Distribution Channels And Logistic Reviews Marketing Essay

Rayzz River Company is preparing to launch transparent lemon-lime flavored caffeine a mild stimulant of the central nervous system free soft drink in complex, competitive and potential marketplace of Pakistan. Product name is Rayzz and its’ catchphrase will “feel amaze with Rayzz” Market Research has indicated the popularity of lemon-lime soft drinks has grown as a result of their status as being free from artificial colors and caffeine. All ingredients and flavors used are Natural which is being grown in our own farms. An ingredient quality and flavor taste is ensured according to set standards, no any artificial ingredient and flavored is being used. We are targeting every segment of market; taking advantage of opportunity for the higher demand of lemon-line soft drinks.

We will also ensure maximum participation in social, entertainment and sports events as part of marketing strategy, which strengthens Rayzz brand image and its business. As far as the target audience is concerned, we will focus as we have always done, on the biggest segment of the society, which is the youth. All products are produced with purely Halal standard and hygienic ingredients.

The primary marketing objectives of this annual plan are to achieve first-year iron fist market share of 10% of Pakistan soft-drink (“lemon-lime” beverage) industry. The prime financial objectives are to achieve first-year sales revenues of Rs.9 billion, keep first-year losses to less than Rs.75million.

Current Marketing Situation:

Rayzz River Company was founded in 2011 in joint venture by five Pakistani entrepreneur and investors with an experience in Food and beverages industry with total investment of Rs. 10 billion , is about to enter in lemon-lime soft-drink packed market dominated by international (Sprite & 7Up) and domestic (Pakola’s Fresh Lime “Mehran bottlers”& Gourmet lemon Up) companies. Pakistan is a high potential country for a soft drink company. Soft drinks, offering fast relief from thirst are becoming a regular part of the daily diet and people’s intake of soft drinks is particularly increasing at events and festivals as an essential item on the menu.

Continued double digit growth in the lemon/lime flavour, in which the key players are PepsiCo’s 7Up and Coca-Cola’s Sprite brands. Clear drinks continue to be perceived as healthy alternatives to ‘harmful’ black/dark carbonated Soft Drinks. Global consumer preference shifts towards healthy lifestyles should continue to drive good growth for the lemon/lime flavour in future. Estimated market share for 7Up is approximately 45% and for Sprite is approximately 40%, and 15% by others in Pakistan. Gourmet Lemon Up is growing dramatically because of penetrative pricing strategies. The consumer remains extremely price sensitive in the gloomy economic environment. Some consumers are willing to compromise on taste, brand and quality if a significant price discount is offered by a brand of lower quality. Dominated by low-cost; Pakistan’s clear soft drinks industry benefits from key demand triggers such as the absence of a notable alcoholic drinks industry and a warm climate.

A global trend whereby consumers are moving away from dark/black drinks to flavours and clear drinks which they see as healthier and less harmful. The market for soft-drinks in Pakistan has proved to be very dynamic in terms of sales, demand and market growth. Pakistan grows about 1 million hectares of sugarcane (ingredients in soft-drinks). Expanding Population and potential markets are two main reasons for launching Rayzz. Other reason may be of scorching heat and hot climate of Pakistan. Rayzz will be bottled and distributed through Pakistan Bottlers Partners (Pvt) Ltd nationwide.

Market Description:

Rayzz market generally will be targeting every segment; most emphasis on segment will be on consumers with age from 12 to 60 years. Soft drinks have replaced milk in the diets of many consumers. Rayzz will try every effort to increase the volume of sales up to maximum level.

Rayzz mantra will be to “create refreshing and inspiring moments for consumers”. Consumers not only need water but they also want taste. Rayzz is not just a physical product or some luxury commodity; it is concept which satisfies consumer needs &wishes. Rayzz will come in a primarily silver translucent bottle and price will 95% than the prices’ of its’ major competitors like Sprite and 7Up.

Product Review:

Rayzz has a unique crisp and clean and clear taste with strong lemon aroma and it’s consistent with its flavor (lemon-lime) no matter where you buy it. It has a refreshingly great taste even if it isn’t cold. Rayzz will pair beautifully with every food and snacks occasion. We are not just selling product, we are selling a solution and dream for consumers “to feel amaze with Rayzz.”

Rayzz is lemon-lime flavored soft-drink, which will be offered in different terms of size and quality. Variant size is given below:

SSRB Standard Size Returnable Bottle

LRB Liter Returnable Bottle

NRB No Return Bottle or Disposable Bottle

PET 1.5/2.25 Liter Plastic Bottle

CANS Tin Pack

Price on all variants capacity will be 80% with respect to prices of competitors’ variant product. First year sales revenues are estimated to be Rs.500 million. During the succeeding year, we plan to introduce Rayzz in Diet, Citrus, Lemon and Grape fruit flavors for different taste segments in market.

