Description
how merchandising of soft drinks is done and how the promotional activities like advertising, sales promotion impact the consumers perception etc.
SUMMER INTERNSHIP PROJECT WORK ON “MERCHANDISING IN TRADITIONAL RETAIL“
THE PROJECT SUBMITTED TO THE UNIVERSITY OF MUMBAI IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF DEGREE OF MASTER OF MANAGEMENT STUDIES (MMS)
BY SARGAM NILESH AMBADAS ASHA PARLE TILAK VIDYALAYA ASSOCIATION’S INSTITUTE OF MANAGEMENT VILE PARLE (E), MUMBAI – 400 057. 2012-2014
1|Page
DECLARATION
I, Mr. Nilesh Ambadas Sargam MMS Student of Parle Tilak Vidyalaya Association’s Institute of Management, hereby declare that I have completed the project titled MERCHANDISING IN TRADITIONAL RETAIL during the academic year 2012-14.
The report work is original and the information/data and the references included in the report are true to the best of my knowledge. Due credit is extended on the work of Literature/Secondary Survey by endorsing it in the Bibliography as per the prescribed format.
Nilesh Ambadas Sargam
2|Page
ACKNOWLEDGEMENT
A summer project is a golden opportunity for learning and self development. I consider myself very lucky and honored to have so many wonderful people lead me through in completion of this project. My grateful thanks to Mr.Abhishek Srivastav, marketing head who in spite of being extraordinarily busy with his duties, took time out to hear, guide and keep me on the correct path. I do not know where I would have been without him. A humble thanks to Prof. Priyanka Dhingra whose patience I have probably tested to the limit. She was always so involved in the entire process, shared her knowledge, and encouraged me to think. Thank you, Dear Madam. I would like to thank Dr. Ramchandran (Director, PTVA’S IM) for his efforts and help provided to me to get such an excellent opportunity. Last but not the least there were so many who shared valuable information that helped in the successful completion of this project thanks to all those.
3|Page
TABLE OF CONTENTS
Sr. No 1 2 3 4 5 6 7 8 9 10 11 12
Particulars Introduction to Merchandising Executive Summery Beverage Industry Overview Company Profile Literature Review on Blue Objectives and Need For The Study Research Methodology Findings, Analysis and Interpretation Recommendation Limitations of The Project Conclusion Bibliography & Websites
Page no. 5 9 10 13 16 18 19 21 35 37 38 40
4|Page
1. INTRODUCTION TO MERCHANDISING
The process of merchandising is getting the right goods in the right sizes, shapes and colors at the right price; at the right location; for the right consumers. In addition, the right time and the right quantity of merchandise must be right for the retailer and for the consumer. To succeed in satisfying the needs and wants of the right consumer, the activities in the merchandising function must be conducted with one part knowledge, one part experience, one part hard work, and even, one part good luck! The right goods means the right merchandise for both consumer and retailers. For example, the right merchandise identified by a merchandise manager for one retailer might not be the right merchandise for another retailer in the same retail classification. For some retailers, the right merchandise may be seasonal merchandise such as heavy wool coats and gloves due to the specific geographic location. Meanwhile, for other retailers, basic trench coats and raincoats may sell in the store year-round. The quality of the merchandise may be another important feature for some retailers. Their target consumers may have specific expectations about workmanship, functional performance, and design aesthetics as related to the price for a valuable product. Several factors, external and internal, can impact the ability of the retailer to obtain the merchandise at the right price. Pricing is a major factor in merchandising. Market trends, current domestic and global economic conditions, pricing and product offerings by the competition, and other external factors may influence the pricing of the merchandise assortment. Within the retail environment, last year’s sales volume and markdown patterns can also affect potential pricing for this year. To achieve the right location for the merchandise, the retail merchandiser must carefully organize the space within the store, in the catalog, or on the Web site for the right merchandise presentation. This right is important for the retailer to achieve the ultimate sales potential for the available space, be it real or virtual. Proper visual presentation as well as the combination of specific merchandise classifications must create an inviting retail environment for maximum sales potential. Artistic displays, appropriate usage of proper signage, and organization and presentation of merchandise in print advertising, catalogs, and Web sites must be considered to
5|Page
develop the right location or place for each item and combination of items. The front of the store or the home page on a Web site is prime selling space. The location of floor space relative to store entrances and traffic paths, the buttons and links within a Web site, and the positioning of merchandise in a catalog are important considerations that are critical to the right place or location for specific types of merchandise. Retailers can track sales of merchandise and note locations to determine the right placement of the goods. The right time of merchandise delivery is another important factor in all aspects and activities of the merchandising function. If goods, especially seasonal or fashion apparel products, arrive in the store too early, the retailer may be forced to house high inventory levels due to a lack of sales and low movement of stock. Keeping high inventory levels can create larger markdowns than anticipated and can reduce cash flow. On the other hand, if goods are received later than needed, a loss of sales resulting from consumer disappointment from low levels of stock, lack of desired merchandise, or unappealing merchandise assortments can occur. Late deliveries due to improper shipping may create unbalanced assortments and cause unexpected markdowns, low or no profits, and leftover and unwanted inventory. The right quantity of merchandise is also important for the retailer and the consumer. The retailer must achieve a balance between the amount of inventory on hand at the beginning of a sales period and the amount of sales realized during that same period. In other words, the right quantities of specific merchandise assortments and classifications are necessary in meeting sales quotas for a specific period. These quantities are usually planned from the units and dollar volumes from the same season of the previous year with adjustments made for the new year. If a retailer orders too few goods, a loss of sales from lack of inventory may result. If the same retailer orders too much stock relative to consumer demands, excess and unsold inventories can lead to unplanned markdowns that reduce profit margins. The actual sale of the merchandise is the final activity in this step. Managing both sales associates and the products is vital to the successful sale in order for the retailer to obtain the double goal of customer satisfaction and profit. Personal selling is important both for stores. Many catalog retailers have highly trained sales associates to help consumers with their telephoned purchases. Service after the sale is also an important aspect of promoting the merchandise and making the sale. Retailers must ensure that the products they sell will fulfill the
6|Page
promise of the promotion and will continue to satisfy the customer. Customer satisfaction may be enhanced through a partnership with the vendors. Vendors can supply information cards and toll-free phone numbers so that consumers can call directly to the source of the product for information and assistance with complaints. Including all the above processes merchandising can also be said as a part of promotions where companies use N number of different tools for merchandising, like Pepsi and Coke use their instore stickers and purchase of hire a strategic place to store their merchandise that may be in or outside the chiller so these are some of the examples of merchandising tools.
Visual Merchandising
The Basics The basic principles of visual merchandising include stocking and front-facing. When a product or item is missing from store shelves, sales will suffer. That’s why it’s essential to regularly stock items throughout the day to ensure a shelf space full of live inventory. Front-facing inventory with labels facing out gives the store a neat appearance and facilitates an easier shopping experience for the customer.
7|Page
Promotional Displays Stores should pay special attention to in-store displays and focus on promoting items that are instock. Visual merchandising an end cap or window display with the most current inventory will positively impact sales for that SKU. When inventory levels are low or if the product is sold out, it’s essential to replace in-store displays with available inventory to make the most of selling through in-stock merchandise. Seasonal Changes Stores need to appear full of fresh inventory on a regular basis to make the most of its retail sales. Visually merchandising the most current items at the front of the store looks inviting and new, especially for your regular customer and can positively impact sales. If your store has few seasonal changes in inventory, you can create the illusion of new stock by rotating which inventory is showcased at the front of the store.
8|Page
2. EXECUTIVE SUMMARY
This project is based on understanding the concept of merchandising and its impact. Almost all the beverage companies use different tools of merchandising depending upon their objectives and budget. Narang Danone Access (NDA) is a joint venture for Narang group and Danone, ?Danone? which is a company form France. NDA uses many merchandising tools to promote Blue. Blue is a noncarbonated flavored soft drink. People in India hardly know about non-carbonated flavored soft drink, so it was very important for the company to educate the market. To spread the awareness NDA used merchandises which are paid and which are unpaid and also which are inside the outlet and outside the outlet. The main objective of this research was to identify the impact of all the tools and among them which is the most impactful tool and how easily it can be installed. Knowing the durability of each tool is also important because the tool which has great impact on customers but doesn’t have durability is of no use. This project is based on a quantitative research where questionnaire was prepared for both customers as well as retailers. 550 customers and 100 retailers were intervened from different areas of Mumbai i.e. Bandra, Khar, Walkeshwar, Marinlines etc. Based on the responses by the customers and retailers conclusion are drawn. All the data which was collected and the conclusions were drawn is explained in detail in the further part of the project.
