Submit To; Prof. Awais Qadeer Section; “A” Date; June 4, 2012
Final Project of Strategic Marketing Reposi Repo siti tion onin ing g of RC Co Cola la in Pakistan
Prepared By; Sheikh M Rumman Haroon L1S10MBAM2132 Syed Bilal Hassan L1S10MBAM0153 Syed Waqar Haider Razvi L1S10MBAM0148 Muhammad Azeem Salahuddin L1S10MBAM2133 Muhammad Farhan Naeem L1S10MBAM0149 Muhammad Waseem Tahir L1S10MBAM0150
Acknowledgement We are are very very than thankf kful ul to our our resp respec ecte ted d teac teache herr Prof Prof.. Awai Awais s Qadeer who gave us the compete knowledge of the subject and encou encoura ragin ging g us to comp complet lete e our our proj project ect.. The The know knowled ledge ge he gave us and the whole class would be helpful throughout our practical life.
Contents Contents.............................................................................................3 STRENGTHS:...................................................................................6 WEAKNESSES..................................................................................7 OPPORTUNITY.................................................................................7 THREAT...........................................................................................7 GEOGRAPHIC SEGMENTATION........................................................8 Distribution Channel.....................................................................12 Competition..................................................................................12 Be free, drink RC...........................................................................12 ANALYSIS AND SUGGESTION........................................................12 MARKETING MIX............................................................................13 Now we discuss the variables of product for RC Cola......................14 VARIETY.....................................................................................14 QUALITY.....................................................................................14 PRODUCT SUGGESTION................................................................14 LIST PRICES...................................................................................15 PROMOTIONAL SUGGESTIONS...................................................17
History of Royal Crown Cola Company (Parent company of all franchises of RC Cola in Pakistan) Since its launch in 1905, RC Cola has been a soft drink that embodies individuality and entrepreneurial spirit. RC's crisp, clean taste distinguishes it from other colas, and has become a favorite of cola drinkers throughout America. RC originated in Columbus, Ga., when a young pharmacist named Claud A. Hatcher decided to supply his family's grocery store with drinks that he produced and bottled. Hatcher called his first line of beverages "Royal Crown," and the first cola product "Chero-Cola." Other early products included Royal Crown Ginger Ale, Royal Crown Strawberry and Royal Crown Root Beer. Sales grew steadily and in 1912 Hatcher's basement bottling activities grew into the Chero-Cola Co. Sixteen years later, he renamed the company Nehi Corporation, after the successful line of fruity beverages he had developed. After Hatcher's death in 1933, Vice President H.R. Mott took control of the company and quickly streamlined operations to make the company debt-free within the year. Part of Mott's plan was the reformulation of the classic Chero-Cola into a more refreshing beverage. Chemist Rufas Kamm was given the responsibility of coming up with the new flavor, which took six months to perfect. The new cola was released to the public with the name of Hatcher's original line of beverages: Royal Crown. Royal Crown Cola was an instant sensation. RC Cola, as it is now called, was such a success that the company was eventually renamed Royal Crown Cola Co. By 1940, RC products were available in 47 of the 48 states. As RC continued to grow, it stayed true to its independent personality by producing innovation after innovation. In 1954, the company became the first to nationally distribute soft drinks in cans. Four years later, the company introduced the 16-ounce bottle. In terms of beverages, RC produced the first low-calorie diet cola (Diet Rite), the first caffeine-free diet cola (RC 100) and the first diet cherry cola (Diet Cherry RC). Other RC innovations include the all-
aluminum beverage can and Royal Crown Draft cola, a premium cola made with pure sugar cane. In 1998, RC was relaunched with new packaging, a dynamic logo, and a new tagline : "Be Free, Drink RC." RC also introduced RC Edge, the first maximum-power cola containing a synergistic blend of Indian ginseng, taurine and caffeine. What's in a name? RC Cola received its name from the people who matter the most: its consumers. When the reformulated product was released in 1934, the manufacturer named it "Royal Crown Cola." As the soft drink became increasingly successful, consumers affectionately abbreviated the name to " RC."
History of Continental Beverages Ltd ` Royal Crown Cola Company has five franchises in Pakistan. Karachi Kotri (Hyderabad) Multan Lahore and Islamabad (Kotri franchise is temporarily closed these days.)