Pakistan’s biggest consumer markets and sales Projection

CITES

POPULATION- Million

Karachi

17

Lahore

11

Rawalpindi

4

Faisalabad

3.5

Multan

2

Gujranwala

1.5

Hyderabad

1.6

Islamabad

2

Peshawar

1.5

Quetta

1

Competitive Review:

Lemon-lime flavor every local company manages to make it good; it might be because of the excess of lemon flavor doesn’t make the taste bad where as in case of cola. Entering in packed competitive market like that of Pakistan which is very potential and growing with expanding population and increase in hot climate. Key competitors include:

Sprite. The market leader in market share of lemon-lime soft drinks. Sprite is brand of global giant and leader Coca-Cola Company. In Pakistan it is operating for more than five decades. Sprite is heavily penetrated in Pakistan market with different variations of sprite brand portfolio: Sprite zero, Sprite max, Sprite ice, Sprite recharge and Sprite 3G etc., with respect to different segments taste.

7Up. 7Up is a distant second in terms of market share.7Up is strong competitor and it is major strategic business unit (SBU) of PepsiCo Incorporation. 7Up is in Pakistan soft-drink industry from last six decades. Currently its’ brands marketed are 7 Up Retro, Diet 7 Up, Cherry 7Up, 7Up Free and 7Up plus with different taste.

Pakola Fresh Lime. Pakola captures healthy market share from its’ Fresh lime soft-drink. Being domestic brand it was launched lately than other competitors, but it captured consumers. Pakola fresh lime is especially popular among youth and middle age Pakistani.

Despite the strong competition, Rayzz is still capable of attracting consumers. Rayzz low-price as compared to competitors and use of natural ingredients and flavors with strong aroma of lemon and lime is differentiation for Competitive advantage.

Distribution Channels and Logistic Reviews:

Rayzz product will be distributed through our distribution partner Pakistan Beverages and Bottlers Partners (Pvt) Ltd and its delivery rate is better, newer, faster and cheaper. Rayzz product will be directly supplies to business customers like Hotel, Restaurant, cash and carry retailers and cafes.

For intermediaries, distribution will took place through supermarkets fountain outlets, vending machines (14.5%), mass merchandisers, convenience stores and gas stations, and other outlets. Main distribution channel for drink will be the supermarket which generates more sales for company

SWOT Analysis:

Going for SWOT Analysis (Strengths, Weakness, Opportunity and, Threats), rather we will go for TOWS Analysis (Threats, Opportunity, Weakness, and strengths) because ordering should be from outside in rather than the inside out; to match with changing marketplace(need and wants).

Threats:

Increased Competition. Increase competition with existing competitors face serious threat towards the sales of product and brand visibility to customers. Competitors are in market from decades which give advantage to them for better understanding market style and its needs. Competitors also offer same product in numerous taste for different segment.

Consumer loyalty towards competitors’ products. Consumers won’t easily switch from competitors product to company product because of brand-new and inexperienced product.

Factors affecting sales. High inflation and Economic slowdown will affect consumer buying power for novel product. Growing awareness for health, and growing use of nutritious juices in place of soft drinks.

Govt. Rules & Regulation. Increasing regulations of Govt. in taxes, quality control and waste conversion.

Environment instability. Economic, Political and electricity crisis will be barriers for us to meet our goals and objectives.

Opportunities:

Increasing demand. Market for lemon-lime soft drinks is growing much faster with expanding population and also due to the absence of a notable alcoholic drinks industry and a country warm climate.

Different Portfolio. There is a cosmic opportunity for launching product in different taste and flavors for different segment of consumers.

Globalization/New market. Market research shows that there is vast opportunity for expanding in new market in different countries and continents, and making it is a major export of country with respect to competitors’ price.

Growing Market Share. In Pakistan there is still chances of improvement and a wide database of customers is available that can be target.

Weakness:

Weak product awareness. As a tyro product Rayzz has no established brand or image, it doesn’t hold any good-will from customers, and our product is yet to be tested by customer. We will address this issue with aggressive promotion to make brand visible towards consumers.

Mismanagement of resources. As a novel company and product we will be facing mismanagement dilemma, due to lack of efficient and modern technology, and employee weak performance and training.

Single channel for distribution. Company has only good relations with single channel of distribution, which is barrier for market growth rate; as most stores of distributors are in major cities.

