splash marketing plan

8/13/2019 Splash Marketing Plan

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2013

Marketing Plan for Splash

Submitted by:

Nischal Joshi

Rachana Dangol


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List of figures:

Figure 1: Location of Splash manufacturing unit

Figure 2: Organizational Structure

Figure 3: Market Share of competitors

Figure 4: SWOT Analysis

Figure 5: Bottle samples

Figure 6: Distribution strategy

Figure 7: Growth in sales (2012-2016)

List of tables:

Table 1: Global soft drink market segmentation by percentage of share

Table 2: Pricing Strategy for Splash

Table 3: Cost for promotional activities

Table 4: Sales for the next 5 years

Table 5: Break even analysis


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1. Executive SummarySplash Drinks Pvt. Ltd. is cold drink Company established in 2012. It is the company which has theextensive knowledge and expertise in the field of the cold drinks. The company aims to be the one ofthe leading brand in the cold drink business by providing high quality cold drink in reasonable price.

1.1 Marketing ObjectivesTo establish the splash brand as one of leading brand in the cold drink market through extensivemarketing, promotional and distribution strategies.

1.2 Major Marketing StrategiesSplash brand aims to hold the strong grip in the cold drink business through extensive brandawareness and promotional strategy. The product Splash will be marketed through intensivedistribution channels. Splash will position itself as a value-for-money brand, which is refreshing andhealthy. Its positioning statement will be Healthy and Refreshing drink for everybody.

Being a new product in the market, the market strategy would be to make the consumer aware ofthe brand so different activities regarding brand awareness would be conducted like sponsoringdifferent game activities, game club of different place, conducting marathon walkathon etc. Andsegmenting the corporate and individual market into different micro levels and target that segmentthrough different schemes like Buy one get one free, distributing gift hampers via lucky draws,event based discounts etc.

1.3 Investment and resource commitmentSplash will make investment to produce a high quality cold drink and through extensive distributionnetwork will distribute the product nationwide.

1.4 Expected ResultSplash aims to become a largest selling brand of cold drinks through its extensive marketing strategywith the minimum sale of Rs. 20million in 2012.

1.5 Basic Channel DescriptionSplash will distribute the product to retailer via different resellers. Splash presently will sell theproduct within Kathmandu valley but will distribute the product outside Kathmandu valley in nearfuture.


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2 BackgroundSplash Drinks Pvt. Ltd. is a cold drink company established in 2012. As the number soft drinks areincreasing rapidly, Splash aims to become leading brand in soft drink market. This cold drinkcontains green tea extracts and is loaded with anti-oxidants which are a definite health booster.

Unlike other cold drinks, Splash! hydrates the body and does not overload it with acidic flavours andpreservatives. This drink comes in a great tasting selection of five flavours in an attractive sportswater bottle. The soft drink comes in five flavours. They are lemon, cola, orange, mango andcanberry. The soft drink is available in 3 different sizes 250ml, 500ml and 1000ml.

Splash drinks are made from real fruits that have been picked from the best orchards the world over.They are power packed with a host of essential vitamins and minerals to keep you going all day long.Splash drinks are all-natural juices with no added preservative. Splash products are sold insupermarkets, warehouse clubs, health food stores, schools and convenience stores across thecountry. We have the latest processing equipment manufactured in New Zealand which ensures that

the quality and taste of the fruits are not deteriorated. Splash drinks is always dedicated towards thehealthy, nutritive and innovative juices products.

Splash Drinks has its head office located in Tinkune and its processing center is located in BalajuIndustrial Estate. The industry view of the factory and the satellite view of the location is shown inthe figure below.

Figure 1: Location of Splash manufacturing unit


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3. Situation Analysis:The population explosion that Kathmandu has experienced during the second half of the pastdecade could be the growth driving factor for Splash!. Spalsh drinks Pvt. Ltd. Delivers to the market adrink that is not only cool and refreshing but also one that is beneficial health-wise.

3.1 Company Summary:3.1.1 Company Goals and Objectives:

As mentioned above Splash! is a drink that is refreshing as well as healthy. These are the qualitiesthat consumers today are looking for but none of the available products have been able to offer. Ourmajor competitors Coca-Cola and Pepsi lack the health benefit. Also the other products such as Real,Appy, Frooti etc have only the essence of fruits which again is not very healthy. This said, it willdefinitely not be easy to survive in the market because of the exceptional penetration and popularityof the multinationals.

