Study on Sales and Distribution Strategies of Bottled Drinking Water in Mysore

( FINAL REPORT- Group 8 )

Submitted to: Prof. Jojo Joy N

Submitted By: Ashish Gupta (10072) BSM Koundinya (10074) Kundal Mahanta (10085) N Sourya Subhanjan (10089)

Table of contents
1 1.1 1.2 2 3 3.1 3.2 4 5 6 7 8 9 10 11 11.1 11.2 11.3 12 13 13.1 13.2 13.3 14 14.1 15 16 17 Introduction Global Market Indian Market Objectives Methodology Primary method Secondary Method Marketing campaign DISTRIBUTION CHANNEL Organizational Structure of the retail outlets that we visited Supply of Goods Layout Target Market Promotion and Customer schemes Product range Bisleri Kinley Aquafina Segmentation Positioning Bisleri Kinley Aquafina Consumer Habits and Practices Behaviour of the consumer Gap Analysis Conclusion Reference

Page 2 2 4 6 6 6 6 7 8 9 9 10 13 13 14 14 15 15 16 16 16 16 17 17 18 19 20 21

1. Introduction
1.1 Global Market
Water is the most important necessity for life. The drinking-water needs for individuals vary depending on the climate, physical activity and the body culture. But for average consumers it is estimated to be about two to four litres per day. The growing numbers of cases of water borne diseases, increasing water pollution, increasing urbanization, increasing scarcity of pure and safe water etc. have made the bottled water business just like other consumer items. Scarcity of potable and wholesome water at railway stations, tourists spots, and role of tourism corp. etc. has also added to the growth. In the refreshing drinks market, bottled water is the most vibrant segment with market share of about 38%. Several bottled water companies are looking to enter developing markets with immense growth potential such as Asia and Middle East. China is one such market where sales of bottled water are rapidly increasing. Companies are trying to capitalize on weather changes such as summer and increase in health consciousness amongst consumers. The bottled water industry is expected to witness greater participation from soft drink and dairy processing companies, fostered by economies offered by existing international distribution network, and processing equipment. As stated by the recent report published by Global Industry Analysts Inc., global bottled water market is dominated by Europe and United States, which together account for about 55% of the market value estimated in the year 2008. Bottled water will continue to fare well in the global beverage marketplace as a healthy alternative to carbonated soft drinks. Gains in bottled water market will also come from flavoured varieties and convenient packaged formats, especially single-serve packs.

Sparkling water market is dominated by Europe, which accounts for more than 75% of the world market estimated in 2008. Western Europe comprises of some of the world's largest per capita bottled water consumer markets, which include Germany, France, Spain and Italy. The largest proportion of bottled water consumers can be found in Germany as 88.2% of its adult population drinks bottled water. The non-sparkling water market constitutes the bulk of bottled water shipments, accounting between 80-85% of the market in both volume and value terms. Non-sparkling bottled water is also expected to offer the highest growth opportunity,
2

outgrowing the sparkling bottle water market by three to four times. Market for non-sparkling water in United States is projected to reach US$15.1 billion by 2012.

The major challenge for most companies is product innovation and differentiation as water is still just water. Containers are an important part of bottled water, as they constitute nearly 47% of cost. Even look, weight and price of the product are as significant as the water itself. For instance, Colorado-based Biota sells bottled water in biodegradable bottles that are produced using corn in order to attract consumers who are ecologically conscious. Some companies try to attract children by selling bottled water in attractive bottles with vivid designs and colours. The bottled water industry is in a continuous state of flux. Entry barriers are low, and decreasing by the day. Large companies are consolidating by acquiring local/small/niche players to increase capacity as well as product portfolio. Consolidation in the industry is expected to accelerate, resulting in higher degree of concentration, with the leading players strengthening their global presence. Bottled water industry in the Asia-Pacific region is expected to experience a major boost, as more companies venture into the market to capitalize on the latent demand potential. Product, marketing/promotion, packaging, distribution, price, and technology would be the key factors in garnering market share in the industry. With the ever-increasing presence of soft drink majors, such as, Coca-Cola, and PepsiCo, and established leaders Nestle, and DANONE, the market is expected to become a cauldron of action in the future. Key players dominating the global Bottled Water market include Aqua Gold International Inc., Boreal Water Collection Inc., China Water & Drinks Inc., Groupe DANONE, DANONE Naya Waters Inc., Isbre Holding Corp, Nestle SA, PepsiCo, Quilmes Industrials Sa-Adr, Saint Elie, San Miguel Corporation, and The Coca-Cola Company.

