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Channel Design For Packaged Coconut Water Marketing Essay

Through supplementary research on supply string in developed marketplaces like USA and Europe, and also in growing market segments like Africa that happen to be huge marketplaces for packed coconut water, we've tried to check out aspects like sourcing, travelling and distribution. Existing distribution channel in India for FMCG goods and drinks were also studied to understand the current scenario.

Indian retail market dynamics are different for rural and urban areas and therefore both were analyzed in detail to learn the most suitable model for both markets. Finally, we have proposed a cross types model consisting of a model for metropolitan markets and another type of model for rural market segments.

Contents

INTRODUCTION

The supply of coconut drinking water in India continues to be quite definitely fragmented and although it is available in packed bottles and pouches in a few parts of India, the supply of it is mostly on roadside outlets and road distributors, which is principally the unorganized market.

Hence we've analyzed the ways companies do business in coconut water far away where the supply chain is developed and has a greater market than we have in India. There will vary models that are opted for in several places of the world depending on customer personal preferences, customer recognition, and the marketplace size and growth rate.

Although in India, generally the production is within rural places, there needs to be developed a powerful and efficient distribution channel whereby the coconuts are transported from these small rural places to handling vegetation and factories.

The market for coconut drinking water drinks grew by 100 % in 2011, taking the retail sales value folks and European marketplaces to over $265 million (Rs. 1, 457 crore). The market is slated to increase another 50 % this season. Bottled in spectacular flavours and in stylish cartons, it's expensive: About $4 (Rs. 220) a can. But it's still available at Rs. 10-30 in Indian bazaars

OBJECTIVES

Our aim is to study and design circulation strategies for packaged coconut drinking water. We intend to look at the intricacies of the category setup in the region of distribution route, schemes, margins, associates, and vehicles from various on / off field experiences. The project will cover the scope of both traditional standard trade/rural as well as the emergent modern trade.

We intend to understand the syndication channel for existing packed drinks and then identify the feasible options available for coconut water. We will conduct our analysis using key or secondary data and design a syndication channel for the same. A detailed explanation of the designed route will get and a comparative study will also be carried out. We will bottom part our design keeping the following framework at heart:

Precondition of marketing channel formation

Identification of goals of distribution

Specifications of the responsibilities of distribution

Provision of choice composition of marketing channel

Analysis of factors influencing the performance of marketing channel

Setting the optimum framework of marketing channel

Selection of marketing route intermediaries

LITERATURE REVIEW

Title-1: DEMYSTIFYING Resource STRATEGY FOR COCONUT WATER

Source: Beroe Inc

Samyuktha S. R | Senior Research Analyst

Paradigm Transfer in the Coconut Normal water Market

2012

Ё Ё Ё

2020

Concentrated demand: The demand for coconut drinking water is principally from the developed countries, especially from the US. There is an increasing demand from European union and Australia as well.

Demand Focus

Demand throughout the world: Increasing per capita income, and throw-away income across the developing parts will get more demand for coconut normal water.

Level of Shift

Price top quality: At present, coconut drinking water is priced around double of other mass market sports drinks.

Price Equivalence

Price parity: It is vital to bring the prices of coconut normal water to similar price items of other existing product category to maintain in the market.

Level of Shift

Expansion of product portfolio: The major drink manufacturers are currently broadening their product collection comprising more normally healthy drinks such as coconut drinking water and RTD Tea.

Consumer Preference

Market cannibalization: There may be potential hazard from normally healthy beverages category that can cannibalize the existing traditional soft drinks. This might be eating soft drink manufacturer's original market leading to an overall drop in sales.

Level of Shift

Lower product differentiation: There are currently very few variation introduced coconut water. Till now it includes come in standard flavours primarily fruit produced.

Degree of Product Variation

Higher product differentiation: You can find high possibility of bringing out multiple flavours and product enlargement in conditions of launching newer/innovative product line produced out of coconut water particularly low calorie smoothies.

