Market Research Project “Impact of Advertising on Sales & Profits-A Study on Carbonated beverage Market”

By: Mayank Popli (F-182) Prateek Jain (F-120) Shashank Kalucha (F-62)

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Table of Contents Introduction Literature Research Methodology Analyzing & Interpretation Results & Discussions Conclusions References Appendix Page 3 Page 6 Page 8 Page 9 Page 15 Page 16 Page 17 Page 18

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Then there is the rare case of the Carbonated Beverage industry with full market coverage.! ! ! Impact of Advertising on Sales & Profits-A Study on Carbonated beverage Market 1. there is a product specialization like Milk and a market specialization like the motor industry. and you can know that the President drinks Coke. “What's great about this country is America started the tradition where the richest consumers buy essentially the same things as the poorest. and just think. A Coke is a Coke and no amount of money can get you a better Coke than the one the bum on the corner is drinking. Introduction There are few products that target all segments of a market. / * +! ! Fig 1: Full Market Coverage by Coca Cola ! #! . the message being sent across to the consumer becomes extremely crucial. you can drink Coke. Liz Taylor drinks Coke. $%&'()*+! . % . too. All the Cokes are the same and all the Cokes are good. Certain niche products cater only to one segment.” A quote by Andy Warhol made in the context of USA but true in India as well. In such a scenario where one is trying to target the entire market is largely affordable. You can be watching TV and see Coca-Cola.

Coca Cola. we study the various components of consumer behavior through primary research and use of secondary data. if any proof was needed of long term loyalty and relationship between brands and consumers.2 litres against a world average of 85. the Cola war was being fought between Thums Up and Pepsi. re-entered the Indian market. Obviously. Until recently. However. Thus. Through this project. it was the largest selling carbonated beverage in India. play the game of one-upmanship to be the market leader. the two main competitors in the country (as in the World).22 litres. the promotions through advertising will differ for various segments. Carbonated Beverage Market in India Coca Cola was the first soft drinks major to enter India in the early 1970’s. consumer loyalty and relationship is the only way through which one can maintain market share.! ! ! With low switching cost and aggressive competition. it had to exit the Indian market due to an unfavorable political climate. Also. • ! 0! . it would be Thums Up. it is important to gauge the impact. However. It soon became popular with the youth and Thums Up was the first brand that advertised heavily especially through the upcoming medium of television. it became the market leader. Soon. at 35%. The Coca Cola Company bought the Thums Up brand and like the rest of the world. In a diverse country like India. it once again became a Pepsi versus Coke battle in India too. The Carbonated beverage Industry has the highest percentage of its revenue spent on advertising amongst all industries. is there a possibility that the existing customer could consume the product in a greater quantity? With all these objectives to fulfill. • Coca Cola company is the market leader with a share of more than 60% followed by Pepsi Co. another major one is to increase the market size. This makes it all the more difficult for these companies as extensive research must go into the unique segments. this is an altogether new challenge. Some key features of the market: Per capita consumption of soft drinks in India stands at 5. which was then dominated by domestic brands. and popular across segments. By this time. In 1993. 1.1. So while one objective of targeting is to increase the market share. The void was soon filled by Parle when they launched Thums Up.

