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Marketing In PracticeIndividual Assignment

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EXECUTIVE SUMMARY

The following report was prepared for Country Style Foods (P) Ltd, which is a leading fruit

based products manufacturers in Sri Lanka since 1981. The marketing team has identified a new

product range in the name of SMAK Fruitees which is fresh fruit product range. This product

launch would be a viable investment for the company as it is expected to increase the market

share of SMAK and would increase the current competitive advantage over rivals.

Sri Lanka is one of the countries which would host ICC cricket world cup 2011. At this time

period launching product would increase the reach of the product to the potential customers.

The management appointed a launch team to investigate on the possible environmental

conditions and target groups. Based on the extensive research carried out the following report

has been prepared. The following report has been divided into the following main sections:

1) Situation Analysis2) Marketing Objectives3) Marketing Strategies4) Marketing Mix Tools5) Implementation and Control

Marketing team hereby reports to the senior management of SMAK on the key finding gathered

based on statistical data and through research findings. Key recommendations were given at the

end of the report to make the project effective.

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ACKNOWLEDGEMENT

The author is heart fully thankful to her practical Marketing In Practice lecturer Mr. Rajitha

Silva, whose encouragement, guidance, and support from the initial to the final level enabled the

author to develop and understanding of the subject. Also the author is also thankful to Dr.Mahesha Samarathunga, the mentor, for directing them in the correct path regarding citation and

references.

The author wishes to thanks Mr Sarath Alahakoon for allocated time for the interview even

during his busy schedule.

The author also wishes to thank the library, and her family and colleagues for their help and

support.

The author is responsible for any errors that remain in this assignment.

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TABLE OF CONTENTSEXECUTIVE SUMMARY .......................................................................................................................... 1

ACKNOWLEDGEMENT ............................................................................................................................ 2

LIST OF FIGURES ...................................................................................................................................... 5

LIST OF TABLES ........................................................................................................................................ 5

LIST OF ABBREVIATIONS ....................................................................................................................... 5

1) SITUATION ANALYSIS..................................................................................................................... 6

1.1 BACKGROUND OF THE COMPANY....................................................................................... 6

1.1.1 INTRODUCTION TO THE COMPANY ................................................................................... 6

1.1.2 MARKETING PHILOSOPHY.................................................................................................... 7

1.1.3 PRODUCT PORTFOLIO OF SMAK ......................................................................................... 7

1.2 SWOT ANALYSIS ...................................................................................................................... 9

1.2.1 STRENGTHS ....................................................................................................................... 9

1.2.2 WEAKNESSES .................................................................................................................. 10

1.2.3 OPPORTUNITIES.............................................................................................................. 10

1.2.4 THREATS........................................................................................................................... 11

2) MARKETING OBJECTIVES ............................................................................................................ 12

2.1 QUANTITATIVE MARKETING OBJECTIVES ........................................................................... 12

3) MARKETING STRATEGIES............................................................................................................ 14

3.1 SEGMENTATION ........................................................................................................................... 14

3.2 TARGETING.................................................................................................................................... 16

3.3 POSITIONING ................................................................................................................................. 16

3.4 BRANDING ..................................................................................................................................... 17

4) MARKETING MIX TOOLS .............................................................................................................. 18

4.1 PRODUCT.................................................................................................................................. 18

4.1.1 Introduction to the product range ............................................................................................... 18

4.1.2 Total Product Classification....................................................................................................... 19

4.1.3 Brand.......................................................................................................................................... 20

4.1.4 Product Classification ......................................................................................................... 20

4.1.6 Product Line Decision................................................................................................................ 21

4.1.7 Labeling ..................................................................................................................................... 21

4.1.8 Packaging ................................................................................................................................... 22

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4.2 PLACE........................................................................................................................................ 24

4.2.1 Objective .................................................................................................................................... 24

4.2.2 Level of Consumer Marketing Channel ..................................................................................... 24

4.2.3 Possible Outlets and Middlemen................................................................................................ 24

4.2.4 Distribution Strategy .................................................................................................................. 24

4.2.5 Time of launch ........................................................................................................................... 24

4.3 PROMOTION............................................................................................................................. 25

4.3.1 Communication Platform ........................................................................................................... 25

4.3.2 Market Communication Process ................................................................................................ 26

4.3.3 Promotion Strategy .................................................................................................................... 27

4.4 PRICE ............................................................................................................................................... 28

4.4.1 Factors Affecting Price .............................................................................................................. 28

4.4.2 Pricing Process ........................................................................................................................... 28

5) IMPLEMETNTATION ...................................................................................................................... 30