The Karachi franchise of RC Cola is working by the name of CONTINENTAL BEVERAGES LTD . Fayysal Iqbal Khan is the Executive Director of Karachi franchise. His family has been in this business of beverages for last 40 years. Initially Mr. Iqbal’s father used to do the business, but he transferred his business to his sons due to old age. One of his brothers is running two franchises of Pepsi, one in Karachi and one in Quetta. Faisal Iqbal’s younger brother came back after completing his studies from abroad. Now his younger brother also supported him in running Continental beverages. In 1985, they introduced RC Cola in Karachi. At that time it was a very famous drink and holds a good share in cola market. But after 1986, the company faced some financial problems and unable to promote RC Cola. The period between 1986-1996 was very difficult for the company to run the business. At that time some political parties in Karachi were very
strong, and their political activities affected the business of beverage industry. The company was not financially strong enough to face these problems. They sold some of their assets in order to pay their loans to bank and run their business. They also faced the problem of SSRB (Single Served Returnable Bottles). They suffered this unethical problem just because of Pepsi. They used to supply their products to the customers in single served returnable bottles and used to collect their bottles after usage (or when they are empty). But what happened is that Pepsi unethically started collecting their empty bottles from the market and stocking them in their godowns or warehouses. Due to the shortage of the empty bottles, they had to buy new bottles from Baluchistan Glass Bottles manufacturers, and had to pay a large amount. They are already financially unstable and this unethical action also affected their production capacity. Continental beverages stopped their production for 2 ½ years, between 2002-2004. In this period some people in the interior areas of Sindh started hand re-filling of RC Cola and were selling these fake bottles in the lower market, because the empty bottles were easily available. When the company stopped their production in the period between 2002-2004, it did not announce officially that they stopped their production because they want to re-launch their product. Due to this some people were misunderstanding that the drink was available in the market but cater to very lower class. Finally, they re-launched RC Cola on 15 th Feb’05 and also introduced some new products along with RC Cola.
SWOT Analysis The analysis of the internal and external environment is integral for determining the company’s strategic standpoint and potential for success regarding the product .
STRENGTHS:
RC Cola is the cola which is more than a 100 years old. In Pakistan the image of the brand is already been made 30 years back and it just want a good marketing strategy to recall the brand.
RC Cola is an international company and it has a very strong position internationally.
RC Cola has a very vast distribution channel and it is easily available everywhere.
WEAKNESSES
Low advertising budget.
Pepsi does not offer any sort of incentive or discount to its retailers.
International Law suits.
RC Cola only targeted only lower class in their promotions before.
OPPORTUNITY
To produce more concentrative and conglomerate products drinks.
The heat factor in the sub-continent.
Company may start entering rural areas also.
To build a brand equity.
The company may also diversify its business in some other potential business.
Increased interest of people in musical groups, cultural shows and sports has provided an opportunity for RC Cola to increase its sales through them.
THREAT
Very strong established competitors like Pepsi and Coke.
Cola drinks are not good for the health so the awareness level of the people is increasing which is a big threat to the company.
This very fact that Royal Crown cola was faded away in the early 90’s.
Segmentation and Targeting GEOGRAPHIC SEGMENTATION
Geographically, Continental Beverages divided Pakistan into provinces and then into cities. Climate is also very important geographical factor because in summers the sales of soft drinks are at peak than in other seasons .
Continental beverages is actually a franchise of ROYAL CROWN COLA COMPANY, Which is the parent company and it is in USA. As you know ROYAL CROWN COLA COMPANY has five franchises all over the Pakistan. Two franchises are in Sindh and three in Punjab. Geographically, the market is divided into cities. But currently, the company’s franchises operate in four cities rather than in five because the kotri franchise is temporarily closed. The Karachi franchise is working by the name of “Continental beverages”. In past it cater only the Karachi market. But now it has become the authorized bottlers under franchise for province Sindh and Baluchistan. They will start their distribution in Sukkar and Baluchistan areas in last year.
In summer season the sales of the soft drinks increases as compare to other seasons. The duration of the summers in Punjab is longer than in Sindh. So in this way the Punjab’s cities are very attractive market than the Sindh. Because the duration of summers in Punjab is longer and hotter as compared to Karachi and Hyderabad. That’s way the three franchises are in Punjab.