Level of Shift

Regional Insights - Coconut Normal water:

Factors

US

Europe

Southeast Asia

Market Share

Consolidated

Consolidated

Fragmented

Vita Coco is the greatest player in the US which holds about 60% of the talk about. In the European union, Green coco is the leading player, but in Southeast Asia the marketplace is highly fragmented.

Coconut Availability

Low

Low

High

Southeast Parts of asia are the greatest coconut producing countries. Large levels of coconut are available in these areas for extracting coconut drinking water.

Consumer Awareness

Low

Low

High

The natural beverage has a locational benefits in tropical belts in conditions of common consumer understanding about its health insurance and nutritional benefits due to centuries-long use unlike other areas namely the united states and European union.

Health Consciousness

High

High

Low-Medium

Increasing health awareness across the EU and US have led to growing demand for health concentrated drinks. This has paved way for the demand for coconut drinking water recently.

Supplier Strategy

The present procurement strategy by coconut water manufacturers is by entering into a long-term contract with multiple suppliers across the major coconut producing countries like the Philippines and Indonesia to ensure supply assurance. However, there is possible shift in the design of permanent sourcing strategy by the companiesin the coming years to make certain on continuous supply of coconut water by either learning to be a major/minimal stake holder in the suppliers firm or by vertical integration. By vertically integration the firms are bound to own coconut plantation which requires high investment and trained labor to look after plantations. Nevertheless the companies can have assured resource through vertical integration excluding unfavorable weather conditions, that includes a critical role to learn in conditions of resource disruption.

Procurement strategy review and outlook

GAPS WITHIN THE LITERATURE:

The paper does not mention the way the appearing countries in Asia would have to do to in order to achieve a distribution system where in fact the product comes in all small rural outlets as well, because the marketplace structure differs in countries like India when compared with the developed resource string system in developed western countries.

Title-2: BUILDING A DISTRIBUTION Gain IN INDIA

Source:www. bcg. com/CreatingDistributi onAdvantageinIndiaMay07

Authors: Vikram bhalla, Abheeksinghi, Sharad varma

India has become world's largest market segments for consumer goods Due to fast growing of retail sector, India has been number to consumer multinational companies for a number of decades

Indeed, quite a few Indians think of Unilever, Nestle & Philips Consumer electronics as Indian companies Retailing density with an increase of than 12 billion retail outlets, India has highest retailing densities on the globe Still India is relatively new territory with lots of inter-related factors that produce distribution route challenging.

Most distribution models in India involve many intermediaries between companies and their vendors. Other distribution includes both sellers and Wholesalers who are served directly by the manufacturer. Infrastructure complexity- Only few full service syndication companies operate

GAPS IN LITERATURE:

The literature does not mention what ought to be the distribution strategy for a tiny price product like coconut normal water, which must also be changed from the tree into the hands of the consumer in s small time period to avoid the product getting spoiled.

Title 3: Evaluation & Analysis OF DISTRIBUTION Programs IN FMCG

Source:http: // www. beemanagement

Authors: Bee Management consultancy private limited.

The supply string of products in the FMCG market in India is one of the longest supply chains a business could really have. There are as much as 5 degrees of intermediaries involved with the entire resource chain.

Even though these FMCG companies are big multinationals and Indian but face a significant challenge of earning their products available for sale in the right amounts and in the right time

FMCG's don't genuinely have a broad network of sales people and other power which is required and is suitable for wedding caterers their products to the markets.

This aspect is bought out by vendors, wholesalers and shop whose margins on the products actually double the price tag on these products when a final consumer purchases it.

These products are transported either via roadways or railways within the domestic markets and normally don't take more than a week to attain the sellers.

The distribution activities are highly volatile and powerful. Since from the quantity game, manufacturers make all possible attempts to improve sales and promote their vendors to earn much more and more requests from the suppliers and wholesalers.

GAPS IN Books:

The gaps in the paper regarding coconut water would include the way the supply string system would be different for the product as the majority of the sourcing occurs from the rural places and the demand lies in both the rural and metropolitan area, hence the rural demand must be satisfied with the devices supplied immediately from the rural areas and the rest needs to be transported to the metropolitan processing plant life.