6) CONTROL.......................................................................................................................................... 31

6.1 BUDGETORY CONTROL .............................................................................................................. 31

6.2 STANDARD REVIEW AND CONTROL....................................................................................... 31

6.3 R & D AND TESTING ..................................................................................................................... 31

6.4 HEALTH AND SAFETY AT WORK PLACE ................................................................................ 32

CONCLUSION........................................................................................................................................... 32

APPENDICES ............................................................................................................................................ 33

REFERENCES ........................................................................................................................................... 38

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LIST OF FIGURESFigure 1CSR of SMAK............................................................................................................................. 7

Figure 2Product Portfolio of SMAK......................................................................................................... 7

Figure 3Product Range of SMAK............................................................................................................. 8

Figure 4SWOT Analysis of SMAK .......................................................................................................... 9

Figure 5 - Production and Testing at SMAK ................................................................................................ 9

Figure 6 - Distribution vehicles of SMAK .................................................................................................. 10

Figure 7Positioning Statement of SMAK Fruitees ................................................................................. 17

Figure 8SMAK Fruitees Brand Logo...................................................................................................... 17

Figure 9PLC Stage of SMAK ................................................................................................................. 18

Figure 10 Total Product Concept ............................................................................................................. 19

Figure 11SMAK Fruitees Logo .............................................................................................................. 20

Figure 12Line Stretching of SMAK portfolio......................................................................................... 21

Figure 13Sample of Label....................................................................................................................... 21

Figure 14 - 220 ml triple laminated stand-up pouches................................................................................ 22

Figure 16200 ml Glass Bottles................................................................................................................ 23

Figure 15 - 1000 ml Tetra Packs for all three flavours ............................................................................... 23

Figure 17Supply Chain ........................................................................................................................... 24

Figure 18 - Communication Platform for SMAK Fruitees ......................................................................... 25

Figure 19 - Market Communication Process .............................................................................................. 26

Figure 20 - Pricing process of SMAK Fruitees........................................................................................... 28

LIST OF TABLESTable 1Demographic Segmentation........................................................................................................ 14

Table 2Geographic Segmentation ........................................................................................................... 14

Table 3Psychographic Segmentation ...................................................................................................... 15

Table 4Behavioural Segmentation .......................................................................................................... 15

Table 5 - Promotion Budget ........................................................................................................................ 27

Table 6Estimated costs associated with launch ...................................................................................... 29

Table 7Budgetary Control....................................................................................................................... 31

LIST OF ABBREVIATIONSGMPGood Manufacturing Practices R & DResearch and Development

GEPGood Ethical Practices USPUnique Selling Proposition

ITIIndustrial Training Institute SLSri Lanka
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1)SITUATION ANALYSIS1.1BACKGROUND OF THE COMPANY

1.1.1 INTRODUCTION TO THE COMPANY

Country Style Foods (Pvt) Limited was formed in 1981 to manufacture and market a range of

food products under the brand name of SMAK to meet the needs of Sri Lankan and export

markets (Athukorala, 2010).

Initially the founders of SMAK purchased a plant sold by Maliban in Jaffna and overtime they

have shifted it to Kadawatha where their current factory is located (Athukorala, 2010). The

company gained market strength over time due to high quality standards they adhered to in their

production and distribution (Alahakoon, 2011).

Due to extensive market research SMAK started capturing niche markets in foreign countries

and stepped into export sector as well (SMAK, 1999). Currently they export their range of

products to more than 10 countries (Alahakoon, 2011).

Source: Alahakoon (2011)

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1.1.2 MARKETING PHILOSOPHY

In authors perspective SMAK follows Societal Marketing concept. Athukorala (2010),

explains that SMAK sets another example as it practices Green causing minimal; in fact zero

harm to the countrys environment . It produces hygienic fruit drinks without any harmful

preservatives or colorings.

By using only the locally grown fruits and purchasing over several million rupees worth of

produce cultivated SMAK provides a ready market for local fruit and vegetable producers of

rural Sri Lanka (SMAK, 2010).

Source: SMAK (2010)

1.1.3 PRODUCT PORTFOLIO OF SMAK

Source: SMAK (2010)

Figure 1CSR of SMAK

Figure 2Product Portfolio of SMAK

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Source: Authors Work

Fruit Drinks Herbal Drinks Milk Added Drinks Other Products

Mango

Pine Apple

Lime

Tamarind

Passion Fruit

Wood Apple

Coffee

Anoda

Mixed Fruit

Sherbet Drink

Vanilla

Ginger

Eramasu

Chocolate

Fruit Chunks

Water

SMAK

Figure 3Product Range of SMAK

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1.2SWOT ANALYSIS

Source: Compiled by Author

1.2.1 STRENGTHSSMAK is a reputed brand in SL since 1981 (Alahakoon, 2011), with HACCP, GMP, GEP, ISO

22000, SLS (SLSI corporate website and Alahakoon, 2011).

