Marketing Plan

Packaged drinking water industry in Dubai(Manufacturing, packaging & Sales)

Name: Rahul Sharma

Class: PGDM

Div.: IB

Roll No: 07

Subject: International MarketingPage | 1

ACKNOWLEDGEMENT

I am grateful to my faculty Prof. Mukesh Goyal for giving

me moral support and guiding me in different matters

regarding the topic. He has been very kind and patient while

suggesting me the outlines of the project and correcting my

doubts. I thank him for his overall support.

I thank my parents for their undivided support and interest

who inspired me and encouraged me to go on my own way,

without whom I would have been unable to complete my

project. At last but not the least I would like to thank my

friends who gave their precious time for motivating me.

I thank all for being informative and tolerant. I would not

have been able to complete my project without sincere

guidance and effort of above mentioned people, whose

presence was blessing in disguise for me, which motivated me

to complete my project on time.

And finally to god who made all things possible.

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Executive Summary:

Packaged drinking water industry is one of the fastest growing beverage segments in the country. As more and more people become aware of the need of safe drinking water, the demand will keep rising. Dubai has a large scope for packaged drinking water industry. Large brands like Ferrarelle, Aquafina, Arwa, San Pellegrino, Super Gulf, Masafi, Acqua panna have established them successfully.

The report provides in-depth information into this industry – the raw materials and machinery used, the manufacture process, the market scenario and the problems faced by this industry. The Appendix provides other necessary information like a tentative time structure required to set up a packaged drinking water unit, its financial aspect.

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Index

Sr.No Topic Page No

01 Executive Summary 03

02 Introduction 05

03 SWOT Analysis 07

04 Market Summary 10

05 Manufacturing process 17

06 Financial Aspects 23

07 Conclusion 24

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Introduction:

Water is very essential for mankind. Water available from untreated sources like bore wells, rivers etc. is not safe for drinking. Thus it is necessary to purify water for drinking purpose. Safe potable water is not available everywhere. Water is contaminated with impurities which cause disease if consumed. Due to this water is processed and bottle for the use of mankind. Packaged drinking water means water from any potable water source including public drinking water supply system which is subjected to different treatments to meet the various standards and packed.

In Dubai, access to safe drinking water is difficult because of shortage of drinking water and scarcity of clean water resource. This has resulted to high growth in demand for packaged drinking water. This industry will experience a huge boom. Today packages drinking water is used in offices, restaurants, railway stations, airports, bus stands, hospitals etc. Though a large number of units have been established for the production of packaged drinking water but, due to the ever growing need, there is still a huge gap between the demand and supply of packaged drinking water.

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Marketing Analysis

Packaged drinking water is available in the quantities of 250ml (cups), 500ml, 1litres, 5litres and 20litres. But, the 1litre bottle and the 20litre jar are the two major products in the market.

The approximate cost of production of 1 carton (12 bottles) comes to around Rs.60 i.e. Rs.5 per bottle. Depending upon the market and the brand the carton is sold at Rs.62 – 65 to the distributor. The distributor forwards it to the retailer at a price of Rs.80 – 90. The retailer then sells each bottle at the MRP or sometimes less than the MRP. Thus a shopkeeper earns around Rs.4 – 7 every bottle. Thus, to summarise, every bottle of water that we buy at Rs.15 costs a maximum of Rs.5/- this is the scenario for small unit which produces around 30,000 bottles per day. For bigger plants like Aquafina the cost of production would be a little lower and the selling price is higher.

Generally, the profit margin on the sale of the water bottles is not very high. Brand that are only into the bottling segment earn profits because of the huge quantity of bottles manufactured and higher selling price compared to local brands. Jars on the other hand have a huge profit margin. When more and more bottles are seen in the market, people will definitely look forward to buy jars of such a brand.

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SWOT Analysis:

The overall evaluation of the company’s Strength, weakness, opportunities, and threats is called SWOT Analysis. It is the way of monitoring the external and internal environment of a company. Strength and weaknesses are measured from the internal environment and opportunity and threats are measured from external environment.