Research Methodology

We have taken the following research technique:

Secondary Research- Research was completed to understand the prevailing syndication system for coconut normal water for any player and any market. Because the product category is principally dominated by unorganized players, beverages industry was analyzed as the product category was similar to the coconut water. Major options for secondary research were websites, books review and articles.

Primary research- Research was done to determine the expectation of the consumers from coconut drinking water and to profile the customer predicated on data research to goal for our product. Convenience sampling was used.

CHANNEL MEMBERS

Traditionally inside our country a consumer has already established a specific ritual before purchasing the coconut normal water. The ritual begins with first choosing the right coconut which is exposed in from of him and then he drinks it. That is very much not the same as the experience of shopping for a coconut normal water drink from at tetra pack.

Modern Trade/Large Chain Retailers

Direct access to the consumer

Demands contribution margins, special discounts etc. from the Brand

Small Person Retailers

Huge amount of small point sales

Can also buy products directly through cash and take or modern trade

Indirect channel (Wholesalers)

Play a fundamental role in drink distribution

Possess critical information regarding quantities of sales, opponents drinks etc.

Price

Cleanliness

FreshnessFactors Governing Development Location

Coconut normal water has been known for its natural health advantages that it offers to human kind. The benefit are well scripted in the traditional text messages of Ayurveda and Unani. Coconut normal water has been thought to provide vitamins and energy, preventing from dehydration in case there is summers in the tropics. The tender coconut water has been thought to improve digestion and assist in the stop of UTI.

But, to create coconut normal water drink in packed form and also to cater regions all across India definitely requires answering some essential questions including the areas of high creation of coconut, the demand of coconut water in the united states, what is the existing coconut production, etc.

The pursuing factors can be studied under consideration while identifying the creation location:

Procurement of Raw materials and location:

Today, India is one of the leading makers of coconut on the globe (rates third) producing 13 million tonnes per annum. Kerala, Tamil Nadu, Karnataka, Andhra Pradesh will be the highest producing states adding 90% of coconut creation in India which is often seen from the table (for yr 2006-07) shown below. Area under cultivation in India is just about 1. 93 million Hectare where Kerala gets the highest cultivation portion of 0. 898 million Hectare. In India, productivity for coconut has been increasing since past decade. In 2006 -07, efficiency increased from 7608 to 8165 coconuts per hectare.

Table 1: State wise production and efficiency of coconut

States

Productivity(nuts/ hectare)

Production (mn nut products/annum)

Kerala

7046

6326

Tamil Nadu

13133

4867

Karnataka

3139

1210

Andhra Pradesh

8577

892

West Bengal

 

323. 5

Orissa

 

274. 6

Maharashtra

914548

273. 4

Assam

 

204. 9

Source: www. indiastat. com

From the desk, it can also be seen that Maharashtra has the highest productivity for coconut. Therefore, in future, it could appear as the most significant producer of coconut if more area is brought under cultivation. Hence, one can say that there is a huge potential in India as far as production of coconut is concerned which is directly linked to the potential of coconut market.

Proximity to natural material suppliers

Coconut is considered as the money crop by the lot of individuals living near to the coastal areas. Additionally close to 7000 km of coastline in the united states has given accessibility like no other in India. Any region which is within proximity (about 100-150km) to these coastal areas and is accessible by major towns and city should be considered.

Proximity to home customers and export site

Northern and Traditional western parts of India are seen as a possible client basic as coconut availableness is lower in these areas. Hence the proposed region of production should be well connected with these parts of India. Furthermore these parts likewise have ports (both ship and international airports) for export of coconut water to other neighbouring countries.

Costs

The location should provide gain in terms of low inbound costs owing to proximity to major procurement centres. In the event the location lies in rural region, labour costs are cheap. Outbound cost in terms of product circulation and marketing should be low due to the closeness to the home markets. Water availableness should be easily available and cheap.