9|Page
3. BEVERAGE INDUSTRY OVERVIEW
The non-alcoholic drinks market has witnessed rapid growth over the past few years in India. Increasing middle class population, rapid urbanization and rising disposable income are some of the major factors fuelling this growth. The industry is broadly classified into soft drinks (carbonated and non-carbonated drinks) and hot beverages. The carbonated drinks market is close to Rs 6,000 crore and is growing by 10-12 per cent annually. The fruit-based beverage market stands at Rs 5,000 crore and is growing at 35-40 per cent an annually. The fruit-based beverage market is divided into three segments — fruit flowered drinks, nectar .i.e. fizz fruit-drink and 100 per cent juice — and is currently dominated by Dabur, Parle Agro, Pepsi, Coke and HUL. The Functional drinks segment is dominated by energy drinks. The current market size of energy drinks in India is around Rs 500 crore and it is expected to grow at a CAGR of 25 per cent. Within the hot beverages category, India is the largest producer of tea with a total turnover of around Rs 8,500 crore, growing at a rate of 1-2 per cent annually. India is the world’s fifth largest producer of coffee, accounting for 4 per cent of the world’s production. Fruit/vegetable juice segment is expected to grow at a CAGR of 30 per cent in value terms, followed by the energy drinks segment at a CAGR of around 25 per cent in value terms.
Growth of Indian Beverage Industry in India
The non-alcoholic ready-to-drink beverage segment has been growing at a compound annual growth rate (CAGR) of 13 per cent since 2009, and is one of the segments that have defied the slowing economic growth.
Arvind Varma, secretary general, IBA, said, "The nonalcoholic ready-to-drink beverage industry is one of the largest investors in the country and has contributed
10 | P a g e
significantly to the growth of industries. This industry is witnessing rapid growth, driven by a combination of factors such as increased investments and innovations.?
?However, the government needs to take a long-term view on the industry while formulating policies or else there is a chance this industry’s growth may get derailed,? he stated.
?IBA aims to act as a catalyst to enable the non-alcoholic beverage industry to play an increasingly significant role in the growth of the economy, by providing employment opportunities and driving income growth and therefore has raised its expectations with the government authorities,? Varma added. IBA's suggestions At the deliberations in the seminar, speakers observed that the macro-indicators and the demographic dividends growth for the beverage industry in India. ?With an enabling policy, which includes a more rational tax structure, frequent consultations with the industry on food regulations, giving the industry its due recognition as manufacturers of high quality, healthy and nutritious products as well as life-critical products like water, will further help the industry realize its potential,? IBA stated.
As an industry that has strong backward linkages with agriculture, its growth will also benefit millions of farmers across the country.
GST One of the key areas where the beverage industry expects Central and state government intervention is goods and service tax (GST) and direct tax code (DTC). The beverage industry has learnt that a single rate for both Central GST and state GST, which was proposed earlier, is reportedly being talked about as three different rates. This defies economic logic and is indicative of difficulty in moving forward the proposal of a Constitutional amendment in Parliament. IBA also suggested that the beverage industry be made a key stakeholder in the introduction of GST, and should be a natural partner in the process of consultation while
11 | P a g e
formulating the plan and roll-out of GST. The extent of involvement of industry currently in the consultation process needs to be scaled up and made more relaxing.
VAT The value-added tax (VAT) rate of six per cent is applicable to fruit juice and fruit juice-based drinks. Despite the states coming to an understanding that VAT would be charged at the rate of six per cent on fruit juice and fruit juice-based drinks, some states have increased the VAT substantially. The move to increase VAT on fruit juice and fruit juice-based drinks will subvert the growth of the juice industry as also the development of the fruit and vegetable processing industry. But some states have also increased the VAT on carbonated soft drinks.
This increase in taxes will, therefore, have to be passed on to the consumer leading to an increase in the price of the soft drinks, which will restrict purchase of soft drinks by the general mass. This, in turn, will have an adverse effect on the beverage industry and industries that depend on the beverage industry. An increase in price also favors manufacturers to sell their products on the basis of cost arbitrage. R&D Industry players also felt that their prowess in research and development would help them move beyond global brands and develop local, indigenous products to suit regional palates, thereby driving further growth in the market. These innovations are meant to address the low per-capita consumption of packaged beverages and will create both a direct and an indirect impact.
Regulatory aspect The industry also expects that the food safety authorities remove roadblocks and provide much faster clearances and approvals on ingredients and new products, without compromising the safety and quality of new products. This is most relevant in case of proprietary foods, where inordinate delays result in food and beverage companies having to wait for many months before launching new products.
12 | P a g e
4. Company Profile NARANG GROUP
At the Narang Group, they are passionate about the work they do and utilize individual ideas, creativity and innovation to achieve a common goal. They have five key business verticals – Danone Narang Beverages, Narang Danone Access, Suntory Narang, Narang Buzz & Narang Gourmet. They are the proud owners of Qua, the No.1 premium natural mineral water in India. The latest addition under their health & wellness still beverage portfolio is B'LUE, a water-based restoration drink.
13 | P a g e
Danone Narang Beverages and Narang Danone Access are joint ventures with Groupe Danone, a global leader in healthy food & beverages. With a turnover of Euro 17 billion, Danone ranks number 1 in fresh dairy and is a leader in baby nutrition and natural mineral water worldwide. Some of their other partners include some of the world's leading food & beverage brands such as Evian, Lindt, Illy Caffé, Twinings, Perrier and Monster. Narang Group is known nationwide for their deep understanding of consumer insights, their abilities to build brands in innovative categories, as well as their localized experience when it comes to sales, distribution, marketing and logistics. NG is recognized for their expertise in promoting and nurturing global, premium brands. They achieve this by raising awareness, identifying opportunities, understanding market needs, integrating processes and initiating activities to achieve common targets.
NARANG DANONE ACCESS (NDA)
Narang Danone Access handles beverage sales & distribution, leverages top-notch minds and world-class partners to create the most efficient marketing team in the country. This force of
14 | P a g e
productivity loves to take on a challenge, no matter how big or small, and look into every detail to ensure happy consumers, as well as results that smell of success. Their strengths and services include: ? ? ? ? A pan-India presence in 125 cities, with an automated distribution system covering over 100,000 outlets, serviced by our dedicated field force. Direct & Indirect Distribution Channel Management – we have dedicated sales teams to handle the different Complexities of Institutions as well as modern & general retail trade in the country. This approach also helps them in key account management as well as in synergizing trade marketing across our portfolio. Their network offers partners VIP entry into key markets across all regions. They also offer complete automated logistics solutions to help bring international products into the country with ease. Using a completely holistic approach, they service all their partners logistics needs.
NDA Specialized Logistics Services include: ? ? ? ? ? ? ? ? ? Sales Forecasting & Demand Management Sales & Operation Planning (S&OP) Production & Material Requirement Planning Importation with emphasis on Duty Paid & Duty Free Clearance Warehouse Management Trucking & Distribution Solutions Cold Chain Logistics Premium Food & Beverage Product Handling Collaborated Planning, Forecasting & Replenishment (CPFR)
15 | P a g e
5. Literature Review on Blue
B’lue has been specially designed keeping in mind today’s Young India – the section of the Indian society who believe in designing their lives and living their passion. Danone Narang Beverages, a joint venture between the French Group Danone and Indian business house Narang Group, announced the national launch of B’lue, a delicious new restoration drink that enlivens you in body, mind and mood. With the launch, this beverage opens a new segment in the Indian Ready to drink beverage segment. B’lue has been specially designed keeping in mind today’s Young India – the section of the Indian society who believe in designing their lives and living their passion. The I Generation of doers who live the change that most of us wish to see! A 24X7 generation who wants to be at their optimal best, anytime, anywhere. B'lue, with its distinctive taste is what every Young Indian ultimately aspires to be – Inventive, unique and Surprising. Formulated with unique taste and stimulating aroma, B’lue is an ideal drink for generation who wants to be at their optimal best, anytime, anywhere. B’lue helps them to feel at their best in body, mind and mood so that they are ready for all the opportunities in life. B’lue has been introduced in three delicious fruit flavors of Apple, Peach and Guava and is available in 500ml pet bottle priced at Rs. 30.
What makes it so awesome! No Carbonation, so no fizz. No Caffeine, so it’s light on you. No Artificial Colours, so you can see its true colours. No Preservatives, so it’s more concerned about your health.