Demographic Demographically the market is segmented on the basis of:
Age Gender Family size Income
Currently, “Continental beverages” is catering the age group of 13-26 years. It’s main focus on school and college going children and young adults. But some of the products of Continental beverages are especially for women and children like:
Pakola Ice Cream Soda Pakola lemonade Pakola Apple Sidra
Now the Continental Beverages Ltd. introduces new 1.5lit pet bottles. These are economy size bottles for families. In Pakistan most of the people prefer economy size bottles because the average family size is 5-6 people and these pet bottles are suitable for the families. That’s way they introduce 1.5liter bottles for all of their brands because of the customer preference. According to them their products are for average income people (income between Rs.5000-8000) and they also cater their products to lower income people in the interior areas of Sindh in order to grab larger market share. Because Pepsi and Coke are firmly establish in the urban areas and they do not cater the lower lowers. That’s why the Continental Beverages Ltd. captures low-income people in rural areas. After 9/11 some new soft drinks enter in the cola market like: Amrit cola Mecca cola Zam zam cola In which two are local brands and one is Irani brand. They boycott franchise soft drinks and forces people to use Islamic and local products. After the 9/11 up till now they did not face any problem related to religion.
But the franchise bottlers always give importance to the norms, beliefs, and attitudes of the target market.
Psychographic In psychographic segmentation, Continental Beverages consider only one factor, which is social class.
Their target social classes are middle class and lower class. In past they were catering to these classes. But they face some problems in catering to these social classes. In the view of Executive Director of Continental beverages,
“In Pakistan the rich has became richer and poor has became poorer and the middle class is almost ended or converted into lower class in Pakistan. It is very difficult to stick to the same social classes and caters them.”
That is why they make changes in their strategies and decided that they continue to cater the middle and lower class and also try to cater the upper class. In order to attract upper class they gave free samples to people at Park towers (Clifton) on 18 th, 19th and 23rd of this march. They also introduced UTC (under the crown) scheme between April till March this year, in which they gave prizes to children. The company will recently introduce DIET RC COLA in order to attract health conscious people. They will also launch pure clear drinking water by the name of “KENNY”. According to their view it will be a premium clear drinking water but not mineral water. Because in mineral water sodium is present in a reasonable high quantity which is dangerous for the people in Pakistan because in Pakistan the people are not facing the problem of sweating like in Saudia and Kuwait, where the sweating rate is much higher than in Pakistan. That is why their body requires minerals. But if these minerals are given to the people in Pakistan, it causes stomach problems. They decided to create awareness among people about the Drinking water and also try to grab the attention of educated people.
Behavioral Segmentation
Considering variables:
Occasions Benefits User status Attitude toward product
In behavioral segmentation Continental Beverages grouped the people on the basis of their responses and usage of the product. They considered that the consumption of soft drinks does not remain the same throughout the year. In summers (April-July) it sales increases but in winter it sales decreases. In summers the people used it on almost regular basis. But in winter they use it occasionally, or use it when they go out (on premises). In order to increase the sales in winter season they influence people by their tagline: Be Free, Drink RC.
By this tagline they want to promote RC Cola as a cool and refreshing drink. That can be used at any time. Different people want different mixes of benefits from the products they buy. Continental beverages introduce 1.5lit pet bottle because people want economy size bottle. In this way they want some thing new in the drink like change in flavor. That is why the company will introduce RC Cola with Cherry flavor and Diet RC Cola in the coming year on the basis of consumer demand. Currently, the company tries to regain its ex-users. In past their target markets were the middle and lower classes. They were also catering the interior areas of Sindh. After re-launching, they have the same future strategies but they want to increase the market share that’s why they decided to cater the upper class in order to convert the non-users into regular users. Continental Beverages tries to gain a positive attitude toward RC Cola by giving a good quality product at a lower price as compare to their competitors and make sure that their product in available at almost all places in Karachi.
Reasons for Failure of RC Cola in Pakistan
Distribution Channel Main reason for failure of RC Cola was their distribution network. Initially in 1981 company started with their own distribution network and capturing the market very well but after 1986 company was unable to carry out its own distribution network as they were financially unstable so decline in the sales started which lead to failure in unavailability of product at outlets.
Competition As a part of publicity other companies like Coke and Pepsi were giving vesicular to the retailer for storing product, but RC Cola were reluctant to do so as a result of which retailers were start keeping competitors product. If we analyze all the reason for failure, we concluded that their product was not have any problem but reason for failure was financially unstable and presence of tiger competitors like Coke and Pepsi, as a result of which they left the market for 2 ½ years.
