved a strong franchise among blacks and had hoped to gain considerably in its market appeal to this segment during the promotion. The primary thrust of the campaign was through cents-off coupons contained in newspapers (particularly suburban editions) and direct-mail pieces, worth varying amounts (depending on bottle size) towards the purchase of the cola. Emphasis was placed on promoting the 2-litre size plastic bottle of the cola, particularly within supermarkets, with large point-of-purchase displays featuring the picture of one of the very attractive female stars on Dallas, and stressing the cola¶s reduced price. Twin Cities Bottling had particularly targeted the area¶s newest and largest supermarkets for special emphasis since these accounted for the biggest volume of the cola¶s store sales. The bottler also ran an increased number of spot TV ads during a local station¶s early evening news show. These 10-second spots reinforced the sales promotion effort being run by the bottler by featuring a local announcer who encouraged consumers to be on the look-out for their coupons. After the campaign had run for 2 months, Twin Cities Bottling management reviewed the success of the program. Although the promotion had been able to shift the bottler¶s overall market share up to 35% during the period, it had not appreciably increased its share among black consumers. This was a disturbing surprise to the management, who assumed that all the consumers would have responded to the promotion rather equally. Twin cities Bottling would like to gain a higher share among the lucrative black segment in any future promotion, but it is not sure what, if anything, it might do differently the next time.

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PART-1: Summary: The case is regarding Twin Cities Bottling Company, which bottles the second leading cola in its market territory. Its major competitor had maintained a steady 40% share for a number of years. The company had hoped to move the brand (with a 30% share before the promotional program) into the lead in the Twin Cities which has a population of approximately 250,000 in its market area, of which approximately 24% are black. The main focus of the campaign was on offering discounts as per the bottle size of the cola. Emphasis was placed on promoting the 2-litre size plastic bottle of the cola, particularly within supermarkets since these accounted for the biggest volume of the cola¶s store sales. The display ads featured the picture of an attractive model of Dallas, and focused on the reduced price of the drink. The bottler also ran an increased number of spot TV ads during a local station¶s early evening news show. These 10-second spots reinforced the sales promotion effort being run by the bottler by featuring a local announcer who encouraged consumers to be on the look-out for their coupons. The review of the campaign showed that the market share had increased to 35% during the period but the case was not the same among black consumers. Twin Cities Bottling desires to gain a higher share among the lucrative black segment in any future promotions and is looking for a strategy to target the same next time. PART-2: Questions for discussion: Q1 What marketing issues are raised in this short case? Be specific as to what issues your group identifies and why. Mistakes the company made ± or the wonderful things it that may contribute to a successful marketing effort? Ans.1 The Case basically deals with 3 important marketing concepts of 1) Segmentation 2) Targeting 3) Positioning Segmentation ± In a market a marketer cannot satisfy everyone in the market. Therefore a marketer starts by dividing the market into Segments. The marketers identify and profile distinct buyer groups, who all have different preferences from the various products and services being offered in the market. This is called segmentation of market. Segmentation is one of the issues in this case as it is clearly mentioned that the Twin bottling firm was a Market Challenger it wanted to increase its sale among the Black Customers. Targeting- After identifying the market the marketer decides which presents the greatest opportunity and thus defines his target market. The target market is the one that offers the greatest success probability within the segment chosen. In the case presented Twin Cities Bottling had particularly targeted the area¶s newest and largest supermarkets for special emphasis since these accounted for the biggest volume of the cola¶s store sales. 2

Positioning- How the firm positions itself in the minds of its customers is called positioning. In the case the Twin bottling company was positioning itself as brand with cheaper rates, it was trying to stress upon the reduced prices of the brand offering. In newspapers, Direct mails and spot TV ads it was laying focus on the reduced prices of its brand. Also the News reporter and Advertisement of a famous actress in the Supermarket reinforced the cheaper rates the brand was offering. As per the case, the firm is aware of the existence of the various segments of consumers in the market. But the marketing strategy was a generalized one which they assumed would attract all sections of the market. Although the firm was successful in increasing its market share by 5 % to 35 %, it was still unable to attract the black customers. Thus it can be said that there was something lacking in their approach which didn¶t attract the Blacks towards the brand. There lies the scope for the firm to focus on a particular segment of the market and work on improving the results. Q2 What is the relationship between ³segmentation´ and ³target market´ selection? What in your group¶s opinion are good segmentation bases? Has this company done a good job of identifying the segments, selecting a target market ± and finally executing a successful marketing effort? Ans. Segmentation precedes Target market selection. First the marketer divides the market into a number of segments. A true market segment meets all of the following criteria: it is distinct from other segments, it is homogeneous within the segment; it responds similarly to a market stimulus, and it can be reached by a market intervention. The term is also used when consumers with identical product and/or service needs are divided up into groups so they can be charged different amounts. These can broadly be viewed as 'positive' and 'negative' applications of the same idea, splitting up the market into smaller groups. Target market selection is done by selecting the most profitable among the available segments. Following are the factors that can be considered while evaluating the attractiveness of a market segment for selection:       Size of the segment Growth rate of the segment Competition in the segment Attainable market share given promotional budget and competitors¶ expenditures Sales potential for the firm in the segment Expected profit margins in the segment