16 | P a g e
Talking on the launch, Tarun Arora, Country Head, Danone-Narang Beverages said,?As a pilot, we introduced B’lue to the city of Pune and received a tremendous feedback. The beverage was very well accepted in the market. We then rolled into the soft launch phase in Mumbai, once again with encouraging results. With the national launch now, we are confident that consumers across the country will experience the B’lue benefit in their very busy daily routine. B’lue has a unique proposition that enlivens one’s body, mind and mood, is ideal for this generation who wants to be at their best hamesha.? ?We believe consumer knows it best. So we decided to co-create the B’lue proposition, including the brand name, with the Indian youth. And it’s heartening that the Youth also voted B’lue as Product of the Year, an Innovation award endorsed by consumers?, adds Tarun Arora “Youth icon, Vir Das, is the brand ambassador of B’lue who truly represents the aspirations of a young India who believes in living their passion and pursuing their dreams?, he added.
Advertising Communication: The tilt in the ad personifies the down / out of state situation resulting due to triggers that might affect body, mind or mood or all. In such situations, all one need is a drink that can restore one to his best. The communication is designed to appeal to the urban youth, projecting into their lives and their need to be at their best. The ad highlights brand ambassador, “Vir Das” missing daily opportunities in love, life and work because he is not at his best. The ad concludes with Vir sipping B’lue to be at his best.
17 | P a g e
6. OBJECTIVES & NEED FOR STUDY
? To understand the concept of merchandising ? To know the tools used in merchandising especially in traditional retail
? To analyze the impact of paid form of merchandising ? To know the durability of the unpaid merchandising tools
? To compare paid and unpaid merchandising tools and conclude the best amongst them ? To know is there a relationship between merchandising and sales?
18 | P a g e
7. Research Methodology
To fulfill the needs defined above and to come to a conclusion a proper research is to be done. I have implemented a quantitative research technique and in that the survey method. Survey method gives me proper and complete information. It is always good to go with a survey method because it includes collecting primary data and is the most relevant one too. Other methods may need, or are based on secondary data or self experience (e.g. Qualitative Research) which is nothing but the experience and opinion of one single researcher based on his research. Which has a chance of differentiation in the opinion of what the customer thinks and what the researcher concludes? So it is always better to go with a quantitative research technique. I have made a proper questioner that will give me the primary data and which helps me in further analysis and come to a conclusion. ? ? 550 customers were personally intervened and 100 retailers were personally intervened.
Following are the questions asked for the customers, the main purpose from these questions was to know from where they came to know about Blue and have they noticed any merchandising tool at a retail store, their perception about blue or what they think about blue.
19 | P a g e
Questionnaire (a) for customers
Questionnaire (b) for retailers
20 | P a g e
8. FINDINGS, ANALYSIS AND INTERPRETATION
Findings: Merchandising as a concept in book changes a bit when it comes to implementing. There are only a few tools mentioned in the books. Whereas companies outside are uses the tools which cannot be implemented by a small scale companies or business units. Big Companies like Pepsi, Parle Agro uses different tools like giving a refrigerator to retailers, placing stickers and giving display boards to retailers were their shop’s name is printed on it. A small or a company just started for them giving a refrigerator is not just a challenge but highly impossible. This gives those big companies a additional advantage over small companies to push their products. In the Same way NDA also uses the following merchandising tools in traditional retail: ? Danglers
21 | P a g e
?
Stickers
?
Posters
?
Banners
22 | P a g e
?
Stock Display
?
Window display
?
Display in Chiller
23 | P a g e
?
Counter top
?
Shop Board
?
Display on Gate
24 | P a g e
Among the above tools some are paid and some are unpaid. From the above questionnaire (a) it was found that 473 customers (respondents) were male and remaining among 550 were female. From the above questionnaire (b) all the retailers responded were traditional retailers which does not big organized retail stores like D-Mart, Big Bazzar etc.
ANALYSIS OF DATA FOUND AND IT’S INTERPRETATION Recall of the brand Blue: Company does advertising on various mediums like TV and other mediums. As the company is also investing time and sources in merchandising it wants to know how many % of people recollect the Brand Blue by any of the merchandising tools show above. So, form the survey conducted of 550 respondents in Bandra (E), Walkeshwar, Marinlines, and Khar (W) the following result was found Pie-Chart
Chart Title
Shoping Mall Merchandise TV Social Other
5% 10% 37% 25%
23%
25 | P a g e
From the above table I can say that among all the mediums used by the company, maximum number of people recall Blue or they recently saw blue at a Shopping Mall (37%). And this is because company gave various schemes in shopping malls and people were attracted to those prices. MRP of Blue is Rs.30 per bottle for 500 ml in any other retail shops except big organized retail stores and shopping malls. But in shopping malls people where getting it for only 50 per combo pack of 3 bottles. This was close to half the price they pay in any other retail shop. What is of our concern is the third highest, that is 23% or respondents recall the brand Blue form one of the merchandising tools used by the company which is just less than the TV add on which company spends some crores in a single year. So it is a great success for merchandising tools. TV adds and Merchandising are both tools and you can say mediums of advertising one of the major difference between TV add and Merchandising is? TV ads are active and merchandising tools are passive. That means TV ads are visual they speak, they sound etc. Where on the other merchandising tools is just a visual method of advertising. 10% of respondents came to know about Blue from social group i.e. form family members, relatives and friends etc. And remaining 5% of respondents recall Blue from other mediums. ANALYSIS OF IMPACT OF PAID MERCHANDISE To know the current market pulls 3rd question of questionnaire (a) was asked that ?When you recently went to a retail store did you noticed “Blue”?” and if Yes where? The main purpose of asking this question was to know how well the paid form of merchandising is doing or performing in the market. Those who have options other than the options given below were asked to tick as NO. This question gave me the current pulls of merchandising tools that whether the respondents noticed one of the options given to them. From the data obtained 90 respondents among 550 haven’t seen merchandising tool in a retail store or they dent noticed Blue in a retail store or they have seen Blue through any other medium which is not mentioned in the given options.
26 | P a g e
460 responses were positive that they saw Blue at a retail store following are the percentage of respondents and their responses.
RECALL
Display in chiller Shop board or display on gate Window display(warm) Counter tops
5%
38% 42%
15%
Company through me wanted to know among all the paid form of merchandising which is the one performing best or contributing the most when it comes to recall the Brand. So, from the study it came to know that shop board or display on gate has the most impact than other paid types of paid form of merchandising. Display in chiller had really great impact on customers/respondents (38%). Company pays some amount or gives Blue of same amount to the retailer on storing Blue in chiller which is visible to the customer. Window display or warm stock display or sometimes we call it branding also has satisfactory impact on customers to what the company pays to the retailers (15%). Branding
27 | P a g e
Counter tops only (5 %) where company spends more in supplying the bottle stand and giving few bottles free every month depending on the sales of retailers doesn’t has that much impact that the company expects in comparison to what it spends on it. DURABILITY ANALYSIS OF UNPAID MERCHANDISING TOOLS Company through me wanted to know the durability of unpaid merchandising tools i.e. dandlers, stickers, posters, banners and stock display. A separate employee is appointed by the company as a merchandiser, he is the one held responsible for all the installation of all the above mentioned unpaid merchandising tools. Through me company wanted to know that ?how many times the merchandiser visits a store in a particular month?? As the company specified a merchandiser should visit 2 or more times to every retail store in the area to which he is appointed. But it was found in most of the outlets that the merchandiser visits more than 3 times in a month which was really unexpected by the company. Following is the bar diagram showing the number of visits by a merchandiser to a retail store.
28 | P a g e
NO. OF VISITS BY A MERCHANDISER
50 45 40 35 30 25 20 15 10 5 0 Once in weak No. of visits 46
Respondents
Once in 15 days 26
Once in a Month 21
Never 7
From the above table you can see that 46 among 100 say that the merchandiser visits the store nearly 4 or more than 4 times a month. But the worst result was 7 respondents saying that merchandiser never visits them. When the question was asked to the merchandiser that why don’t you visit some outlets? The ultimate answer was ?in the past when we install our tool the shopkeeper himself uninstalls it when we move from their shop?. When the higher authority asked the merchandisers that how come you visited your allotted outlets more than 2 times in a month? They said when they install any tool like poster or a dangler it was found that it doesn’t last longer so they need to go and again install it. This answer again created a question that ?How long the tools last? And which tool lasts longer?? DURABILITY OF UNPAID MERCHANDISING TOOLS When it was found that the merchandiser needs to visit more than 2 times in a month company through me decided to find out which is the unpaid merchandising tool that lasts longer. Company with the survey made a standard format and came to conclusion that banner is the one lasts longer among the all unpaid merchandising tools.
29 | P a g e
But what I found out from my study is completely different and this was the result of change in time and primary research. Company was following a standard policy which was of other well knowing soft drink brands. And when compared to Blue from my research the result was completely different. Retailers are the one who closely observe or those are the one who can tell most accurately that how long different kind of merchandise lasts according to them. Following is the bar diagram showing the durability of the unpaid merchandising tools.
