THE CASE OF ROMANESQUE COFFEE

Abhijeet Prabhu (P13038)

Anant Sharma (P14050)

Anuj Vengurlekar (M14113)

Bhavesh Rathod (M14084)

Dhananjay Surte (M14106)

Kakoli Laha (P14026)

Shrikant Wankhede (M14119)

Source: National Sample Survey Office’s (NSSO’s) consumption studies for urban areas, 2013

Haryana

Himach

alDelhi

Punjab MP

Jharkhand UP

Rajasthan

Maharashtra

GujaratGoa

Kerala

Tamil Nadu

Karnataka AP

West Bengal

0

2

4

6

8

10

12

14

16 Consumption of Coffee in Different States (Rs./ Month)

Region % Consumption

North 25%

West 13%

South 60%

East 2%

Coffee Statistics

CFAs in Navi Mumbai; Chandigarh, Gurgaon; Bangalore, Vellore, Hyderabad, Kochi

End Consumer

End Consumer

Retailer (70%) / Wholesaler (30%)

End Consumer

Modern Trade Retailer (20%, approx. 500 in number)

E-commerce Retailer – Amazon, Big Basket (3%)

Manufacturing Plant at Haridwar

Distribution Model Overview

Distributor (77%)

Plan of action for West Region• Navi Mumbai CFA will cater to metros and mini metros Mumbai, Pune, Nagpur, Nashik, Ahemdabad,

Ahmednagar, Ajmer, Surat, Jaipur, Jodhpur etc.

• CFA will cater to General Trade + 500 Modern Trade Outlets + Ecommerce Retailers

• For General Trade, there will be 1 Distributor per city

• 40 major cities in Western Region, hence 40 Distributors

• 1 lakh population 200 Retailers

• Ex. Mumbai’s population is 120 lakhs, and hence there are 24000 Retailers

Plan of Action for North Region• Chandigarh and Gurgaon CFA will cater to metros and mini metros Delhi, NCR, Agra, Indore, Kanpur,

Lucknow, Patna and Chandigarh etc.• Ex. 12 cities in Delhi-Haryana Region, hence 12 Distributors• Ex. Delhi’s population is 100 lakhs, hence there are 20000 Retailers

Plan of Action for South Region• Vellore, Hyderabad, Kochi CFA will cater to metros and mini metros Bangalore, Chennai, Hyderabad,

Kochi, Thiruvananthapuram, Coimbatore, Madurai, Visakhapatnam, Ooty, Kolam, Vijayavada etc.• Ex. 18 cities in Karnataka, hence 18 Distributors• Ex. Bangalore’s population is 40 lakhs, hence there are 8000 retailers

Operations• Margins: 8 % margin to retailers and 5% margin to distributors• Wholesalers will get approximately 2% margin as per standard norms

• Credit Terms to Distributors/ Retailers: 5% Payment on Spot and remainder of the money after sale of coffee

• Logistics: Should currently use 3rd party logistics and purchase own vehicles within the next 5 – 10 years, For ex. Future Supply Chain Solutions (FSCS) is 3rd Party Logistics Supplier for HUL

• In next 5-10 years it should build plants in the south (TN, Karnataka) and then move onto west of India (Goa, Maharashtra)

Terms of Operations• Storage Policy :The Distribution/ Storage Centers must be equipped with

adequate refrigeration and air-conditioning. Distributer has to bear all the charges pertaining to storage

• Return Policy : The stock is to be returned if it passes the expiry date or found to be damaged. Replenishment will be done in cash bi annually.

• Credit Policy: Retailers/Distributers will have to pay an advance payment of 25% on order. A credit period of 2 to 3 weeks will be given for the remaining amount.

Market SegmentationTarget market consists of basically coffee drinkers, especially people whom are in the need

of instant coffee that stimulates body within a day. Due to its convenience, it is a quick solution for people who want to enjoy it at home, work or College; accordingly, it targets each of them in different ways. Especially for target segments of working individuals or

students, it aims to awake them in the mornings, sober up in the afternoons, or again keeping awake in the late evenings. Moreover, geographically, it addresses more south side rather

than north side in terms of habituality. Besides, another target can be assumed which contains the middle-aged and elderly people who get into the habit of drinking

Market SegmentationGeographic Wise: Northern, Western. Southern And Eastern• Southern Segment consumes the most amount of coffee and prefers hard and roasted coffee• Northern region: Instant coffee consumed in higher quantity

Demographic:

Age wise and occupation wise

1. 15yrs-23yrs(Students)

2. 23yrs-31yrs (College student and new employee)

3. 31yrs- 61yrs (Employee and businessman)

4. 61yrs – and above (Retired and who are mostly habituated)

Psychographic

5. Social Class: Middle class,Upper midle, lower upper and upper upper class

6. Personality: Ambitious,Compuslive, outgoing, inspired

1)Occupation: StudentsAge: 15-23Lifestyle: Busy Denstiy: UrbanPersonality: Ambitious, outgoing Occasion: Seasonal (at exam times)User Status: Potential user, regular user, first-time userUser rate: Light user Loyalty Status: Medium

2)Occupation: ProfessionalsAge: 23-31Lifestyle: Western Denstiy: UrbanPersonality: Inspired, outgoing Occasion: In the morningsUser Status: Regular user User rate: Medium userLoyalty Status: None, medium, strong

3)Occupation: ManagersAge: 46-60Family Life Cycle: Married w/childrenLifestyle: Hard-worker Denstiy: UrbanPersonality: Ambitious Occasion: RegularUser Status: Regular user User Rate: Heavy user

Coverage Plan• Each City will have one distributor

• For mega cities there will be more than one distributor

• Each distributor will have number of Sales Representatives based on the population of the city

• In Mumbai, there are 24,000 retail outlets & each SR can do 210 outlets in a week, so theoretically number of SR required would be 115.

