horlicks
DESCRIPTION
project of customer satisfactionTRANSCRIPT
CONTENTS
# Certificate
# Acknowledgement
# Declaration
# Preface
Chapter- 1. Introduction
1.1 Product History
1.2 Product Profile
1.3 Why Horlicks...Key Nutritional Facts
1.4 Objectives of the Project
1.5 Research Design And Methodology
Chapter - 2 Company Profile
2.1 Glaxosmithkline Consumer Healthcare Ltd. (Gskch)
Chapter - 3. Marketing Environment
3.1 Competitors
3.2 Market Share
3.3 Marketing Landmarks
Chapter - 4. Marketing Strategies
1
9 – 16
11
12
13
14
15 – 16
17 – 22
18 – 22
23 – 27
25
26
27
28 – 34
30 – 31
32
33
34
4.1 Market Segmentation
4.2 Brand Extensions
4.3 Problems Leading To Its Re-Launch
4.4 Relaunch of Horlicks Brand
Chapter - 5. Marketing Mix
5.1 Product
5.2 Packaging
5.2.1 Repositioning of Horlicks
5.3 Price
5.3.1 Price of Horlicks
5.4 Promotion
5.4.1 Running Seminars About Health Concerns And
Health Supplements
5.4.2 Claims
5.4.3 Advertising
5.4.4 Promotions To Consumers
5.4.5 Promotions To Retailers
5.5 Distribution
2
35 – 53
36 – 38
39 – 42
41 – 42
43 – 45
44 – 45
46 – 50
46 – 47
47
48
49
49 – 50
51 – 53
54 – 66
55 – 66
67 – 70
71 – 73
74 – 74
75 – 82
83
Chapter - 6. Data Analysis
6.1 Result & Findings
6.2 Conclusion
6.3 Suggestion
6.4 Limitations
Annexure
Bibliography
Preface
The research was carried out on the topic A Study of consumer brand
preference of Horlicks (With special reference to product variants) in the
theoretical concept I had taken the basic concept which are mandatory to
carry out the research project
The core concept are marketing strategies, Marketing Environment &
Marketing Mix after that in the objective of study I had taken the objectives
to carry out the research where the main objective is to study the consumer
brand preference of Horlicks.
In the prior chapter I have given the company profile of Horlicks after that I
have presented and analysed the data collected from the sample I had done
3
the analysis of the questions of questionnaire with the help of responses
from the respondent found during the field of survey
4
CHAPTER-1
INTRODUCTION
5
The MFD market in India has traditionally been divided, on the basis of their
colour of appearance, into whites where brands like 'Horlicks' (GSKCH),
'Complan' (Heinz India Private Limited) and 'Viva' (GSKCH) are prominent,
and browns, where 'Bournvita' (Cadbury India Limited), 'Boost' (GSKCH)
and 'Maltova' (GSKCH) are the main brands. White MFDs can be had with
water or milk and account for approximately two-thirds of the MFD market
(by quantity). Brown MFDs are basically milk additives.
The total market for MFDs was estimated to be around 70000 MT. After
witnessing sluggish growth in the early 1990s, it is now estimated to be
growing at more than 10% p.a. in the last five years. 'Horlicks' dominates the
whites segment and accounts for more than three-fourths of the total sales in
the segment. 'Boost' is the second largest player in the browns segment and
has a market share of more than 30% in the segment. 'Horlicks' and 'Boost'
together command a 65% share of the total MFD market.
6
1.1 PRODUCT HISTORY
The brand Horlicks came into existence way back in 1873. In its earlier
days, Horlicks was imported into the country from the U.K. Manufacture in
India began in the year 1960. Calcium was added to the product in 1988 as a
nutritional enhancement. In 1994, Horlicks was relaunched with the addition
of vitamins and minerals, which made the product even more wholesome.
Now Horlicks has again been relaunched with smart nutrients. The focus this
time is clearly on providing the added benefit of “mentally sharp and
physically active.”
7
1.2 PRODUCT PROFILE
Horlicks is made from wheat, milk and malted barley. Horlicks is widely
known as an easy to prepare malted food drink. It is fortified with iron and
eight essential vitamins with twice as much calcium as fresh milk.
Horlicks is still the world's most widely consumed malted milk product. For
over 50 ye a r s ,generations after generations of children wakeup to a mug
of Horlicks pre p a red by mothers in their own special way, yet providing
the same nourishing goodness unrivaled by any competitive pro d u c t s.
Horlicks can be enjoyed in over 15 countries worldwide. Malaysians are the
third largest consumers of the brand, after India and the United Kingdom. It
is the number one brand for Glaxo SmithKline (GSK). The enormous
success of the horlicks brand has been reflected in the ever rising sales graph
for the product. With a brand share of over 50% in the health food drink
market, turnover of over Rs. 400 crores in 1997 and a CAGR of over 20%,
Horlicks remains the number one health food drink in India.Its success is
due to a mixture of factors. A strong brand heritage,its commitment to
quality and its understanding of consumer needs..
8
1.3 WHY HORLICKS ...KEY NUTRITIONAL FACTS
Horlicks is a nourishing malted food drink which combines the wholesome
goodness of malted barley, wheat and dairy ingredients.
The malting of barley through the natural process of germination releases
enzymes. These enzymes break down complex carbohydrates to simple
sugars that are easily assimilated by the body, making Horlicks easily
digestible.
Horlicks drinks provides a modicum of vitamins A, C, D, B12, plus calcium,
iron, thiamin, riboflavin, niacin, folate, and dietary fiber . as fresh milk.
Refer to appendix 1 for the details of nutrients provided by horlicks.