UNPAID MERCHANDISE DURABILITY
60 RETAILERS RESPONSE 50 40 30 20 10 0 Response Dangler 14 Sticker 57 Banner 20 Poster 9
As company thought that banner lasts longer than any other was not found true. Initially company also thought that yes banner may be the one that lasts longer because once it is installed at the top of the retail store or on the electricity pole near the retail store it is hard to uninstall by any one, but that was not the case and found that the banner was removed by the outsiders or the retailers themselves and put it to some other uses like stopping the rain water and covering some eatables etc. Another important parameter was installation. How difficult is the installation of a particular tool and how much time it takes to do the same.
30 | P a g e
Obviously banner takes more time than the other 3 alternatives because the merchandiser should arrange a ladder to climb up and tie a banner and also it is risky when the merchandiser is trying to install is anywhere near or on the electricity board. On the other hand when it comes to installation of other 3 alternatives they are easy to install. They rank in the fallowing manner (most easiest to install is the first) 1. Sticker 2. Poster 3. Dangler 4. Banner So the study showed that even though installing the sticker was the easiest one is would last longer than any other tool. This gave to company a very valuable information so that it could tell their merchandisers to concentrate more on installing stickers and finding out more results why not only banner but other tools i.e. dangler and poster fails to last longer which are also easy to install. COMPARISON OF PAID AND UNPAID FORM OF MERCHANDISING Finally it was important for the company to know the overall impact on merchandising but according to 2 parameters i.e. 1. Paid and unpaid and, 2. Inside and outside. To make future policies company suggested me to find the information according to the 2 parameters mentioned above and analyze it, were the final conclusion may help a little bit in uttering or give information in designing new policies. Following is the diagram showing the impact according to the given 2 parameters.
31 | P a g e
Paid window display display in chiller counter top A[32.71%] Inside Shop Board Display on gate B[32.71%] Outside
Stock display
danglers stickers posters banners D[21.64%]
C[12.10%]
Un-Paid
From the above you can say that more than 65% of impact of merchandising is seen by using a paid form of merchandising that is window display, display in chiller, counter top, shop board and display on gate. What can company alter if there was instability between paid inside and paid outside is that it would have changed the policy and try to stabilize it. If the impact is same of paid inside and paid outside than here the cost of installing and maintaining the merchandising tool is very important. Window display, display in chiller and counter top doesn’t cost as much as making a shop board and installing a display on gate may cost. So company would go for the first three options i.e. window display, display in chiller and counter top than that of investing time, money and recourses in making and installing a shop board and display on gate respectively.
32 | P a g e
Never the less more than 40% of the impact of merchandising tools is coming from the unpaid form of merchandising tools which is really appreciable where company bares only the cost of making that tools and cost of appointing a merchandiser wherein in paid form of merchandising it has to incur the cost of visiting the outlet, cost of installing the out let, cost of making the merchandising tools, and conducting a regular survey to ensure that the policy or the agreement signed is correctly implemented all this adds as a cost to company. Individually speaking both the sections i.e. A and B collectively contribute will to the companies expectations. Where as in section C where company spends nothing is also having effect on customers mind which is really great but one thing is for sure here the company has to ensure that there should not be any stock outs otherwise this opportunity is lost by the company. Section D is the focus area for me because the tools are pretty simple but still they have the ability to spread the awareness in the society and finally influence people to buy Blue.
RELATIONSHIP OF MERCHANDISING AND SALES Merchandising is a small part of advertising where as sales is a revenue generator of any company. Whenever you go to big companies you mainly find that the sales department and the marketing department are entirely different and they hardly coordinate to each other. But most of the people think that advertising is directly related to the sales in some cases it may be true but not in case of NDA. In NDA the sales focus is just to go out and sell the product in any case they just know selling whatever the product may be and never meet or contact the advertising person whether they are making a great advertising or promotion strategy or not. In the same sense Advertising department is not concerned with what the sale department is doing weather they are pushing the product to increase the sales or not. They have their own objectives given by management. The main purpose of merchandising is to promote, increase awareness and get into the customers mind and try to make them purchase, which ultimately increases the sales.
33 | P a g e
And if the sales increases in the coming year the budget for advertising will also increase were the advertiser can try new things and experiment his ideas. So we can say that, not directly but indirectly both advertising and merchandising are related to each other.
34 | P a g e
9. RECOMMENDATION & SUGGESTIONS
? Blue is a non-carbonated flavored soft drink it was found that people still think it as a carbonated soft drink and few call it as a fruit juice because it has flavors. So, the perception of the people needs to be changed through proper merchandising. ? The stock outside the chiller is also gaining the business or having the impact on customers and spreading the awareness, care must be taken that there should be no stock outs by inspecting the regular visits by salesmen.
? Never the less the 2nd most important thing for a retailer to sell Blue is the customers demand and the 3rd is advertising, so demand could be raised by proper advertising, so company should bring in new and latest type of merchandising tools to support retailers interest. ? There is a huge scope for innovations in stickers, as from the study I came to know that stickers are the most efficient tool of merchandising so company can make innovations in it by having even more attractive colors and types.
? It was found that in paid outside form of merchandise display on gate has more impact than the shop board, it is obvious because as soon as the customer enters the store he sees Blue on the gate so there it has more chances that he might pick it up or go for a purchase. So, company should ensure that all the contracts of display on gates are properly executed and try to do more of display on gate contracts. ? Stock in chiller brings a significant amount of business is what the retailer says because it is in the condition of ready to drink. So salesmen should always ensure the bottles are properly placed in the chiller as it is his duty to do so.
35 | P a g e
? Company is making good business there are few stores like welcome foods Bandra (W), Chechda Collection Haji Ali etc who give a great business to the company. To support them and increase the sales even more company should give them a chiller to store only Blue. ? As merchandising is a tool to increase awareness and make the customer purchase the product, merchandising is must for new outlets or outlets which are recently converted, that will support and increase the awareness that Blue is stocked here.
? The quality of danglers needs to be improved because the quality of dangler which the company is using now is of paper, which is now lasting to the extent what it is expected due to heavy rain and wind. A plastic coating may help it a bit. ? Company is now focusing on South Mumbai, to the major tool of spreading the awareness in the area is on merchandising. So the marketing head should ensure a proper merchandising strategy in all the vicinities in South Mumbai.
36 | P a g e
10. LIMITATIONS OF THE PROJECT
? This entire project is based on the study of only 2 months (summer) i.e. May and June of 2013. So the data may not be applicable in other seasons. ? Only few areas were covered from entire Mumbai so things may be a bit different where the study was not conducted.
? Some conclusions drawn by me based on the data is my own personal opinion it can be contradicting to some other experts opinion. ? Sample size of customers i.e. 550 is less for the company to come to a conclusion and take a major decision.
? Sample size of retailers is also less100 to make any changes in the existing policies with retailers. ? The primary data obtained in just 2 months cannot be said completely valid in the same period of next year due to changing trend.
37 | P a g e
11. CONCLUSION
? As from the entire study we came to know that merchandising is very important for any beverage making company because is it one of the medium which increases awareness in the society and also supports the retail stores to increase their sales. ? Companies which are the initial starters cannot use big advertising medium to spread awareness of their products, so for them merchandising tools can be a option for them.
? There are number of tools that different companies use. But what is used by the NDA to promote Blue is really a great mix. The company is following the strategy on just to push the unpaid merchandising tools because that cost them less and has a greater impact too. ? From the above study you can also now say that by going with both paid and unpaid merchandising tools company can have penetration form both the ends that is form the companies end (unpaid merchandise) and from retailers end (paid merchandise).
? If NDA makes innovation in its merchandising tools and try to increase the durability of the tools which it is using can really gain them a great success. ? Whenever you talk about merchandising the person i.e. the merchandiser is of at most important, if the company gets a experienced or the person who is really very enthusiastic to work as a merchandiser can bring out a great results to the company.
38 | P a g e
? Last but not the least the main purpose of merchandiser is to make the customer buy the product and generate revenue for the company. Form the above study I can say that yes customers are recalling the brand Blue through one of the merchandising tools so if we do similar kind of research in future by increasing the sample size, that will give company the real pulls of the market and that will help the company to decide how much experiments they can do in merchandising tools and what is the amount they should spend on the same.
39 | P a g e
12. BIBLIOGRAPHY & WEBSITES
Indian Infoline News Service,09:21, Mar 28, 2013
Websites:
www.naranggroup.com/ http://www.in-beverage.org/ http://www.indiainfoline.com/Markets/News/Danone-NarangBeverages-launches-Blue/5647766278
40 | P a g e
doc_298461868.docx
how merchandising of soft drinks is done and how the promotional activities like advertising, sales promotion impact the consumers perception etc.