Market Positioning Continental beverages Ltd. is working to occupy a very distinctive position in the mind of customers by giving them superior quality products. They should emphasis on the careful delivery of their products. They ensure that RC Cola reaches to customers in the same condition in which it was made. In this way they attract customers towards the quality maintenance of their product. Secondly, they want to hold the position of RC Cola in the mind of the customers as a cool and refreshing drink by using this tagline:
Be free, drink RC Means that you can drink RC any time to refresh yourself.
ANALYSIS AND SUGGESTION Currently, Continental Beverages want to position RC Cola as a:
Cool and refreshing drink
Best quality soft drinks
By using the tagline: Be free, drink RC Cola
Their positioning strategies are good, but they are not promoting it in a good way. They try to promote RC Cola in such a way that it occupy a very distinctive and clear position in the mind of consumer that RC Cola is a quality drink at a reasonable price.
Repositioning W.R.T 4p’s MARKETING MIX Marketing mix consist of everything that the firm can do to influence the demand for its products. Here we will be discussing the 4 Ps of RC Cola.
Product Products are the goods of the company that they offer to their target market. Currently, Continental Beverages have four products:
RC Cola Royal Orange Royal Lemonade
They will recently introduce:
Upper 10 (soft drink) Kenny (drinking water) New varieties in RC Cola They will also introduce one American and one British drink in future (but they didn’t disclose the names of the drinks.)
Now we discuss the variables of product for RC Cola. VARIETY RC Cola was introduce in 1985, and re-launched in 2005, in this period they did not introduce any new flavor and variety of RC Cola. They are also working to introduce,
RC Diet RC with cherry flavor in the coming year. QUALITY
The company has the basic purpose to give quality products to the consumers. According to Mr. Fayysal Iqbal, a “mystery man” comes from America any time during the whole year and collects the samples of their product from the market places and takes back these samples to America for testing. If there is any flaw in the quality of product, strict action is taken against them. They also said that some special supervisors come from the parent company that stay with them for the whole week and monitor their production process and take the report back to America. According to this strategy, they ensure their customers that their quality is always consistent. He claims that no other company in Pakistan has this privilege. DESIGN AND PACKAGING
RC Cola is available in glass bottles (250ml) and also in economy size pet bottles (1.5lit). The design of the 250ml-glass bottle of RC Cola is same as it was in past. The design of the 1.5lit pet bottles is almost similar as the 1.5lit pet bottles of Pepsi. They will introduce new design 250 or 330ml pet bottles for RC Cola and for their other brands in future.
PRODUCT SUGGESTION As far as RC Cola’s bottle design is concerned we have some suggestions.
FOR 250ML BOTTLE
If they introduce 250ml bottle of RC Cola in a new and attractive design then it shows some difference and also influences the buyer to purchase.
There is a little difference in the design of 250ml bottle of Pepsi and RC Cola, but the design of 250ml Coke is different from them. In this way the design of the Coke shows a difference from Pepsi and RC Cola and if there is no logo present on the bottle, a buyer of soft drink easily recognizes Coke just because of the bottle design.
Existing Bottle of Introduce Can 250 ml
Suggested Bottle of Packing 350ml in Pakistan 250 ml
350ml Can in Pakistan
Price RC Cola is available in two packaging:
250ml glass bottle 1.5lit pet bottle
LIST PRICES A crate of 250ml-bottle of RC Cola contains 2dozen (24) 250ml regular bottles; the cost of the carat is Rs.315. It means that the cost of each 250ml bottle is Rs.15.
The crate of 1.5lit pet bottle contains 6 bottles. Each bottle cost Rs.65, means that the cost of the crate is Rs.330.
Discounts to Distributors and Retailers DISTRIBUTORS
The Continental Beverages gives 6 bottles of 250ml free to distributor on each crate and gives 1.5lit pet bottle at a cost of Rs.55 instead of Rs.65
RETAILERS
The distributor gives 4 bottles free of 250ml to the retailer on each crate. It means that the retailer gets a discount of Rs.60 on each crate. The company set a price for 250ml bottle is Rs 12, but some retailers sell it on the price of Rs.12 to Rs.15 to the final consumer. In this way they get an additional profit. In the case on 1.5lit pet bottles, the discount of the retailers based on the distributor because sometimes they give discounts to retailer or sometimes not. IN THE CASE OF PEPSI AND COCA-COLA
Distributor’s profit=6% Retailer’s profit=12.5% (1x24=Rs.24/crate))
(Rs.1
on
each
Place Continental Beverages uses 25 direct routes (means their own vans) and 35 indirect routes (different distributors work for them) to distribute their products in the market. This franchise has two warehouses one in the site area (behind the manufacturing plant) and another in the Clifton area. Currently, they are working to expand their distribution network.
bottle
of
250ml
That’s why on April 10, 2011 (Sunday), they gave an ad in Newspaper JUNG by the heading of “Distributors Are Required” They can take first mover advantage by introducing the automatic can machine on different places and roads of major cities in Pakistan.