Health effect. Soft drinks do not have any nutrition value (in terms of vitamins & minerals). It has high sugar content, carbonic acid, chemical e.g. Coloring etc. Lemon-lime sodas are a common home remedy for nausea and upset stomachs.

Strength:

Cheaper price. Our product is cheaper than our competitors’ product price, with same great same taste and better positioning because “price loyalty is more important and greater than brand loyalty” in price conscious customers.

Handsome investment. We are beginning our operations with a good investment which provide an easy access to deal with cost in this recession economic down-turn.

Going millennium and focused. We are entering in market because we are passionate to change the rules of the marketplace by connecting emotionally with our consumers and partners by better serving their needs. We will be here forever-more flexible to respond to market changes because market changes faster than marketing and people (consumers).Rayzz will be mascot to “Create refreshing and inspiring moments for consumers.”

Natural taste. Natural Use of natural flavor and natural ingredient’s which are being grown in our own farms and processed with state of the art methodology and technology.

Good market research. Before launching our product we have contracted with marketing research firms (client) “Business Monitor International” and “Gallup Pakistan” for marketing research and consultation. After conducting deep market research on ground which in result shows that the demand of lemon-lime soft drinks has grown in every segment of age and profession and SEC class as a result of their status as being free from artificial colors and caffeine and absence of notable hot-drinks drinks.

Objective:

We have set aggressive and achievable objectives for the initial year of market entry. We will make every effort to make our “product”, “marketing position”, and “marketing differentiation” clears, with a goal to “make today’s investment worth more tomorrow.” Once we gain a customer, we never lose them by creating memorable moments for them which create fresh moments in their lives and turn them to satisfied (loyal& retention) customer because we believe best advertising and promotion is done by your satisfied customers. The prime financial objectives are to achieve first-year sales revenues of Rs.500 million, with 10% market share.

Issues:

In relation to the product launch, our major issue is the capability to create a well-regarded brand name linked to a significant differentiation and positioning with competitive advantage. We will have to devote efforts heavily in marketing to build a memorable and distinctive brand image projecting” refreshing, eternal and inspiring moments.” We also must measure awareness and response so we can adjust our marketing efforts as necessary and we believe our business is worth no more than the life time value of our customers.

Marketing Strategy:

Rayzz marketing strategy is based on a positioning of product differentiation with competitive advantage for creating amazement, and USP (Unique Selling Proposition/Point) of being cheaper. We will be targeting every consumer of each SEC class, which fit in with our product offering.

Our primary business target is café, Hotel, Motel, and Restaurant. This segment is more profitable, with the following of 80-20 rule.

Positioning:

Using product differentiation, we are positioning the Rayzz as the cheap, refresher, and every time thirst quencher and matches with every food event. Our marketing will focus on building public relations and creating memorable and inspiring moments for consumers and partners (distributors, bottlers, intermediaries).

Product Strategy:

Building a Rayzz brand is integral part of our product strategy; which will be made on product positioning. Designing of product will be attractive; easy to open, and easy to dispose, and structure of bottle will be easy to hold in hand for average consumers. Brand logo will be identified as mascot for creating inspiring and fresh moment-during the introductory marketing campaigns.

The company offers their products in different bottle sizes and packaging which include:

24 Regular Bottle Shell.

6 Bottle Pack for 1.5 PETs.

12 Bottles in a pack for Disposable Bottle.

24 Cans in one crate.

Pricing Strategy:

Brand pricing is a challenge and the most effective profit lever. Product price will be 95% with comparison to competitors’ product price. Cheaper price for our product than competitor price firstly, reflect strategy for affordability which in turn attract consumers and retailer channel partners and secondly, taking share from Sprite and 7Up and established competitors etc.

Current environmental situation (recession) truly matches our pricing strategy of cheap and affordable product in which price loyalty is greater than brand loyalty.

Distribution Strategy:

Our channel strategy will be more focus based on positioning of our product. Our product major distributor is Pakistan Bottlers Partners (Pvt) Ltd. Company constantly will emphasize the increase of distribution capacity of logistics channels, and further open up more store nationwide which covers both rural and urban zone. Company will directly distribute product café, restaurant, motel, and hotel; and even making available of product to paan waala. By understanding the need for more channels we add more distributors on our list-adding more channels create rapid growth. The higher the number of distributor channels; the greater the company’s market coverage and rate of growth of its sales. Distribution strategy based on positioning and matching other aspects of the marketing mix, company will increase capacity of distributor channels which in turn can create a competitive advantage when used strategically.