STRENGTHS:

a. Strong management of the companyb. Latest and efficient machineries and technologies will be

used for productionc. Have a secured line of raw material supplyd. Extensive distribution of networke. High quality of product.

WEAKNESS:

a. The company is coming in the market with a new product

b. Short of fund for further investment.

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OPPORTUNITY:

a. Have opportunity of market/product developmentb. People in metropolitan areas are inclined towards

branded productsc. The bottled drinking water is becoming popular and can

be advertised to gain the market share among health conscious people

THREAT:

a. Large number of competitors in the marketb. Increase price of raw materials and other necessary

things.c. Import & export & other government VAT & TAX

issuesd. Competitors invested huge amount for promotional

activities to gain their market share

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Objectives:

To earn a reputation for being an innovative, trend setting brand.

To be positioned as a lifestyle oriented, vibrant and contemporary product.

Build strong relationship with our suppliers to secure a preferential supply of the best quality products.

Gain the 50% share in the market Provide the pure mineral water.

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Market Summary:

Target market:

We are targeting our market by segmenting it in consumer market and business market. The most important decision about the product will decide what people we want to attract, i.e. our target audience.

Geographic:

Our geographic customers are of Dubai but in near future after establishing our products in the other areas of the world.

Demographic:

Target all age groups Lower and middle income class

Psychographic:

Middle class and lower middle class Lower – middle class Lower – lower class

Market Trends:

Market trends is headed towards a more sophisticated and aware customer.

The preference for high – quality and low product is increasing as customers are learning to appreciate the qualitative differences.

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Consumer market:

We are segmenting the consumer market by family size and social classes exist in Dubai.

Family size

Social class/ Income level

According to income level; consumer like monthly, weekly or daily basis may buy our drinking water from our retailers.

A mini pack of 250ml has been introduced for a daily basis use; our research says 20% of our population buy at least one 250ml of bottled drinking water in a day.

The average customer will buy 5 litres to 250ml bottled water as per their requirement. It will depend on their income and their daily requirement.

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Market Positioning:

This would be our first bottled drinking water launched in Dubai market; there are few large companies who are currently capturing the market of bottled water, a few of them are in top position as market leader and most of them are following the market follower policy.

The big companies are dominating cause of their huge investment and promotional activities, their product quality might not be that much enriched like ours but currently they are in existing market with a major market share. Where we are coming as a new comer and we will follow the market follower strategy for few years but we are not here to be a market follower, our main target would be to be the market leader someday. Company like us cannot challenge them with a unique product right now

We must understand that, we cannot dominate the market right now as the major market share is not on regular bottled water; we will create threat also opportunity for them. Only a single advantage what we got is maybe for two to three years we might dominate the niche market for our goodwill and brand position for the high demand of bottled drinking water but, after that other companies will introduce the same product maybe with our compete price or less as their business is already established. So we can’t just loose our growing market share, in any mean we have to control the market share and grow it as much as possible.

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Marketing Entry Strategies:

Every company takes necessary steps to sell their product in the market, even though the product is highly enriched but without any sales promotion activities or strategy, we can’t get a good response from our target audience.

We will apply marketing strategies and sales strategy/ promotional activities, we have done our survey, and we have talked with the distributors, wholesalers, retailers, and we know what demand do we have in the market, now it’s time for the implementation.

Now the sales promotion activities would be as follow, we are taking some strategies for both our target customers and the distribution channel

For Consumer:

Websites Newspaper Radio Television Discounts Social works Banners Emails TV actors Free samples

For distribution channel:Page | 13

High paid commission Sales target gifts Rewards as best retailers

Awareness of:

Doctors NGO’s Health ministry Community clubs

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Pricing Strategies

Distribution Strategy

Promotional Strategy

Communication Strategy

Pricing Strategy Structure:

In the case of pricing three types of pricing is available:

• Low pricing• Market price• Premium pricing

Advantages of Market Pricing

• The consumer, so greater chance of accepting the price, accepts the price.• Quality of the product initially would be accepted.