Infrastructure

Availability of power, cell phone, mobile and internet connectivity are a few of the infrastructural sources of the area. Connectivity to nearest railway stop and international airports should be taken into account. Additionally transfer of coconut water in particular conditions of temps should be preserved so as to boost the shelf life of the product.

Quality of Labour

In a rural area, semi skilled labour necessary for manual operations is offered cheaply. For the specialized businesses, technicians can be appointed locally on according to need. Very skilled technical labour would need to be incentivized to work in rural marketplaces, but may also be chosen on as freelancers.

CHANNEL DESIGN

Intensive Distribution Network

Intensive Circulation is when a product is made available in many vendors. The products that can be purchased intensively are usually reasonably priced or impulse purchase products. A good example of the use of Intensive Circulation would be for chocolate bars. They could be found almost everywhere (grocery stores, department stores, convenience stores, gas stations, etc. ) In this kind of syndication the seller's unit costs for stocking are low. The convenience for customer is critical as almost all of the products are impulse buy products.

In intensive distribution the merchandise is everywhere. An example is the retailing of gasoline. If you look at all the major shops, they are on every place. In an extensive distribution, the stocking costs are usually very low. Convenience for the customer is critical. If they decide that they need gas or toothpaste, you'd better be there. Convenience is more important to the customer, whereas in selective circulation they are prepared to travel to a retail store and also have fewer options for that kind of product.

Urban Circulation Network

Company

Carry and forwarding agents

Redistributing agents

Wholesalers

Rural retailers

Urban Retailers

Consumers

In this, the company directly supplies its product to the stores which helps them to save the margin, which they give to the wholesalers looked after ensures quick option of the product to the dealer. The flowchart above depicts the circumstance. The company companies the merchandise which is then sent to the carry and forwarding brokers. After Production of the merchandise, it needs to be sent to the market for sales & circulation. That's where C&F (Take & forwards) agents come into picture. They become a connection between company & distributor. They transfer stock from company to marketers. The marketers then make the product available for sale through retail & seller channel

Rural Distribution Network

Since last five years drink companies had began penetrating rural marketing also. For the rural sector these businesses will work on Hub and Spoke model. To attain out to rural India, we are in need of to start out by pulling up popular list of high potential villages from various districts. So to ensure full lots, large marketers (Hubs) have to be appointed, and they would provide you with the product from the company's depot in large cities and metropolitan areas. . The hubs would appoint smaller marketers (Spokes) in adjoining area so the goods can be distributed. Below is the diagram illustrating the same.

CONSUMER PROFILING

Since we live coming up with a product at the national level, therefore, it's important to recognize the industry. Customers' and consumers' behaviors help to correctly define one's industry. Therefore, we conducted survey to identify the industry where our product will have an existence. The test size was around 80 people out which 96% people drink coconut drinking water. Convenience sampling was used as a result of time constraint.

From this it could be seen around half of the people in the test perceive coconut normal water as health drink and around 45% people understand it as stimulating drink. Through the survey, it has also been seen that folks mainly choose coconut drinking water when they are thirsty, worn out or when they need some health drink. As a standard perspective we can see that near 80% consumers understand coconut to be related to nourishment and wellbeing of their body.

Others

Thirst quencher

Refreshing

Drink

Health drink

No response

What do you take into account coconut water?

100

80

60

40

20

0

Percent

Thus, from the study results, it can be plainly seen that the merchandise must have an living in Health and stimulating industry which we, here, are considering it to be fruit juice industry as fruit juices are also perceived in the same way. Here, one might argue you will want to (Carbonated) soda industry? The reason why we aren't placing our product in the same is that folks do not consider soda pops as health refreshments, but thirst quenchers. Since our company is setting our product as health insurance and refreshing drink so fruit juice industry suits the best which is also backed up by the survey so conducted.

STP Research:

Segmentation:

Demographic: The junior (Age group: 15-30) will be the key target segment whereas the people of middle age would be the spillover segments.

Geographic: We will focus on both rural and cities.

Psychographic: Socioeconomic classification is done in rural and urban areas.

Behavioural: This will likely be done considering the benefits and use rate, as required by aim for customers.

