Description
documentation about sales promotion plan for bournvita and covers brand cadburys bournvitas sales promotion by studying the market situation, objectives, promotion plan, offer, strategy, consumption pattern, budget, contribution and designs
Sales Promotion Plan
Sales Management
-
Product
The product for which a sales promotion is suggested is a health drink, Bournvita. It is manufactured by Cadbury India. Bournvita, a chocolate-flavoured health drink, was launched in 1948 and is one of the oldest brands in the malt beverage segment. The sales promotion is proposed to be implemented in Bangalore, in the state of Karnataka.
MEMO
To: Mr. Harish Bedarkar Branch Sales Manager, Bangalore From: Group 1D Date: 6th September 2009-09-06 Re: Sales Promotion Plan for Bournvita in Bangalore
Market situation: Bangalore has a population of approximately 5.3 million, out of which, 54% are below the age of 19 years. Our target segment consists of people below the age of 19 years. The total number of people falling in this target segment is 2.86 million. The percentage of people falling in the middle and upper-middle class income group is 65%. Hence, the number of consumers in the target segment is 1.86 million. Bournvita has a market share of 17%. Hence, the number of current consumers of Bournvita is 0.316 million. Current population of Bangalore Target segment (Age group) Target segment as a percentage of population Strength of Target Segment Middle class income group in the population Final target audience Current market share of Bournvita Total number of children consuming Bournvita Table showing the current market situation 5300000 0-19 years 54% 2862000 65% 1860300 17% 316251
However, the leader in the health drink market is Horlicks, by Glaxo Smithkline Consumer Healthcare Ltd, with a market share of approximately 55%. Objectives Short-term Objective ? To increase sales by 20% during the time period of the sales promotion, i.e. 2 months.
Long-term Objectives ? ? ? To increase baseline sales of Bournvita. To widen customer base. To capture a larger market share in terms of revenue.
Promotional Plan: SKUs on which the promotion is valid: 500g and 1000g Time period of Promotion: Two months. Offer: The promotion consists of giving ‘Scratch Cards’ with each pack of Bournvita. There will be one scratch card in every 500g pack and two scratch cards in every 1000g pack of Bournvita. Each scratch card will serve as the gateway to winning any one of the following: ? ? ? ? Cadbury’s 5-Star chocolates Tennis Balls Badminton Racquets T-shirts
The scratch cards will be an ‘In-Pack’ promotion, i.e. the card will be kept inside the pack of Bournvita. Strategy: The proposed sales promotion is expected to increase sales by 20% during this time period. Due to this, the market share of Bournvita is expected to increase by 3.4% (20% of the existing market share, 17%), during the period of this promotion. It is optimistically assumed
that the offer will induce more potential customers to buy Bournvita, thus, widening the customer base. We further assume that at least 30% of these new customers will become repeat purchasers, even after the promotional offer is terminated. Therefore, this will increase the baseline sales of Bournvita. As the target segment consists of youngsters below the age of 19, the freebies have been chosen such that they will interest these customers. Also, the desire to possess the entire collection of freebies will induce more frequent purchase of the product during the period of promotion (especially for the Badminton racquets, which would be required in pairs). The rationale behind including a scratch card and not the freebies directly in the SKUs is to introduce an element of surprise. Children will find this surprise element more attractive than knowing what exactly is inside the pack. .Current Consumption Pattern Total number of children consuming Bournvita Consumption per day per child Consumption per month per child Current SKU (type 1) Current SKU (type 2) No. of 500g SKUs utilised for two months per child No. of 1000g SKUs utilised for two months per child Number of 500g SKUs proposed to be sold Number of 1000g SKUs proposed to be sold Total SKUs projected Table showing consumption The average consumption per child per day is 20g and thus, the consumption per child per month is 600g (20g*30 days). The number of 500g SKUs and 1000g SKUs used for 2 months (period of promotion) is found to be 2.4 and 1.2 respectively. Therefore the number of 500g SKUs and 100g SKUs to be sold was found to be 455401 and 159391 respectively, leading to a total of 614792 SKUs. 316251 20g 600g 500g 1000g 2.4 1.2 455401 159391 614792
500g SKU MRP Per child revenue for two months Total present revenue Total present market revenue Expected percentage increase in market share Expected revenue in two months 130 312 49335156
1000g SKU 225 270 29885720
79220876 3.4% 95065051 3.4%
The maximum retail price of the 500g SKU is Rs. 130 and that of 1000g SKU is Rs. 225. The total expected revenue is calculates as Rs. 49335156 for 500g SKU and Rs. 29885720 for 1000g SKU. Thus, the total expected revenue due to the sales promotion is calculated to be Rs. 95065051. Assuming that there is a 20% increase in the current market share of Bournvita, the net increase in Bournvita’s market share was calculated to be 3.4%.
