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Pricing Power- the way forward for KDHP

This presentation covers the results that I, with the support of my team, had achieved in 21 months time frame at KDHP, in developing a new packet tea FMCG brand.
by

Arun Chery Jacob

on 4 June 2015

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Transcript of Pricing Power- the way forward for KDHP

Brands! Why do we need them?
Better price, margins.
Better efficiency of resources.
Extensions
Trade Leverage
Social Status
Even out peaks and valleys
Attract talent
Improve prices by moving up the value chain.
Pricing Power
Build Brands
Export Markets
New port opportunities.
How can we overcome?
Lower Costs
Move up the
value chain
Opportunities
B2B Websites
New Port Infrastructure
Focus on export markets
Target institutional sales
Build Brands
Fair Trade Brand
Niche
Green Tea/Organic Tea

Domestic Mass Market Brand
Solve the easiest problem first.
The next easiest channel is organized retailers
But we do not have bargaining power without a brand.
Why do you pick from a shelf?
Since we do not have the domain expertize for unorganized market we had to rely on an experinced hand who has managed distribution in unorganized market.
How was it done at Jeevan?
How can we do it?
Consistancy (Reliability)
Quality
Freshness
Communication
What is a brand?
Product
Why does a consumer buy a tea brand?
Price
Delivery Mechanism
Product Extensions
Percieved Value
Underlying Value
Publicity
Advertizements
Communication
Product
Price
Delivery Mechanism
Communication
Would you buy a VX-Pro for
the price of a Sony?
Why do we need to plan
Dell
McDonalds
Eastern
How can we be different?
Go micro! Fortune at the bottom of the tea business pyramid!
Habit driven consumption
Name
Symbols
Insignia
Images
Personalities
Identity

How can we externalize our identity ?
Purely commercial way?
Does not differentiate!
Too many ads in a cluttered market space corrodes value.
PR canot be done without ad revenue- Catch 22
Too much PR also corrodes value
Overall risk is higher through this route
Most Plausible solution!
Symbols
Insignia
Images
Personalities
Identity
Size
Biodiversity conservation
Size
Social Equity
Producer
History
Stage -I & II
Stage -II
How do we do it ?
Insignia
Images
Personality
Champions of Biodiversity conservation in the Pvt sector
A project undertaken to improve the pricing power of KDHP produce and thereby bring sustainability to our way of existance.
-"Not Overtly Stated"
Elevate Project Ripple to the Biodiveristy cause.
What could be more inspiring than a brand that embodies the natural wealth of entire Kerala State !
KDHP is the company that is located at Munnar and runs the plantation here at a scale of X acres. . We are south indias's
largest producer. we give employment to 12000 workers mostly women. We do a lot of social welfare activities that conform
to international standards. We have a history that is very fascinating.
To give visibility to the identity of KDHP
ProFex
Samsung
Rs7500
Rs 9,200
Videocon
Rs 8500
Onida
Rs 7900
How had others communicated ?
"Kettile Kettile,
vangiyille vangiyille,
AVT Premium Tea"
"Prakrithiyude misranam
tatayude packing"
-Narrated by mohanlal
Name
Images
Personality
Identity
Name
What are brands?
- Name
-Symbol
-Images
-Insignia
-Personality
-Identity