1.2 Indian Market

Indians currently spending about $330m a year on bottled water, analysts estimate. The packaged water market constitutes 15 per cent of the overall packaged beverage industry, which has annual sales of at least $2.6bn. Almost all the major international and national brands water bottles are available in Indian market right from the malls to railway stations, bus stations, grocery stores and even at panwala's shop. The growth and status of Indian Bottled Industry in comparison with Western or Asian market, India is far behind in terms of quantum, infrastructure, professionalism and standards implementation. The per capita consumption of mineral water in India is a mere 0.5-liter compared to 111 litre in Europe and 45-liter in USA. Also As per UN study conducted in 122 countries, in connection with water quality, India's number was dismal 120. In comparison to global standards India's bottled water segment is largely unregulated. The Water shortage around the world and particularly in the developing countries has opened new doors for bottled water Industry. Bottled water is sold in a variety of packages right from 200 ml pouches and glasses, to 330 ml bottles, 500 ml bottles, to one-litre bottles and even 20- to 50-litre bulk water packs. In terms of cost the bottled water business in India can be divided broadly into three segments, premium natural mineral water, natural mineral water and packaged drinking water. It is obvious to found the bottled water manufacturer in metro cities though it might be running only in one room or shop, but its surprising to know that at present in many medium and small villages and even in some of the prosperous rural areas you will find the local manufactures of bottled water and local brand of bottled water laying with the well-known brands on the same shelf. Parle was the first major Indian company to enter the bottled water market in the country when it introduced Bisleri in India 25 years ago and created Bisleri as the synonym of mineral water but now that image is getting deteriorated with the entry of major international giants like Coca cola, Pepsi, Nestle and noticeable presence of national players like Mount Everest, Manikchand, Kingfisher. Their distribution network with professional marketing approach has resulted to capture the major chunk of the bottled water market though they are

receiving good fight from the local players as well. One thing have to be noted in this business is that the required infrastructure and the distribution network requirements are same for major players and small or local players but in as per my belief where they can make difference is the only marketing and branding part. The Indian market in 2010 reached Rs. 4,000 - 5,000 Crore with 33 per cent market for natural mineral water. According to a national-level study, there are more than 200 bottled water brands in India and among them nearly 80 per cent are local brands. This industry is dominated by the big players like - Parle Bisleri, Coca-Cola, PepsiCo, Parle Agro, Nestle, Mount Everest, Kingfisher and Manikchand and so on. These players can be called as the trend setters in the marketing of packaged drinking water. This growth rate makes Indian Bottled water market as one the fastest growing in the world. The factors contributing to such a rapid growth are sound economy, disposable income of the people, poor public water distribution system and infrastructure and the Indian government hardly cares for what happens to the nation's water resources.

2. Objectives:
Any promotion activity should end up as a sale, only then will a company benefit from it. And in almost 90% of cases the final decision is made or sale/ buy decision is influenced at the point of purchase. This is more so in the fast moving consumer goods industry as the customer is either motivated to buy a particular brand by the channels or the availability of certain brands only forces the customer to buy it. This makes the sales by the channel, their strategy to push a product or brand, the display and aesthetic aspect of the product and brand very important part of the sales activity. Our study aims to capture this aspect or sales activity the details and reasons for each of the departmental stores, small stores, kirana stores, vendors to influence the customer to buy a particular product. The study also tries to capture the channel, distribution networks and management of each of the brands viz. Bisleri, Kinley, Aquafina and Bailey.

3. Methodology:
Collection of data is done through: 3.1 Primary method: 1. Visiting all sorts of branded bottled water sellers in Mysore city. 2. Visiting multi/mono brand distributors (based on availability in Mysore city). 3. Interviewing the people of the channel at different levels of hierarchy. 4. Collecting data through relevant questionnaires and survey. 3.2 Secondary Method: Where ever primary sources of data and information are inadequate, we propose to collect information from: 1. Internet: the company websites, and other related websites. 2. Data from economic and business data collection agency sites. 3. If possible collect information via company representative through e-mail. 4. Information available in other research studies, journals and projects.