Source: SMAK (2010)

Brand Name Quality Assurance Usage of hybrid technology Island wide distribution Importance given to HR and Training Financial Stability Relationship with local farmers Storage Capacity

Low Promotional Efforts Environmental Pollution No awards received to date

Reduction in Synthetic Drinkconsumption rate

Expansion in scope of business End of war in Sri Lanka More access to raw materials

Low quality drinks with similarnames

Reputed hotels and restaurantsoffering other fruit drinks

Seasonal impact on fruit cultivation New fruit drink flavours entering the

market

STRENGTHS WEAKNESSES

OPPORTUNITES THREATS

Figure 4SWOT Analysis of SMAK

Figure 5 - Production and Testing at SMAK

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SMAK uses stateof the art technologies in production and has a very good distribution strategy

with corporation with Alahakoon distributors (SMAK, 2010).

Source: SMAK (2010)

450 employees at SMAK are been trained accordingly by ITI (Alahakoon, 2011). Open doorpolicy makes their employees feel free to express their views (Alahakoon, 2011). SMAK is

financially stable in terms of annual revenue which has grown since 1981 2010 from LKR 1M

LKR 600M (Alahakoon, 2011). Due to seasonal impact on fruit cultivation SMAK developed

an integrated storage system to save 2.5M3M tons of fruit pulp (Alahakoon, 2011 and SMAK

2010).

1.2.2 WEAKNESSESComparing to competitors SMAK do very few promotions for their products. SMAK use ofplastic bottles is going against its societal marketing philosophy by polluting the environment.

Directors of SMAK do not believe in getting awards so till to date the brand didnt receive any

rewards.

1.2.3 OPPORTUNITIESStumptuous corporate website (2011) says, that synthetic drinks like carbonated soft drinks

consist of carcinogenic which is cause for cancer. More awareness has been created regarding

this issue and people started to choose natural fruit drinks. Directors plan to expand the business

into hotel industry is a good plan to promote SMAK drinks (Alahakoon, 2011). End of war in

Northern region has created good demand and this has removed the barriers to reach raw

materials like karathakolumban mango in Jaffna.

Figure 6 - Distribution vehicles of SMAK

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1.2.4 THREATSFruit drinks with similar brand names like SMACK, SNAK has created issues for cutomers

which is threat to the reputation of SMAK (Alahakoon, 2011). KFC provides Cargills kist nectar

drinks whereas hotels provide sunquick which is a threat to SMAK. Seasonal impact on fruit

cultivation is a threat to SMAK as they had to spend a lot in R & D to enhance storage facilities.

New brands are coming into the market which creates a immense competition.

(Refer Appendix 1 & 2)

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2)MARKETING OBJECTIVES2.1 QUANTITATIVE MARKETING OBJECTIVES

Attracting young kids segment from 5-15 years with next 3 yearsAlahakoon (2011) says, SMAK is very popular among adolescents. Kids fall into this category is

about 3 million which is 18% of the total population (Department of census and statistics

corporate website, 2011). Fruitees contain fruit calories which is necessary for the kids fall into

the age category. SMAK has 49% (Alahakoon, 2011) market share so this is reachable within

next 3 years.

Capturing the market share 1-2% by next 2 yearsSMAK occupies 49% of market share in market for fruit drinks (Alahakoon,2011). Launch of

this 3 new flavours. As it would satisfy 2 segment groups of kids and diabetes patients, it is

possible to reach that target.

Giving more opportunities to mango producers in Jaffna by purchasing 600 tons ofmango pulp each year

After the end of war SMAK has a potential of reaching the farmers in Jaffna to purchase

karatha kolumban mango which was an ingredient in the original recipe. Because of the

seasonality SMAK needs to preserve about 600 tons of mango pulp on average each year

(Alahakoon, 2011). This mango can be purchased from Jaffna to create an opportunity for local

farmers.

Reducing the synthetic drink consumption rate by 2-3% within 2-3 yearsCarbonated drinks such as soft drinks and as well as alcoholic drinks has cancer causing

ingredients in it. SMAK fruitees expect to reduce the consumption rate of these types ofbeverages by 2-3% as SMAK is made out of natural fruit pulp without any harmful

preservatives. Through promotion this can be reached.