Culture can vary in different countries and for a large and diverse market like India. The first step towards understanding consumer behaviour is to know what really drives the buying choices of the consumer. Consumer ! 1! . First is to understand the culture of the market. • While health drink sales are estimated to grow by 14%. This can be done through multiple means. public relations etc. Carbonated Soft Drinks are estimated to grow at about 5%. people are moving towards juices and health drinks. radio and more recently through social media. Language is also necessary as it is amongst the effective means of communicating with the prospective consumer. Companies also undertake other marketing activities like sales promotion. The mass communication tools trade off the advantage of personal selling and the opportunity to tailor a message to each prospect.Consumer behaviour analysis views the consumer as another variable in the marketing sequence. 5 billion. 35 billion out of which juices account for Rs. This is why we see a new campaign or tag line every 2-3 years along with nature of advertisements. • With increasing awareness and disposable incomes. emphasizing that “it seeks to do this providing information. the purpose of advertising is to enhance potential buyers’ responses to the organization and its offering. 1996).! ! ! • The size of the beverage industry is pegged at Rs. is to be aware of prevailing ‘times. Kotler (1988) sees advertising as one of the four major tools companies use to direct persuasive communications to target buyers and public noting that “it consists of non-personal forms of communication conducted through paid media under clear sponsorship”. According to him. and by supplying reasons for preferring a particular organisation’s offer”.’ Society evolves continues and thus it important for companies to keep evolving their respective brand positioning with regard to these times. 1.2. Second. Media. for the advantage of reaching many people at a lower cost per person. it can vary from region to region and especially dependent upon language. Advertisement & Consumer Behavior Advertising through mass media can be through various means like television. As such. by channelling desire. this particular industry spends a major portion of their revenues in advertising to influence the choice of the consumer and eventually develop brand loyalty.

Finally. Sachin as we all know enjoys the god-level status in India. Coke had also announced to roll out special “Sachin Tendulkar” cans to honour his 100th century. Also we need to know whether the advertising is informative or persuasive which is an important basis for competition to know how advertising affects the demand. We need to understand how the advertising campaigns impact the demands of products because inaccurately measuring or ignoring advertising would lead to biased estimates of consumer price and advertising responsiveness. This new commercial was aligned with the same message to which Coca-Cola has been sticking to for the past several years that Coca-Cola gives a reason to be happy. thus this movie is something that will work in the favour of the company. Thums Up They have not just changed their tagline form “Taste the thunder” to “ Aaj kuch Toofaney Karte Hain” but also the concept of the advertisement. in comparison with their previous 2! ! . climbing roof tops and slipping through pipes all just for fun of it.! ! ! behaviour analysis is conducted to assess the complexities of marketing operations. by covering a distance that would normally take 30 minutes in 2 minutes while jumping across terraces. and most importantly. He expectations of a consumer change from time to time and market research on the ground can be the most relevant data for a company to position its brand. Today it shows a group of youngsters who look from adventure and thrill after drinking Thums Up. smile and share happiness. such as consumer goods. enjoy life. Now let us talk about some of the successful advertising campaigns by the cola–giants: Coca-Cola The feedback to their campaign “Reasons to Believe/ Umeedon Wali Dhoop” was positive as through the advertisement they were selling hope and not a carbonated drink. companies must conduct regular market surveys to stay in touch with the needs and aspirations of the consumer. companies tend to have aggressive advertising campaigns that publicize the quality of their products over those of their competitors. Literature Review In case of the competitive sectors of the economy. 2.

! ! ! campaign which has an alpha male chasing Thums Up and performing stunts. The commercials are simple with a nice jingle and the hint of ‘sprite’ mischievousness. PepsiCo and Coca-Cola. 7Up The new commercial with a bit of dancing and a not so catchy jingle fails to connect with the customers. Pepsi for the first time has brought together cricket and football for their latest ad. Word of mouth is a great way to get local business but there is a far large scale of business advertising will help bring in. outdoor and on ground initiatives the campaign plans to spread the new idea of ‘Change the Game’. The commercial brings together both the sports on a common platform and features the biggest names of the world of cricket and football. Although they have changed their tagline from ‘Sprite Bhujaye Sirf Pyaas. Supported by a 360 degree approach including on-air. 3! ! . They have used a sport star that hasn’t starred in any soft drink commercial before but the tagline “Darr ko maaro Dew” does not make it entertaining for the customers. but still works. Though the idea of ‘light hearted optimist’ is good for a clear fizzy. The bunch of ads rolled out by Sprite with new faces and smart writing never cease to amuse us. The two giants in the carbonated drinks industry. bubbly drink but the communications seems to be mixed up and confused. Sprite Sprite always comes up with fresh witty commercials that never fail to make us laugh. Pepsi After a series of commercials. The change in demand and sales would reflect the reason Thums Up moved away from its earlier communication strategy of showcasing extreme levels someone would go to for a ‘taste of thunder’ which was quite effective. it does not give anything new. Mountain Dew A short advertisement with a same message but a new face of wrestler Sushil Kumar. The companies today advertise because they want to increase their customer base. Baki Sab Bakwaas’ to ‘Rasta Clear hai’ which is not that cool and different.