3.1.2 Organizational Structure:

Figure 2: Organizational Structure

President/CEO

VPMarketing

MarketResearchManager

R&DManager

SalesManager

VP Finance

FinancialManager

Manager -InformationTechnology


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3.2.3 Dominant Players in the Market:

Coca-Cola and Pepsi are the dominant players in the Nepali market, whereby Coca-Cola enjoys amassive share of the Individual Market with 67.8% of the total market share with an investment ofover $45 million and an annual production of a million bottles of soft drinks. Also Bottlers Nepal

generated a 20% growth in 2011 recording double digit annual growth for the past five years.

3.3. Trends and Drivers:3.3.1. Growth in sales of soft drinks

The market leaders have been recording double digit growth annually with growth rates as high as20%. this is due to the fact that they are multinational companies and have aggressive marketingcampaigns with various offers from time to time. For instance in 2012, Pepsi came up with the offerGrab a Pepsi, Party @ Namche. Also the rising mercury has contributed to increase in demand forcool and refreshing drinks. Increase in standard of living of the people in general has alsocontributed to the market for off the shelf beverages.

3.4. Legal, Political and Economic Factors3.4.1 Fake Products: As mentioned earlier, there is a huge amount of loss borne by the marketleaders due to fake products flooding the market from time to time. This could be the biggest threatfor Splash! The anti counterfeit laws are yet to be formulated in the country, hence there are noexisting strong mechanisms to curb such products from entering into the market.

3.4.2 Government and Political Stability: Nepal has been under political turmoil since a very long

time now and the conditions do not seem to be improving any time soon. Major budget delays areone primary area effecting sales and growth.

3.4.3 Labor Unions: The labor unions going on regular strikes and lockouts has crippled theindustries in Nepal. Such labor unions, under the influence of political parties, have threatenedmajor established industries in Nepal leading to the closure of a few (eg. leading garmentsmanufacturer Surya Nepal Pvt. Ltd.). This could be a major challenge that Splash! faces.

4 Market Summary

4.1 Competitors Analysis:The biggest competitors of Splash are carbonated soft drink (CSD) such as Coca-Cola, Pepsi etc. In2005, the global carbonated soft drink market generated revenues of over $120 billion, all of whichcomes from two global powerhouse companies occupying 80% of the market. Coca-Cola and Pepsi,are one and two respectively, in the very competitive CSD industry. Over past decades, the CSDmarket has been honored with record growth, showing consumption rates that have more thandoubled over the last 25 years.

In 2004, 10.24 billion cases were sold, while 2005 showed a 0.6% decrease translating to 10.18billion cases. This 2005 decline came after a small growth in both 2003 and 2004. Coca-Cola lost


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some market share, Pepsi gained some, and diet drinks seems to be what is fueling the overallcategory growth. Coca-Cola continues to hold the lead position with a market share of 45%, butPepsi is not far behind with 32%.

People are consuming twice as many beverages as they were 25 years ago. However, while

carbonated soft drinks continue to remain the most popular beverage, consumer preferences arechanging to include other types of beverages, such as waters, juices, and other drinks perceived tobe a healthier alternative. The changes in preferences and overall increases in new alternatives arebeginning to bring the total consumptions rates for CSDs down from their 25 year high.

Coke and Pepsi concentrated so much on each other that they failed to see the emergingcompetition from bottled water, iced teas and fruit and energy drinks, all very profitable niches.Splash will also build its brands as the health drinks and compete with all the soft drinks.

The following table shows the global soft drink market segmentation by percentage of share.

Table 1: Global soft drink market segmentation by percentage of share

Category% Share

Carbonated Drinks 47%

Bottled water 18%

Juices 15%

Tea and Coffee 8%

Functional Drinks 8%Concentrates 4%

Total 100%

In Nepal, Coca-cola has 45%, Pepsi has 35% and others (Real juice, Energy drinks etc.) has 20%market share.


