Project report on product life cycle (PLC) ON FOSTER’S OF Under the guidance of: Prepared By: Mr. Shibashish Chakraborty Avisek Dey Faculty Guide- IBS Kolkata ACKNOWLEDGEMENT This report has been made possible through direct and indirect support of various people for whom i wish to express my appreciation and gratitude. Nothing in this World can be achieved without proper coordination. Every work, be it of marketing, finance, production or successful launching of a product is the result of teamwork.
This project could not have seen the light of the day without the coordination of Mr. Shibashish Chakraborty, our faculty guide and Mr. Mohit Arora, Area Sales manager, SABMiller (Kolkata). I would like to express my special thanks and gratitude for guiding me in my research project. Without his overall guidance and help, the project may not have been completed. Avisek Dey Table of contents 1) ACKNOWLEDGEMENT 2) MISSION AND VISION 3) INTRODUCTION 4) COMPANY HISTORY 5) BUSINESS LINES 6) PRODUCT DETAILS 7) LIFE CYCLE OF A PRODUCT a. Introduction b. Growth c. Maturity d. Decline ) SWOT ANALYSIS OF THE PRODUCT 9) RECOMMENDATION 10) BIBLIOGRAPHY MISSION, VISION AND VALUES OF SABMiller: SABMiller authority is very much committed to make it a responsible company because it makes sense. It’s not about being altruistic for its own sake, it’s about understanding how behaving responsibly has a positive impact on profitability and on economic growth. Here the aim is to secure economic benefits for the local communities where company grow raw materials and brew beer and also for shareholders who benefit from a sustainable business and a return on their investment
Values— * Company people are our enduring advantage * Accountability is clear and personal * People work and win in teams * We understand and respect our customers and consumers. * Company reputation is indivisible INTRODUCTION:- Beer is the world’s oldest and most popular alcoholic beverage. Some of the earliest known writings refer to the production and distribution of beer. It is produced by the fermentation of sugars derived from starch-based material—the most common being malted barley; however, wheat, corn, and rice are also widely used, usually in conjunction with barley.
The Indian beer industry has been witnessing steady growth of 10 – 17% per year over the last ten years. The rate of growth has increased in recent years, with volumes passing 170m cases during the 2008-2009 financial year. Beer Industry comes under Alcohol Industry where it is very tough to survive without proper planning. Because of Indian culture which does not allow us to consume alcohol freely. The beer industry in India operates in a challenging environment. Success in such an environment can only be achieved by constantly reinventing and recreating practices that adapt to a changing environment .
At the same time in India we have big players like UB Group, Shaw Wallace, Mohun Mikens, Cobra beer etc. So companies are having negligible space to fault in all aspect of marketing like branding, marketing strategy, making product awareness etc. Generally Sales volume and profit of a product decides the changes in the stages of the product. But there can be different reasons behind the changes that we need to consider while deciding the phase of the product. These reasons are called as Market risk associated with the product.
Product life-cycle is the movement of a product through the various stages of development, growth, expansion, maturity, saturation and decline. Not all products go through such a cycle; for instance, paper clips, nails, knives and pencils. But maximum products go through this cycle, products like Air conditioner, food products etc. Here I have discussed the product life cycle of FOSTER’S. COMPANY HISTORY:- One of the world’s largest brewers, SABMiller plc has brewing interests and distribution agreements across five continents.