SUMMER INTERNSHIP PROJECT WORK ON “MERCHANDISING IN TRADITIONAL RETAIL“
THE PROJECT SUBMITTED TO THE UNIVERSITY OF MUMBAI IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF DEGREE OF MASTER OF MANAGEMENT STUDIES (MMS)
BY SARGAM NILESH AMBADAS ASHA PARLE TILAK VIDYALAYA ASSOCIATION’S INSTITUTE OF MANAGEMENT VILE PARLE (E), MUMBAI – 400 057. 2012-2014
1|Page
DECLARATION
I, Mr. Nilesh Ambadas Sargam MMS Student of Parle Tilak Vidyalaya Association’s Institute of Management, hereby declare that I have completed the project titled MERCHANDISING IN TRADITIONAL RETAIL during the academic year 2012-14.
The report work is original and the information/data and the references included in the report are true to the best of my knowledge. Due credit is extended on the work of Literature/Secondary Survey by endorsing it in the Bibliography as per the prescribed format.
Nilesh Ambadas Sargam
2|Page
ACKNOWLEDGEMENT
A summer project is a golden opportunity for learning and self development. I consider myself very lucky and honored to have so many wonderful people lead me through in completion of this project. My grateful thanks to Mr.Abhishek Srivastav, marketing head who in spite of being extraordinarily busy with his duties, took time out to hear, guide and keep me on the correct path. I do not know where I would have been without him. A humble thanks to Prof. Priyanka Dhingra whose patience I have probably tested to the limit. She was always so involved in the entire process, shared her knowledge, and encouraged me to think. Thank you, Dear Madam. I would like to thank Dr. Ramchandran (Director, PTVA’S IM) for his efforts and help provided to me to get such an excellent opportunity. Last but not the least there were so many who shared valuable information that helped in the successful completion of this project thanks to all those.
3|Page
TABLE OF CONTENTS
Sr. No 1 2 3 4 5 6 7 8 9 10 11 12
Particulars Introduction to Merchandising Executive Summery Beverage Industry Overview Company Profile Literature Review on Blue Objectives and Need For The Study Research Methodology Findings, Analysis and Interpretation Recommendation Limitations of The Project Conclusion Bibliography & Websites
Page no. 5 9 10 13 16 18 19 21 35 37 38 40
4|Page
1. INTRODUCTION TO MERCHANDISING
The process of merchandising is getting the right goods in the right sizes, shapes and colors at the right price; at the right location; for the right consumers. In addition, the right time and the right quantity of merchandise must be right for the retailer and for the consumer. To succeed in satisfying the needs and wants of the right consumer, the activities in the merchandising function must be conducted with one part knowledge, one part experience, one part hard work, and even, one part good luck! The right goods means the right merchandise for both consumer and retailers. For example, the right merchandise identified by a merchandise manager for one retailer might not be the right merchandise for another retailer in the same retail classification. For some retailers, the right merchandise may be seasonal merchandise such as heavy wool coats and gloves due to the specific geographic location. Meanwhile, for other retailers, basic trench coats and raincoats may sell in the store year-round. The quality of the merchandise may be another important feature for some retailers. Their target consumers may have specific expectations about workmanship, functional performance, and design aesthetics as related to the price for a valuable product. Several factors, external and internal, can impact the ability of the retailer to obtain the merchandise at the right price. Pricing is a major factor in merchandising. Market trends, current domestic and global economic conditions, pricing and product offerings by the competition, and other external factors may influence the pricing of the merchandise assortment. Within the retail environment, last year’s sales volume and markdown patterns can also affect potential pricing for this year. To achieve the right location for the merchandise, the retail merchandiser must carefully organize the space within the store, in the catalog, or on the Web site for the right merchandise presentation. This right is important for the retailer to achieve the ultimate sales potential for the available space, be it real or virtual. Proper visual presentation as well as the combination of specific merchandise classifications must create an inviting retail environment for maximum sales potential. Artistic displays, appropriate usage of proper signage, and organization and presentation of merchandise in print advertising, catalogs, and Web sites must be considered to
5|Page
develop the right location or place for each item and combination of items. The front of the store or the home page on a Web site is prime selling space. The location of floor space relative to store entrances and traffic paths, the buttons and links within a Web site, and the positioning of merchandise in a catalog are important considerations that are critical to the right place or location for specific types of merchandise. Retailers can track sales of merchandise and note locations to determine the right placement of the goods. The right time of merchandise delivery is another important factor in all aspects and activities of the merchandising function. If goods, especially seasonal or fashion apparel products, arrive in the store too early, the retailer may be forced to house high inventory levels due to a lack of sales and low movement of stock. Keeping high inventory levels can create larger markdowns than anticipated and can reduce cash flow. On the other hand, if goods are received later than needed, a loss of sales resulting from consumer disappointment from low levels of stock, lack of desired merchandise, or unappealing merchandise assortments can occur. Late deliveries due to improper shipping may create unbalanced assortments and cause unexpected markdowns, low or no profits, and leftover and unwanted inventory. The right quantity of merchandise is also important for the retailer and the consumer. The retailer must achieve a balance between the amount of inventory on hand at the beginning of a sales period and the amount of sales realized during that same period. In other words, the right quantities of specific merchandise assortments and classifications are necessary in meeting sales quotas for a specific period. These quantities are usually planned from the units and dollar volumes from the same season of the previous year with adjustments made for the new year. If a retailer orders too few goods, a loss of sales from lack of inventory may result. If the same retailer orders too much stock relative to consumer demands, excess and unsold inventories can lead to unplanned markdowns that reduce profit margins. The actual sale of the merchandise is the final activity in this step. Managing both sales associates and the products is vital to the successful sale in order for the retailer to obtain the double goal of customer satisfaction and profit. Personal selling is important both for stores. Many catalog retailers have highly trained sales associates to help consumers with their telephoned purchases. Service after the sale is also an important aspect of promoting the merchandise and making the sale. Retailers must ensure that the products they sell will fulfill the
6|Page
promise of the promotion and will continue to satisfy the customer. Customer satisfaction may be enhanced through a partnership with the vendors. Vendors can supply information cards and toll-free phone numbers so that consumers can call directly to the source of the product for information and assistance with complaints. Including all the above processes merchandising can also be said as a part of promotions where companies use N number of different tools for merchandising, like Pepsi and Coke use their instore stickers and purchase of hire a strategic place to store their merchandise that may be in or outside the chiller so these are some of the examples of merchandising tools.
Visual Merchandising
The Basics The basic principles of visual merchandising include stocking and front-facing. When a product or item is missing from store shelves, sales will suffer. That’s why it’s essential to regularly stock items throughout the day to ensure a shelf space full of live inventory. Front-facing inventory with labels facing out gives the store a neat appearance and facilitates an easier shopping experience for the customer.
7|Page
Promotional Displays Stores should pay special attention to in-store displays and focus on promoting items that are instock. Visual merchandising an end cap or window display with the most current inventory will positively impact sales for that SKU. When inventory levels are low or if the product is sold out, it’s essential to replace in-store displays with available inventory to make the most of selling through in-stock merchandise. Seasonal Changes Stores need to appear full of fresh inventory on a regular basis to make the most of its retail sales. Visually merchandising the most current items at the front of the store looks inviting and new, especially for your regular customer and can positively impact sales. If your store has few seasonal changes in inventory, you can create the illusion of new stock by rotating which inventory is showcased at the front of the store.
8|Page
2. EXECUTIVE SUMMARY
This project is based on understanding the concept of merchandising and its impact. Almost all the beverage companies use different tools of merchandising depending upon their objectives and budget. Narang Danone Access (NDA) is a joint venture for Narang group and Danone, ?Danone? which is a company form France. NDA uses many merchandising tools to promote Blue. Blue is a noncarbonated flavored soft drink. People in India hardly know about non-carbonated flavored soft drink, so it was very important for the company to educate the market. To spread the awareness NDA used merchandises which are paid and which are unpaid and also which are inside the outlet and outside the outlet. The main objective of this research was to identify the impact of all the tools and among them which is the most impactful tool and how easily it can be installed. Knowing the durability of each tool is also important because the tool which has great impact on customers but doesn’t have durability is of no use. This project is based on a quantitative research where questionnaire was prepared for both customers as well as retailers. 550 customers and 100 retailers were intervened from different areas of Mumbai i.e. Bandra, Khar, Walkeshwar, Marinlines etc. Based on the responses by the customers and retailers conclusion are drawn. All the data which was collected and the conclusions were drawn is explained in detail in the further part of the project.