Contribution
Contribution for 500 gram SKU MRP Retailer Margin Retailer commission Retailer VAT Retailer landing price Distributor margin Distributor commission Distributor VAT Distributor Landing price Excise duty CST Freebie cost Transportation cost per Unit Scratch card Realization 130 8% 9.63 1.20 119.17 3% 3.47 0.43 115.26 10.40 4.61 35.00 1.56 2.00 61.69
Contribution for 1 kilogram SKU MRP Retailer Margin Retailer commission Retailer VAT Retailer landing price Distributor margin Distributor commission Distributor VAT Distributor Landing price Excise duty CST Freebie cost Transportation cost per Unit Scratch card Realization 225 8% 16.67 2.08 206.25 3% 6.01 0.75 199.49 18.00 7.98 70.00 3.13 2.00 98.39
The contribution and realization per unit are shown in the tables given above. The distributor’s margin is 3%, while the retailer’s margin is 8%. The Value Added Tax rate is 12.5%. Sales Promotion Budget Total No. of Scratch Cards required Cost of Scratch Cards + Freebies Total Sales Promotion Budget (25% of Sales Revenue, including Advertising Costs) 774183 23066086 23766262.65
The break-up of the sales promotion budget is shown in the table given above. The average cost of the freebie offered per SKU is Rs. 35. One scratch card is given along with each 500g SKU, while two scratch cards are offered with each 1000g SKU. Therefore, for 614792 projected SKUs sold, the number of scratch cards was calculated as 774183.
Break-up of the Freebies Offered: Freebie Cadbury's 5-star Tennis ball Badminton racket T-shirt Total Cost of Freebies Nos. 265953 264600 231408 12222 Cost per unit (Rs.) 10 22 50 120 21517720
The total cost of the freebies offered under the promotion, Rs. 21517720 is calculated on the basis of projected sales of 614792 SKUs with a bundled freebie of an average cost of Rs. 35 per 500 gram SKU and Rs. 70 per 1 Kg SKU. Communication of Sales Promotion: The details of the sales promotion will be communicated through posters at the retail outlets, in-store displays of freebies, local print media, etc. A sample t-shirt offered as a freebie is shown below:
I have the
Confidence
1 - Front View
2 - Back View
doc_119458361.docx
documentation about sales promotion plan for bournvita and covers brand cadburys bournvitas sales promotion by studying the market situation, objectives, promotion plan, offer, strategy, consumption pattern, budget, contribution and designs
Sales Promotion Plan
Sales Management
-
Product
The product for which a sales promotion is suggested is a health drink, Bournvita. It is manufactured by Cadbury India. Bournvita, a chocolate-flavoured health drink, was launched in 1948 and is one of the oldest brands in the malt beverage segment. The sales promotion is proposed to be implemented in Bangalore, in the state of Karnataka.
MEMO
To: Mr. Harish Bedarkar Branch Sales Manager, Bangalore From: Group 1D Date: 6th September 2009-09-06 Re: Sales Promotion Plan for Bournvita in Bangalore
Market situation: Bangalore has a population of approximately 5.3 million, out of which, 54% are below the age of 19 years. Our target segment consists of people below the age of 19 years. The total number of people falling in this target segment is 2.86 million. The percentage of people falling in the middle and upper-middle class income group is 65%. Hence, the number of consumers in the target segment is 1.86 million. Bournvita has a market share of 17%. Hence, the number of current consumers of Bournvita is 0.316 million. Current population of Bangalore Target segment (Age group) Target segment as a percentage of population Strength of Target Segment Middle class income group in the population Final target audience Current market share of Bournvita Total number of children consuming Bournvita Table showing the current market situation 5300000 0-19 years 54% 2862000 65% 1860300 17% 316251
However, the leader in the health drink market is Horlicks, by Glaxo Smithkline Consumer Healthcare Ltd, with a market share of approximately 55%. Objectives Short-term Objective ? To increase sales by 20% during the time period of the sales promotion, i.e. 2 months.
Long-term Objectives ? ? ? To increase baseline sales of Bournvita. To widen customer base. To capture a larger market share in terms of revenue.