Our wide portfolio of brands includes premium International beers such as Pilsner Urquell, Peroni Nastro Azzurro, Miller Genuine Draft and Grolsch along With leading local brands such as Aguila, Castle, Miller Lite, Snow and Tyskie. Six of company’s brands are among the top 50 in the world. One of the world’s largest bottlers of Coca-Cola products Key financial:- Contribution to the group: Continent| contribution| North America| 14%| Asia & Africa| 15%| Europe| 22%| Latin America| 28%| South Africa| 21%| Contribution from Indian unit towards the group is 0. 9 % of total growth of the group. Sales data of company group:- Sales volumes(‘000HL)| March ’09 | March ’08 | change| Total | 260139| 253719| +3| Lager| 210393| 206665| +2| Soft drinks | 44328| 42668| +4| Other alcoholic Beverages | 5418| 4836| +24| The group at a glance on 31 March 2009 :- Latin America:- Breweries – 17
Average number of employees – 24793 Brands- Aguila; Atlas; Balboa; Barena; Club; Club Colombia; Costena; Cristal; Cusquena; Golden Light; Imperial; Pilsen; Pilsener;Pilsen Callao; Pilsen Trujillo; Poker; Port Royal and Salva Vida. Head office- Bogota, Colombia Europe:- Breweries – 23 Average number of employees – 15987 Brands- Arany Aszok; Dorada; Dreher; Gambrinus; Grolsch; Kozel; Lech; Peroni; Peroni Nastro Azzurro; Pilsner Urquell; Radegast; Birell; Saris; Timisoreana; Topvar; Tropical; Tyskie; Ursus; Zolotaya Head office- Zug, Switzerland North America:- Breweries – 08
Average number of employees – 8643 Brands- Blue Moon; Coors Banquet; Coors Light;Foster’s; Henry Weinhard’s; Icehouse; Keystone Light; Killian’s; Leinenkugel’s;MGD64; Mickey’s; Miller Chill; Miller Genuine Draft; Head office- Zug, Switzerland Africa and Asia:- Breweries – 41 Average number of employees – 13841 Brands – 2M; Balimi; Bluetongue; Carling Black Label; Castle Lager; Castle Milk Stout; Chibuku (Sorghum beer); Club; Club Pilsner; Eagle(clear sorghum beer); Foster’s; Haywards; Indus Pride; Kilimanjaro; Knock Out;Laurentina; Maluti; Manica; Mosi; Ndovu;N’gola;
Head office- Johannesburg, Hongkong South Africa:- Breweries – 07 Average number of employees – 12184 Brands – Brutal Fruit; Carling Black Label; Castle Lager; Castle Lite; Castle Milk Stout; Dreher; Hansa Marzen Gold; Hansa Pilsener; Redd’s; Sarita and Skelter’s Straight Head office- Johannesburg, Hongkong SABMiller INDIA:- SABMiller India is a wholly owned subsidiary of SABMiller plc, one of the world`s leading brewers, operating across six continets with over hundred years of heritage.
SABMiller’s India sojourn began in 2000 and in just a few years, it has cornered nearly one third of the Indian beer market with brands such as Haywards 5000, Haywards 2000, Haywards Black, Knock Out, Royal Challenge, Castle Lager and Fosters. Based on consumer insights, SABMiller India has taken innovative measures to fill up the packaging, pricing, occasion and product gaps. Expertise on a global level has come in use to create many firsts in India including the use of one-way bottles, flash pasteurization, establishing draught standards, and now Haywards Black — a genuine stout beer. | With ten world-class breweries strategically located across India, SABMiller is well positioned to easily access and efficiently service the beer markets. The Company’s commitment to India and ethos of quality is reflected in the fact that it invested over Rs. 125 crore in the last two years to upgrade breweries in line with global standards. SABMiller is a market facing and brand led organisation that continuously refreshes itself in pursuit of its mission of owning and nurturing local and international beer brands which are the first choice of the consumer.
The company invests in bottles, which are returnable in nature and are accounted for as fixed assets in its books. The company pays to its customers/agents for returning the empty bottles at the prevailing market prices. The company urges its customers/agents to return the empty bottles to the company for which the company will reimburse them at prevailing market prices. | BUSSINESS LINE OF SABMiller INDIA- ROYAL CHALLENGE- Brand:| Royal Challenge Premium Lager| Colour:| Golden Honey| Taste:| Rich Smooth Taste|
Alcohol content by volume:| < 5%| Serving Temperature:| 4 – 9 ° C| Fats:| Zero| Proteins:| 3. 2 gm / liter| Fermentation Process:| Bottom fermenting Lager Yeast| Malts:| 6 row malted barley| Packaging:| Non returnable green bottles – 650 ml & 330 ml Glass, Bottle, Cans – 500 ml, 330 ml,| Haywards 5000 Brand:| Haywards 5000| Colour:| Golden yellow| Taste:| full bodied malty flavor| Alcohol content by volume:| < 7. % by volume| Serving Temperature:| 7 – 9 °C| Fermentation Process:| Bottom-fermented| Packaging:| 650 ml and 330 ml Indian standard glass amber bottle ; 500 ml Non returnable bottles ; 500 ml cans and 330 ml cans ( in select markets) | Haywards 2000 – Brand : | Haywards 2000| Colour:| Gold| Taste:| Rich, smooth and crisp taste| Alcohol content by volume:| < 7. % by volume| Serving Temperature:| 7 – 9 °C| Fermentation Process:| Bottom-fermented| Packaging:| 650 ml and 330 ml Indian standard glass amber bottle 330 ml | Knock out:- Brand:| Knock Out| Colour:| Golden yellow| Taste:| Smooth and strong with a rich malty taste| Alcohol content by volume:| < 8 % by volume| Serving Temperature:| 7 – 9 °C| Fats:| |