9
1.4 OBJECTIVES OF THE PROJECT
The study is planned to focus on some emerging questions. They are:
a) How successful would be the out-of-home consumption model as
launched by Horlicks?
b) Can Horlicks really break the image barrier and get nourishment plus
fun image?
c) After confusing consumer with so many campaigns like- “Strength and
energy drink” and “Health drink for the family” can GSK settle for a
long term promoting strategy?
d) How does new Marketing mix helps Horlicks in getting back its
position in market?
10
1.5 RESEARCH DESIGN AND METHODOLOGY
Research design
Exploratory Research
Exploratory Research seeks to discover new relationship and establish
hypothesis. .
Exploratory studies are used when little is known about a given area . .
The research process tends to be circular over a period of time.
Sources of information :
Primary Data
Secondary Data
The research is a combination of both primary and secondary data. For
the primary data purpose we had visited company’s sales office and tried
to collect as much information as we could. A survey was done covering
various aspects of the customer opinion regarding the product Horlicks.
Sampling for the research is convenience sampling . The sample size was
50 people
Secondary sources of data includes internet, newspaper, brochures of the
company, magazines e.t.c.
Sampling Plan :
11
Data was collected through questionnaire
Sample Size :
Sample size is of 50 people including mothers .
12
CHAPTER-2
COMPANY PROFILE
2.1 GLAXOSMITHKLINE CONSUMER
HEALTHCARE LTD. (GSKCH)
13
Smithkline Consumer was originally incorporated in 1958 and went public
in 1961. The company was then known as Hindustan Milk Manufacturers
(HMM). It was promoted by Horlicks Limited, UK, mainly to manufacture
and sell malted milk food - 'Horlicks', which was hitherto being imported.
The worldwide interests of Horlicks Limited, UK, were purchased by
Beecham Group plc, UK, in 1969. In 1977 Beecham’s Indian subsidiary
Beecham India Pvt. Ltd was merged with HMM Beecham India was
producing a range of products such as Eno fruit salt, Brylcream hair
grooming cream and Silvikrim shampoo.. Consequent to the merger of
Beecham Group plc, UK, and SmithKline, USA in 1989, the name of the
Indian operations was changed to SmithKline Beecham Consumer Brands
Limited in 1991. In Mar ’95, SmithKline Beecham Consumers Brand
Company worldwide was renamed as SmithKline Beecham Consumer
Health Care with a change in business focus to "Science based health care
products". The company exited from toiletries, hair care etc. Major brands
Brylcream and Silvikrim were globally sold to Sara Lee. The parent
company SmithKline Beecham Plc. has been merged globally with Glaxo
Wellcome on 27th Dec'00 to form a new entity, GlaxoSmithKline Plc.. In
India, Smithkline operated through 3 companies - SmithKline
Pharmaceuticals, SmithKline Consumer Healthcare and a 100% subsidiary
14
SmithKline Beecham Asia Pvt. Ltd. The Pharmaceutical business of Glaxo
and Smithkline has been merged in India. The Consumer business however
is continued separately through SmithKline Consumer and the company is
being renamed as GlaxoSmithkline Consumer Healthcare Ltd to reflect the
new association.
SmithKline Beecham plc, one of the world's largest healthcare companies,
with around US$13 billion in revenues and operations in 160 countries, is
the largest single shareholder of SBCH with a 40% stake and management
control.
SBCH is an Indian associate of SmithKline Beecham of the UK and has
continually benefited from the technical and marketing inputs that have been
available as a consequence of this association. SBCH is the largest player in
the domestic malted food industry. Its flagship product, Horlicks, is a widely
regarded and highly respected 110 year old brand. The company today
markets over 12 products which include prominent household names such as
Horlicks, Boost, Eno, Crocin and Tums. SmithKline Consumer Healthcare
acquired two local brands - Maltova & Viva, further strengthening its
position in the category.
The company has two manufacturing plants located in Nabha and
Rajahmundry and a total workforce of 2300 people. A new plant for
15
manufacture of Horlicks has been set up at Sonepat in Haryana and has
commenced commercial production in early 2002. Malted drinks Viva &
Maltova and biscuit brands Horlicks & Boost are outsourced by the
company. Its manufacturing units at Nabha and Rajahmundry and its
packing facilities at Hyderabad were recently awarded the prestigious ISO
9002 certification
GSK has a strong marketing and distribution network in India comprising
over 1000 wholesalers and direct coverage of over 2,50,000 retail outlets.
The company has a wide distribution network covering 3000 towns. A
chunk of GSK’s sales come from south and west India though it plans to
increase coverage in the northern and eastern parts of the country. GSK’s
main competitors are HJ Heinz, Cadbury India and Nestle India. But GSK’s
brand, Horlicks is the market leader and accounted for over 55% of the
market while Cadbury’s Bournvita accounted for 15% and Boost around 9%.
SMBE has a 70% volume share, followed by Cadbury (12%) and Heinz
(10%). Nestle and GCMMF have 3-4% market share each. In white food
drinks, GSK’S chief competitor is Complan from HJ Heinz.Both SmithKline
Consumer and Heinz have extended their malted drink brands to the biscuit
category. SmithKline has Horlicks and Boost range of biscuits while Heinz
has Complan brand of biscuits.
16
GSK has an intensive dairy development programme in the milk sheds
allotted to it in Punjab and Andhra Pradesh for ensuring regular supply of
milk, which is the major raw material for manufacturing MFD. The other
major raw materials are malted barley, wheat flour and sugar. Vendors have
been developed for the supply of these products and raw material availability
is not a constraint.