Promotional Plan: SKUs on which the promotion is valid: 500g and 1000g Time period of Promotion: Two months. Offer: The promotion consists of giving ‘Scratch Cards’ with each pack of Bournvita. There will be one scratch card in every 500g pack and two scratch cards in every 1000g pack of Bournvita. Each scratch card will serve as the gateway to winning any one of the following: ? ? ? ? Cadbury’s 5-Star chocolates Tennis Balls Badminton Racquets T-shirts
The scratch cards will be an ‘In-Pack’ promotion, i.e. the card will be kept inside the pack of Bournvita. Strategy: The proposed sales promotion is expected to increase sales by 20% during this time period. Due to this, the market share of Bournvita is expected to increase by 3.4% (20% of the existing market share, 17%), during the period of this promotion. It is optimistically assumed
that the offer will induce more potential customers to buy Bournvita, thus, widening the customer base. We further assume that at least 30% of these new customers will become repeat purchasers, even after the promotional offer is terminated. Therefore, this will increase the baseline sales of Bournvita. As the target segment consists of youngsters below the age of 19, the freebies have been chosen such that they will interest these customers. Also, the desire to possess the entire collection of freebies will induce more frequent purchase of the product during the period of promotion (especially for the Badminton racquets, which would be required in pairs). The rationale behind including a scratch card and not the freebies directly in the SKUs is to introduce an element of surprise. Children will find this surprise element more attractive than knowing what exactly is inside the pack. .Current Consumption Pattern Total number of children consuming Bournvita Consumption per day per child Consumption per month per child Current SKU (type 1) Current SKU (type 2) No. of 500g SKUs utilised for two months per child No. of 1000g SKUs utilised for two months per child Number of 500g SKUs proposed to be sold Number of 1000g SKUs proposed to be sold Total SKUs projected Table showing consumption The average consumption per child per day is 20g and thus, the consumption per child per month is 600g (20g*30 days). The number of 500g SKUs and 1000g SKUs used for 2 months (period of promotion) is found to be 2.4 and 1.2 respectively. Therefore the number of 500g SKUs and 100g SKUs to be sold was found to be 455401 and 159391 respectively, leading to a total of 614792 SKUs. 316251 20g 600g 500g 1000g 2.4 1.2 455401 159391 614792
500g SKU MRP Per child revenue for two months Total present revenue Total present market revenue Expected percentage increase in market share Expected revenue in two months 130 312 49335156
1000g SKU 225 270 29885720
79220876 3.4% 95065051 3.4%
The maximum retail price of the 500g SKU is Rs. 130 and that of 1000g SKU is Rs. 225. The total expected revenue is calculates as Rs. 49335156 for 500g SKU and Rs. 29885720 for 1000g SKU. Thus, the total expected revenue due to the sales promotion is calculated to be Rs. 95065051. Assuming that there is a 20% increase in the current market share of Bournvita, the net increase in Bournvita’s market share was calculated to be 3.4%.
Contribution
Contribution for 500 gram SKU MRP Retailer Margin Retailer commission Retailer VAT Retailer landing price Distributor margin Distributor commission Distributor VAT Distributor Landing price Excise duty CST Freebie cost Transportation cost per Unit Scratch card Realization 130 8% 9.63 1.20 119.17 3% 3.47 0.43 115.26 10.40 4.61 35.00 1.56 2.00 61.69
Contribution for 1 kilogram SKU MRP Retailer Margin Retailer commission Retailer VAT Retailer landing price Distributor margin Distributor commission Distributor VAT Distributor Landing price Excise duty CST Freebie cost Transportation cost per Unit Scratch card Realization 225 8% 16.67 2.08 206.25 3% 6.01 0.75 199.49 18.00 7.98 70.00 3.13 2.00 98.39
The contribution and realization per unit are shown in the tables given above. The distributor’s margin is 3%, while the retailer’s margin is 8%. The Value Added Tax rate is 12.5%. Sales Promotion Budget Total No. of Scratch Cards required Cost of Scratch Cards + Freebies Total Sales Promotion Budget (25% of Sales Revenue, including Advertising Costs) 774183 23066086 23766262.65
The break-up of the sales promotion budget is shown in the table given above. The average cost of the freebie offered per SKU is Rs. 35. One scratch card is given along with each 500g SKU, while two scratch cards are offered with each 1000g SKU. Therefore, for 614792 projected SKUs sold, the number of scratch cards was calculated as 774183.
Break-up of the Freebies Offered: Freebie Cadbury's 5-star Tennis ball Badminton racket T-shirt Total Cost of Freebies Nos. 265953 264600 231408 12222 Cost per unit (Rs.) 10 22 50 120 21517720
The total cost of the freebies offered under the promotion, Rs. 21517720 is calculated on the basis of projected sales of 614792 SKUs with a bundled freebie of an average cost of Rs. 35 per 500 gram SKU and Rs. 70 per 1 Kg SKU. Communication of Sales Promotion: The details of the sales promotion will be communicated through posters at the retail outlets, in-store displays of freebies, local print media, etc. A sample t-shirt offered as a freebie is shown below:
I have the
Confidence
1 - Front View
2 - Back View
doc_119458361.docx