How do we 'secure notice' from a common consumer ?
The best things in life are yours, if you can appreciate yourself.
- Dale Carnegie
"You do not need to be different from who you are. You only need to be more of the what you already are."
- Brian Tracy
How can we cut through the public with a message that ignites change in consumer behaviour?
So how are we different?
Social equity
Producer
History
Location
Re-arranged from a consumer perspective...
Location
Medium of Communication
Identity
Tools that we can use ...
Concept
Project Ripple
Labour Shortages.
Rising cost of inputs.
Declining price trends.
Prelude
Commodity Business Perils
No Pricing Power
How we changed 'supply chain strategy'.
Creative contributions
Fresh Leaf Concept: Strategy and execution plan for for enhancing retail sales
In the pipeline-
New wholesale counter:
Reduced public traffic at office
Reduced load of marketing staff
More convenient for customers
the inconvenince of signatures
incentive to improve sales
A few PR articles
No of shops penetrated through branded devilery vehicle: 800
Current numbers (from April2010 to Aug 2011):
Sales & revenue
Sales growth chart
Total Distributors: 27
Total number of routes developed by the vehicle and team: 30
Ripple: 49,335 Kgs
1 Kg Hotel Blend: 11116 kgs
Maxi Blend:6900 Kgs
Black Tea Bags: 3255 boxes or 162.75 Kgs
Green tea bags: 4250 boxes or 212.25 kgs
Competitor Activities
Hitachi
Rs 11,800
Brand distribution business experience low hence acumen low
- Cash flow management
-loose tea distributed along with brands
Support resources
-1 Delivery Vehicle
-2 Sales staff & driver
-1 Sales manager to manage ground operations and reporting
Product
Communication
Pamphlet
Posters
Branding work on
delivery vehicle.
Branding work on distributor vehicles
-8 vehicles branded
-6 in the pipeline
Free shop name board space
- Works out cheaper than commercial
hoardings and helps attain retailer support
for the brand.
Business Issues:
Distributors do not operate through route planning.
Minimal efforts directed at relationship building
Remedial Measures
Training at company premises
-product knowledge
-business management workshop
Superior Delivery Mechanism
created!
Develop new businessmen from bottom up.
Operate distribution system as flat as posible
Increase the spread of distributors and gain threshold volume of 20 tons
Operate two delivery routes - north and south- with angamaly as a central hub.
Focus on inner areas for sales
Price
These are the four pillars
that build a brand !
New Brand Development
Organizational Politics
Issues
-Distributors have formed a clique led by staff distributors
-Increasing instances of intentionally contemptuous behaviour and attitude.
Where we lack behind...
Communication
Being different has no value in itself. It needs to be communicated to get the consumer connect !
Design of new polypack for 1 kg hotel blend
Design and printing of marketing collaterals
Pamphlet
Posters
Vehicle branding artwork design
Publicity proposal
- Change of poly pack design with the objective of communicating our identity through the packet itself.
More quality focus
Extensions
1 Kg Hotel Blend
Ripple tea bags- green & black
Maxi blend - 5 & 15 kgs
Introduced 50 gms pack
Promotions:
Ripple: For every 250 kgs, 1 kg free
Maxi: For every 500kgs, 1 kg free
Newspaper ads followed by screening and interview
Terms of engagement
Advance payment
Dedicated Vehicle
Demarcated Area
Rationale for margin structure explained
Distributor Perspective
Social Status
Risk
Convenience
Penetrate retail shelf
Consumer Perspective
Price
Product
Communication/Signalling
Association with KDHP
Margin Structure
Superior Value Proposition
to Distributor
2
Increase Price
3
Reduce
Costs
4
Target aspiring
entreprenuers
5
Superior Delivery
Mechanism
Retailer Perspective
Throughput/Velocity of sales
Margin
Reliability of supply
Retailer
Velocity of sales
Distributor
Velocity of sales
Reliability of Supply
Retailer
Route Linked Incentives
Total Sub-Distributors: 12
Shelfs Penetrated: 3000 shops
D-4
SD-2
D-1
D-1, SD-1
D-1
D-3, SD-4
D-4
SD-2
D-3
SD-1
D-1
SD-2
D-3
D-2
- Information System
Sampling
Art work communicates our identity.
Help them increase their revenue
Help them decrease their cost
Help them increase their profitability
Better response to distributor needs
Help improve their productivity
1
Create Consumer Pull
Market Penetration
Haves & Have nots
Total sales in 6 months: approx 4 tons
- Margin was similar to competition
What would you pick ? Nescafe or Mello Joy?
-Both priced Rs 90.
Imperative Aspects were not addressed
Communication
Reliability of supply
Velocity of sales
Product
Margin
Velocity of sales
Social Status
Risk
Price
Retailer Perspective
Consumer Perspective
Margin
Distributor Perspective
- Its a volume/turnover business
- No consumer pull
- General perception : Its a low margin high turnover business
Respond to their needs
- No support system
Delivery Mechanism
- Therefore he had to stock in excess
- Pitfalls of preceding methods.
AVT
Semi wholesale: 250 kgs in any bulk combination- 2gms gold
Consumer: Coupons Rs 2 to Rs 50
Free Sugar: Tvm & Ekm
Brooke Bond
Rs 5 off on 250 gms
Kanan Devan
Special incentive given to replace Ripple- 20 dist 20k
Our teas purchased from retailer-8kgs- Pothenkode Tvm
KD distributor Pullad, Kozhenchery
GRT & Master Tea
-Free sugar with each pack.
Display discounts for retailer
Display discounts for retailer
Display discounts for retailer
Display discounts for retailer
Involves Huge Ad Spend. Limited budget negated this option
Given the segment we are trying to target, we cannot price more than established competetion like AVT, Brooke Bond etc
What would you pick ? Nescafe or Folgers?
Communication is about...
Building Credibility
Fact: Folgers is the No1 selling brand in America
So can you really fight a competitor who is bigger and stronger than you?
In other words ' Create a real opportunity to make profits'
Consumer Perspective
Intermediaries Perspective
Non-Brand Related Contributions:
- By Arun Chery Jacob
sdfsdfdsfd
Hope is the biggest motivator.
Thank You.
Christian Theology
Hindu Mythology
Recent History
Reduction in packaging costs
50gms-36.93%
100gms-27.6%
250gms-17.67%
500gms-2.72%
To be able to manage you need to measure...
Raw reports (dispatch reports)
Management report perepared from the raw data
-Monthly sales volume report- product wise
-Cum sales volume from April- product wise
-Sales from April- distributor wise
-Product wise revenue split
-Product wise sales volume split
Back end work done for
reducing cost of operations.
Packing machine modified to make Rs2 or 10gms satchets for wet sampling purpose and promotion with regional magazines.
Full transcript