ICRA expects the MFD market to maintain a steady growth rate of 8-10% in
the medium term. GSK, by virtue of its strong market position and well-
established brands, is expected to capitalize on this growth. ICRA does not
perceive any threat to the leadership position of GSK in the near future.
Operating Performance
GSK, India's largest player in the malted food drinks with a dominant 60%
market share is represented through Horlicks (52% market share) and Boost
(8% market share).
GSK's sales primarily come from the MFD market where it has two
established brands - 'Horlicks' and 'Boost'. Cumulative market share post
acquisition stands at 70%.Biscuits are sold primarily to take advantage of an
established distribution channel and the brand equity enjoyed by 'Horlicks'
and 'Boost' and contribute about 6% to GSK’s operating income. GSK set its
long-term revenue growth target at 25% year on year.
17
Key issues
GSK continues to maintain its leadership position in the MFD market, with
'Horlicks' maintaining its dominant market share in the white MFD segment
and 'Boost' being positioned strongly in the browns segment. The financial
flexibility of the company remains strong due to its low gearing, sizeable
liquid investments and low bank limit utilization. ICRA expects GSKCH to
further consolidate its strong financial position with healthy cash accruals in
the short to medium term.
18
CHAPTER-3
MARKETING ENVIRONMENT
19
The white malted category comprises 60 per cent of the overall Rs 1,200-
crore HFD market, and Horlicks, along with Junior Horlicks, is the market
leader with a 59 per cent market share. While 45 per cent of the brand's sales
comes from the South, especially Tamil Nadu, 49 per cent of its sales is
from the East, while the rest is from the North and West put together.
Amongst GSK's quality nutritional products, Horlicks stands out as the No.1
malt drink in Malaysia. As the leading nourishing malt drink in the region,
Horlicks established its household stature as the trusted source of
nourishment by combining wholesome goodness of milk, wheat, and malted
barley.
20
3.1 COMPETITORS
The nutritional drink or the health drink industry has been marked by
competition from various companies in the past few years. The health drink
manufacturers in India have tried to retain their brand image by improving
their product quality & by meeting consumer’s expectation.
Glaxo SmithKline Beecham’s Horlicks is the leader in the HFD market
with the market share of over 50%.
There are two kinds of competitors GSK face in the industry, the direct
competitors and the indirect ones including the substitutes. Here the primary
competitors or direct ones are very easily identifiable and very visible.
Whereas the indirect ones may not be competing directly but still pose a
threat to the company. The key to success being strong product innovation,
marketing and the promotion efforts and distribution capabilities of the
manufacturer in the HFD market.
GSK’s main competitors are HJ Heinz (Complan), Cadbury India
(bounvita) and Nestle India(Milo).
Given here under is a percentage wise beak-up of the market shares enjoyed
by the various brands in the MFD industry:
21
3.2 MARKET SHARE
The market size of health food drink is : Rs. 1,300 Crores.
Percentage Share of Major Brands In The Health Food Drink Market
Amul has launched its new health beverage Amul Shakti in northeast India
at a higher price than GlaxoSmithKline Beecham Consumer's Horlicks this
year and Rasna has launched Rasna Shake UP, a pre-sweetened milkshake
mix powder increasing the competition in the HFD market.
The market growth will depend on the ability of the major players to drive
category penetration amongst the milk consuming masses in the North and
the West as well as their ability to drive penetration amongst the lower
SECs, which is currently low.
22
3.3 MARKETING LANDMARKS
1931: "Night Starvation" story developed to promote Horlicks as a
bedtime drink.
1952: Horlicks is linked to the successful treatment of gastric ulcers
and some forms of diabetes.
1982: Instant Horlicks launched as the first instant malted drink.
1985: Flavours (Chocolate and Chocolate Malt) added to original
Horlicks.
1988: Instant Horlicks changed from jars to Ceka packaging format.
1999: “Twice the calcium of fresh milk” claim.
2000: “Guess who didn't have their Horlicks last night?” Advertising
Campaign is launched.
The testimonial advertising campaign, “one for now, one for the
future” with tactical advertising such as “Iced Horlicks”.
23
CHAPTER-4
MARKETING STRATEGIES
24
Marketing strategy is an integral part of business strategy, no matter what
source of competitive advantage a firm chooses to pursue. It involves
focusing explicitly on the quest for long run competitive and
consumer advantage. Changing definitions of market segments, changing
definitions of industries/new sources of competition responding to all of
which, is clearly the role of marketing strategy.
The Consumer Healthcare business relies on the development of high-
quality branded products with good consumer acceptance, supported by
advertising and brand promotion, line extensions, new formulations and
packaging innovations. Glaxo SmithKline’s ability to compete effectively is
dependent on its skills in developing new scientifically supported products
and line extensions with performance superior to those of its competitors,
backed up by compelling advertising. The marketing strategy of GSKCH
formulation enhancement, relaunches, product repositioning, upgradation in
packaging and consumer education through advertising.
25
4.1MARKET SEGMENTATION
The Indian market for malted milk powders is very large, since the product
is widely used as a nutrition and energy supplement by a large number of
adults and children. Three major players exist in this product-market:
Cadbury’s India with its brand Bournvita, Glaxo Smithkline Beecham with
its brand Horlicks and Heinz, with its brand Complan. Historically, market
segmentation was done on the basis of milk availability, milk-surplus
markets and milk-short markets. Brown powders (containing cocoa) and
needing to be mixed with liquid or milk were targeted at milk-surplus
markets while white powders, containing a much higher proportion of milk
powder, which could be mixed with just water were targeted a milk-short
markets. Over the years, the divide between milk-short and milk-surplus
markets was beginning to blur due to operation flood solving of the problem
of milk shortage in the milk deficit regions and the product-market segments
ended up being brown powder for those who were drinkers of liquid milk,
and white powders for those who were not. Bournvita was the leader in
brown powders and Horlicks in white powders. Glaxo Smithkline
Beecham,the makers of Horlicks, complicated matters by launching a brown
variant of their white powder – Chocolate Horlicks – which could be
consumed unlike Bournvita, with water alone. They extended the Horlicks
26
brand name along many dimensions into several sub brands (Junior
Horlicks, Mother Horlicks, Horlicks with Smart Nutrients, Horlicks Lite).