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Reaching the 10% of diabetes population in Sri Lanka by launching low sugar andno sugar fruit drinks within 3 years

As stated by Daniel (2011) diabetes range in Sri Lanka is at increasing phase. 10% of the

population has diabetes (Daniel, 2011). Fruitees are expected to be launched in 3 flavours which

only have fruit sugar so it would be healthier choice for diabetes patients.

2.2QUALITATIVE MARKETING OBJECTIVES Empowering healthy drinking habits among Sri Lankan citizens by next 5 years

SMAKs social responsibility will be aligned with the above objective as it would reduce

synthetic drink consumption rate among Sri Lankans.

Increasing brand awareness within next 2 yearsDuring the world cup SMAK has planned to launch this new variety which would create more

brand awareness. SMAK is expecting to spend LKR 1 million only on promotion to create

awareness.

Combating the increasing competition in fruit based natural drinks for next 3 yearsIncreasing competition from brands like minute maid should be combated by launching this new

variety. This product would add more value to the price paid by the consumers and it is fresh so

would be different from other fruit drinks. SMAK has to 51% of competition in the fruit

beverage industry and expects to keep the market leadership by this launch.

Decreasing the harm done to the environment by new packaging in the years tocome

Even though SMAK thinks about social responsibility it is giving a huge burden to the

environment by plastic bottle packaging. Fruitees will be launched in new packaging which is

environmentally friendly and would set example to other fruit drink manufacturers.

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3)MARKETING STRATEGIES3.1 SEGMENTATION


Geographic Tropical Region:

SMAK can be sold island wide but there are certain areas in which the

weather is always hot. Population density of tropical region is about

13.07 m (Dept of census and statistics, 2011).

Table 2Geographic Segmentation

Source: Compiled By Author

Demographic Age:

Special recognition to the kids between 5-15 years who love fruit

drinks with some differentiation.

Life Cycle Stage:

Low and no sugar variety in Mango drink is approaching people above

40 years to control health issues.

Income:

People who earn more than Rs 35465 per month which is the mean Sri

Lankan income per month (Dept of census & statistics, 2011).

Family Size:

1 ltr, 500 ml and 220 ml bottles are going to be launched to match the

family size.

Table 1Demographic Segmentation

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Psychographic: Interests:Young adults & middle aged people started changing to healthy food

consumption. Non carbonated and natural fruit drinks would be their

first preference.

Life Style:Fast food trend is popular now days. So ready to drink fruit beverages

would be welcomed among households without preparing them.

Table 3 Psychographic Segmentation


Beahvioural: Usage Rate:As explained in medin corporate website (2011), the usage rate of fruit

drinks has increased from 10% to 20%.

Benefits:

Low & no sugar drink would give the exact taste of fruit pulp while

helping to keep away from health issues and would also help to

maintain the perfect figure.

Table 4Behavioural Segmentation


(Refer Appendix 3)

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3.2 TARGETING

Author has chosen the segments of kids who fall into the age of 5-15 and above 40 years old

people who has diabetes and who expects to get rid of health issues in future through synthetic

drink consumption.

In order to target kids SMAK should target their parents. Purchasing power of the age group of

5-15 years is very low and they are dependent on their parents. American academy of pediatrics

(2001) says that per day kids from 5-18 years needs 2800 kilo calories which can be provided by

4 fruit drink servings. Calorie requirements can be satisfied by this fruit drinks.

Considering about the diabetes patients in Sri Lanka which is about 10% of the population

(Daniel, 2011) needs to consider about their consumption of sugar free drinks and foods.

SMAKs no sugar and low sugar categories in fruitees would be a choice for people above 40

years.

Purchasing power of SL people is in average range. So, different sizes of packages can be

targeted towards low income groups and large family households. Present pattern in fruit drink

consumption is towards purchasing ready to drink fruit drinks.

3.3 POSITIONING

Special attributes of Fruitees are as follows:

Another launch from the market leader of fresh fruit drinks in SL. Healthier than carbonated drinks. Low / no sugar varieties available to people have diabetes and health issues. Consumer can have the fun of drinking new flavours which are new to the market. Suitable for kids as it would provide more calories to give more energy.

The strategy is USPas SMAKs product is differentiated through launching of new flavours

which are not available in the market and they are fresh. Positioning Statement of Fruitees is

Fascination of Fruits, in the sense customers are going to get delighted with the taste of fruits.

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Source: Authors work

3.4 BRANDING

SMAKs as a brand name has gained popularity in Sri Lankan fresh fruit drink industry for more

than 30 years. SMAK is known for natural goodness which contains in fresh fruits. SMAKs new

product variety Fruitees can be made popular through the launch during world cup period.