4. Marketing campaign
The Breakaway Seal: keeping in mind the consumers need to recognize a genuine product that cannot be tempered with. Unique caps have been patented and cannot be duplicated. This technical strength ensures that the consumer will only get a high safe product when they will drink these brands. The companies also increased advertising in the media, especially television, and the growth of bulk bottled water sales to homes has also helped to increase volume sales. Bisleri enjoys first mover advantage in bottled water, having been present on the market for more than 30 years. It enjoys strong brand equity in the country as Bisleri is synonymous with bottled water to most consumers. Kinleys marketing campaigns ride through the Coca-Cola brand equity and brand positioning. The 2008 ad campaign on trust theme was much needed to revitalize the companys image after the pesticide scandal. Aquafina uses Pepsis image and campaigns as a trendy thing to carry, not just water bottle. These companies plan to introduce vending machines for its packaged drinking water. The first initiative of its kind was taken by Bisleri in India. Bisleri has tied up with vending machine company Grabbit to set up automated machines in offices, shopping malls, airports and other high traffic points. Aquafina and Kinley also try to follow suit in the future. Kinley and Aquafina sponsor refrigerators to the retail outlets under their marketing campaign. This provides easy visibility to their products. More often the products are kept closer to the main roads so that the commuters can notice easily. Bisleri has started the Aqua green revolution with changing its theme colour from blue to green. Kinley is currently campaigning using trust theme to regain customer fidelity. Aquafina is gradually shifting from youth centric advertisements to safety and purity based campaigns. Currently none of these three brands have a brand ambassador.

5. DISTRIBUTION CHANNEL

They have appointed Distributor for each area to sell their products and have also approaches to the Retailers. They appoint a sales representative to each distributor. The salesmen are divided among the territories defined by the distributor. The distributor has 5 routes. Out of the 5 routes, one is the main route and the other four are sub routes. The salesmen have to handle these routes. This helps in avoiding horizontal conflict and leads to better focus and evaluation of sales performance of the salesmen. The company sales person makes a visit once every week on Friday. Every Friday a report is given by the sales representative to the area head. Communication regarding stock replenishment, etc. takes place over phone. The person of the company whom the distributors communicate with is the Sales Executive. At times the company deploys its own men to do the distribution job for the Distributor also.

6. Organizational Structure of the retail outlets that we visited

The organizational structure of a retail store will vary by the size and type of the business. Most tasks involved with operating a retail business will be the same. However, small or independent retail stores may combine many sectors together under one division, while larger stores create various divisions for each particular function along with many layers of management. The small specialty shop named ARYA Bakery had all its employees under one category called Store Operations and the owner sitting on the Manager cum Cashier desk. The kirana stores or the mom & pop stores we had visited had the owner/manager himself as the sole worker with one/no assistants. Large department stores like More, Daily Needs , Big Bazaar had a complete staff consisting of a manager, assistant manager and sales associates for its Food and Beverages, Sporting Goods department, Home and Garden, Bed and Bath, and each additional department. In order to define the store's organization, one needs to start by specifying all tasks that need to be performed. Then divide those responsibilities among various individuals or channels. As the store grows and the retail business evolves, the dynamics of the organization's structure will change too. Therefore it is paramount to redesign the store's organizational chart to support the decision-making, collaboration and leadership capabilities that are essential during and after a growth period.

7. Supply of Goods
In this section we try to analyse the supply of goods to the various retail outlets visited. The basis for the study was the lead time (time from order to stock received) and the order placing method. The findings are summarized in the table shown below. From our interaction with the employees of these outlets we got to know that respective company salespersons come regularly and verify the stock available. They also check for the expired or soon to be expired bottles and immediately take it back. In this criterion, all the three competing brands are Proactive. The supply comes from the company depot which is in Mysore. Distributors

make sure that the respective company lead time and frequency of supply is kept intact. The lead time and frequency of salespersons visit is also dependent on sales and size of the outlet. More the sales through the outlet, more the frequency of visit, subsequently lesser lead time.

Name of the Outlet MORE ARYA Bakery Mom & Pop stores

Lead Time(in days) 1 0 1 to 2

Order placement method Salesperson Salesperson Salesperson

8. Layout

The refrigerator provided by Coca-Cola containing Kinley along with other products of the company. It is kept in the anterior part of the outlet so as to attract maximum attention of the customers and also the travellers going on the road.

10

Bisleri bottles in display stand, which are kept with other local products. These are not kept in the most visible parts of the outlet, but people come and ask for the product.