Promotion Currently, Continental Beverages give more importance to the availability of the product than to advertise it. According to the view of Mr. Fayysal Iqbal: If your distribution is strong/good and your product is easily available in the market. After the availability of the product in the market then you advertise your product, in this way you satisfied your customer in a good way. But if you first advertise your product on a large scale but your distribution is not good enough, means that your product is not easily available in the nearer stores or in the market. Example if the customers go to the nearer retailer’s shop and asked about the product which he/she saw in the TV or hear on Radio but if his/her desired product is not available in the market then it definitely dissatisfied your customer.
That is why they are currently not advertising their product. But they are doing some promotional activities like on March 18th, 19th and 23rd they gave free samples of soft drinks to people on Park Towers and distributed free gifts among children. They are working to organize a function at PAF Museum on 1 st May 2005 to promote RC Cola.
PROMOTIONAL SUGGESTIONS
We have some ideas related to the advertisement and promotion.
Selection of the media vehicle will depend largely on the target market. The company’s target market comprises of youngsters between the age group of 13-26. Following are the media through which the company will reach the target market.
Television
Cinema
Magazine
Newspaper
Radio
Outdoor advertisement
TELEVISION
Television has the consistency high viewership among the target market. It provides maximum coverage as most of the youngsters watch television regularly. PTV and PTV World Geo ARY Digital Hum Tv Ten sports Among them Hum Tv and Ary Digital must be selected because youngsters mostly view these channels, because these channels provide a lot of entertainment program for them. PTV World and PTV Network have wide coverage and are the channels that are viewed by the masses. Geo sports have emerged as a channel that comes cricket related events of Pakistan and thus viewers ship mostly consistency teenagers and young adults. CINEMA
The company should put banners in cinemas like Cine strar and DHA other popular cinemas in Lahore. This will promote RC cola among the lower and middle class. Also, they should put large bulletin boards in the Lahore area to attract consumers towards the drink.
MAGAZINES
Sunday Magazine (Jung group) Akhbar-e-Jahan Young World
Akbar-e-Jahan and Sunday magazine both are the most widely read magazines in Lahore and other cities. Young World is an English magazine for kids and teens. It will cater age 13-18. NEWSPAPER
Dawn Jung The News Jung is the most widely read newspaper in Pakistan with a publication of over 750,000. Dawn and the news also cater those people prefer reading in English.
OUT DOOR ADVERTISINGS
Billboards, Musical concert, Advertisements in popular hangout and sponsor ship of the music videos are used as outdoor advertising tools.
BILLBOARDS
Billboards are used to support above-the-line activities. Billboards will be selected where the major portion of the target market frequency view it. As the target market is mainly young people and older school going kids. Following areas will be chosen for billboard activities:
Iqbal Town Bhekawal Mor, Lahore
DHA Horse Roundabout
Near Rahat Bakery
Entrance of fotress Stadium
Chaburgi Chock
SPONSORSHIP OF A MUSICAL VIDEO
In today’s world, music is an important part of people’s lives. And in particular, the young generation’s world revolves around music. Keeping this thing in mind RC Cola must have an association with one of the
musical band of Pakistan. In present JAL BAND is very famous among youngsters. Other up coming bands such as EP, MIZRAB, AAROH etc.
MUSICAL CONCERT
Musical concerts held on and off throughout the year. Only those concerts are arranged which will give an opportunity to have maximum coverage of target audience. PROMOTIONAL ACTIVITIES
Promotion will be done at outside popular grocery stores. Free samples of RC Cola, and handbills will be given out. Promotion might be done outside:
Metro
Makro
Hyperstar
Al-Fatah Super Store
Raheem Store
Rahat Bakery
Green Valley (Mall Of Lahore)
In these promotional ideas, we have tried our best to suggest as many as creative ideas. Some ideas are to attract the upper class and some ideas are only to attract the middle and lower classes. Through these ideas all the classes are easily attracted toward RC Cola.