however the focus on inferences will be largely on relatively heavy consumers. Visibility of various brands and relative ratings were also included. advertising impact can be gauged from all respondents since all the respondents are exposed to these. Advertising increases the sales to some extent because people like buying a name they feel they know. Research Methodology Market research on the impact of advertising in the Carbonated beverage Industry was conducted. Their campaigns have put their product on the map. This is one of the main reasons people refuse to buy the products of a generic brand because they are not aware of the name and have never been given a reason to trust the product. Data for the study were collected by using the random sampling method among 120 urban respondents by means of a structured questionnaire.! ! ! are known because of their great advertising techniques. ii) Visibility of various brands through advertising iii) Direct impact of advertising iv) Impact of celebrity endorsements v) Possible reasons for positive/negative correlation between advertising and consumption Pls put the survey here (shortened and edited as per the excel sheet) ! 4! . All respondents consume carbonated beverages in some quantity. The survey below consists of indirect questions relating to consumer preferences regardless of advertising. The objectives of this study through the survey are: i) Current preferences of the sample in a highly developed and saturated market. 3. currently developed loyalties as well direct questions with regard to potential changes in preferences due to advertising. However.

>?! @<:9AB! +>:B!/CDABEFB! +GFF>CFEE! +FB. the initial questions tries to the weight of other factors in the decision making progress. Analysis and Interpretations The majority of the respondents are from the age group 20-25 (83.33%) while the age groups of 15-20 and 25-30 are the other significant contributors. The graph below denotes factors behind consumer preference sans any external influences. With youth being the dominant consumers of these products. A further question would they change their preferred brand if their favourite celebrity endorsed it saw a negative response. the implications of the finding can present a reasonably clear picture in terms of impact.<. Do these factors ultimately lead to the brand preference? If the preferred brand differs. with 91. Rating (on a scale of 5) for various factors affecting sales 1! 071! 0! #71! #! "71! "! 871! 8! 671! 6! -9:. While the loyalties are well and truly developed.! ! ! 4.FE!8! The rating for star endorsement was included to gauge how many respondents put it above simple unbiased preferences.<:=.66% stating that they 5! ! . is it due to the impact of advertising? These are some the key questions to be answered from this part.

even if one is to come to a conclusion that advertisements do not have a direct impact on sales.! ! ! would not switch. would awareness levels of positioning be high. This is then correlated with a direct question of brand preference. sales promotions etc. Thus. ! 86! . it can position its brands accordingly. Adjective options were provided and respondents were asked which attributes they associated themselves with and a respondent could select multiple options. Positioning. Only when the consumer is informed.()($/(! #1! #6! "1! "6! 81! 86! 1! 6! +FB.1. Personality and Preference Question based on personality was asked in the context of positioning of brands. Two-thirds of the respondents had appositive correlation.FE!8! There is a high correlation between personality and brand preference (attribute positioning of brand). So if a company through market research can establish the attributes in vogue. consumer preference is guided to a certain extent by attributes they associate themselves with. The next logical step would be to send across the message of this positioning through advertising. The results could vary to a large extent if the majority of respondents were from rural or Tier-II or Tier-III cities.!-)(. "#$%&'()!*)+$. 4. The attributes were aligned closely with positioning of various carbonated beverage brands.