SMAK can change its promotional strategy to make the new product range more popular by

advertising on big scale.

Source: Designed by Author

Fascination of

Fruits.

Figure 7Positioning Statement of SMAK Fruitees

Figure 8SMAK Fruitees Brand Logo

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4)MARKETING MIX TOOLS4.1PRODUCT4.1.1 Introduction to the product range

SMAK decided to launch a product range with the name of SMAK Fruitees with 3 new

flavours:

Mango Delight King Coconut Bliss Pomegranate Wonder

It has two varieties. One is for kids who need more energy through calories and other variety is

for people above the age of 40 years who are concern about dieting, who wants to keep away

diabetes and other health issues. This variety is 100% fruit based drink.

According to the product life cycle SMAK is in the stage of Maturity so that it is important to

increase the product range to exist in the market for long term rather than reaching the declining

stage.

Source: Google Images corporate website (2011) and authors work

Figure 9 PLC Stage of SMAK

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4.1.2 Total Product Classification


Core Product

This is a healthy drink to quench the thirst.

Basic Product

This will be a thirst quencher coming in 3 flavours with the brand name of SMAK Fruitees in

environmentally friendly packaging.

Expected Product

A healthy drink variety made out of fresh fruits from local farms, made in a recommended

manner of production to improvise the healthy lifestyle of consumers without any added

preservatives and colorings.

Augmented Product

SMAK Fruitees will have ISO 22000, SLS, HACCP, GMP and GEP certifications which assures

quality of it. Drinks are loaded with calories and the diet range would have very low sugar and

no sugar varieties to achieve competitive advantage.

Potential Product

SMAK will be added more nourishing flavors to this Fruitees range to satisfy customer needs.

PotentialProduct

Augmented

Product

ExpectedProduct

BasicProduct

CoreProduct

Figure 10 Total Product Concept

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4.1.3 Brand

The brand name will comprise of SMAKs corporate logo and Fruitees Name on it with the

caption statement.


4.1.4 Product ClassificationIt is an FMCG good which is convenient and variety seeking product.

4.1.5 Product Attributes

Consists of 3 flavours Normal variety comes with high calories which are essential for kids from 5-15 years.

Diet pack comes without calories / sugar which are suitable for diabetes patients and

health conscious people.

Product will come in 220ml juice pouch, 200ml glass bottle and 1ltr pack. Product will be in line with SMAKs marketing concept of societal marketing. Will expire earlier than other fruit drinks of SMAK as it is fresh.

Figure 11SMAK Fruitees Logo

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4.1.6 Product Line Decision

Introduction of SMAK Fruitees is a decision of Line Stretching with an increase in SBU.

Figure 12Line Stretching of SMAK portfolio

Source: Compiled by author

4.1.7 Labeling

Source: Created by Author

Fruit

Chunks

Milk

Added

Herbal

Drinks

Fruit

DrinksFRUITEESWater

Manufactured by: Country Style Foods, Kadawatte.

Must keep refrigerated. Use within 1 day.

Ingredients - Water, Mango pulp, sugar, citric acid-E330

Manufactured Date: 1/2/2011

Expiry Date: 1/5/2011

Nutritional Information

Typical values for 100ml

Energy53.6kcal/287

Sucrose0.49g

Glucose8.24g

Calcium4.3mg

Iron - 0.004mg

Vitamin C2.9mg

Vitamin A0.28mg

Figure 13Sample of Label

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4.1.8 Packaging

SMAK Fruitees will be launched in diverse choice of packages representing 3 different

quantities (Refer figure 14, 15 and 16).

The packaging for Fruitees is different from existing range as more concern is given on

environmental impact of using plastic bottles. Packs will also be available with the caption of

Light which is suitable for diabetes patients and dieting people.


Figure 14 - 220 ml triple laminated stand-up pouches

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Figure 16200 ml Glass Bottles


Figure 15 - 1000 ml Tetra Packs for all three flavours

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4.2 PLACE4.2.1 Objective

The placing objective is to make Fruitees available in all possible outlets or locations to reach the

customers much as possible.

4.2.2 Level of Consumer Marketing Channel

Figure 17Supply Chain


Local fruit producers will supply fruit pulp to country style foods to manufacture fruitees and it

will be sent to retail outlets all over SL by Alahakoon distributors and then it will be sold to the

end user. It is the 2nd level of supply chain strategy.

4.2.3 Possible Outlets and Middlemen

Super Markets Schools Hospitals

As Fruitees will be delivered through 2nd level of supply chain possible partner relationship

management strategies should be planned to create possible and effective relationship with

intermediaries.