Proteins:| | Fermentation Process:| Bottom-fermented| Malts:| | Packaging:| 650 ml and 330 ml Indian standard glass amber bottle; 500 ml cans and 330 ml cans ( in select markets) | PERONI :- Peroni Nastro Azzurro is an intensely crisp and refreshing lager, with an unmistakable touch of Italian style, brewed in Italy to the original recipe, since 1963. Peroni Nastro Azzurro has become highly representative of classic Italian style and culture. This premium beer is 5. % alcohol by volume and expertly brewed using only the finest quality and variety of spring barley, maize, malts and hops and by following a meticulous production process. This gives Peroni its unique taste which is refreshing and dry, with a clear-cut, clean character and clarity, achieved through the exclusive brewing process. Peroni is available in Mumbai, Delhi, Bangalore and Pune. Positioned as ‘Italian style in a bottle’, from presentation to pouring the brand, INDUS PRIDE: Brand:| Indus pride| Colour:| Sunrise yellow|
Taste:| Rich in flavors with a clean head and foam| Alcohol content by volume:| < 4. 8| Serving Temperature:| 7° C| Fermentation Process:| Bottom fermenting | Malts:| 6 row malted barley| Packaging:| 650 and 350 ml| PRODUCT(FOSTER’S) DETAILS:- Foster’s® Lager is a uniquely Australian beer, brewed with the finest sun-dried malted barley, the purest water, and Foster’s® own specially bred ‘Pride of Ringwood’ hops imported directly from Australia to give the beer an authentic flavor.
Foster’s Lager Beer has always been at the forefront of brewing technology and the Foster’s® Lager brewed today is the result of over a century of attention of the brewing art. Quality has been the strength of Foster’s since its earliest days and remains a paramount concern at every stage of the beer’s journey from brewery to consumer. Foster’s crisp, clean flavour won it immediate international acclaim when it was first brewed in Melbourne in 1888. Today, more than one hundred years later, it is still recognized as one of the world’s best beers.
SABMiller India now brews & markets Foster’s in India For the first time, an international beer is being brewed in India, under world class conditions of quality control and hygiene. The brewery has earned the prerequisite international accreditation to brew Foster’s. The beer brewed in India exhibits the brand’s premium characteristics, with each step in its production rigorously controlled, One of the world’s fastest growing international beer brands, Foster’s is ranked the 1st most recognizable beer across Asia and 5th most recognizable brand across all product categories.
It is currently available in the following markets in India; Mumbai, Pune, Nagpur, Aurangabad, and other parts of Maharashtra, Daman & Diu, Goa, Pondicherry, Bangalore, Hyderabad, Vizag and other places in Andhra Pradesh, Delhi, Haryana, Chandigarh, Punjab, Jammu and Chhattisgarh and west Bengal. The brand has acquired tremendous brand recall among consumers. This success can be attributed to the Company’s strong marketing initiatives that have generated a synonymous association between Foster’s and its Australian origin.
Foster’s synonymous with the easy going Australian lifestyle and major international sports including Cricket, Formula One and the Olympics, offers a sense of fun, good humor and relaxation. Brand:| Foster’s| Colour:| 7. 5 EBC| Taste:| Full body lager, Malty character on the mid palate blends well with a delicate creaminess and crisp, clean hop aroma, creating perfect balance to the beer. | Alcohol content by volume:| ; 4. 8| Serving Temperature:| 6° C| Fermentation Process:| Bottom fermenting | Malts:| 6 row malted barley|
Packaging:| 650 and 350 ml,amber bottles| ADVERTISEMENT (PRINT) OF FOSTER’S:- Advertisement has a very important role in making a successful business.. It has an effect in all the phases of Product life cycle apart from decling phase. This is the best to to create product awareness.. In every point company would like to get new customer or to retain old customer and to get them company need to send information to them and this is done through different kind of advertisement. FOSTER’S LIFE CYCLE:- Products life cycle refers succession of stages that a product goes through.