Visibility The concept of visibility is simply about consumer perception of brand recall. Ranbir Kapoor. Shahrukh Khan. Frequency of Buying Row Labels Never Occasionally Regularly Grand Total [Pepsi] 33 68 20 121 [Coca-Cola] 13 65 43 121 [Sprite] 31 72 18 121 [Thums Up] 33 53 35 121 [Appy Fizz] 61 50 10 121 [Mountain Dew] 44 59 18 121 Fanta and Limca featured fairly low in consumer choice. one can see Aamir Khan. we asked respondents to state how often they consume a particular brand. portfolio. However. The Test of Loyalty The ultimate aim of any brand is to establish a dedicated group of loyal consumers. which nationwide the largest selling brand enjoys second position in regular consumption after Coca Cola making it a favorable choice across urban and rural domains. While one reason is that the positioning of Sprite and Dew is more ! 88! . For example. 4. For these loyal folks. Dhoni. promoting the Cola Brands while you would rarely see brand ambassadors for Sprite. 56% people stating that they were loyal to one particular brand. While segregating brands in terms of frequency of sales.8%) as compared to only 50% for pepsi.! ! ! 4. it is observed that they either only consume the brand that they are loyal to or do not consume a rival brand of the same category (eg-cola).2. Amongst above displayed brands. it can be seen that Coca Cola enjoys tremendous loyalty in terms of regular consumption while Sprite sees a major chunk of consumers choosing it occasionally. This was to study the variety consumed and rigidity adopted in selecting a brand. We set about asking our respondents as to whether they were loyal to any particular brand. Thums Up. Tendulkar. Mountain Dew etc. Akshay kumar etc. it is also abundantly clear that companies spend more on promoting certain brands.3. Pepsi shows an average performance and is almost equal to its subsidiary brand Mountain Dew which is the fastest growing brand in the Pepsi Co. Majority of people who prefer coke said they are loyal to the brand (75.

it is to be noted that the Cola drinks are the primary drinks of these companies (the corporations are named after the primary Cola drinks!).90 Coca Cola 3.10% 60.32% 47. We also asked respondents their favourite campaigns for respective brands. the focus is largely on mass media. With Thums Up and Sprite being the top two soft drinks and Mountain Dew the fastest growing. While for these brands.! ! ! towards youth representation.50 Sprite 3. however. The question then becomes: should companies focus more on growth areas or the primary colas which seem to be lagging in comparison. 60% of the respondents claimed to have an experienced such a campaign with most people saying it had a moderate impact. Brand Visibility Brand Visibility Pepsi 3. need not necessarily define sales.27% 41.33% ! 8"! . Such personalized campaigns in urban areas are bound to increase as companies look for more innovative ways to connect with the consumer. college festivals. Thums Up in this case has an advantage as the longest surviving among the above mentioned drinks and is fairly visible across the rural spectrum as well.22 Visibility. maybe the balance is to be adjusted. Below the Line campaigns like Coke Happiness have seen enormous success and the frequency of such promotions has been increasing. This was done to gauge whether there is a pattern in the preferred campaigns.97 Thums Up 3. It can be observed from the below table that almost all campaigns had a mix of Hindi and English.29 Mountain Dew 3. Most preferred advertising campaign for every brand Brands Pepsi Coke Thums Up Mountain Dew Most popular campaigns Yeh Dil Maange More Thanda Matlab Coca Cola Taste the thunder Darr ke agge jeet hai Percentage People Preferring 27. localized campaigns have been gaining ground recently. carnivals. mostly in urban congregations like malls.