4.2.4 Distribution Strategy

Intensive Distribution as it is a convenient good.

4.2.5 Time of launch

Fruitees can be launched during February as it is usually high money circulation time due to

cultivation. As world cup is going to occur in SL it would create much awareness.

Raw material

su liers

Manufacturer Retail Outlets Customer

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4.3 PROMOTION4.3.1 Communication Platform

Fruitees would be promoted mainly through advertisements. The following mediums are going

to be used for this activity:

TV Advertisements (repetitive) POS displays Sponsoring events Face book advertisement Bill Boards Advertising in health magazines

Figure 18 - Communication Platform for SMAK Fruitees


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4.3.2 Market Communication Process


A. Indentify Target MarketFruitees is targeted towards young kids from 5-15 years of age and also targeted towards elder

people who are above 40 years and healthy conscious people.

B. Determine Communication ObjectivesSMAK focuses on AIDA model of communication in order to determine the objectives (Mind

tools corporate website, 2011). The main objective is to create knowledge to the target group

about the differentiation which would suit their consumption pattern.

C. Designing the Communication MessageThe communication message of Fruitees is Fascination of Fruits.

D. Selection of Communication ChannelRefer 4.3.1

Figure 19 - Market Communication Process

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E. Establishing Marketing BudgetPromotion Medium Cost (LKR)

TV Advertisements

-Shakthi TV

-Sirasa TV

250000.00

POS Displays 20000.00

Sponsoring

-World Cup 2011 tickets

-School sports events

500000.00

15000.00

Face Book Advertisement 3000.00

Bill Boards

-Near schools and hospitals 200000.00

Printed Media

-News Paper health corner

-Leaflets and Bulletins

20000.00

10000.00

Total Budget 1018000.00

Table 5 - Promotion Budget


F. Measure ResultsFeedback can be through customers. Measurement can be done by using the awareness created,

no of bottles purchased and also by customer preferences after the launch of the product.

4.3.3 Promotion Strategy

Fruitees should be promoted by using pull strategy as the company invests on promo tional

activities to create demand in return from customers.

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4.4 PRICE

4.4.1 Factors Affecting Price

A. Internal Factors Production Cost Promotion Cost R & D Cost

B. External Factors Competitor activities on pricing Governments changes in tax systems, incentive schemes etc. Due to weather patterns storage quantity and related activities should be updated.

Demand conditions

4.4.2 Pricing Process

Figure 20 - Pricing process of SMAK Fruitees


A. Selection of pricing objectiveObjective is to present the product to the target customers at an affordable price while, achieving

a competitive position among competitors to retain the market leadership.

Selecting the Pricing Objective

Determing demand

Estimating costs

Analyzing competitors' costs, price, & offers

Selecting the pricing strategy & Set the Final price

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B. Determining demandFruit beverages come into the monopolistic market condition. The demand is elastic. As Fruitees

is an impulse good demand condition needs to be considered more.

C. Estimation of Costs

Source: Auhtors Work

D. Analysis of competitor pricesDirect Competitors of SMAK drinks would be,

MD Real Nectar Cargills Kist Nectar Cecil Organic Minute Maid Sun Top

The prices and offers of the competitors are more or less the same as there is a heavy competition

among the brand names.

E. Selection of pricing strategy and finalizing the priceSMAK Fruitees will be launched by using penetration pricing by giving discount. The price

will be as same as the usual prices in the markets but the additional value will be more.

220 ml - Rs 38.00

200 mlRs 33.00

1 liter - Rs 150.00

Table 6 Estimated costs associated with launch

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5)IMPLEMETNTATION

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6)CONTROL6.1 BUDGETORY CONTROL

200 ml Bottles

Year 2011 2012 2013

Sales Price 33/= 36/= (est.) 37/= (est.)

Quantity 31200 bottles 40000 bottles 48000 bottles

Total Revenue LKR 1029000/= LKR 1440000/= LKR 1776000/=

220 ml Packets

Year 2011 2012 2013

Sales Price 38/= 40/= (est.) 42/= (est.)

Quantity 35000 packets 38000 packets 40000 packets


1 Liter Home Packs

Year 2011 2012 2013

Sales Price 150/= 160/= 165/=

Quantity 20000 packs 30000 packs 40000 packs


Table 7

Budgetary Control


Production managers and sales managers have to focus on the above planned budget annually. If

there is any variation necessary action needs to be made to increase the revenue.

6.2 STANDARD REVIEW AND CONTROL

Management should ensure that the ISO and SLS managers are doing their role perfectly

regarding the quality control aspects.