Product life-cycle begins with the initial product specification and ends with the withdrawal from the market of both the product and its support. There are defined stages in a product’s life-cycle; these include research and development, introduction, maturity, decline and abandonment. Now I will discuss about the different phases of the product. Introduction:- It is time to roll out a new product. In this phase sales volume will be very less and as well as the profit will be vey low it can be negative also. As per the formula of the cost TOTAL COST=FIXED COST + VARIABLE COST.
Fixed cost is the cost that company pays for incurring the asset. So it is fixed for the company for the whole life. This cost includes the charges paid for the Research and a development purpose, for getting the equipments etc. and the average cost depends on production level. As at the Introduction level the sales is very low so profit will be less, and Promotional expenditure is high. This is done to create the awareness of the product. Main thing that a company needs to do is to get the proper distributional channel so that it should to reach customer.
If product is of a reputed company this work is not tough to get but if the company name also unknown then this is very hard to find the passage. In this phase bargaining power of the customer as well as of the supplier will be very high. For the customers they are already having a equivalent product when they are going to change they wont pay more, and as product is new, and the company has less practical experience so supplier’s will quote more because In case straight rebuy the same quote will be continued. And threat of rivalry is also very high, because the competitors will not allow the new company to open his wing easily.
The effect of Porter’s five forces in this phase in beer industry: Name of the force| Effect| Threat of new Entry| Not applicable| Bargaining Power of customer| High| Bargaining of the suppliers| High| Threat of rivalry| High| Threat of substitutes| Not applicable| Market Entry Strategy HIGH LOW P R I C E LOW HIGH PROMOTION Growth:- Growth stage is marked as rapid climb in sales. Early adopters like the product and additional consumers start buying the product. Price changes as per the demand of the product.
As per Law of demand the demand increases with the fall of price. The changes with the adoption of the product. | | | | | | | | | | | | | | | | | | | D| | | | | | | | | E| | | | | | | | | M| | | | | | | | | A| | | | | | | | | N | | | | | | | | | D| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | price| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Some of the companies opt this way to create huge sales volume. Otherwise stays with the same price but if the product is superior then it will do well over the same kind of product of the different company. In this phase company shifts from product awareness advertisement to product preference advertisement. * Company adds flanker product and new models to capture new segments. * Brand repositioning is being done by the company * As well as high penetration. The effect of Porter’s five forces in this phase in beer industry: Name of the force| Effect| Threat of new Entry| Low| Bargaining Power of customer| Low| Bargaining of the suppliers| Low| Threat of rivalry| Low| Threat of substitutes| Low| Maturity:- This is the 3rd phase of a product life cycle. This phase can be divided in 3 parts. a) Growth maturity b) Stable maturity ) Decaying maturity. Although risks will be reduced at this stage, the effect of existing competition will reduce the level of profits. The features of this phase a) Sales volume will reach its peak point. b) The length of this stage is much more than other stage. c) Slowly the product will get matured. So customer will start looking for substitute product. d) Low cost per customer e) Middle majority are targeted f) Companies do price matching to beat competitors. g) Diversify brand and models. SABMiller has chosen Infosys Technologies’ retail solution ‘Shoppingtrip360’ to evaluate and improve the effectiveness of its in store marketing ampaigns. The market modification depends on the following equation * MARKET MODIFICATION VOLUME = NO. OF BRAND USERS*USAGE RATE PER USER * The effect of Porter’s five forces in this phase in beer industry: Name of the force| Effect| Threat of new Entry| High| Bargaining Power of customer| Moderately high| Bargaining of the suppliers| Low| Threat of rivalry| high| Threat of substitutes| Moderately high| Market Share of different companies in beer Industry: United Breweries is the leading company in the Indian beer market, with a 50. 3% share of the market’s volume.
In comparison, SAB Miller accounts for 34. 2% of the total market’s volume. Company| % Share| APB| 4%| United Breweries Limited| 47. 30%| SAB Miller India| 37. 20%| Mohan Meakin | 10. 10%| Other | 5. 30%| UB (United Breweries Ltd. ) is the market leader in the Indian beer market with a 47% market share. Its flagship Kingfisher brand alone commands 25% market share. The company introduced its strong beer, Kingfisher Strong during the year 2000. Where as SABMiller is having 37% market share. Its flagship FOSTER”S brand alone commands 9. 7% of market share. Decline:-
This is the final stage of the product,the brand manager faces lot of difficulties to increase the sales volume as well as profit margin. company faces lot of difficulties to sustain in the competition with the rival companies as because the products get matured and the performance of the rival companies depend on the market maturity. If the market is matured then the all products in the market of industry will do more or less same. But In case of product maturity rival companies will push matured product so hard that it becomes difficult for product to sustain in the market.