9|Page
3. BEVERAGE INDUSTRY OVERVIEW
The non-alcoholic drinks market has witnessed rapid growth over the past few years in India. Increasing middle class population, rapid urbanization and rising disposable income are some of the major factors fuelling this growth. The industry is broadly classified into soft drinks (carbonated and non-carbonated drinks) and hot beverages. The carbonated drinks market is close to Rs 6,000 crore and is growing by 10-12 per cent annually. The fruit-based beverage market stands at Rs 5,000 crore and is growing at 35-40 per cent an annually. The fruit-based beverage market is divided into three segments — fruit flowered drinks, nectar .i.e. fizz fruit-drink and 100 per cent juice — and is currently dominated by Dabur, Parle Agro, Pepsi, Coke and HUL. The Functional drinks segment is dominated by energy drinks. The current market size of energy drinks in India is around Rs 500 crore and it is expected to grow at a CAGR of 25 per cent. Within the hot beverages category, India is the largest producer of tea with a total turnover of around Rs 8,500 crore, growing at a rate of 1-2 per cent annually. India is the world’s fifth largest producer of coffee, accounting for 4 per cent of the world’s production. Fruit/vegetable juice segment is expected to grow at a CAGR of 30 per cent in value terms, followed by the energy drinks segment at a CAGR of around 25 per cent in value terms.
Growth of Indian Beverage Industry in India
The non-alcoholic ready-to-drink beverage segment has been growing at a compound annual growth rate (CAGR) of 13 per cent since 2009, and is one of the segments that have defied the slowing economic growth.
Arvind Varma, secretary general, IBA, said, "The nonalcoholic ready-to-drink beverage industry is one of the largest investors in the country and has contributed
10 | P a g e
significantly to the growth of industries. This industry is witnessing rapid growth, driven by a combination of factors such as increased investments and innovations.?
?However, the government needs to take a long-term view on the industry while formulating policies or else there is a chance this industry’s growth may get derailed,? he stated.
?IBA aims to act as a catalyst to enable the non-alcoholic beverage industry to play an increasingly significant role in the growth of the economy, by providing employment opportunities and driving income growth and therefore has raised its expectations with the government authorities,? Varma added. IBA's suggestions At the deliberations in the seminar, speakers observed that the macro-indicators and the demographic dividends growth for the beverage industry in India. ?With an enabling policy, which includes a more rational tax structure, frequent consultations with the industry on food regulations, giving the industry its due recognition as manufacturers of high quality, healthy and nutritious products as well as life-critical products like water, will further help the industry realize its potential,? IBA stated.
As an industry that has strong backward linkages with agriculture, its growth will also benefit millions of farmers across the country.
GST One of the key areas where the beverage industry expects Central and state government intervention is goods and service tax (GST) and direct tax code (DTC). The beverage industry has learnt that a single rate for both Central GST and state GST, which was proposed earlier, is reportedly being talked about as three different rates. This defies economic logic and is indicative of difficulty in moving forward the proposal of a Constitutional amendment in Parliament. IBA also suggested that the beverage industry be made a key stakeholder in the introduction of GST, and should be a natural partner in the process of consultation while
11 | P a g e
formulating the plan and roll-out of GST. The extent of involvement of industry currently in the consultation process needs to be scaled up and made more relaxing.
VAT The value-added tax (VAT) rate of six per cent is applicable to fruit juice and fruit juice-based drinks. Despite the states coming to an understanding that VAT would be charged at the rate of six per cent on fruit juice and fruit juice-based drinks, some states have increased the VAT substantially. The move to increase VAT on fruit juice and fruit juice-based drinks will subvert the growth of the juice industry as also the development of the fruit and vegetable processing industry. But some states have also increased the VAT on carbonated soft drinks.
This increase in taxes will, therefore, have to be passed on to the consumer leading to an increase in the price of the soft drinks, which will restrict purchase of soft drinks by the general mass. This, in turn, will have an adverse effect on the beverage industry and industries that depend on the beverage industry. An increase in price also favors manufacturers to sell their products on the basis of cost arbitrage. R&D Industry players also felt that their prowess in research and development would help them move beyond global brands and develop local, indigenous products to suit regional palates, thereby driving further growth in the market. These innovations are meant to address the low per-capita consumption of packaged beverages and will create both a direct and an indirect impact.
Regulatory aspect The industry also expects that the food safety authorities remove roadblocks and provide much faster clearances and approvals on ingredients and new products, without compromising the safety and quality of new products. This is most relevant in case of proprietary foods, where inordinate delays result in food and beverage companies having to wait for many months before launching new products.
12 | P a g e
4. Company Profile NARANG GROUP
At the Narang Group, they are passionate about the work they do and utilize individual ideas, creativity and innovation to achieve a common goal. They have five key business verticals – Danone Narang Beverages, Narang Danone Access, Suntory Narang, Narang Buzz & Narang Gourmet. They are the proud owners of Qua, the No.1 premium natural mineral water in India. The latest addition under their health & wellness still beverage portfolio is B'LUE, a water-based restoration drink.
13 | P a g e
Danone Narang Beverages and Narang Danone Access are joint ventures with Groupe Danone, a global leader in healthy food & beverages. With a turnover of Euro 17 billion, Danone ranks number 1 in fresh dairy and is a leader in baby nutrition and natural mineral water worldwide. Some of their other partners include some of the world's leading food & beverage brands such as Evian, Lindt, Illy Caffé, Twinings, Perrier and Monster. Narang Group is known nationwide for their deep understanding of consumer insights, their abilities to build brands in innovative categories, as well as their localized experience when it comes to sales, distribution, marketing and logistics. NG is recognized for their expertise in promoting and nurturing global, premium brands. They achieve this by raising awareness, identifying opportunities, understanding market needs, integrating processes and initiating activities to achieve common targets.
NARANG DANONE ACCESS (NDA)
Narang Danone Access handles beverage sales & distribution, leverages top-notch minds and world-class partners to create the most efficient marketing team in the country. This force of
14 | P a g e
productivity loves to take on a challenge, no matter how big or small, and look into every detail to ensure happy consumers, as well as results that smell of success. Their strengths and services include: ? ? ? ? A pan-India presence in 125 cities, with an automated distribution system covering over 100,000 outlets, serviced by our dedicated field force. Direct & Indirect Distribution Channel Management – we have dedicated sales teams to handle the different Complexities of Institutions as well as modern & general retail trade in the country. This approach also helps them in key account management as well as in synergizing trade marketing across our portfolio. Their network offers partners VIP entry into key markets across all regions. They also offer complete automated logistics solutions to help bring international products into the country with ease. Using a completely holistic approach, they service all their partners logistics needs.
NDA Specialized Logistics Services include: ? ? ? ? ? ? ? ? ? Sales Forecasting & Demand Management Sales & Operation Planning (S&OP) Production & Material Requirement Planning Importation with emphasis on Duty Paid & Duty Free Clearance Warehouse Management Trucking & Distribution Solutions Cold Chain Logistics Premium Food & Beverage Product Handling Collaborated Planning, Forecasting & Replenishment (CPFR)
15 | P a g e
5. Literature Review on Blue
B’lue has been specially designed keeping in mind today’s Young India – the section of the Indian society who believe in designing their lives and living their passion. Danone Narang Beverages, a joint venture between the French Group Danone and Indian business house Narang Group, announced the national launch of B’lue, a delicious new restoration drink that enlivens you in body, mind and mood. With the launch, this beverage opens a new segment in the Indian Ready to drink beverage segment. B’lue has been specially designed keeping in mind today’s Young India – the section of the Indian society who believe in designing their lives and living their passion. The I Generation of doers who live the change that most of us wish to see! A 24X7 generation who wants to be at their optimal best, anytime, anywhere. B'lue, with its distinctive taste is what every Young Indian ultimately aspires to be – Inventive, unique and Surprising. Formulated with unique taste and stimulating aroma, B’lue is an ideal drink for generation who wants to be at their optimal best, anytime, anywhere. B’lue helps them to feel at their best in body, mind and mood so that they are ready for all the opportunities in life. B’lue has been introduced in three delicious fruit flavors of Apple, Peach and Guava and is available in 500ml pet bottle priced at Rs. 30.
What makes it so awesome! No Carbonation, so no fizz. No Caffeine, so it’s light on you. No Artificial Colours, so you can see its true colours. No Preservatives, so it’s more concerned about your health.