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Coca-Cola

Strengths

a. Most Popular Brand: Coca-Cola is the most popular and well established brand in the soft

drinks industry. People buy coke due to its brand strength.b. Brand Loyalty: People are loyal to the brand of coca-cola. They prefer coca-cola and usually

do not buy other soft drinks.c. Strong Distribution channel: Coca-cola has strong distribution channel through which it

serves all over the world.d. Retailers Trust: Most of the retailers keep coca -cola in their cold store because coke is

bought by most people.e. Various Products: Coca-cola has many other products such as fanta, sprite etc.f. Promotion: They do the promotion is most effective way. People in nepal watches Indian

channels and they advertise in Indian media which helps them to capture market in nepal.

g. Pricing: Coca-cola offers very affordable price.

Weaknesses

a. Unhealthy Drink: Coca-cola is categorized as unhealthy drink because it is carbonated drink.There is fair amount of people who dont prefer carbonate drinks.

b. Harmful ingredients: Coca-cola contains penicillin. The allergenicity of penicillin in thegeneral population is thought to be at least ten percent. Nearly 25 percent of theseindividuals will display hives, angioedema, or anaphylaxis upon ingestion of penicillin.

c. Unhealthy for children: Coca-cola consumption in children poses a significant risk factor forimpaired calcification of growing bones.

d. Difficult to manage: As the size of this company is very huge and all around the world, itsdifficult for them to manage at every market

Pepsi

Strengths

a. Established Brand: Pepsi is also very established and popular brand of all age group.b. Most loyal brand: Pepsi is the most loyal brand in the soft drinks industry.c. Good Distribution channel and retail: Pepsi also has strong distribution channel all over the

world and Nepal. It is distributed to most of the retail store.d. Variety of products: Pepsi also has various products such as mirinda, mountain due etc.e. Pricing: The pricing of pepsi is also very affordable.f. Variety of size: Pepsi comes in various quantity from 250ml to 2 litres.


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Weaknesses

a. Carbonated Drink: Pepsi is also carbonated drink. So, people who dont prefer carbonatedrink do not buy it.

b. Unhealthy ingredients: Pepsi also contains unhealthy ingredients similar to coke which is not

suitable to allergic persons and children.c. Hard to manage: Pepsi also do not focus in a particular market. So it cannot be the best for

one particular market

Real Juice

Strengths

a. Healthy Drink: Real Juice is a healthy juice.b. Various Flavors: Real Juice comes in many flavors such as mango, mixed, apple, pineapple

etc.c. Good Distribution: Its distribution channel in Nepal is good. It is found in most of the retail

stores.d. Relatively easy to manage: Real is Indian brand and they also have targeted Nepal as a

potentially good market.

Weaknesses

a. Relatively expensive pricing: It is relatively expensive than coca-cola and Pepsi.b. Brand yet to establish: It is not well established brands as Coca-cola and Pepsi.c. Less market share: It has less market share compared to Coca-cola and Pepsi.

d. Competition: There are similar products in the Nepalese market such as Rio, Appy etc. So ithas to compete with its similar products in terms of brand, market share, consumer loyaltyetc.

4.2 Consumer Market SegmentMost people in Nepal still buy carbonated drinks such as Coca- cola and Pepsi. Thats why the marketshare of these products is still very high. However, nowadays people are becoming more healthconscious. They are consuming healthy drinks such as Real juice, slice, energy drinks etc. The marketshares of these products are growing. The introduction of Splash is in the market will give them acomplete solution. It is much refreshing as carbonated drinks and much healthier.

People in Nepal are very much pricing sensitive. The income level of most people is average and theywill buy products which are within their range. If any soft drink intends to capture the larger marketsize, they should make the price affordable. Nepal is a young country. Most of the people in Nepalare below 35 years old. They will buy such soft drinks which suits them best. To capture large marketthey should target people between 15-35 years. In Kathmandu, there are almost 80 million peopleout of which 50 millions lies below 35 years. Splash offers very affordable price and taste suits to theyouth.

In Nepal people usually buy and consume drinks at the cold store and restaurants. So, Splash will be

easily available in every cold store and restaurants.


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4.3 Business Market SegmentThere is also business market segment for soft drinks in Nepal. Restaurants, Hotels and eventmanagers buy soft drinks which they can sell to their customers. Restaurants and Hotels buys bulksoft drinks from the distributor and sell to their customers. Event managers also buy large volumesof soft drinks which they distributes during marriage ceremony, birthday party, concerts and otherevents because soft drink in very popular in Nepal. Splash will also target to distribute its products tothe most of hotels, restaurants and event managers.