Such markets can best be termed ‘markets in transition’ where products,
consumers, competitors are all in a state of flux and the traditional ‘rules of
the game’ seem to be changing – some driven by the consumer environment
and some by the players in the business. Though not very explicitly horlicks
tries to address the younger population i.e. kids under the age of 15 as it has
been found that maximum consumption of HFD is by this generation. The
market is still segmented based on product capabilities and usage method
(brown and white powders) through there are signs that this is beginning to
change, Thus the segmentation is largely on the basis of age, the
advertisement and sales promotion also focuses on kids by way of cartoons
featuring in the advertisements and also cartoons serial sponsorships.
27
4.2 Brand Extensions
GSK has introduced various brand extensions in the last few years and
notable among these are 'Mother Horlicks' and 'Junior Horlicks'. The former
caters to the nutritional needs of pregnant and lactating mothers while the
latter is targeted at the growing child in the age group of 1-3 years. Both the
brand extensions have been very well accepted in the market and have
shown good growth rates since 1997.
During 1997, GSK launched another health drink under the brand name
'Ribena Amla'. 'Ribena' is one of the most successful brands of SmithKline
Beecham Plc. In India, the product has been launched as an Amla based
Vitamin C drink. The brand launch has been successful and initial trial rates
are healthy.
GSK has already re-launched 'Horlicks' and 'Boost' to maintain the top of
mind recall for its products. Further the new products to be launched by the
company will strengthen the presence of the company in the MFD markets.
28
4.3 PROBLEMS LEADING TO ITS RE-
LAUNCH ARE:
Various problems faced by the brand ultimately leading to its re-launch are:
1) Although the brand was proving out to be a cash cow for GSK, it was
having a boring nutrient image which made its market stagnant. After
extensive research it was realised that Horlicks was considered as a
boring nourishment drink.
2) Positioning of the brand has been a big point of confusion in the
consumers mind. The brand was earlier targeted towards Mothers
whereas the actual consumer were mainly children.
3) In launching other products like Aquafresh, Boost e.t.c. GSK ignored
its flagship brand.
4) The brand is not available into the ready to drink category.
5) The market for milk food beverages has stagnated for the last three
years. This has led to a great deal of intra-category cannibalization.
Frequent re-launches and the attempt to differentiate the brands by
ingredients by competitors has stop putting impression on customer
perception.
29
4.4 RELAUNCH OF HORLICKS BRAND
Glaxo SmithKline (GSK) has re launched its Rs 800-crore Horlicks brand in
three new variants — vanilla, honey and chocolate in addition to its regular
malt. The relaunch is done for the very specific purpose of changing focus
from nutrient value to the flavors of the product. This is done to change
Horlicks from a boring nourishment drink to attractive health drink. The
relaunch includes a change in appearance with the change in packaging
style. The positioning has also been changed from mothers to children in the
new marketing strategy. In a relaunch campaign New TV advertisement has
been created. While the first phase of the campaign would talk about the re-
launch of Horlicks, the second phase will talk about the new features of the
product.
30
CHAPTER-5
MARKETING MIX
31
The marketing manager needs to choose a mix of marketing efforts to make
a set of tangible decisions. The mix is commonly referred to as the 4 P's of
marketing. They include product, price, place and promotion.
5.1 PRODUCT
Product variety, quality, design, texture, brand name, packaging, sizes,
services, warranties, are all components of product itself. In all it is the
characteristics of product or service that meet the needs of customers.
Decisions regarding a product are dependent on how a product fits in with
the existing line, what is the differentiating factor in the product and in what
stage of the product life cycle is it currently in. Starting from the concept
stage to the delivery stage, marketing is instrumental, as it strives always to
"satisfy" the customer. Product attributes are the characteristics that describe
a good or a service. Marketers use these features to attract consumers. But
they must be careful when planning the campaign to create a fit between the
product's attributes and the needs or desires of the target market.
Horlicks- A Glaxo SmithKline product occupies major share in Health food
Drink segment. Horlicks is made from milk, wheat and malted barley.
32
Pharma and healthcare company, GSK has relaunched Junior horlicks. It
was realized that Horlicks was considered as a boring nourishment drink and
was beginning to lose its significance. The company research showed that
preference for flavours reigned higher than nutrients, and hence, the decision
to make the drink tastier and enjoyable was taken.
New Horlicks with Smart Nutrients is being manufactured at the company’s
modern plants in Nabha and Rajahmundry.
Relaunch of its 'New Horlicks with Smart Nutrients-The relaunched
product contains a 'combination of nutrients that act as resistance builders'
and helps 'build up the immune system of the child'.
The new formulation brings about a significant improvement in this much
liked health drink by incorporating vital micronutrients that are known to
have a proven direct co-relation with mental sharpness and physical
activeness. These are Iron, Vitamin B2, Vitamin B6, Vitamin B12, Folate
and Vitamin C. It also plays a significant role in enhancing internal
33
resistance against infections. The SBCH research team has termed these
micronutrients as 'Smart Nutrients' because of their positive effect on mental
sharpness and physical activeness. New Horlicks with Smart Nutrients has
been scientifically formulated to provide optimal levels of these nutrients, on
consumption. Two cups of New Horlicks with Smart Nutrients fully meet an
individual’s daily requirement of these vital nutrients.