16 | P a g e
Talking on the launch, Tarun Arora, Country Head, Danone-Narang Beverages said,?As a pilot, we introduced B’lue to the city of Pune and received a tremendous feedback. The beverage was very well accepted in the market. We then rolled into the soft launch phase in Mumbai, once again with encouraging results. With the national launch now, we are confident that consumers across the country will experience the B’lue benefit in their very busy daily routine. B’lue has a unique proposition that enlivens one’s body, mind and mood, is ideal for this generation who wants to be at their best hamesha.? ?We believe consumer knows it best. So we decided to co-create the B’lue proposition, including the brand name, with the Indian youth. And it’s heartening that the Youth also voted B’lue as Product of the Year, an Innovation award endorsed by consumers?, adds Tarun Arora “Youth icon, Vir Das, is the brand ambassador of B’lue who truly represents the aspirations of a young India who believes in living their passion and pursuing their dreams?, he added.
Advertising Communication: The tilt in the ad personifies the down / out of state situation resulting due to triggers that might affect body, mind or mood or all. In such situations, all one need is a drink that can restore one to his best. The communication is designed to appeal to the urban youth, projecting into their lives and their need to be at their best. The ad highlights brand ambassador, “Vir Das” missing daily opportunities in love, life and work because he is not at his best. The ad concludes with Vir sipping B’lue to be at his best.
17 | P a g e
6. OBJECTIVES & NEED FOR STUDY
? To understand the concept of merchandising ? To know the tools used in merchandising especially in traditional retail
? To analyze the impact of paid form of merchandising ? To know the durability of the unpaid merchandising tools
? To compare paid and unpaid merchandising tools and conclude the best amongst them ? To know is there a relationship between merchandising and sales?
18 | P a g e
7. Research Methodology
To fulfill the needs defined above and to come to a conclusion a proper research is to be done. I have implemented a quantitative research technique and in that the survey method. Survey method gives me proper and complete information. It is always good to go with a survey method because it includes collecting primary data and is the most relevant one too. Other methods may need, or are based on secondary data or self experience (e.g. Qualitative Research) which is nothing but the experience and opinion of one single researcher based on his research. Which has a chance of differentiation in the opinion of what the customer thinks and what the researcher concludes? So it is always better to go with a quantitative research technique. I have made a proper questioner that will give me the primary data and which helps me in further analysis and come to a conclusion. ? ? 550 customers were personally intervened and 100 retailers were personally intervened.
Following are the questions asked for the customers, the main purpose from these questions was to know from where they came to know about Blue and have they noticed any merchandising tool at a retail store, their perception about blue or what they think about blue.
19 | P a g e
Questionnaire (a) for customers
Questionnaire (b) for retailers
20 | P a g e
8. FINDINGS, ANALYSIS AND INTERPRETATION
Findings: Merchandising as a concept in book changes a bit when it comes to implementing. There are only a few tools mentioned in the books. Whereas companies outside are uses the tools which cannot be implemented by a small scale companies or business units. Big Companies like Pepsi, Parle Agro uses different tools like giving a refrigerator to retailers, placing stickers and giving display boards to retailers were their shop’s name is printed on it. A small or a company just started for them giving a refrigerator is not just a challenge but highly impossible. This gives those big companies a additional advantage over small companies to push their products. In the Same way NDA also uses the following merchandising tools in traditional retail: ? Danglers
21 | P a g e
?
Stickers
?
Posters
?
Banners
22 | P a g e
?
Stock Display
?
Window display
?
Display in Chiller
23 | P a g e
?
Counter top
?
Shop Board
?
Display on Gate
24 | P a g e
Among the above tools some are paid and some are unpaid. From the above questionnaire (a) it was found that 473 customers (respondents) were male and remaining among 550 were female. From the above questionnaire (b) all the retailers responded were traditional retailers which does not big organized retail stores like D-Mart, Big Bazzar etc.
ANALYSIS OF DATA FOUND AND IT’S INTERPRETATION Recall of the brand Blue: Company does advertising on various mediums like TV and other mediums. As the company is also investing time and sources in merchandising it wants to know how many % of people recollect the Brand Blue by any of the merchandising tools show above. So, form the survey conducted of 550 respondents in Bandra (E), Walkeshwar, Marinlines, and Khar (W) the following result was found Pie-Chart
Chart Title
Shoping Mall Merchandise TV Social Other
5% 10% 37% 25%
23%
25 | P a g e
From the above table I can say that among all the mediums used by the company, maximum number of people recall Blue or they recently saw blue at a Shopping Mall (37%). And this is because company gave various schemes in shopping malls and people were attracted to those prices. MRP of Blue is Rs.30 per bottle for 500 ml in any other retail shops except big organized retail stores and shopping malls. But in shopping malls people where getting it for only 50 per combo pack of 3 bottles. This was close to half the price they pay in any other retail shop. What is of our concern is the third highest, that is 23% or respondents recall the brand Blue form one of the merchandising tools used by the company which is just less than the TV add on which company spends some crores in a single year. So it is a great success for merchandising tools. TV adds and Merchandising are both tools and you can say mediums of advertising one of the major difference between TV add and Merchandising is? TV ads are active and merchandising tools are passive. That means TV ads are visual they speak, they sound etc. Where on the other merchandising tools is just a visual method of advertising. 10% of respondents came to know about Blue from social group i.e. form family members, relatives and friends etc. And remaining 5% of respondents recall Blue from other mediums. ANALYSIS OF IMPACT OF PAID MERCHANDISE To know the current market pulls 3rd question of questionnaire (a) was asked that ?When you recently went to a retail store did you noticed “Blue”?” and if Yes where? The main purpose of asking this question was to know how well the paid form of merchandising is doing or performing in the market. Those who have options other than the options given below were asked to tick as NO. This question gave me the current pulls of merchandising tools that whether the respondents noticed one of the options given to them. From the data obtained 90 respondents among 550 haven’t seen merchandising tool in a retail store or they dent noticed Blue in a retail store or they have seen Blue through any other medium which is not mentioned in the given options.
26 | P a g e
460 responses were positive that they saw Blue at a retail store following are the percentage of respondents and their responses.
RECALL
Display in chiller Shop board or display on gate Window display(warm) Counter tops
5%
38% 42%
15%
Company through me wanted to know among all the paid form of merchandising which is the one performing best or contributing the most when it comes to recall the Brand. So, from the study it came to know that shop board or display on gate has the most impact than other paid types of paid form of merchandising. Display in chiller had really great impact on customers/respondents (38%). Company pays some amount or gives Blue of same amount to the retailer on storing Blue in chiller which is visible to the customer. Window display or warm stock display or sometimes we call it branding also has satisfactory impact on customers to what the company pays to the retailers (15%). Branding
27 | P a g e
Counter tops only (5 %) where company spends more in supplying the bottle stand and giving few bottles free every month depending on the sales of retailers doesn’t has that much impact that the company expects in comparison to what it spends on it. DURABILITY ANALYSIS OF UNPAID MERCHANDISING TOOLS Company through me wanted to know the durability of unpaid merchandising tools i.e. dandlers, stickers, posters, banners and stock display. A separate employee is appointed by the company as a merchandiser, he is the one held responsible for all the installation of all the above mentioned unpaid merchandising tools. Through me company wanted to know that ?how many times the merchandiser visits a store in a particular month?? As the company specified a merchandiser should visit 2 or more times to every retail store in the area to which he is appointed. But it was found in most of the outlets that the merchandiser visits more than 3 times in a month which was really unexpected by the company. Following is the bar diagram showing the number of visits by a merchandiser to a retail store.
28 | P a g e
NO. OF VISITS BY A MERCHANDISER
50 45 40 35 30 25 20 15 10 5 0 Once in weak No. of visits 46
Respondents
Once in 15 days 26
Once in a Month 21
Never 7
From the above table you can see that 46 among 100 say that the merchandiser visits the store nearly 4 or more than 4 times a month. But the worst result was 7 respondents saying that merchandiser never visits them. When the question was asked to the merchandiser that why don’t you visit some outlets? The ultimate answer was ?in the past when we install our tool the shopkeeper himself uninstalls it when we move from their shop?. When the higher authority asked the merchandisers that how come you visited your allotted outlets more than 2 times in a month? They said when they install any tool like poster or a dangler it was found that it doesn’t last longer so they need to go and again install it. This answer again created a question that ?How long the tools last? And which tool lasts longer?? DURABILITY OF UNPAID MERCHANDISING TOOLS When it was found that the merchandiser needs to visit more than 2 times in a month company through me decided to find out which is the unpaid merchandising tool that lasts longer. Company with the survey made a standard format and came to conclusion that banner is the one lasts longer among the all unpaid merchandising tools.
29 | P a g e
But what I found out from my study is completely different and this was the result of change in time and primary research. Company was following a standard policy which was of other well knowing soft drink brands. And when compared to Blue from my research the result was completely different. Retailers are the one who closely observe or those are the one who can tell most accurately that how long different kind of merchandise lasts according to them. Following is the bar diagram showing the durability of the unpaid merchandising tools.