say 1318 would most likely be influenced by advertisement ! 8#! . There can be various reasons for this. less than 10 % said they would switch to another brand if their favourite actor/sportstar jumped ship to a rival brand. Eastern and Western parts of India involving local stars. • • A young. Marketing survey has a limitation that it does not account for Transference.4.! ! ! A local flavor to campaigns definitely helps in connecting with the consumer. This also explains why companies run localized campaigns for the Southern. but also on the secondary associations with the product. He was able to show that even though people’s choices were affected by factors such as packaging and color. people rationalize it and are not able to state the actual reason for their choice. they denied that such changes had any affect on their what they preferred. urban population may not be easily swayed by such advertisements Most people have developed loyalties by now. An even lesser number of people. A younger segment of people. • Respondents may not fully aware of their behavioral patterns. But when asked directly about the reason for preference. local languages and local cultural influences. As shown by Louis Cheskin. So the results about factors affecting people’s preferences gathered from a marketing survey may vary significantly from the actual reasons. a person’s assessment of a product not only based on the product itself. The Impact Finally. we asked our respondents if they switch to any brand based on advertising. 4. An overwhelming 87% responded in the negative.

even if we consider this drop in terms of its loyal/regular users. This brings to 80! ! .! ! ! *)+$.!#$!6.!3#!6'#&$3!#. we asked if sales of any particular brand would drop if the respective advertising was reduced. that a substantial chunk of people acknowledge the role of advertising in terms of quantitative performance.+3(.! 6. Almost 30% of the respondents concurred on this.7()8%2$5! JFE! #"I! HA! 24I! Likewise. we can conclude.!0123/42$5!*+%(.7()8%2$5! JFE! 8#I! HA! 43I! "#$%&'98#$!:(. Thus.

Two of the objectives were to increase the market share and increase sales amongst current users. Colgate. however. constantly evolving brand positioning and continuous awareness programs ensure brand recall culminating into constant sales. In 1992. 5. but largely there is a consensus regarding long term impact. It is obviously difficult to quantify and measure these small effects. and Kimberly Clark were all cutting promotional spending while P&G was actively increasing its print advertising (Wall Street Journal 1996). Thus. In the case of the second objective. This is why see in the survey results very few individuals agreeing to changing brand preference due to advertisement as such an outcome would happen over a longer period of time. Clorox.. This is perhaps because in our pursuit of looking for major effects like change in preference. While advertising affects the quantitative results in sales. Then it is easy for us to introspect on its effect. Ralston-Purina. we see a positive response with respondents agreeing that sales would indeed drop if advertising were reduced. the question of effective advertising mix has always puzzled the biggest of corporations. Big and immediate effects of advertising do occur when the advertiser has something new to say. many firms increased spending on trade promotions (e. However. We often see advertisements peak during sports tournaments like World Cups. The real impact of advertising is much more subtle and with minor effects which have a cumulative impact in the long run. Results and Discussions The above inferences clearly illustrate that brand preference exists amongst consumers in the carbonated beverage market.! ! ! our original objectives. These minor effects are not obvious but they are more characteristic of the way advertising works. and Ralston-Purina) had substantially reduced their advertising budgets with little discernible effect on sales. but even small effects of advertising can influence which brand we choose especially when all other factors are equal and when alternative brands are much the same.g. A good example would be introduction of Pepsi Blue during the Cricket World Cup. Heinz). it may not necessarily bring about changes in preference. Best Foods and H. RJR. The reason is to capture the maximum market from the resulting spike in demand. Concurrently. Just four years later. 81! ! . J. Olympics or during approaching summers in a country like India. the Wall Street Journal reported that several consumer goods companies (including P&G. Quaker Oats.

! 82! . Thus. language and celebrities. decrease in advertising may result in lower volume of sales and vica versa. Campaign themes should also include this. • Most brands have already developed a fair share of the market. This is more to do with how people wish to perceive themselves. This time frame is relatively shorter for the younger population. In terms of product life cycle they are between growth and maturity. Innovative BTL campaigns in areas urban congregations can have a major impact as well. • There is a positive correlation between identifiable personality traits and brand positioning.! ! ! 6. • For existing consumers. it is important for brands to be aware of the ‘times’ and constantly evolve the positioning. • It is important to have localized campaigns in terms of culture. these seem to be over long very long terms and may seem to be in perpetuity from a static point. Conclusions • Advertising is responsible for subtle changes in consumer mindset and over a long term have a cumulative effect in consumer choices. However. The eventual positioning of the brand is a mix of these and the aim is to connect with the consumer.