While the product has been substantially enhanced to provide greater
benefits, it continues to retain all the positive features and advantages of the
earlier formulation. This includes the unique delicious taste that has
characterised Horlicks for generations.
Customer is the profit, everything else is
the overhead’
Keeping this in mind the Horlicks has shown good understanding of both the
consumer and the buyer / influencer by addressing two issues with one
product, that of nutrition and taste.
The focus this time is not only on enhancing the nutrient values of the
product but major emphasis has been given to different flavours. The
company has re-launched Horlicks in three new variants — vanilla, honey
and chocolate — apart from the regular malt.
34
5.2 PACKAGING
The role of packaging has increased significantly in recent times, partly due
to improvement in packaging technology. Traditionally, packaging was
expected to serve the purpose of protection and economy. Then, packaging
was expected to fulfill the objective of convenience. Today, packaging is
used as an effective tool for promotion. Besides, new packaging technology
has enabled most FMCG companies to significantly reduce their packaging
costs.
The packaging of the Great Family Nourisher has been made Modern &
contemporary. While the product packaging has been designed by Tata
Elxsi, the pack designing has been done by J. Walter Thomson. The new
avatar of Horlicks has the highest shelf appeal and maximum visibility. The
new Horlicks formulation is accompanied by contemporary packaging in
hues of bright blue and orange. It has also gone in for a packaging change
with more convenient-to-handle jars.
The new jars are more convenient to handle and dispense from.
35
Horlicks has substantially increased the value for money proposition for its
consumers. While the product has been enhanced to provide an additional
new and important benefit, it continues to retain all the positive features of
its earlier formulation.
36
5.2.1 REPOSITIONING OF HORLICKS
The re-launch also includes a new look for the brand not only in terms of
packaging but also new positioning which addresses children instead of
mothers.
Junior Horlicks, is now positioned for children in the one to three age-
group. The brand variants targeted different consumer segments such as
Junior Horlicks for infants, Mother’s Horlicks for expecting mothers,
Horlicks Three-in-one and Horlicks Smart Nutrients positioned on health
platform and targeted at children.
37
It is been realised that it is not only the mother who plays main role in
purchasing but the children which are indeed the main users of the product.
The company's communication strategy, therefore, focuses on children who
have an attitude - an attitude, which is positive, livewire and spirited.
Although the relaunch has targeted the children segment this time , the
concept of mother has not been fully given up.
38
5.3 Price
The Marketing Department of any company does a lot of research work in
order to determine the price points that are most suitable to the company and
at the same time would generate maximum satisfaction for the target
customer. Depending on the product the marketing department adopts
various pricing strategies. Premium pricing, penetration pricing, economy
pricing, and price skimming are the four main pricing policies or strategies,
which form the bases for the pricing exercise.
Premium Pricing
It is decided to use a high price when the product or service is unique.
This approach is used where a substantial competitive advantage
exists. Such high prices are cpharged for luxury products. For e.g.: a
Mercedes car
Penetration Pricing
The price charged for products and services is set lower than actual
when it is introduced in the market in order to gain market share.
Once this is achieved, the price is increased. This approach is adopted
in order to attract a new customer base.
39
EconomyPricing
This is a basic price of the product. The cost of marketing and
manufacture are kept at a bare minimum. Supermarkets often have
economy brands for atta, dal etc.
Price Skimming
If a product is unique and has a considerable competitive advantage,
then the product may be introduced at a high price so that before
competitors come in you can make maximum profits. When Dove was
launched in the market it was the only soap with ¼ moisturizer and
was priced at a premium price of Rs. 45/- per soap, today the soap is
available at a lower price.
5.3.1 PRICE OF HORLICKS
Similarly the GSk has chosen the price for horlicks keeping in mind the
value addtion done to the product by the company along with the
consumer comfortability. Junior Horlicks is available in three SKUs —
500 gm jar (Rs 114),
500 gm GP (Rs 105)
40
200 gm jar (Rs 58)
The company has not gone for reducing price as they believe that Price
alienation could translate into alienation with the product proposition itself.
Diehard Horlicks consumers who may have moved out of the brand and
learnt to live without it may not find a credible reason to go back if such a
step is being taken.
41
5.4 PROMOTION
Promotions are very important because health food drinks are generally not
considered necessities by the majority of users. Promotions of Horlicks are
done by GSK through both direct and indirect means. These involves :
5.4.1. RUNNING SEMINARS ABOUT HEALTH CONCERNS
AND HEALTH SUPPLEMENTS.
GSK organized a seminar for doctors in Chennai stressing on the
importance of nutrition during illness and convalescence.
GSK is also planning to take up major initiative to increase awareness of
its brands among school kids. About 1.5 million students from 3000 schools
in eight cities will be involved in the mega programme called Activity
2003. The Activity, an organisation working with schools, has announced
the launch of Horlicks Activity 2003— The Kool Skool Fest, an inter-school
literary and cultural event. The event aims at encouraging the learning of
`Life skills'— that are recommended by the World Health Organisation for
the development of individuals. Sponsored by Horlicks, the flagship brand
of GlaxoSmithKline, the fest is being held in the cities such as Bangalore,
Mumbai, Delhi, Kolkata, Chennai, Hyderabad, Cochin, Pune and
Jamshedpur. The fest will feature more than 40 different competitions in
fields such as literary art, creative speaking, singing, dancing and informal
42
events for students from 1st to 12th std. The Activity along with Horlicks
will hand out scholarships to two deserving students in each city. The
scholarships for the year 2003 are worth more than Rs 1,00,000. Over and
above the scholarships, Horlicks will also sponsor the complete one year
education for two students who emerge as the "Mr & Ms Live Wire
Activity" in the personality contest during the finals.