Targeting: Our focus on band of consumers would comprise people from SEC A and SEC B in urban areas and R1 & R2 in rural areas, health mindful people, the youth who consider going natural as fashionable and also institutional clients like airlines, railways, upmarket restaurants and hotels. We'd also concentrate on doctors who would recommend our product to their clients. This might provide an huge possibility to us to make a stronghold on the market and generate higher revenues and superior monetary profitability.

Positioning: We have been positioning our product as a natural health drink that is incredibly nutritive and also highly relaxing.

Its tagline will be 'By natural means Refreshing'

MARKETING Combine:

Product: Product is different from whatever we get from roadside coconut suppliers because the shelf life of such products is very low. Our product has a shelf life of 9 months and hence turning it into available to an array of markets gets easier since customers would be confident of the quality of the product. We would also apply for accreditation by approved food organizations like FPO and other quality control certifying firms like HACCP.

Packaging: Tetra packages will be produced available both for small as well as large SKUs. The colour of the packs will be palm green and you will see images of green cocounuts, prominently displayed to reinforce the placement of the brand.

In the metropolitan centers, especially in modern trade, plastic material bottle packs may also be made available for SKUs greater than 500ml.

Price: We'd price our product competitively. We would initially launch the merchandise in tetra packs of 200 ml and 1 lt capacity priced at Rs. 20 and Rs. 95 respectively. This is almost consistent with our rivals' rates strategy.

For rural areas, concentration will be on Rs. 5 and Rs. 10 SKUs. These packages will drive penetration through studies. This would ensure greater profits to us and also task a high end quality image of the merchandise in the eye of consumers.

Place: Our handling unit would be positioned in Tamil Nadu because the procurement would be achieved from local places. So, we would be conserving on inbound travel costs. Were launching the merchandise throughout the country in one go, mainly concentrating on the northern, european and eastern market.

Focus will be on Traditional trade, for rigorous distribution. This includes paan shops, LEG, HEG and chemists as well.

Modern trade: In urban areas, there is certainly huge potential of modern retail types and our product will be made available in Hypermarts, Supermarts and Food Stores.

Alternative Channels:

We will also focus on convenience aspect of marketing route. The packaged coconut normal water will be sold in a variety of bus depots, airports, transit tips and railway stations. The on-the-go proposition of the product makes it a great option for consumers to get instantly refreshed when they are going.

Promotion: We'd take up heavy promotional plan to build consciousness about our product and to push it in the market. We would keep an eye on activities our competitors would be doing so that we can strategize further.

We would incentivize our route partners and develop a push technique to gain more shelf space. Heavy advertising and brand promotion activities would be taken up to increase visibility of our own product. Since were new players and unfamiliar to consumers, we have to spend seriously on all these activities so that we can preserve competition from giants in the industry and finally overtake them. We would also consider sponsoring T. V. shows, athletics events and social nights so our focus on consumers can be produced more aware of our brand. We recognize that building good romance with this suppliers, channel partners and customers is the solution for our success in the market.

Focus will be on ATL as well as BTL campaigns.

ATL: An advertising campaign with a southern professional with mass charm can be launched to popularize the brand.

BTL: This will be the prime focus area specifically for promotions in option route routes. Such campaigns can help in maximizing sales and make the product a quick-recall refreshing option for the clients.

We would be placing our product mainly in modern format retail stores, hypermarkets where new ideas are more immediately accepted by consumers. Here we'd have a greater chance of showcasing ourselves and increasing our awareness. Besides, these are places that happen to be frequented by our target group of customers. We wish to ensure that the quality of our product is intact when it is in the market and hence we wish to sell it through stores that take proper care of inventory, have good and sufficient safe-keeping facilities. Also, we'd have the ability to keep track of not only our sales and turnover but also that of our competitors. This data would be accessible through the store administrator because unlike traditional suppliers, he would be involved in systematic data management and record keeping.

