Q2) List out problems regarding: (a) Product features and benefits (b) Package (material, design

and SKU). What will be your new decisions regarding the above?  

The major concerns regarding the NACCO Jam product’s features were:
1. Fruit Richness: The taste and richness of the fruits used to produce the jams were
perceived to be not as good as some of its competitors, however being better than 3 of
its competitors, which could be a ma
2. Flavour: The flavors offered by NACCO were perceived to be not as not that satisfactory
as compared to its competitor’s product, which were rated much higher in this category.
It also had a limited variety which did not consists of the more famous fruit jams such as
Raspberry, Strawberry, Plumps, Peaches & Apricots.
3. Variety of Colour: The colour of the different jams offered by NACCO was also perceived
to be of not a good shade, suggesting that it appeared more dull (not bright) than its
competitors.
The major concerns regarding the NACCO Jam product’s benefits were:
1. Ease of Spread: The ratings given to NACCOs jam for ease of spreading is the lowest
amongst all, suggesting that the quality of its texture was of low grade (clumps with
uneven consistency), and leading to difficulty in applying it to the food items.
2. Sweetness to Bland food: The satisfaction of taste derived from such jams, which were
applied to bland food items, was also depended on sweetness of the jam, which was
again rated the lowest and hence suggested that the sweetness wasn’t providing any
benefit to the final consumer.
3. Quick Breakfast: Since the thickness of jam and ease of spread has been rated the
lowest, it can be understood that the consumers were not satisfied with the application
of such jam on their early morning food items. This would also imply that the jam was
not fully meeting the concept of a “Quick & Tasty breakfast” for the young working
professionals seeking for such a benefit.
The major concerns with respect to the packaging of NACCO jams were:
1. Material: The marketing done by NACCO for jams was done intensely for its glass
bottles and not so much for it pet (being costlier) and tin packages. This uneven
marketing would lead to lost potential sales in both the B-2-C & B-2-B markets.
2. Design: The design of the final package was also uninviting in both Aesthetic and Visual
terms. The final product came in only 4kg, 1kg & 500gm packs, whereas its competitor
was offering packs in sizes of 200gms, 100gms & small plastic sachets along with pack
sizes of NACCO. This variety would be both aesthetically and economically
advantageous. Along with such difference in sizes there was a major lack of
attractiveness in the print of the packages and the font type which did not have
contrasting images with the details printed on it.
 3. SKU: The package sizes produced by NACCO were limited, being of 4kgs, 1kg and
500gms. The variety offered by its competitor of smaller packs of 200gms, 100gms and
sachet packs appealed to the segments wanting lesser quantities and/or affording
smaller packs.
Solution:
The decisions which could be taken to overcome such concerns could be categorized into:
a. Short Term: The packaging design could be made more attractive by adding relevant
contrasting images and providing ample space for printing product details (both
nutritional and safety/usage).
b. Medium Term: In order to overcome the issue of limited package sizes, there would be
a requirement to provide the same product in smaller, more appealing package sizes, so
as to cater to all segment of customers. An attractive pack for small children can also be
introduced so as to appeal to such an influencing segment.
c. Long Term: An investment in improved machinery and Research & Development would
be necessary to provide a better quality of jam to its customers, since the ease of
spread, sweetness, colour and flavor are all rated relatively lower than its customers.
This is imperative in order to provide quality product and gain sales in the long run.
Q3) What are the problems in Distribution and price regarding (a) Distribution structure (c)
Commissions (d) Price ? (d) What will be your new distribution, cost and price structure, also
keeping the new thinking regarding price and cost escalations?
The problems identified with respect to the various parameters are:
1. Distribution Structure: There is high dependency of NACCO on Far and Wide
Distribution Agency (FADD), for its products to be sold in the market. Such dependency
could lead to reduced bargaining power of NACCO in the future, and restricted scope to
launch newer products in the market due to the improved position of FADD in terms of
such dependency.
2. Commission: The high commission given to its stockists is also a waste of resources,
since the stockists aren’t the actual sellers of the goods to the final customer. The
Retailers are also provided with a lesser commission i.e. 8% as compared to its
competitors i.e. 10%. This would be a major concern since they are the final interaction
point between the company and the final customer and play an influential role in the
customers buying process. The reduced commission would discourage them to push
NACCO’s product to the customer.
3. Price: The pricing of the products is relatively well positioned as compared to its
competitors, hence no sudden changes in price is suggested. The increase in costs does
call for an increase in price but should be implemented in a similar proportion.
Solution:
The existing distribution structure implemented can be streamlined by doing away with FADD
and establishing a direct connection with the wholesalers who would in turn supply to their
retailers.
A direct supply to the wholesaler saves the extra commission of 6% which in turn could be
reallocated to the retailers and wholesalers. In order to implement a successful push strategy
the Retailers should also be provided a fair share of the commission and encouraged to
influence customers on purchasing NACCO’s products so as to increase sales in the long run. An
ideal commission of more 10% (more than the competitors) would support in pushing the
product in the market.
The allocation of fixed cost of all products can also be done on the basis of the Average sales of
the last 3-years and their contribution to the entire sales of the company. The recommended
fixed cost allocation is shown as below:

Products Sales (in Lakhs)

2010 2011 2012 3-year Avg. Contribution
Fruit Slices 102 87 118 102 6%
Pulp 232 217 183 211 12%
Juices 187 196 242 208 12%
Squashes 290 303 313 302 18%
Jams 605 591 572 589 34%
Pickles 245 260 267 257 15%
Soft Drinks 38 31 28 32 2%
Synthetic Vinegar 22 14 16 17 1%
Total 1721 1699 1739 1720
The prices of the products need to be increased keeping in mind the escalations of the material
costs by 6%, by 5% of its bottling and packaging and by 2% of its Fixed Cost.

Old Cost New Cost Change

Fixed (2%) 16.17 16.49 0.323
Material 19.94 21.14 1.196
(6%)
Bottle (5%) 6.47 6.794 0.324
Label (5%) 1.08 1.134 0.054
Total 43.66 45.56 1.897
Hence we see that a total increase in cost has been by Rs. 1.9/pc approx. Now to keep the profit
levels constant we can increase the price by Rs. 2/pc, to Rs. 72/pc or increase the profit by Rs.
3/pc of 500gms. by increasing the price by Rs. 5/pc to Rs. 75/pc, instead of increasing it to Rs.
80/pc and Rs. 85/pc. In North & Eastern India and South & West India respectively. This way a
competitive price would be maintained also helping to avoid losing market share, being an
already, perceived, lower quality brand.
Q5) What will be your new Promotion budget?
Since there has been limited promotional activities in the last 5 years and the company has
witnessed a clear fall in jam sales in 2012 since 2010 i.e. from 605 lakhs to 572 lakhs (33 lakhs
in No. of Units and Rs. 17.78 Crores in revenue), there is a dire need for better more effective
promotional activities in order to improve sales and push products into the market.
The promotional activities should include better display of the product at retail stores in order
to increase visibility (through higher commissions) and more attractive Ads being displayed in
newspapers and small traffic light boards for passerby traffic. This can be supplemented with
setting stalls at exhibitions and food fairs held at certain intervals to appeal to the B-2-B
customers or purchasers of bigger packs and bulk quantities. A range of children activities can
also be held through sponsorships to Play schools and High Schools in order to attract children
going to such schools, which constitute a major segment of the final consumers of the product.
Online launch of the products can also be implemented through Amazon, Snapdeal, Big Basket,
Grofers etc. This would provide NACCO a platform to appeal to a new segment of customers
seeking more convenience in the shopping experience or ordering groceries. This would be also
provide for increased visibility to the Brand and its other products.
All such promotional activities can be conducted keeping in mind the budget constraint set by
the owner of NACCO i.e. 5-8% of the revenue. The current revenue levels being: Rs. 53.9 *
572.25 lakhs = Rs. 308 Crore., the estimated Marketing budget for 2013 will be ranging from
Rs. 15.42 Crores (5%) to Rs. 24.67 Crores (8%), depending on the level of activity involved in
each of the marketing campaign launched through magazines and newspapers and all such
online activities.