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5. SWOT Analysis:

Figure 4: SWOT Analysis


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Strengths:

a. Healthy soft drink: Splash contains green tea extracts and is loaded with anti-oxidants whichis a health booster. It hydrates the body and does not overload it with acidic flavors andpreservatives.

b. Innovative product: The taste and quality of splash is better than other drinks. Its taste is notlike other carbonated soft drinks but is really refreshing.

c. Five Different Flavors: This drink comes in a great tasting selection of five flavors in anattractive sports water bottle.

d. Low pricing: The pricing of Splash is relatively lower compared to the competitors.

e. Competent and Skilled Human Resources: Splash has hired respected scientists who makeenergy and health drink. Through years of product research, it has developed this highquality drink

f. Green Company: Splash manages the waste from its production and keeps environmentclean.

Weaknesses:

a. New Brand: Splash is a new brand so it needs to be familiarized with proper promotion.

b. Low Market Share: This market share is relatively low compared to other popular soft drinks.

c. Local Market: Splash is targeting at the Kathmandu city and then to other cities in Nepal. Ithas not globalized as its competitors like Coca Cola, Pepsi Cola, Real juice etc.

d. Less Distribution Coverage: Splash has relatively smaller retail network and distributioncoverage. The brand is yet to be established so there are less distributor and retailercompared to its competitors.

e. Small scale operational plant and R&D: Splash has very low scale operational plant andresearch and development center compared to its competitors.


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Opportunities:

a. Health Consciousness: People are becoming more and more health conscious. So, there islarge growth in the sales of health and energy drinks. This growth will favor Splash.

b. Income Level: There is growth in income level of people. So, they can afford more in buyingSplash.

c. Young Population: Nepal is young with the maximum population being below 35 years old.This soft drink is targeted to young population and therefore the market coverage area iscomparatively large.

d. Change in Life style: The life style of people is changing. There is growth in the sales of softdrink during festivals and occasions. Therefore there is overall growth rate in the sales ofsoft drinks.

e. Peak Season: The Company is starting its operation from the peak season. So, it may help to

establish the brand.Threats:

a. Threat of Substitutes: The direct substitutes of Splash are only energy drinks. But as it fallsunder the soft drinks, people can easily substitute Splash with popular brands like Coke,Pepsi etc.

b. Threat of new Entrants: Due to the demand in the market, there is threat of new entrantsentering into the market.

c. ghtened Competition: Splash has to face competition from well established brands like Coke

and Pepsi in terms of Market Share, Promotion, pricing etc.d. Inflation: Due to inflation, the cost of raw materials, managing the waste and human

resource will increase. So, the profit might decrease if we keep the price constant.

e. Political Instability: The political situation is Nepal is very unstable. Due to this, theeconomical situation in Nepal is changing which may be threat to a newly establishedcompany.

f. Labor Union: Labor unions have caused lot problems in many industrial sectors in Nepal andSplash can also anticipate similar threats.

g. Electricity Problem: The problem of load shedding is very severe in Nepal which will increasethe cost of production.


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6.2 Pricing Strategy

The maximum retail price (MRP) for each bottle of Splash! 250ml, 500ml and 1000ml Rs. 20, Rs. 35and Rs. 60 respectively. However, the company sells the bottles to distributors first at Rs. 17.10 for

250ml bottle, Rs. 29.47 for 500ml bottle and Rs. 51.30 for 1000ml bottle. The distributor then sells itto the retailers putting a 5% profit margin and the retailers sell them to consumers at MRP putting a10% profit margin. The pricing strategy is given below:

Table 2: Pricing Strategy for Splash

Segment Distributor Price / Bottle(5% Margin)

Retailer Price/ Bottle (10%Margin)

Consumer Price/ Bottle

250 ml 17.10 18.00 20.00

500 ml 29.47 31.50 35.00

1000 ml 51.30 54.00 60.00

Note:

For the distribution channels, we will offer a discount of 5-10% on the regular purchase and if thevolumes exceeding 12 cartoons at a time then additional 1 cartoon will be provided on free basis.