Thus after considering all the above mentioned factors, a target segment is selected from the various segments. For eg. GE medical equipments wants to sell its products in India, So first it segments the market, Suppose it segments it into North, East, West, South and decides North as it segment market and then it chooses the Hospitals of NCR region as its Target Market. Thus we see that both Segmentation and Target Market are related concepts. 3

The Bases for good segmentation are as follows ± y Geographic Segmentation y Demographic Segmentation y Psychographic Segmentation y Behavioural Segmentation According to our group the firm was aware of the segments of consumers present in the twin city. They are the market-challengers with a market share of 30 % before the promotion. The Twin city bottle brand served a town of almost 250,000 population which consisted of whites as well as blacks and the firm was aware of this. The company however did not take any steps to target the different segments of the population. They had assumed that all the consumers would have responded to the promotion rather equally. The brand was thus found to be less favoured by the blacks, who constitute about 24% of the population of the segment. The promotion offer taken up by the brand was also not aimed at particularly any target market. Although the firm was successful in increasing its market share by 5 % to 35 %, it was still unable to attract the black customers. Thus it is obvious that there was something lacking in their approach which didn¶t attract the Blacks towards the brand. To summarize, the firm had identified the segments but did not choose a particular target market. They instead went for a generalized marketing campaign which they assumed would attract all sections of the market. Thus improvements are required in case of segmentation, target market selection and executing a successful marketing effort. In order to attract the Black customers the company could have had special focus on Black community areas in their segment the following approaches could have been applied1. A black female model along with the original model used in the supermarket should have been used to specifically attract the Blacks community. 2. Special promotion of the product by Black sportsperson in the areas where the black community lived. 3. Organizing events in the Black community areas such as Music concert by eminent Black Singers. The above were a few steps the brand could have taken to attract the Black community specifically together with the rest of the market. Q3 As an expert group consulting on marketing & consumer behaviour matters, advise Twin Cities Bottling Company management on future promotional and other marketing efforts and activities. Ans.3 As an expert group consulting on Marketing and Consumer behaviour we would suggest the following measures ± 1. Identify the Target Market ± There must be proper Target audience in mind while starting the Process. One must keep in mind the potential buyers of the product, Current users, 4

deciders, and influencers while deciding the promotional offer. In this case the Twin Bottling Company should have focussed on the Black market also specifically as it was the objective of the company to increase the sales among the black community as well. 2. Creating different products for different segments: The company needs to check the ingredients composition, as it may contain certain ingredients which their society may not consider good or healthy. For example Indians consider packed and ready to eat food packs not so healthy. If there is a similar case with regards to the cola, the firm can create a different product for the segment under consideration. 3. Economy Packs: The black population may not be the elite population of the country and as the promotion was only for the 2 litre bottle, they may not have found it economical. If this is the case, then economy packs may help. 4. Determine the communications objective ± One must keep in mind the objectives the promotion is going to address. Objectives can be of the following type ± y Brand awareness ± Ability to increase the brand awareness or the recall of the brand among users. y Brand Attitude ±Evaluating the brand with respect to its perceived ability to meet a current relevant need. y Brand purchase intention ±Self instructions to purchase the brand or to take purchase related actions. Promotional offers in the form of coupons or two for one deals encourage consumers to make mental commitment to buy product. 5. Focus on Advertising ± Advertising reaches geographically dispersed buyers. Advertising can be on TV, in Newspapers , on the Internet and on Bill boards. The brand ambassador can be a black celebrity. 6. Sales promotion ± The twin bottling company is already using this mode very effectively still other then offering price discounts the bottling company can provide Lucky draw gifts such as home appliances or having offers such as collecting coupons with the cola bottle and have a chance to meet a Celebrity or a Super Star. 7. Public relations and Publicity- The twin bottling company can use public relations to great effect as the public relations offer high credibility to the users. 8. Events and Experiences ± The twin bottling company can use Events to a great effect in enhancing their brand awareness. Sponsoring Events such as Musical concerts, Sports tournaments, College Fests and Festival Events can greatly enhance the Brand awareness of the Cola Brand. 9. Online Promotion ± Advertising on the Internet and giving promotional offers on the internet can greatly enhance the brand sales. Also having Interactive sessions with the users on the internet on Social Networking sites can increase the brand awareness and also provide valuable insight into consumer behaviour. 10. Environmental Marketing ± Today environmental marketing is the buzz word and Twin bottling company should actively participate in Societal marketing such as organizing Blood donation camps, Relief funds etc . Also having environment saving campaigns such as planting trees etc can be used to great effect for promoting the cola brand.