The parameters which describes the decline phase a) Decling sales b) Low cost per customer c) Decling profit d) Phase out Unprofitable outlets e) Phase out of weak items f) Selective distribution g) Cut price h) High competition The effect of Porter’s five forces in this phase in beer industry: Name of the force| Effect| Threat of new Entry| High| Bargaining Power of customer| High| Bargaining of the suppliers| Moderately high| Threat of rivalry| High| Threat of substitutes| High| Sales data got from company:- Year| Sales volume (In HL)| 2002| 1044| 2003| 1660| 004| 2171. 66| 2005| 4062| 2006| 5248| 2007| 5712| 2008| 5637| All the data’s given here is of all India sales volume of Foster’s. Product Life cycle curve:- year X axis—–year Y axis–sales volume (in HL) Review of curve:- Previously the foster’s was the product of Foster’s INDIA Ltd. Year 2002,was the introductory phase of the Foster’s in SABMiller India. Sales data of that corresponding year was 1044 Hl after that they came up with some promotional offer of bulk purchase for bars n other buyers.
So the sales volume increased drastically in the coming years till 2007. Now In case of change in 2007-2008 sales volume decreased . so it indicates the product is in the maturity phase. The reason behind the drop down in sales a) The distribution channel is not so strong like as compare to other players of the Industry. Products like haywards 5000 or 2000, kingfisher is easily available in different outlet where as it is not easily available. That‘s why the growth percentage of the product is also less than the other product of the same company or other company.
Another factor behind the decrease of the sales is recession and inflation. But as the product was designed towards the high profile customer so it dropped down . Presently there are working in single shift where as they used to operate in both the shift of a working day. Now as per the data I have got it shows product in the first stage of the maturity phase. Where the sales volume remains constant or drops down slightly. If the dropped down was only because of recession then all the product would have got affected. Market shows growth where as product shows decreased sales. Here we can see the same thing.
So to increase the sales volume the company needs to come up with new offers as well as they need to change the marketing strategy. SWOT ANALYSIS OF FOSTER’s:- Strengths:-z 1) International Brand Image. 2) Different kind of market experience. 3) The attributes of the product is as per the consumer aspirations, specifications and taste. It has high perceived quality; it is affordable by the consumers. This factor has helped the company to keep steady margin of its sales volume. 4) 2nd market share holder in the beer industry. Weakness:- 1) Price is high in compare to other companies ) Product is targeted towards high profile customers. 3) Distribution channel is not so strong like other companies. 4) As the company manufactures different same kind of product so it is difficult to diffentiate and decide the quality and price Opportunities:- 1) The opportunity of the company (SABMiller) is to reduce the price of the product and offer the same quality. This will increase the sales volume of the company. 2) The packaging of the product should be changed and each and every attribute should be mentioned on the bottle and also the level of harmless should be mentioned.
This will help in ‘Word of Mouth’ marketing. Threat:- 1) Market competitors are having huge brand equity. 2) The next threat may also be the changing habits of the consumer; they may quit drinking due to its ill effects and hazards. This may affect the sales as well as the brand image of the product 3) In future the government may completely put ban on advertisement of cigarettes or also put a ban on sponsorship under the consideration that cigarette is harmful for health. This will be the biggest threat for the product as well as the company. RECOMMENDATION:- ) The Price strategy should be changed. 2) Company need to change Distribution chain. It should be available in all the outlet of different foreign liquor shop. 3) Product awareness programme is not done properly . People of rural areas are aware of the product like kingfisher, Thunderbolt. bt only few them have idea about FOSTER’s. As they are doing their business in India so they need to Advertise their product in Indian fashion . 4) Foster’s need to concentrate in socio-marketing process also. It creates good amount of impression in consumer’s mind. ) The beer-drinkers in the country are much younger than the average beer-drinker elsewhere in the world. This makes them more likely to carry the brand with them for a lifetime. So company need to target young people. 6) As the target audience becomes younger, a light beer is expected to attract first-time drinkers, since it is much milder than any of the other beers in the country. So company need to introduce milder form of the present beer. As Kingfisher has introduced KINGFISHER PREMIUM mild beer. BIBLIOGRAPHY: Websites:- 1) www. wikipedia. org 2) www. sabmiller. in Books:- 1) Marketing Management ( kotler & Keller )