Outlay of Arya bakery. Coca-Cola refrigerator kept at the entrance of the outlet. Other brands are separated and kept in cold cell owned by the outlet owner.

11

Aquafina and Bisleri kept in one place due to lesser space availability.

12

9. Target Market
Target market is a set of buyers sharing a common needs or characteristics that the company decides to serve. Targeting Premium drinking water segment Major part of the consumer base for bottled water lie in metros and semi metro towns

10.

Promotion and Customer schemes

Kinley and Aquafina are promoting along with other sister brands by their mother companies through retail outlets. These two companies sponsor refrigerators to the outlet bearing the company logo, which is branded and designed beautifully to catch attention of the customer. Visibility plays a vital role in purchasing decision of customers at the point of purchase. Coca-Cola and Pepsi showcase their products (respective water bottles) in anterior side and noticeable parts of the outlet. Bisleri doesnt provide with a refrigerator, instead they give display stands to keep their bottles. They promote through its quality and frequent service to
13

the retailers. Moreover they offer highest sales margin to the retailer, which is 17%, as compared to 15% offered by Aquafina and Kinley. It drives the retailer to promote Bisleri more than the other two brands. Two litre variant of Bisleri comes with a handle to make it easy for the customer while carrying, which is not present in other two brands (2-litre variant). Bisleri has made such an image in the minds of customers that it doesnt need much of promotion. As the retailers say, people come and ask for Bisleri and it has become a generic name for the mineral water.

11.

Product range

11.1 Bisleri
Bisleri is available in the retail outlets in 1 litre, 2 litre, 5 litre and 20 litre pack sizes. Although Bisleri has 250 ml cups, 250 ml bottles, 500 ml, 1.5 litre bottle sizes, these are not readily available in the market. 20 litre packs are frequently ordered for party or bought as family pack.

14

11.2 Kinley
Kinley is available in a range of packaging including 500ml, 1 litre, and 2 litre PET bottles, and 20 litre and 25 litre bulk jars for larger consumption.

11.3 Aquafina
Aquafina is available in various pack sizes like 500ml, 1 litre and 2 litre bottles and in bulk water jars of 25 litres

15

12.

Segmentation

Bottled water industry is segmented into four segments based on price and type of water. All the three brands (Kinley, Bisleri, Aquafina) fall under same segment with almost same price and offering.

Segment
Premium natural mineral water Natural mineral water Premium drinking water Normal drinking water

Products
Evian, San Pellegrino and Perrier Himalayan and Catch Bisleri , Kinley , Aquafina and Bailey Local brands

Price/litre in Rs
80 110 25-30 15-16 10-12

13.

Positioning
Sweet taste of purity

13.1 Bisleri-

Earlier it has positioned itself as Pure and Safe, which they have modified to Play Safe through new ad campaign. Bisleri has changed its packaging colour from blue to green to showcase its go green purpose. It has started Aqua Green Revolution campaign to create eco-friendly image of the company. 13.2 KinleyBoond boond mein Viswas (trust in every drop) Kinley has positioned itself as a trust brand, which is indicated by its tagline. It tried to strengthen its brand positioning by communicating the statement, Water which can be trusted and is truly safe and pure. After pesticide allegation and scandal, it repositioned itself in 2008 with introduction of trust theme.

16

13.3 AquafinaThe purest part of you The campaigns created by Aquafina have helped the brand to drive premium, modern and youthful image. It targeted the young generation and positioned itself as a fancy product to carry. As its tagline suggests, it also tries to position itself as a pure product, just like any other mineral water manufacturer. But the core theme of positioning remains youth oriented.

14.