Costing PlanPlan Per Outlet Per Month

Quantity 10 gm 250 gm 500 gm 1 kg

Price per SKU 10 230 450 880

No. of SKU 10 4 4 1

Total 100 920 1,800 880

Total Sale 3,700

Total Sale in Mumbai 8,88,00,000

Coverage PlanSD Area No. of

DistributorsNo. of

SSONo. of

SRCost per

SSOCost of

SSOCost per

SR Cost of SR Total Cost Expected Business Cost %

Mumbai (Central) 1 3 40 15,000 45,000 7,000 2,80,000 3,25,000 2,73,00,000

Mumbai (Harbour) 1 3 37 15,000 45,000 7,000 2,59,000 3,04,000 2,55,36,000

Mumbai (Western) 1 3 38 15,000 45,000 7,000 2,66,000 3,11,000 2,61,24,000

Total Cost of Two ASMs 70,000

10,10,000 7,89,60,000 1.279

• This plan will be implemented over the period of four years

POSM Costing

POSM for Mumbai for One Year

Tools No. required Cost per shop Frequency Total Cost

Poster 24,000 2.5 3 1,80,000

Dangler 24,000 4 3 2,88,000

Banner 4,000 11 2 88,000

Stickers 12,000 5 2 1,20,000

6,76,000

PJP & MJP• Permanent Journey Plan (PJP) & Monthly Journey Plan (NJP) will be

worked out once the distributors are finalized.

• There would be 25 days of working (21-Fixed & 4-Flexxible)

• One monthly meeting is essential for review purpose.

Market Visibility• The online connection – Increasing the brand visibility by campaigns

conducted online

• Demos at college events and festivals

• Placement of the product in the store

• Sampling at various locations in the metros

SKU’s and Pricing• SKU’s on offering by competitors – Nescafe and Bru :

• Pouch packets cost 20-30 rs less than jars

• Mr. Ajay should preferably keep the sku’s lesser in number

• Introduction of premium and non-premium variants can be done – where the premium variant can be priced competitively with the likes of Nescafe Gold and the non – premium variant can be targeted at the masses

Incentive Scheme For SR• According to Lines & Bills per day

• According to Target Achievement• 100% achievement-750rs• 99% achievement- 450rs• 97% achievement- 150rs

• According to Eco• 100% achievement- 750rs

No of Bills Amount0-12 0rs

13-18 25rs

19-23 40rs

24 & above 60rs

No of lines Amount0-50 0rs

51-65 20rs

66-80 35rs

81-95 50rs

96 & above 65rs

Competition Quarterly and Yearly There would be a competition among the employees for a extra incentive

for 2000rs which would last for a quarter. In which 4 parameters would be measured

Eco Bill Lines Value achievement Then whoever tops the quarter in all 4 parameters would receive the money and this

would boost all the SR to increase their performance

• This same competition would be carried out for an year in which out of four quarters whoever tops maximum time would receive 15000rs as a reward

Competitors in the Market

Top Coffee brands in India• Nescafe

• Tata Coffee

• BRU

MAJOR COFFEE PLAYERS IN INDIA

MARKET SHARE IN INDIA

34%

40%

20%

4% 2%

Barista CCD

Mocha Qwicky

Georgia

CREATING A NEW ENTRY POINT1. Pilot-testing Bru World Café in Mumbai

with four outlets

2. Roast green coffee beans in partnership with the Tatas.

3.franchise agreement with Domino's pizza

chain

CREATING A NEW ENTRY POINT

deals with leading oil companies like HP,BP Indian oil for setting up cafes in gas stations across India.

4.

5. Java Green from the Reliance Group began life as a cyber café in 2003

Nescafe (NESTLE)

Product LineNescafe

Classic Sunrise Sunrise Premium Cappuccino

Gold Taster’s Choice

Product SizesNescafe

10 gm Satchets 200 gm Jars 500 gm Jars 1 Kg Jars

Distribution Network• The average landing price per KG for Nestle distributors is Rs 2000/-• On an average Nestle offers 8 % margin to retailers and 5% margin to

distributors• The contribution of wholesale in Nestle is high at 30%• It follows Distributor Loyalty Contract (A Nestle distributor can sell only

Nestle products)• Tie-ups with all super market chains like Big Bazaar, Reliance Fresh etc.• Fascinating Marketing campaigns and near to perfect at customer

satisfaction yielding to brand recall and loyalty

Our Blueprint ahead to tackle NESTLE• Be a follower for 1-2 years• Price your product bit higher than NESTLE Classic and match prices for the

premium NESTLE products• Start with 6 cities (Metros) and then push yourself into the mini-metros and tier-2

cities• Try having parallel distributor chains to NESTLE in the cities you choose to cater to• Give better margins to super markets you cater to for gaining entry into the

market• Concentrate on quality and taste more than just quantity, try bringing in new

variants of flavors to enhance customer engagement