SWOT Analysis of our product - Packed coconut water

Limitation and Future Opportunity of Research

Limitation: The study on channel design is qualitative somewhat than quantitative. It's very difficult to assign weightage to different parameter for selection of channel design. The research suffers from the perception of service end result regarding another. Some other set of researcher may have given different weightage to different guidelines and hence could have recently come out with different suggestions.

Current market is unorganized and there are incredibly few and small organized players. The research is heavily borrowed from the knowledge of beverage industry as the product characteristics are identified to become more or less similar.

We haven't considered e-commerce as the channel for the product

Future Opportunity of research: As the market is nave, so there is a lot of scope for new players. In future, if the intermediaries are actually removed from the distribution route with companies directly selling the product to the consumers like in US and the coconut drinking water market gets more sorted out, the distribution route strategy may need to be revamped.

As there is absolutely no current founded market innovator in this category, we want to replicate syndication strategy of current drinks industry in India. So again if the marketplace grows significantly in future, today's distribution must be changed dramatically and a completely different distribution model may need to be designed.

We can also think of advertising directly to consumers through e-commerce.

CONCLUSION

Setting up a distribution channel for coconut water requires some strategies which are different from traditional syndication options for other products like aerated refreshments, mineral drinking water etc.

There is huge prospect of something like packaged coconut drinking water to work in a country like India. Coconut has already been seen as a product which is very useful in daily requirements of households in southern parts of the country, and coconut drinking water is seen as something which would essentially quench thirst for the individuals as well as have some vitamins and minerals.

Designing a packaged coconut water drink has some unique issues in itself. To sell the product, we not only have to go through the aspect of providing just coconut drinking water to the end consumer, but give a means to fix him, so that he can quench his thirst, and also get the healthy benefits provided by coconut drinking water. For this purpose we've used a organized method of design the distribution route for coconut normal water.

Despite coconut water's potential as a competitor in the bottled beverage market, attempts to capture those characteristics in a commercial product have been largely unsuccessful. Once subjected to air, coconut water commences to ferment, and swiftly loses the majority of its organoleptic and healthy characteristics. To eliminate the chance of bacterial growth, commercial bottlers are required to sterilize the product using high-temperature/short-time pasteurization, which damages a few of coconut water's nutrients and almost the complete flavor.

We have researched some of the existing channel designs becoming used for syndication of aerated drinks, and figured out how different strategies are being used to send out the merchandise in rural as well as cities. Also, while designing a new route we have to keep in brain that the Indian retail installation is such that still only 2 % of all retail takes put through planned retail. All of those other retail still occurs through unorganized route and this contributes to a lot of intermediaries being mixed up in traversal of the merchandise from the maker to the end consumer, which provides its own unique obstacles.

According to your consumer survey, we have determined that the ideal way to position our product is really as a health drink which refreshes, so that it is placed over a pedestal where it might be put by the consumer in the same category as a packaged fruit juice. This specific product category is growing at an extremely fast pace, with more and more folks becoming health mindful and going for products that happen to be healthy and stimulating. There has already been a general pattern of people choosing substitutes of aerated refreshments as thirst quenchers instead of say a decade ago.

We plan to use an intensive distribution strategy typically in northern parts of the country, because in those parts there might also be some novelty factor mounted on coconut drinking water, as it would not be as easily available as with the southern parts of the country.

In the finish we wish to add that in market like India, no particular route can be reported to be an ideal syndication channel. Multinationals which have been functioning in India for many years will have seen that even for marketing the same SKU to different parts of consumers, altogether new channels need to be setup in some cases, whereas some modifications have to be manufactured in other conditions. Hence we'd initially focus on those segments of the consumers where we feel that maximum chances are there for innovators segment of the consumers, so that they would try product, and maximum marketing can even be obtained through word of mouth marketing. Targeting programs like education and cafes will be a good start, and we could start of with strategies like free sampling, savings, display incentives to the various retailers, in order to push the merchandise from the shelf, and create consciousness about it. Also along with drive strategies, we can also go for a few TVCs where the product is introduced to folks, and create inquisitiveness about the product, and create our product as a different offering in the healthy drinks product category.

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