Consumer Habits and Practices

Consumers are growing more health conscious and are more careful of their drinking habits. Brand loyalty is very low as all the products taste the same so they can buy just any product which is on the shelf, same as that of soft drinks and fruit beverages. Availability in the chilled form and brand awareness plays a crucial role in purchase decisions. While there is no aversion to consumption of mineral water by any age group, this product is mainly consumed by the people in the age group >40 years who have less attraction of soft drinks or other synthetic drinks whereas youngsters look in for soft drinks and fruit beverages to quench their thirst. Visibility is another factor that should be taken care of by the companies as consumers are not very brand loyal and consume whatever is in front of them. Consumers often drink bottled water as an alternative to tap water. They think it tastes better (no chlorine taste) and perceive it to be safer and of better quality. They also look for security: food scandals in industrialized countries and water-borne diseases in developing countries greatly influence consumers attitudes. Consumers buy bottled water to feel well and to lose weight. Bottled water is perceived as a healthy alternative to other beverages. Thus, for the aerated beverages bottled water offers a potential threat. Moreover, increasing urbanization, causing declines in tap-water quality, can also explain the popularity. Because it is untreated, natural mineral water is perceived as natural by city dwellers looking for genuine products. Higher living standards and auto usage enable people to easily bring home more and heavier bottles of water. At the office, a bottle of water is now a common sight on the desk, next to the computer and the telephone. Drinking bottled water is a sign of a rise in the social scale. Above all, bottled water has become a huge marketing success.

17

14.1 Behaviour of the consumer

Consumer behaviour is the study of when, why, how, and where people do or do not buy a product. It blends elements from psychology, sociology, social anthropology and economics. It attempts to understand the buyer decision making process, both individually and in groups. It studies characteristics of individual consumers such as demographics and behavioural variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general. Bottled water industry is a highly saturated industry where in the product differentiation is less. The need of all the consumers is one and the same. So the numero-uno influencing factor will be price. In this bottled water industry, there will be high price sensitivity. If one of the three major brands reduces the price then obviously the momentum will be shifted towards that brand. So price is the major influential factor. After the price, it is the brand name that influences buyer decision process. For example, the only brand that pulls consumers, in case of bottled water, is Bisleri (which is obviously the market leader). There is little differentiation among other brands. But mostly buying a water bottle will be an impulse decision rather than a planned one.

18

15.

Gap Analysis

15.1 Current situation

Bisleri -Doesnt provide refrigerator, hence selling chilled water is a problem for the retailers - No advertisements -Not aggressive in marketing communication strategy, hence riding through the goodwill and image of the company -Highest retailer margin of 17% - Cloners are flooded in the market -Market price has increased over the time -Production capacity is limited as compared to demand Kinley -Margin to the retailer is lesser than Bisleri, around 15% - Pesticide scandal is still haunting the brand -Market price has increased over the time -Cloners are flooded in the market -It has the advantage of its parent company Aquafina -Margin to the retailer is lesser than Bisleri, around 15% -Limited target segment, i.e. youth -Market price has increased over the time - Cloners are flooded in the market -Availability in the market is a problem for the company -Aquafina packaged bottles water is given in a scheme to promote Pepsis beverages brand.

15.2 How to fill the gap

Bisleri Kinley -Margin to the retailer to be increased -Increase the frequency of trust based advertisements -Leverage on the already existing distribution network -Should curb the cloners and imitators Aquafina -Margin to the retailer to be increased -Need to expand the target segment -Pepsi logo should be noticeable in the bottle -Should curb the cloners and imitators

-Should

come up with advertisement -should provide refrigerators to retail outlets -Should increase production capacity -Increase the visibility in bigger and multi-brand outlets -Should curb the cloners and imitators

19

16.

Conclusion

In Mysore, sales of Bisleri are on the higher side compared to Kinley and Aquafina. Distribution of all the companies seems to be in right place. Sales force of Bisleri is proactive in following up and taking feedback from outlet. Local brands like Kelvin, Sparsh, and Bubble try to dominate the remote corners of the city. They are aggressively selling throughout Mysore with lower price and immediate delivery. One of the major observations was chilled water selling at higher price. It is happening in relatively smaller shops. Company sales person should take the initiative to convince those stores not to sell at more than MRP. It will hamper the image and goodwill of the brands and thereby the sales. Some general observations may be listed below for the Mysore city are: Companies concentrate on consistent supplies to the retailers and vendors because timely delivery is very important. Bus stands & railway station are taken care since water is always the necessity for travelers, be it long distance or inter city and the record number of people travelling by buses. Easy to carry water bottles are supplied more frequently for the intercity daily travelers at the Bus stands. Good communication is present in the channel which increases the efficiency. Meeting demands are one of the primary targets of the company. Tie ups with hotels, restaurants, bars and hospitals.

20

Reference
1. http://en.wikipedia.org 2. http://www.bisleri.com/ 3. http://pepsicoindia.co.in/brands/aquafina.html 4. http://www.coca-colaindia.com/products/kinley_water.html 5. http://www.worldbank.org.in

21