6.3 R & D AND TESTING

Management must carry out continuous R & D to ensure that the food safety standards are met.

Food testing in terms of acidity, total sugar content, coloring variations should be done to

comply with SLS. Storage capacity should be developed by thinking on storing fruit in their

natural way without using chemicals.

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6.4 HEALTH AND SAFETY AT WORK PLACE

Production workers must ensure wearing gloves and scarves while at work. This is to ensure that

the products are out of any harm to the final consumer.

CONCLUSION

The SMAK Fruitees is a new product range from SMAK to reach the market of kids and diabetes

patients. This launch would increase the market share of SMAK and also would combat the

emerging competition from the fruit drink market.

Launching the product in 3 new flavours to the market would create competitive advantage for

the company in future. During the world cup season, company would be able to generate more

awareness for the product.

The author suggests the company to launch the product on time as it is viable.

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APPENDICES

1) SWOT AnalysisSTRENGTHS

Brand NameSMAK was introduced to Sri Lankan beverage industry in 1981 and built a strong

relationship with fruit lovers (Alahakoon, 2011). Brand recognition is an asset for the

company which differentiates their product from others in the similar field (Athukorala,

2010).

Quality AssuranceAll SMAK drinks are tested at the factory to comply with all world food safety standards.

SMAK has obtained SLS (SLSI corporate website, 2011), ISO 22000 (Alahakoon, 2011),

HACCP, GMP, GEP certificates(Alahakoon, 2011).

Usage of hybrid technologySMAK is well equipped with state-of-the-art equipment which is hybrid dependent upon

the variety of drink and packages (SMAK, 2010). They rapidly update their production

plant with latest technology to be more efficient in production (Alahakoon, 2011).

Island wide distributionSMAK utilizes effective and innovative distribution strategy backed up with marketing

expertise to ensure that the product is available in all possible outlets in SL (SMAK,

1999).

Giving more importance to HR and trainingSMAK currently occupies 450 employees (Alahakoon, 2011). Directors of the company

are having expertise relating to the field they operate. Each level of employees will be

trained by ITI as and when required. (Alhakoon, 2011). SMAK has an open door policy

so that any issue can be immediately dealt (Alahakoon, 2011).

Financial StabilityIn 1980s SMAK could only generate about Rs 1million sales annually (Alahakoon,

2011). But in 2010 they generated about Rs 600million (Alahkoon, 2011).

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Long term relationship with local farmers and storage capacitySMAK has created long term relationship with local fruit producers to have access to their

main raw material (SMAK, 1999). SMAK is the largest buyer of locally grown fruit on

average about 2.5M 3M tons of fruit pulp (Alahakoon, 2011). SMAK has also developed

integrated fruit procurement and storage system to supply full range of products throughout

the year (Alahakoon, 2011).

WEAKNESSES

Low promotional effortsSMAK only does point of sales promotions. Comparing to Cargills Nectar, Minute maid and

MD they are lacking behind in promotion.

Environmental PollutionSMAK uses plastic bottles as packages. This is harmful to the environment and it is going

against their marketing philosophy of going green.

No awards received to dateSMAK hasnt received any quality or performance related awards as the directors are not

showing any interest (Alahakoon, 2011). Companies like Cocacola and Ceylon cold stores

are been recognized as superbrands (Superbrands corporate website, 2011). This will

promote minute maid instead of SMAK.

OPPORTUNITIES

Reduction in synthetic drink consumption rateSynthetic drinks consist of carcinogenic which is a cancer causing element. Health reports

on this issue brought in awareness among healthy conscious people. This has made them to

consume fruit drinks instead of carbonated drinks (stumptuous corporate website, 2011).

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Expansion in scope of businessSMAK founders started working on moving into home marketing and hotel & catering

industry (Alahakoon, 2011). This would enable the company to attract more customer base to

earn more revenue in future by making SMAK products more famous.

High time establish in Northern and Northern East regionAs war in SL came to an end there is a high chance for SMAK to establish their products in

those areas.

More access to raw materialJaffna is famous for karathakolumban variety in mango. After the end of war there are

more suppliers willing to supply SMAK with mango pulp (Alahakoon, 2011). SMAK

expanded by 40% in 2010 and was able to meet the exceeded demand due to willing and able

fruit producers (Alahakoon, 2011).

THREATS

Low quality drinks with similar namesIn the market there are fruit drinks with the name of SMACK, SNAK. They are low in

quality and lead to stomach aches to consumers. SMAKs brand name is under the threat to

such consequences (Alahakoon, 2011).