6.3 PlacementInitially, we will supply directly to the point of sales. From the second year, the product will belaunched under the Splash brand, in a few major cities as Kathmandu, Pokhara, Dharan throughdealers and outlets. Since the drink is a health booster, so we will supply our product topharmaceutical stores and medical clinics as well. Similarly, we will place our Splash in some of thecities of Terai as Biratnagar, Bhairahawa.


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Figure 6: Distribution strategy

6.4 PromotionThe best starting promotional route will be distributing sample trial packs of 250ml. Similarly puttingattractive danglers placed near check-out counters to make customer know about the product.Another starting promotion will be organizing the open concerts to inform the customers about ourproduct. Another way will be maintaining efficient supply chain management, visiting the outletsregularly to ensure the proper handling of the product, taking feedback from the distributors andretailers.

The estimated cost incurred in the promotional activities is as follows:

Table 3: Cost for promotional activities

Promotional Activities Cost

Hoarding Boards (in 5 places) Rs. 500,000

Live Concerts Rs. 400,000

Sample packs (100,000) Rs. 1,500,000

Total Rs. 2,400,000

7. Financial Projections:

The financial projection and the breaks even analysis for the next five years is given below.


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Table 4: Sales for the next 5 years

Studying the market trends as mentioned above, the following assumptions were made for the salestill 2016.

1. Sales increases by 50% in the year 2013 and by 25% thereafter2. The sales mix consists of 40% 250 ml, 35% 500ml and 25% 1000ml.

7.1 Break Even Analysis

Table 5: Break even analysis

Revenue/liter 60.81 (Average revenue of all segments)

Variable cost / liter 45.61 (Average variable cost of allsegments)

Contribution/ liter 15.20

Fixed Cost 10,440,000

Break-even volume (liters) 686,707

Break-even sales (Rs) 41,761,373.41

From the sales table and the breakeven analysis table, we can infer that the breakeven point will beachieved by 2015. From then on, the company will see a profit in the years that follow.

Year Sales (Liters) Sales (Rs.) Sales Growth Rate 250 ml (40%) 500ml (35%) 1000 ml (25%)

2012 333,190 20,000,000 - 8,000,000 7,000,000 5,000,000

2013 499,785 30,000,000 50% 12,000,000 10,500,000 7,500,000

2014 624,731 37,500,000 25% 15,000,000 13,125,000 9,375,000

2015 780,914 46,875,000 25% 18,750,000 16,406,250 11,718,750

2016 976,142 58,593,750 25% 23,437,500 20,507,813 14,648,438


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0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

2012 2013 2014 2015 2016

S a

l e s

( R s

)

Year

Growth in Sales (2012-16)

Break-even point

Figure 7: Growth in sales (2012-2016)

8. Contingency planSplash anticipates pressures on price due to competitive activities and strong buyer power. Itsimpact will be felt on profitability and break-even volume. Even with a sufficient cushion at present,Splash envisages tight cost controls consisting of a lean organization and efficient use of resources.

However, in dire circumstances, Splash is very well insured and financially cushioned, that it can ifnot grow, but can survive until the market recoups.

However, in the event of a disaster or other circumstances which bring about the need forcontingency operations, the normal organization of the Splash will shift into that of the contingencyorganization. The focus will shift from the current structure and function of business as usual to the structure and function working towards the resumption of time-sensitive business operations.In this plan, the Splashs contingency organization will operate through phases of response,resumption, recovery, and restoration. Each phase involves exercising proce dures of the Splashs Contingency Plan and the teams executing those plans. The teams associated with the planrepresent functions of a department or support functions developed to respond, resume, recover, orrestore operations or facilities and its affected systems. Each of the teams is comprised ofindividuals with specific responsibilities or tasks, which must be completed to fully execute the plan.Primary and alternate team leaders, who are responsible to the plan owner, lead each team.


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9. Future of Splash!

Splash has a lot of growing potential and is expected to grow in the soft drink industry as a tasty andhealthy drink. Extensive promotion in the major cities of Nepal will eventually lead to brand

recognition and hence, Splash intends to grow through market penetration in the larger markets ofIndia and China by 2020. For this, the revenue generated by operating in Nepal will be re-investedand larger machineries and manpower will be hired. The prices will be adjusted according to theinflation rate and the market rate of competitors. Distributors will also be hired in India and Chinaand promotional activities will be carried out mainly by advertising in the local media.

splash marketing plan

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