Disadvantages:

• No reason for the consumer to shift the product when the price is same.• Product cannot be positioned as a premium product

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Business Market:

Hotels and restaurants:

a. Five Stars: Pan pacific, Sheraton, westin, bhurj al Arab all these are world class five star rating hotel, our target will be to convince the quality manager to use our branded drinking water.

b. Three Stars: Three star hotels are located all around, we will also target the quality manager and the purchase department to buy our bottled drinking water, and also we will offer them a good amount of commission in a manner so that they may not refuse us.

c. Regular Hotels: Even though five, four, three stars hotels are known as corporate clients, a big number of local restaurants are available all around Dubai who fulfils the needs of main stream. We are also going to target them because, even if we count on daily basis, a minimum of 1litre to 5 litres will be required for each restaurant, if we convert it to weekly or monthly basis, it would generate a huge amount of revenue.

d. Catering Services: A good example is the community centres or party halls. If we consider 3 parties in a week, a minimum of hundred litre of bottled water required for each week. And will generate a handsome amount of revenue for the company.

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Manufacturing Process

Three different processes are carried out simultaneously within a plant.

1. Perform Heating Chamber Hot air blowing

The perform is passed into a heating chamber to soften it. Hot air is then blown into it to expand it into a 1 litre bottle

2. Raw material Raw material storage tank Raw water feed pump dosing system Sand and carbon filter High pressure pump Reverse osmosis ozonisation Finished water storage Filling Visual examination Packing Transported.

Raw water is collected in the storage tanks. The water is then fed into the dosing system where anti-scalents are used for softening of water. From the dosing system, water goes into the sand and carbon filter where impurities are removed from the water. Carbon filter removes the organic impurities.

Water then goes into the reverse osmosis (R.O) system which removes 90.95% of dissolved solids. The finished water is collected into a stainless steel storage tank. The tank is provided with a manhole for cleaning process. The tank is used for ozonisation. Ozone gas is passed for disinfection.

Water from this tank is used by filling machines to fill the bottles. Empty bottles are fed from one end of the machine. The automatic machine washes the empty bottles, fills them with water and seals them with the cap. These bottles are then examined against light to check any defect/leakage. Labels are attached to the bottles as they pass on the conveyor belt. As the bottles move on the conveyor belt, a laser prints the batch number on every bottle. The conveyor belt passes through a

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heated chamber which causes the thin plastic up and packed in cartons. The cartons are then tapped and are ready to be sold.

3. Empty jarwashingfillingvisual examsSealTransported.

A separate jar filling section deals with the 20 litres jars. Finished water from the stainless steel tanks is used here. The empty jars are washed from the inside and outside. They are filled with water and then examined for leakage. A seal is put on the mouth of the jar and the jar is ready for transport.

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Raw Materials:

Water: Raw water is generally pumped out from the ground, or from the sea.

Chemicals: these are used in the treatment of water. Soluble salts precipitate over the membranes of reverse osmosis (R.O) system and render them non-functional. Thus anti-scalents are used to keep membranes from fouling. Ozone gas is used for disinfection.

Perform: It is a small plastic test tube which expands into a bottle when hot air is blown into it. The quality of the bottle depends of the preform. These bottles are for one time use only.

Cap: caps are used for sealing the bottle after water is filled into them.

Jar: these are reusable 20 litres plastic containers. They are washed and refilled. The average life of a jar is 40 rounds

Jar Seal: Similar to the cap of bottle, it is used to seal the 20 litres container. Once the seal is broken, it cannot be used again on a jar. Thus, every time a jar is refilled a new seal is fitted on it

Labels: these are of two types. The bottle label is thin and circular which are slid onto the bottle from the top. The jar labels are sticker which are put somewhere on the body of the jar.

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Machinery:

Three different machines are used in this process:

Perform blowing machine: The perform is passed through a heated chamber which makes it soft. This soft perform is then picked and put into the blowing chamber where hot air is blown into it and gives it the shape of the bottle.