Reputed restaurants/hotels prefer other fruit drinksAccording to Alhakoon (2011), Sunquick is most recognized drink at hotels. In KFC

Cargills KIST nectar is given more preferences in seasons.

Seasonal impact on fruit cultivationDue to weather patterns in SL continuous supply of fruit pulp gets affected. SMAK has to do

massive R & D activities to identify solutions to store fruit pulp in a natural way without any

preservatives.

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New entrance of fruit drinks from reputed brandsMD Real Nectar, Cargills KIST Nectar and Minute maid fruit drinks come up with new fruit

drink flavors to the fruit drink market. Increasing competition is a challenge to SMAK.

2) PEST AnalysisPolitical Factors

Political move to stop the civil war in SL has created many business opportunities in Northern

region. Thithata Matha campaign by the government has almost discouraging the alcoholic

drinks in SL. Under uthure vasanthaya scheme government started developing the northern

region which would increase the infrastructural developments which would benefit SMAK in

return.

Economical Factors

The economy of SL is expected to grow by 6.9% in 2010 (CIA corporate website, 2011). This is

about 2 times higher than last years growth. That means this would increase the household

income and per capita income. Increase in per capita income creates more opportunities for

SMAK. Inflation is at 5.6% which is higher than last year (CIA corporate website, 2011). This

would have an impact on discretionary income and would reduce the demand for goods. SMAK

doesnt receive any tax benefits from government (Alahakoon, 2011).

Social Factors

SL teenagers are so fond of foreign brands where as rural people prefer SL goods. Old

generation only seek for healthy foods but teenagers mostly go for fast foods kind of foods or

beverages which are aligned with current trend.

Technological Factors

Utility services are almost available in all over the areas. Infrastructure is developing under his

Excellency president Mahinda Rajapakses patronage.

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3) Segmentation

Out of the above classification age classification from 5-15 can be selected as viable segment as

they are dependent on their parents and parents would wish to give the best to their kids. The

population falls into this category is 18% of the total population (Dept of census and statistics,2011).

Medin corporate website (2011) says usage rate in fruit drink consumption has increased 10% to

20% so which would increase the demand for SMAK fruitees.

Average family size in SL is 4 members per household (Dept of census and statistics, 2011)

which again can be viable due to the 1 ltr and 500 ml package that going to be launched.

Tropical region of SL consists of 13.07 million people which are about 70% of the whole

population (Dept of census and statistics, 2011). All of these districts fall into dry zone so that

cool drinks which are nutritious would reach the segment easily.

As mentioned by Daniel (2011), diabetes rate in SL is about 10% out of total population which is

another viable segment.

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REFERENCES

American Academy of Pediatrics (2011) The use and misuses of fruit juices in Pediatrics,

[online] availbele: http://medind.nic.in/ibv/t08/i3/ibvt08i3p215.pdf [Accessed on 29th January,

2011]

Alahakoon, S. (2011), Background about SMAK, [Interview], 6th January 2011.

Athukorala, N. (2011), Leaders [online] available: http://www.google-

webhosting.com/leaders/alahakoon2.html [Accessed on 14th December, 2010]

Ceylon chamber of commerce corporate website (2011) [online] available:

http://www.chamber.lk/inpages/informationbank/economicinfo.php [13th January, 2011]

CIA corporate website (2011), [online] available: https://www.cia.gov/library/publications/the-

world-factbook/geos/br.html [Accessed on17th February, 2011]

Department of census and statistics corporate website (2011) available:

http://www.statistics.gov.lk/PopHouSat/Pop_Chra.asp [Accessed on 23rd January, 2011]

Daniel. S, (2011) Rising diabetes in Sri Lanka, [online] available:

http://sundaytimes.lk/090621/MediScene/mediscene_7.html [Accessed on 23rd January, 2011]

Knee,D.& Walers, D. (1985) Strategy in retailing: theory & Application, P.Allan, UK.

Mind tools corporate website(2011), [online] available: www.mindtools.com Communication

Skills [Accessed on 1st

March, 2011]

Super brands corporate website (2011) [online] available:

http://www.superbrands.com/lkc1/pdf/18_consumerSB.pdf[Accessed on 7th January, 2011]

Sri Lanka Standards Institute (2011) [online] available:http://www.slsi.lk/search.php [Accessed

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Stumptuous corporate website (2011) [online] available: http://www.stumptuous.com/artificial-

sweeteners-not-a-get-out-of-bad-habits-free-card - Cached[Accessed on 13th

January, 2011]

SMAK, (1999), Advertisement Brochure, Country style foods, Sri Lanka.

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