Marketing Communication/Promotion Strategy:

Our product promotion will be based on positioning of product, and product’s value proposition and differentiation from competitors product by applying brand activation tactic. Research about media planning patterns will help out our advertising agency (Manhattan Leo Burnett), and creative agency (Blitz DDB) chooses proper media and timing to reach prospects before and during product introduction to catch people’s attention and interest with differentiation messages to inform, influence consumer decision and persuade them to go for product trial. i.e. 1st time usage

For product promotion we will apply teaser campaign-using some statement and question to get attention publically, and further company will sponsor sports event and support social cause. Firstly, before launching product in market we will promote our product online; to create a buzz around the nation and gain some brand visibility. As matter of fact creating a new product or brand gives more opportunity to establish and circulate a fresh public relations story to gain valuable media attention and talk. Product website will be informative, where free games can be played.

Advertisement Budget:

Rate of TV commercial Ad on HUM TV:

Timing

Pricing

Basis of Selection

Days to run

Time to run per Day

Total Cost per day

Total Cost in campaign

19:30-22:00

200,000/min

This is Prime time includes major running dramas

30

5

10,00,000.00

30,000,000.00

TOTAL

30,000,000.0

Rate of TV commercial Ad on Geo News:

Timing

Pricing

Basis of Selection

Days to run

Time to run per Day

Total Cost per day

Total Cost in campaign

17:00-19:00

20000.00/m

While having tea most of people watch Geo

1st to 10thday and 15th to 30th day

1 minute ad 10 time during this hour

200,000.00

5000,000.00

19:00-20:00

75000.00/m

TV Hour

1st to 20thday

1 minute ad 2 times a days in this time

150,000.00

3000,000.00

21:00-22:00

260,000.00/m

Mostly executive class at this time watch TV for external information like national and international news, economy and politics news.

All 30 Days with little time variations on selected hours

1 minute ad 3 time during this hour

780,000.00

23400000.00

TOTAL

31,400,000.00

Poster Advertisement Rates of local Newspapers:

Total Expenditure charged monthly of giving ad in newspaper:

Sr.No.

Name of Newspapers

No. of ads /month

Size of Advertisement

Rate of front Page ad/day

Amount Charged Monthly

1

Dawn

8

27×4

459,000

3,672,000

2

Jang

10

27X4

1,015,740

1,01,57,400

3

Express

4

27X4

1,109,376

44,37,504

Total=18,266904

Rate of TV commercial Ad on channel Cartoon Network:

Timing

Pricing

Basis of Selection

Days to run

Time to run per Day

Total Cost per day

Total Cost in campaign

11:00-12:00

25000/10 sec

As our target market includes kids also who may influence their elders to buy and 85% of kids watch Cartoons on habitual basis, so we may capture that part of audience in that time

All Fridays, Saturdays and Sundays in 30 days campaign because, this time most of the children are in school and these 3 days are expected holidays for them

1

150,000.00

1800,000.00

16:00:00-20:00

25000/10 sec

Most of favorite cartoons for kids run in these timings including Tom & Jerry, Ben10 and others,.

All 30 days

2

300,000.00

3,600,000.00

TOTAL

5,400,000.00

Billboard rates:

Size: 2700 Sq. ft

Rent for 1 month in A1 area: 850,000.00

Total No. of Billboards in Major 5 Major Cities Karachi, Lahore, Islamabad,Faisalabad and Peshwar are 25

Total Cost: 21,250,000.00

Budget plan for national Print Media:

As for Advertising plan the print media is one of the media which is being selected. For that the newspapers like DAWN, The Nation, The News, Jang, Express, and Nawa-e-Waqt are the newspaper on which the advertisement will be shown and following table provides the information about its rates related to advertisement size.

Newspaper

Size

Weekday

Front

Back

Dawn

20 x 3

331,500

229,500

27 x 4

459,000

348,840

Full Page

NA

NA

Jang

20 x 3

564,300

480,600

27 x 4

1,015,740

865,080

Full Page

NA

NA

Express

20 x 3

616,320

462,240

27 x 4

1,109,376

832,032

Full Page

NA

NA

Total Budgeting plan for Advertisement Campaign of One-1 Month

SR.

Nature of Work

Cost

1

Radio, TV, Internet & Billboard Ad Making

200,000.00

2

30 days commercial ad running on HUM TV channel

30,000,000.00

3

30 days commercial ad running on GEO TV channel

3,1400,000.00

4

30 days commercial ad running on Cartoon Network channel

5400,000.00

5

30 days ad on Radio in 5 cities 24 times per day

500,000.00

6

Bill Boards

212,50000.00

7

Small boards on Roads

525,000,00,00.00

8

Print Media

18,26,6904.00

9

Other Communication Tools

Key Chains

150,00,000.00

Van

1,750,000.00

Busses Skin

3,750,000.00

2010 and 2011 Calendar

3000,000.00

TOTAL BUDGET PAK RUPEES

5,380,516,904.00

Marketing Research:

Conducting on-going research with our research agencies Business Monitor International and Gallup Pakistan, we will determine which segments are more profitable and changing needs of other segments. Brand awareness research will help us in determining the effectiveness and efficiency our promotional campaign, and company constantly will measure and analyze customers attitudes towards competing brands and products (Sprite and Up).