Water purification system: This includes the sand and carbon filter and the R.O. system. Raw water is processed and finished water is stored in the stainless steel tank. For every 5000 litres of water produced by the R.O system, 3500 litres of waste water is generated. This waste water is recharged back into the ground via soak pit.

Automatic filling machine: The machine comprises of four different sections i.e.: suction pump, filling unit, cap feeder and the conveyor belt. Empty bottles from the blowing machines are fed into a suction pump which pulls these bottles and pushes them into the filling unit. These empty bottles are washed and filled. The automatic cap feeder unit feeds caps to the filling machine which are then tightened to seal the bottles. These sealed bottles are queued on the conveyor belt where labels are put and batch number is printed.

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Problems Faced By the Industry:

Like any other industry, problems keep knocking the door of the packaged drinking water industry.

Shortage of labour: As the literacy rate grows, there has been a decline in the blue-collar workforce. It is not easy to find cheap labour to do jobs like loading and unloading of trucks/auto, packing cartons, putting labels, filling jars etc. the scarcity of workforce causes hike in wages.

Stealing of jars by deliver guys: Incidents happen when the required amount of jar is not delivered at the customer’s place. These jars are then sold to customers by the delivery guys without any formal record. E.g. A bank requires 10 jars every day. The delivery guy makes a deal with the security guard (pays him a bribe) of the bank and delivers only 8 jars but charges the bank manager for 10 jars. He sells the other 2 jars to the private customer, the record of which is not available with the owner. The day this disorder comes to light, it will bring about a bad name to the brand and will cause loss of customer.

Inventory problems: Sometimes missing/broken jars go unreported and it is difficult to track which jar came from which customer. All the empty jars are collected into one place and it is difficult to track which delivery team is responsible for the missing jar. One solution to this problem is to deploy separate personnel who keep a count of the number of empty jars brought back by each delivery team. But even this becomes difficult when many delivery teams arrive simultaneously for refilling

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Unavailability of machinery parts: the machines used in the manufacturing and packaging process are not purchased from the local market. Thus, their spare parts are not easily available. Most of the parts need to be purchased from the machine’s manufacturing process. The issue can be solved up to a certain level the machine parts which breakdown often can be purchased and stocked so that immediate repair can take place.

Highly competitive market: with new rivals entering the market at regular intervals, the price has to be regulated accordingly. This is clearly visible in the sale of water bottles where the profit margin is just Rs.2-5 per carton. Also, brand loyalty is very low as all the brands taste the same so sometimes people just buy the cheapest product on the shelf.

Illegal manufacturers: These are manufacturer who do not have a license to commercially sell drinking water. They provide water at a cheaper rate then the licensed manufacturer. Sometimes these manufacturers also fake the name of the branded bottles and sell their product. The possible solution is to report any unlicensed unit to the concerned authorities and get them shut down.

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Financial Aspects: (approx.)

Amount (in Lakhs)

Fixed Capitalo Land & Building 50.00o Plant & Machinery 25.00o Other Fixed Assets 10.00

(Furniture bore well, delivery van)o Total Fixed Cost 85.00

Working Capital (Per month)

o Raw material 17.00o Salary & wages 0.75o Utilities 0.50

(Electricity, Fuel)o Other Expense 0.10

(Stationery, telephone)o Total working capital 18.35

o Fixed capital 85.00o Working capital 55.05

(For 3 months)

Total Capital Investment 140.05

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Conclusion:

In spite all the problems faced, packaged drinking water industry is growing with leaps and bounds. The demand for packaged drinking water is driven by higher disposable income, increased preference for hygiene, improved affordability and easy availability of packaged water and shortage of safe drinking water. The industry largely supports institutions like hotels, hospitals, offices and parties, caterers, travel, tourism etc. the required machinery can be purchased easily from a number of dealers and the unit can start selling water once the BIS certification is obtained.

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Bibliography:

Books/Reference:

Branding for success – by Larry checco Marketing Management – by Philip Kottler

Websites:

www.managementparadise.com www.google.co.in www.uaebusinessadvisors.blogspot.com www.africa-business.com

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Appendices:

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