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Q4 Identify a brand in the Indian marketplace which may have inadvertently ³not targeted´ the segment that they actually wanted to direct their marketing effort at ± and therefore the results were not exactly what was anticipated. The brand we have chosen is: Mahindra-Renault Logan. The reasons for this are shown below:  Logan was launched as a mid-sized car model targeted at middle-income segment. The petrol range for the car started at Rs 4.43 lakh going up to Rs 5.32 lakh and the diesel variant was priced at Rs 6.68 lakh (all prices ex-showroom Mumbai).  But there were stronger competing models in the market with aggressive price tags such as Maruti Swift Dzire and Tata Indigo CS and other models like Ford Ikon and Hyundai Accent that were available in a price bracket close to the Renault model. This put pressure on demand for Logan.  Logan was unable to keep the price low owing to the localisation content (the percentage of parts sourced locally) of the car, which was at 50 per cent. This was much lower than competition and thereby pushed up the final cost of the car.  Also, the engines were imported from France, forcing the joint venture to price the sedan higher than the segment leaders -- Maruti Suzuki and Tata Motors.  Another reason affecting the model was the fact that the car ended up being a tourist taxi in many urban centres, which dented its image.  Owing to its image of a car targeted for the mid-income segment, it did not garner attention from the higher-income segments.  Also the fact that the car was not promoted as a luxury car did not do it any good. Logan was promoted as a car for the Indian families and its advertisements focused on factors like space and mileage showing that it was lighter on the customer¶s pocket. Thus its certain that the car was not promoted as a luxury car.  This created a doubt among both middle-income as well as higher-income groups regarding the car and it lost out easily to its competitors which were already wellestablished. PART-3: Relationship To Concepts:  Target Market: The twin bottling company was targeting the entire population which included both blacks and whites. However the Brand specifically targeted the newest and largest super market area which had large cola sales.  Positioning: The company was positioning itself as brand in the mind of the users which was cheaper and highly affordable. Special reference was made in all the promotion offers to the discount the cola company was giving.  Cost leadership: The brand was trying to gain a higher market share through cost leadership. By giving discount on their products the brand was following the cost leadership approach.

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Sales Promotion: The company was following the concept of sales promotion in their entire campaign by providing discount on their product and promoting the sales of the product.  Integrated Marketing communications: The Integrated marketing concept is being used here where in the various communications medium such as Advertising and Sales Promotion all are reinforcing the discount offers being made by the cola brand. In the case, Twin Cities Bottling Company does Consumer Sales Promotions in the following ways Consumer sales promotions encompass a variety of short-term promotional techniques designed to induce customers to respond in some way. The most popular consumer sales promotions are directly associated with product purchasing. These promotions are intended to enhance the value of a product purchase by either reducing the overall cost of the product (i.e., get same product but for less money) or by adding more benefit to the regular purchase price (i.e., get more for the money).  Point of Purchase Displays: Point of purchase (POP) displays are specially designed materials intended for placement in retail stores. These displays allow products to be prominently presented, often in high traffic areas, and thereby increase the probability the product will standout. POP displays come in many styles, though the most popular are ones allowing a product to stand alone, such as in the middle of a store aisle or sit at the end of an aisle (i.e., end-cap) where it will be exposed to heavy customer traffic. For channel partners, POP displays can result in significant sales increases compared to sales levels in a normal shelf position. Also, many marketers will lower the per-unit cost of products in the POP display as an incentive for retailers to agree to include the display in their stores.  Coupons: Most consumers are quite familiar with this form of sales promotion, which offers purchasers price savings or other incentives when the coupon is redeemed at the time of purchase. Coupons are short-term in nature since most (but not all) carry an expiration date after which the value may not be received. Also, coupons require consumer involvement in order for value to be realized. In most cases involvement consists of the consumer making an effort to obtain the coupon (e.g., clip from newspaper) and then presenting it at the time of purchase. Coupons are used widely by marketers across many retail industries and reach consumers in a number of different delivery formats including: Free-Standing Inserts (FSI) ± Here coupon placement occurs loosely (i.e., inserted) within media, such as newspapers and direct mail, and may or may not require the customer to cut away from other material in order to use.  Celebrity advertising: It is the use of a public figure¶s likeness for the purpose of selling a product or service. The firms use a Brand Ambassador who endorse the brand and get involved in the promotions. Celebrity advertising can be accomplished through celebrity endorsements, whereby the celebrity consents for his or her likeness to be used in advertisements for a certain brand. Celebrity endorsements imply that the celebrity uses 7

the product or service that he or she is endorsing, and prefers it above others of its kind. For this reason, brands will often target celebrities who appear to reflect whichever effects the advertisement is promising.  Spot TV advertisement: Advertising time on television can be purchased in different ways. One way is to buy time from a network and then allow the network to distribute the ad to its affiliates. Another way is to buy spot television time. Spot television works by allowing media buyers to choose which stations they want their ad shown on and during which programs they would like it to run. One advantage of spot TV advertising is that an ad can reach channels that are not affiliates of a larger network. Many times these channels do not have as many ads as network affiliates, so therefore an ad would face less competition. Another advantage of spot television advertising is that by choosing the programs during which the ad would run, advertisers can pick programs that the target audience would watch. This gives the advertisers more control in making sure the right audience is seeing the ad.

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