5.4.2. CLAIMS
GSK remains committed in inventing new reasons and ways for consumers
to enjoy the nourishing goodness of Horlicks. They make a strong claim on
Horlicks which changes from time to time. Horlicks has constantly
improved its formulation to keep up with the ever changing needs of the
consumers. Like in 1998, calcium and protein the building blocks to
children’s growth were added into Horlicks. After a few years, Horlicks
contained a new formula fortified with Vitamin C, B-12 and Iron. Now, its
latest relaunch contained a new a new claim “twice the calcium of fresh
milk”, which boosted it ‘s sales.
5.4.3. ADVERTISING
43
The advertising account is being handled by creative agency HTA. The
company has also launched a television ad campaign created by JWT
featuring kids, which would be aired across channels. The TV campaign
would also be accompanied by print ads and hoardings. Mothers always
hope to see their children grow up strong and healthy. This age-old fact is
the backbone of Horlicks communication strategy. It lays the foundation for
a child’s future, hence it’s tagline: “Horlicks, nourishment for life”. In late
90s it’s ads reverberated through the television sets of every Indian
household and they just couldn’t get it out of their heads. It’s campaign was
well received by Indian mothers. Also there campaigns are still lodged in
consumers memory.
5.4.4. PROMOTIONS TO CONSUMERS
44
Besides relying on conventional bottles, the Horlicks brand is also being
aggressively pushed in the market through a mix of refill-packs and bundled
gifts (like katoris). Promotions include special discounted bundled packs and
periodic price discounts of between 5% and 10% off the recommended retail
price are also being provided by the company from time to time.
5.4.5. PROMOTIONS TO RETAILERS
DISPLAY CONTESTS
A strong brand presence at retail outlets is made with impressive
floor displays and value added promotions from time to time. Recently
they have asked retailers to display three bottles of Horlicks arranged in a
triangular form for 45 days with a poster advertising Horlicks in the
background. The rationale behind this is that bottles arranged in this
fashion attracts consumers attention. Moreover after 45 days the GSK
people will conduct a lucky draw of the retailers who participated in this
scheme and offer them attractive prices.
OTHER PROMOTIONS
45
There are also various sampling programmes in schools, shopping malls
and at sponsored events. All this is done in an effort to vie for the top
spot in consumers’ minds.The brand had begun to look dated and was
losing its significance. The company is looking at innovative ways to
increase consumer base in the health food drinks segment. For instance,
it is exploring the possibility of introducing ready-to-drink version of
its popular drinks. It is also looking at opportunities in joint marketing
with companies that have strong rural networks.
5.5.DISTRIBUTION
46
In this sector, one of the most critical success factor is the ability to build,
develop, and maintain a robust distribution network. To derive success in the
FMCG segment it is important to have a good distribution channel. Infact a
good distribution channels guarantees a good reach to the consumer which is
so vital to derive profits Availability near the consumer is vital for wider
penetration. Distribution network refers to the consumer buying points
where products are available (almost always). It takes enormous time and
effort to build a chain of stockists, retailers, dealers etc and establish their
loyalties. There are entry barriers for a new entrant as a new product is
typically slow moving and has lesser consumer demand. Therefore dealers/
retailers are reluctant to allocate resources and time.
Distribution Channel followed by GSK for
Horlicks:
47
FACTORY ► DISTRIBUTION CENTERS ►
WHOLESALERS ► RETAILERS
The first link in the channel is the factory situated at Sonepat, which has
been designed to produce Horlicks formulations. The Sonepat plant is of
26,000 tonnes per annum capacity. GSK has total workforce of over 3,000
people at its manufacturing plants located in Nabha and Rajahmundry. Its
packing facilities are located at Hyderabad and Ballabgarh. GSK has four
regional Sales Offices in the four metros which co-ordinate the sales,
distribution and collection activities in their respective regions. The
company now has 34 sales depots (one in each State), as against 28 in 1998.
The product is supplied to wholesalers from over there. It has a strong
marketing network in India comprising over 1,800 wholesalers and
direct coverage of over 4,25,000 retail outlets. Its wholesaler network has
grown from 1,317 in 1998 to 1,800 at present. These wholesalers further
supply to 425,000 retail outlets across the country.. SBCH has increased its
reach over the years, which has helped it gain incremental market share.
48
49
CHAPTER-6
DATA ANALYSIS AND
FINDINGS
Changing consumer profiles, shifts in value systems, changing cultural
labels of product categories, attitudes to technology, changing behaviour in
the area of diffusion of innovation, are some examples of macro trends of
consumer environment. For knowing the consumer attitude
50
Consumer analysis is dome on the basis of a questionnaire covering different
aspects of the consumer opinion in the Northern Region. The main
objectives being met by the questionnaire are:
a) To find out which brands consumers are actually preferring
b) To find out what they actually look for from a health food drink
c) To find out their taste preferences
d) To find out which medium of promotion actually attracts them
e) To find out their satisfaction level from their current brand
f) To find out the influencer of buying decision
g) To find out the image of horlicks
h) To find out the prospects of success of promotional plan of horlicks
Q1) What Brand(s) comes to your mind first in the Milk based health
food drink?
51
Horlicks Boost Maltova Milo Complan Bournvita Others
14 4 2 2 9 19 0
The survey indicates that Bournvita enjoys the most recognized brand
among the milk based health food drink category, followed by Horlicks.
Even complan have a good recognition. Thus Horlicks should work upon
building such promotional programs which increase its visibility among the
health food drink segment.