Marketing Organization:

Rayzz chief marketing officer, Mohsin Iqbal, holds overall responsibility for all of the company’s marketing activities. Rayzz marketing organization department is decentralized into sales campaigns, public relations efforts, sales promotion, advertising, online promotion, and planning sub-departments.

Action Programs:

Rayzz will be introduced in March. Following are summaries of the action plan programs we will use throughout the year to achieve our stated goals and objectives.

January: Start of teaser campaign with launching website for our product, in which consumers can get informative news about new product and playing games. Also creating fan pages on social sites like Facebook, Twitter and Youtube.

February: We will sponsor some sports events in different cities, and participate in social cause in support for making people aware of global warming, and all these activities will be videotaped. Also will make TV advertisement in which there will shown only new product entry in market without any specifications.

March: Distribution all over the nation will be done in company owned vehicles with our product name and logo. Our distributor channels stores will be open and operating 24/7, round the clock service.

April: We will start an integrated internet/print/radio/TV campaign for attracting consumers and positioning it in their mind.

May: we will be doing national advertising activities in different schools, colleges, and universities all around the country. In institutes we will organize 100 meter Marathon race, and everyone participant will be given Rayzz t-shirt with engraved brand logo.

June & July: In hot season we will boost our advertising and promotion campaign, in which different TV and radio programs will be sponsored with Mob dance activity; which will emphasis Rayzz position as refresher and thirst quencher. We will also consider Ramazan season in this period, where consumption reaches a high level during Ramazan.

August: we will organize an advertisement competition with title of “Mesmerizing”, in which we will ask team of students or consumers to make an advertisement (video, commercial, act) for our product based on innovative ideas and its positioning. Winner team will be awarded Rs.100, 000 with Rayzz kit which includes t-shirt, cap, and jacket Rayzz brand logo. For building personal relationship, advertisement will be posted on our official website and social network sites fan pages.

September: we plan to roll out new national advertising campaign with title of “Rayzz Solo Challenger” on TV. Ads will feature athletes and sports celebrities speaking good word-of-mouth for our product. Emphasis on use of product used by athletes on field will be given importance.

October: we will link up with restaurant and fast-food chain, as customer increase its’ purchasing of our product we will decrease down product price on next purchase. If customer buying goes up than Rs.500; buyer will get coupons for free product, applicable nationwide and discount prices on fast-food items.

November: Special song for Rayzz will be released; which will be as inspiring as our product. Further, a concert will be organized and act will be played; where everyone will be asked to make their views about product, and participants will be given Rayzz kit whose idea or view will get more ratings.

December: Around the nation bill boarding will be done, in which avatars of celebrities using the product will be advertised.

Budgets:

To achieve first-year sales revenues of Rs.9 billion, keep first-year losses to less than Rs.75million.

Total first-year sales revenue for Rayzz is estimated at Rs. 1.9 billion, with average sale price of Rs. 60 on 1.5 liters and a variable cost of Rs. 40 on 1.5 liters for sales volume of 1million liters, while total first year fixed cost is estimated to be Rs.35 million. Based on these assumptions, the break even calculation for 1.5 liters is:

9, 000, 000, 000 = 450,000,000 bottles of 1.5litr.

60-40

Controls:

Our marketing controller, a sub-department will constantly and closely monitor marketing mix strategy implementation; this will enable us to respond quickly in correcting any problems and inaccuracy in flexible market. Other early warning signals that will be monitored for signs of deviation from plan include monthly sales by segment (SEC) and distribution channel. Given the market’s volatility, we are developing rolling and contingency plans to address fast-moving environment (market and industry) changes such as changing lifestyle and trend in consumer life and new competition.

Rayzz River Company

Projected Profit and loss Statement

For the year ended on 30 Dec 2012

Description PKR

Sales Revenue 9,000, 000, 000

Less: cost of goods Sold 40, 000,000

Gross Profit 8,960, 000, 000

Less: Expenses

Advertising 645,662,028,48

Electricity and Gas 20,000,000

Wages and salaries 10,000,000

Material 110, 000, 000

Net Profit 8,281,943,096

Less:Tax@35% 2,898,680,084

Net Profit after tax 5,383,263,012