A. Times Mirror Higher Education Group Inc. V. Sunil Gupta. Company.A Study on Carbonated Beverage Market with Reference to Coca-Cola”." • Arens. 1994. “The Long-term Impact of Promotion and Advertising on Consumer Brand Choice”. Irwin”. 1996 • Kotler. 1-14.unilorin.1. “Contemporary Advertising. 1996 • • http://www.R. Back Bay Books. No. 2009 • Chowdhury. “Marketing Management: A South Asian Perspective”.aef. Lehmann. “Impact of Media on Consumers’ Brand Preference .pdf Thomas Michael. Williams F. Abdur R.edu.ng/studproj/cis/0766nc005. 2005.! ! ! References • • http://www. M.com/on_campus/classroom/book_excerpts/data/1504 Carl F. P. 2012 • Gladwell. Nedunchezhian. International Journal of Advertising. “Blink: The Power of Thinking Without Thinking”. Mela. USA: Richard D. and Donald R. Pearson Education. Advertising Expenditures and the Macro Economy: Some New Evidence. ! 83! .

! ! ! Appendix Form Floated Carbonated Drinks Industry This is a survey to study the consumer preferences and the impact of advertising campaigns and commercials on customers. * Required Age * 15-20 20-25 25-30 >30 • • • • City * How many times do you consume soft drinks in a week * <3 4-6 7-9 >9 • • • • ! 84! .

Orange etc) Sweetness Price Would you switch to another brand if your favourite sportsperson/actor endorsed it? * Yes No • • ! 85! .! ! ! Which soft-drink do you prefer? * Pepsi Coca-Cola Sprite Mountain Dew Thums Up Appy Fizz Fanta Mirinda 7Up • • • • • • • • • On a scale of 1-5 rate the following on the basis of their importance when buying a soft drink (5 being most important) * 1 Availability Flavour (Cola. 2 3 4 5 Lime.

! ! ! Are you loyal to a particular brand? * Yes No • • Do you switch to a brand based on advertising? * Yes No • • Do you think there is a drop in your purchase of a particular brand if the advertising is reduced? * Yes No • • Which brands do you buy and how often? * Regularly Pepsi Coca-Cola Sprite Thums Up Mountain Dew Appy Fizz Fanta Limca Occasionally Never ! "6! .

Jiyo Thanda Thande ka Tadka Paanch Matlab Chota Coke • • • • • ! "8! .! ! ! Which attribute(s) do you associate yourself with? (you can fill multiple options) * Macho Adventurous Chilled out Sharing Happiness Feel Good Other: • • • • • • Which particular campaign for Pepsi you liked the most? * Change the Game Yeh hai Youngistan Meri Jaan Yeh Pyaas hai Badi Oye Bubbly Yeh Dil Maange More Yeh Pyaas hai badi Yeh hai Right Choice Baby • • • • • • • Which particular campaign for Coca-Cola you liked the most? * Reasons to Believe/ Umeedbon wali Dhoop Piyo sir utha ke Piyo thanda.

! ! ! • • Thanda Matlab Coca Cola Coca cola Brrrr Which particular campaign for Mountain Dew you liked the most? * Dar ko maaro Dew Darke aage jeet hai Cheetah bhi peta hai Do the Dew • • • • Which particular campaign for Thums Up you liked the most? * Aaj kuch toofani karte hai Live the Thumder Taste the thunder Refreshing Cola • • • • Have you ever experienced a promotional campaign in a mall/market/ campus? * Yes No • • If Yes Rate the success of the campaign * Successful Moderate • • ! ""! .

! ! ! • • Low Impact No Impact Rate the following brands interms of their visibility by advertising( on a scale of 1-5 . 5 being the most visible) * 1 Pepsi Coca-Cola Sprite Thums Up Mountain Dew 2 3 4 5 ! "#! .

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