Q2) What do you prefer in Health food Drink?
Nutritional Value Taste Colour Other
52
26 22 2 0
It is evident from the survey that people consume health food drink mainly
for its nutritional value rather than taste or to change color of milk. Thus
there is no flaw on horlicks having an image of nutritional health food drink.
Q3) Which flavor do you prefer to take?
Chocolate Malt Vanilla Honey
53
35 8 5 2
It is clear that chocolate remains ever preferred choice of health food drink
consumers irrespective of gender. Thus horlicks should concentrate on
chocolate flavor rather than malt to build its market.
Q4) Time period of usage
Less than 1 yr 1-3 yrs 3-5 yrs More than 5 yrs
54
10 15 18 7
It is seen that in case of health food drinks the consumers are more or less
loyal towards their brand. Hence horlicks should concentrate on tapping new
customers while giving value to their existing customers.
Q5) Satisfaction level
Highly Satisfied Satisfied Dissatisfied Indifferent
55
6 30 8 6
The survey shows that the customers are more or less satisfied with their
current brand. Hence it will prove to be difficult for horlicks to tap the
customers of different health food drink.
Q5) What do you think is the most effective in creating an impact on
decision making process regarding Health food Drink.
56
T.V. Magazines Newspaper Word of Mouth
32 8 2 8
It is evident from the survey that T.V. plays an important role in forming the
opinion of the consumer regarding choice of health food drink. Hence GSK
should concentrate over visual media to promote its brand.
Q6) Given a chance would you like to shift to another brand?
Yes No
57
17 33
Most of the respondents in the survey were not willing to shift from their
brand. But the good news for horlicks is that most of the respondents in this
segment are users of horlicks itself.
Q7) Who influences choice of health food drink in your family?
Parents Children Knowns
12 9 1
58
Contrary to the popular opinion, survey indicates that parents are still the
deciding force in the health food drink segment. Though pester power also
play its part. So GSK should concentrate over both segments to build equity.
Q8) What image does horlicks carry in your mind?
Fun Drink Nutritional Drink Other
59
2 21 4
No matter how hard GSK is trying, it is not been able to break its image of
Nutritional Drink. Most of the respondents in the survey are carrying image
of horlicks as nutritional drink.
Q9) Have you tried new variants of Horlicks?
Yes No
60
8 42
Most of the respondents of the study have not tried the new variants of
horlicks. GSK should take efforts in this field. It should plan proper channels
to get its product to the customer.
Q10) Would you like to have horlicks in ready to use out of vending
machine form?
61
Yes No
31 19
Most of the respondents from the study are willing to consume Horlicks out-
of-home ready to drink form. GSK should go ahead with its plan to setup
Vending machines to sell Horlicks.
62
CONCLUSION
The health food drinks industry has been facing testing times with stagnant
markets. Market leader GlaxoSmithKline is looking to put the spring back in
63
its brands and the market through repositioning and relaunches of the
product.
Milk food drinks, the category in which GSKCH operates, offers scope for
steady growth through development of high-quality branded products with
good consumer acceptance, supported by advertising and brand promotion,
line extensions, new formulations and packaging innovations. So, the market
growth in the health food drinks will depend on the ability of the major
players to drive category penetration amongst the milk consuming masses in
the North and the West as well as their ability to drive penetration amongst
the lower SECs, which is currently low.
Speed and reach will become critical and differentiation in supply-chain
capabilities would determine the success of competing companies.
We have done Consumer analysis through questionnaire which covered
different aspects of the consumer opinion in the Northern Region.
The results of which are as follows:-
64
1. Horlicks should work upon building such promotional programs which
increase its visibility among the health food drink segment as the
Bournvita enjoys the most recognized brand among the milk based health
food drink category in the northern region.
2. Horlicks should not change its positioning of Nutritional Health Drink
but it should also focus on its image building as Nourishment with fun.
3. chocolate remains ever preferred choice of health food drink consumers
irrespective of gender.
4. In case of health food drinks the consumers are more or less loyal
towards their brand. Horlicks should concentrate on tapping new
customers along with more innovative marketing strategies while giving
value to their existing customers.
5. Customers are more or less satisfied with their current brand but Horlicks
should try to tap new customers as promotion and marketing strategies
play a significant role in attracting new customers.
6. People rarely shift their brands but they do so when they are being
enticed by the freebies or other promotion.
7. Parents are still the deciding force in the health food drink segment. GSK
should concentrate over both segments parents and children to build
equity.
65
8. Horlicks has not been able to break its image of Nutritional Drink in the
northern region.
9. GSK should go ahead with its plan to setup Vending machines to sell
Horlicks as people are willing to consume Horlicks out-of-home ready to
drink form.
66
SUGGESTIONS
67
PRE-EMPTIVE MOVE
A sustainable competitive advantage can sometimes be built by a pre-
emptive move . In the HFD it pays to go for a pre-emptive move. In case of
GSK, it can go for a pre-emptive move by going in for innovative ideas as
designing the product in interesting shapes or to come up with freebies as
games, or a collection of a popular comic character or of pictures of a chain
of events so that the completion of the series will bring a prize.
THE FOCUS STRATEGY
The market growth will depend on the ability of the major players to drive
category penetration amongst the milk consuming masses in the North and
the West as well as their ability to drive penetration amongst the lower
SECs, which is currently low. Apart from this GSK has to focus it’s energy
towards rural markets which have huge potentials and are highly
unexploited.
PROMOTING CHOCOLATE FLAVOUR
The white powder has become a boring flavour so GSK should promote it’s
chocolate flavour as it is much more popular in the northern and western
parts of the country.