UNPAID MERCHANDISE DURABILITY
60 RETAILERS RESPONSE 50 40 30 20 10 0 Response Dangler 14 Sticker 57 Banner 20 Poster 9
As company thought that banner lasts longer than any other was not found true. Initially company also thought that yes banner may be the one that lasts longer because once it is installed at the top of the retail store or on the electricity pole near the retail store it is hard to uninstall by any one, but that was not the case and found that the banner was removed by the outsiders or the retailers themselves and put it to some other uses like stopping the rain water and covering some eatables etc. Another important parameter was installation. How difficult is the installation of a particular tool and how much time it takes to do the same.
30 | P a g e
Obviously banner takes more time than the other 3 alternatives because the merchandiser should arrange a ladder to climb up and tie a banner and also it is risky when the merchandiser is trying to install is anywhere near or on the electricity board. On the other hand when it comes to installation of other 3 alternatives they are easy to install. They rank in the fallowing manner (most easiest to install is the first) 1. Sticker 2. Poster 3. Dangler 4. Banner So the study showed that even though installing the sticker was the easiest one is would last longer than any other tool. This gave to company a very valuable information so that it could tell their merchandisers to concentrate more on installing stickers and finding out more results why not only banner but other tools i.e. dangler and poster fails to last longer which are also easy to install. COMPARISON OF PAID AND UNPAID FORM OF MERCHANDISING Finally it was important for the company to know the overall impact on merchandising but according to 2 parameters i.e. 1. Paid and unpaid and, 2. Inside and outside. To make future policies company suggested me to find the information according to the 2 parameters mentioned above and analyze it, were the final conclusion may help a little bit in uttering or give information in designing new policies. Following is the diagram showing the impact according to the given 2 parameters.
31 | P a g e
Paid window display display in chiller counter top A[32.71%] Inside Shop Board Display on gate B[32.71%] Outside
Stock display
danglers stickers posters banners D[21.64%]
C[12.10%]
Un-Paid
From the above you can say that more than 65% of impact of merchandising is seen by using a paid form of merchandising that is window display, display in chiller, counter top, shop board and display on gate. What can company alter if there was instability between paid inside and paid outside is that it would have changed the policy and try to stabilize it. If the impact is same of paid inside and paid outside than here the cost of installing and maintaining the merchandising tool is very important. Window display, display in chiller and counter top doesn’t cost as much as making a shop board and installing a display on gate may cost. So company would go for the first three options i.e. window display, display in chiller and counter top than that of investing time, money and recourses in making and installing a shop board and display on gate respectively.
32 | P a g e
Never the less more than 40% of the impact of merchandising tools is coming from the unpaid form of merchandising tools which is really appreciable where company bares only the cost of making that tools and cost of appointing a merchandiser wherein in paid form of merchandising it has to incur the cost of visiting the outlet, cost of installing the out let, cost of making the merchandising tools, and conducting a regular survey to ensure that the policy or the agreement signed is correctly implemented all this adds as a cost to company. Individually speaking both the sections i.e. A and B collectively contribute will to the companies expectations. Where as in section C where company spends nothing is also having effect on customers mind which is really great but one thing is for sure here the company has to ensure that there should not be any stock outs otherwise this opportunity is lost by the company. Section D is the focus area for me because the tools are pretty simple but still they have the ability to spread the awareness in the society and finally influence people to buy Blue.
RELATIONSHIP OF MERCHANDISING AND SALES Merchandising is a small part of advertising where as sales is a revenue generator of any company. Whenever you go to big companies you mainly find that the sales department and the marketing department are entirely different and they hardly coordinate to each other. But most of the people think that advertising is directly related to the sales in some cases it may be true but not in case of NDA. In NDA the sales focus is just to go out and sell the product in any case they just know selling whatever the product may be and never meet or contact the advertising person whether they are making a great advertising or promotion strategy or not. In the same sense Advertising department is not concerned with what the sale department is doing weather they are pushing the product to increase the sales or not. They have their own objectives given by management. The main purpose of merchandising is to promote, increase awareness and get into the customers mind and try to make them purchase, which ultimately increases the sales.
33 | P a g e
And if the sales increases in the coming year the budget for advertising will also increase were the advertiser can try new things and experiment his ideas. So we can say that, not directly but indirectly both advertising and merchandising are related to each other.
34 | P a g e
9. RECOMMENDATION & SUGGESTIONS
? Blue is a non-carbonated flavored soft drink it was found that people still think it as a carbonated soft drink and few call it as a fruit juice because it has flavors. So, the perception of the people needs to be changed through proper merchandising. ? The stock outside the chiller is also gaining the business or having the impact on customers and spreading the awareness, care must be taken that there should be no stock outs by inspecting the regular visits by salesmen.
? Never the less the 2nd most important thing for a retailer to sell Blue is the customers demand and the 3rd is advertising, so demand could be raised by proper advertising, so company should bring in new and latest type of merchandising tools to support retailers interest. ? There is a huge scope for innovations in stickers, as from the study I came to know that stickers are the most efficient tool of merchandising so company can make innovations in it by having even more attractive colors and types.
? It was found that in paid outside form of merchandise display on gate has more impact than the shop board, it is obvious because as soon as the customer enters the store he sees Blue on the gate so there it has more chances that he might pick it up or go for a purchase. So, company should ensure that all the contracts of display on gates are properly executed and try to do more of display on gate contracts. ? Stock in chiller brings a significant amount of business is what the retailer says because it is in the condition of ready to drink. So salesmen should always ensure the bottles are properly placed in the chiller as it is his duty to do so.
35 | P a g e
? Company is making good business there are few stores like welcome foods Bandra (W), Chechda Collection Haji Ali etc who give a great business to the company. To support them and increase the sales even more company should give them a chiller to store only Blue. ? As merchandising is a tool to increase awareness and make the customer purchase the product, merchandising is must for new outlets or outlets which are recently converted, that will support and increase the awareness that Blue is stocked here.
? The quality of danglers needs to be improved because the quality of dangler which the company is using now is of paper, which is now lasting to the extent what it is expected due to heavy rain and wind. A plastic coating may help it a bit. ? Company is now focusing on South Mumbai, to the major tool of spreading the awareness in the area is on merchandising. So the marketing head should ensure a proper merchandising strategy in all the vicinities in South Mumbai.
36 | P a g e
10. LIMITATIONS OF THE PROJECT
? This entire project is based on the study of only 2 months (summer) i.e. May and June of 2013. So the data may not be applicable in other seasons. ? Only few areas were covered from entire Mumbai so things may be a bit different where the study was not conducted.
? Some conclusions drawn by me based on the data is my own personal opinion it can be contradicting to some other experts opinion. ? Sample size of customers i.e. 550 is less for the company to come to a conclusion and take a major decision.
? Sample size of retailers is also less100 to make any changes in the existing policies with retailers. ? The primary data obtained in just 2 months cannot be said completely valid in the same period of next year due to changing trend.
37 | P a g e
11. CONCLUSION
? As from the entire study we came to know that merchandising is very important for any beverage making company because is it one of the medium which increases awareness in the society and also supports the retail stores to increase their sales. ? Companies which are the initial starters cannot use big advertising medium to spread awareness of their products, so for them merchandising tools can be a option for them.
? There are number of tools that different companies use. But what is used by the NDA to promote Blue is really a great mix. The company is following the strategy on just to push the unpaid merchandising tools because that cost them less and has a greater impact too. ? From the above study you can also now say that by going with both paid and unpaid merchandising tools company can have penetration form both the ends that is form the companies end (unpaid merchandise) and from retailers end (paid merchandise).
? If NDA makes innovation in its merchandising tools and try to increase the durability of the tools which it is using can really gain them a great success. ? Whenever you talk about merchandising the person i.e. the merchandiser is of at most important, if the company gets a experienced or the person who is really very enthusiastic to work as a merchandiser can bring out a great results to the company.
38 | P a g e
? Last but not the least the main purpose of merchandiser is to make the customer buy the product and generate revenue for the company. Form the above study I can say that yes customers are recalling the brand Blue through one of the merchandising tools so if we do similar kind of research in future by increasing the sample size, that will give company the real pulls of the market and that will help the company to decide how much experiments they can do in merchandising tools and what is the amount they should spend on the same.
39 | P a g e
12. BIBLIOGRAPHY & WEBSITES
Indian Infoline News Service,09:21, Mar 28, 2013
Websites:
www.naranggroup.com/ http://www.in-beverage.org/ http://www.indiainfoline.com/Markets/News/Danone-NarangBeverages-launches-Blue/5647766278
40 | P a g e
doc_298461868.docx