68
PROMOTING OUTSIDE HOME
CONSUMPTION
GSK should focus to build upon out of home consumption business.
The company should focus upon vending machines and introduce the brand
in a ready to drink aspectic pack.
IMPROVING DISTRIBUTION CHANNELS
To derive success in the FMCG segment it is important to have a good
distribution channel .Infact a good distribution channels guarantees a good
reach to the consumer which is so vital to derive profits. .So GSK will do
well to improve its distribution channels in time to build sustainable
competitive advantage.
DIFFERENTIATION STRATEGIES
The concept is to make the product different from those of its competitor.
GSK should constantly differentiate itself from the competitors on the basis
of newer products. This differentiation could be on the basis of product
quality, product features, or distribution channels.
69
LIMITATIONS
During research and making this project some limitations that could affect
the effectiveness of the study are:
Survey sample is done from geographical region. The sample is
selectively selected from the families which are known to the brand.
This may result in the sample not being true representation of entire
market of health food drink segment.
Several products from health food drink segment are left such as
juices, lassi, flavoured milks etc.
Usage pattern may differ from metro, non-metro, semi-urban and rural
areas.
Sample size was not big enough.
Time was also a limiting factor.
70
71
ANNEXURE
ANNEXURE I
Key Nutrients
Horlicks is a nourishing malted food drink which combines the wholesome
72
goodness of malted barley, wheat and dairy ingredients.
Horlicks drinks provide the following essential nutrients:
Nutrient Function
Energy Essential for the basic metabolic processes of the body
(for the heart to beat, for breathing, to maintain body
temperature etc.); for growth and repair of tissues; for all
movement.
Protein Essential for healthy growth and development in children
and for cell maintenance and repair throughout life.
Protein can also be used as a source of dietary energy.
Carbohydrate The main source of dietary energy. Horlicks provides a
mixture of carbohydrates including maltose (the sugar
obtained by the breakdown of cereals in the Horlicks
process), lactose (the sugar found naturally in milk),
sucrose (ordinary table sugar) and more complex
carbohydrates.
Fat The most concentrated form of dietary energy.
Vitamin A Required for healthy eyes and skin.
Niacin A vitamin which aids the conversion of food into energy.
73
Vitamin B1 A vitamin which aids the conversion of food into energy.
Also needed for proper functioning of the heart and
nervous system.
Vitamin B2 Helps to keep skin and eyes healthy. Involved in energy
release from foods.
Vitamin C Helps in growth and repair of tissues. Aids iron absorption
for healthy blood. Helps protect against infection.
Folic Acid Needed for the production of red blood cells.
Vitamin D Needed for proper calcium absorption and therefore
healthy teeth and bones.
Vitamin B12 Necessary for the proper formation of red blood cells and
nerve fibres.
Vitamin E An important dietary antioxidant.
Vitamin B6 Important for a healthy nervous system, for healthy blood
and for the metabolism of protein.
Iron Essential for the production and functioning of red blood
cells.
Calcium Essential for healthy bones and teeth; required for the
proper functioning of nerves and muscles. An adequate
74
intake of calcium is vital in childhood and adolescence to
ensure that strong bones are formed. Optimising peak
bone mass in early adulthood may help guard against the
development of osteoporosis in later life.
Annexure-II
Some facts about Horlicks
Horlicks was first invented to substitute milk as baby food.
In India, two billion cups of Horlicks are drunk every year.
Horlicks is consumed by over 120million people daily and enjoy an
annual growth rate of over 22% in global sales.
75
In Britain, South Africa and Australia, Horlicks is positioned as a
sleep enhancing night time drink.
Where there’s a problem taking solid food, Horlicks can provide the
nutrition that would otherwise be missing from the diet.
People on special diets, including liquid diets or any diet devised for
gastric disorders, can benefit from the nutritional convenience of Horlicks.
76
ANNEXURE-III
QUESTIONNAIRE
Dear Respondant,
I am a student of MBA at SKYLINE INSTITUTE OF ENGINEERING AND TECHNOLOGY, Greater Noida. As a part of our curriculum; I am supposed to undertake a survey on “A STUDY OF CONSUMER BRAND PREFERENCE OF HORLICKS”.
1) Which is the Brand that comes to your mind first in the Health Food Drinks?
Horlicks Boost Maltova
Milo Complan Bournvita Others
77
2) What do you prefer in Health Food Drink?
Nutritional Value Taste Colour Other________
3) Which flavor do you prefer to take?
Chocolate Malt Vanilla Honey
4) Which Brand(s) are you currently using?___________________________________________________________________________________________________
5) For how long are you using this brand?
Less than 6 Months Less than a Year More than a year
6) Are you satisfied with your current brand?
Yes No
If No, What else do you want? _____________________________________
7) What do you think is the most effective in creating an impact on decision-making process regarding Health Food Drink?
T.V. Magazines Newspaper Word of Mouth
8) Given a chance would you like to shift to another brand?
Yes NoIf Yes, to which brand____________________________
78
And Why ______________________________________
9) What image does Horlicks Carry on your mind?
Fun Drink Nutritional DrinkOther__________________
10) Have you tried new Variants of Horlicks?Yes_________ No___________
79
BIBLIOGRAPHY
1. Pande, Bhanu, “Cup Half Empty”. “The Economic Times
Brand Equity”, New Delhi.
2. “Glaxo SmithKline consumer not in pink of health”
http://www.sharekhan.com
3. “SmithKline to add muscle to boost Horlicks, Viva”
http://www.sharekhan.com
4. “GSK relaunches Horlicks”
http://www.sharekhan.com
5. Kailash, Sanjay. Distributor of GSKCH, Chandigarh.
80