HOW TO PROMOTE A PRODUCT

Module 05 Assignment
Name :A.A. Tharindu Lankeshwara Perera

Course : GDPSCM 2018

Module 05 : Marketing Management

Index no : GDPS11848

Word count : 2432

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ACKNOWLEDGEMENT

I would like to express my deepest appreciation to

our lecturers Mr. Vishwa & Mr. Sameera who
taught us Marketing Management Module &
provided me the possibility to complete this
assignment.

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Table of Contents
ACKNOWLEDGEMENT...........................................................................................................................2
EXECUTIVE SUMMARY...........................................................................................................................4
1. Product Description...........................................................................................................................6
Product Profile...................................................................................................................................6
2. Market Research and Analysis...........................................................................................................7
Market Segmentation and Targeting.................................................................................................7
Target market and projections:.........................................................................................................8
Competitive Analysis.........................................................................................................................9
3. Market Plan.....................................................................................................................................10
Determining Demand:.....................................................................................................................10
Estimating costs:..............................................................................................................................10
Analysing competitor’s costs, prices and offer:...............................................................................11
Marketing Mix (4P’S):......................................................................................................................11
4. Types of cost and level of production:.........................................................................................12
5. Profit and Loss Projection............................................................................................................13
Conclusion...........................................................................................................................................14
References...........................................................................................................................................15

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EXECUTIVE SUMMARY

As the Marketing Manager of Lankan Products (Pvt) Ltd, I want to market a Green Coconut
water product. I have prepared this feasibility plan on that basis & assigned a name for the
product as “Coconut Sip”. Since the raw materials are very much available in our country,
we have decided to give the product an indigenous image.

“Coconut Sip” is a kind of soft drink that provides the consumers with processed green
coconut water in bottles. For the marketing purpose of the product we have decided to
launch three product lines. The Coconut Sip would be launched in the market at 250 ml. 500
ml. and 1 Litre bottle.

We have set a reasonable price for the product so that all kinds of people can afford to buy
this soft drink following Target Costing pricing approach. We would gain a competitive
advantage, as this is a first hit in the market.

I have targeted a huge market segment for the product. Lots of people are looking for such a
product. Green Coconuts are not available all the time. For example: a person walking on
the street. Suddenly he feels thirsty. Now if he wishes to drink green coconut water he
cannot find it easily. It is not always found in the right place at the right time. If we launch
our product in the market, a person willing to drink green coconut water can have it from a
nearby shop. At present this is not possible. Our target market includes health conscious
people, sick people, sportsperson & many other consumers, which I have segmented from
the Demographical, Geographical, Psycho graphical & Behavioural point of view.

I have prepared a financial documentation for this feasibility plan of a new product. As we
are introducing the product in three categories at 250 ml, 500 ml and 1 Litre bottles, I have
prepared the Break-Even-Analysis for each of the product line. I have prepared the
feasibility plan for five-year basis.

For 250mls the break-even point is at 273,438 Units. That means if I sale 273,438 Units a
year, we will make neither profit nor loss. So, to make profit we have to create a market
demand in such a way so that more than 273,438 Units are sold every year. Obviously, the

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unit cost will eventually come down because of the law of Marginal Cost. Then the break-
even point will also come down. The consumers will first taste the product by consuming
the 250ml bottles. So we might gain a short run profit from that.

For 500mls the break-even point is 169,903 units per year. So we have to sell more than
169,903 units to earn profit. we know that after the product is well promoted, people will
eventually consume more of 500mls, as pet bottles are more in demand. The price is such
that people will turn to the 500mls because we are providing them at lowest possible
market price.

For 1 Litre bottles we have a different plan. We know many people are not going to
consume the 1 Litre package. Our target is to sell less quantity of products but achieving
higher profit. For 1 Litre bottles I have estimated the break-even point at 96,685 bottles per
year. As we can see, I have prepared the selling price in such a way so that, to be in a profit
earning zone we have to sell least amount of units comparing the other 2 product lines.

I have given an elaborate discussion on financial summary at the later stage of the feasibility
plan following the Target Costing Pricing Policy; which means an ideal price is set first based
on customer considerations, then target costs will ensure that the price is met. we decided
the market price before. Then I calculated the estimated unit price & fixed price. Then we
decided how much profit margin is possible on each of the product line. I have assigned
three different profit margins for three product lines. This price setting is based on the
current market research.

1. Product Description
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Product Portrayal

‘Coconut Sip’ is a product that serve different segment of customer. Which is unique in the
current market. The “Coconut Sip” will be processed and sold in glass bottle of convenient
sizes of 250 ml, 500 ml and 1 litre. The Coconut Sip will be very much refreshing and provide
great support to the sick and health conscious people.

Product Profile
Name of the Product:  Coconut Sip

Type of Product: Green Coconut water

Ingredients: Pure natural green coconut water, Sugar, mineral salts, vitamin
C.

Container: Stylish glass bottle

Container size: 250 ml, 500 ml, 1 Litre

Product Price : 250 ml for Rs.40

500 ml for Rs.70

1 litre for Rs.130

Estimated Durability: 12 Months from date of manufactured

Machinery used: Advanced technology imported from USA.

2. Market Research and Analysis

Market Description

Sri Lanka is a country of about 23 million people. The total market size of the soft drink
industry is about 3 million and day by day it is increasing. we have a spread nationwide

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market of different convenient product. People are nowadays very much concerned about
the market and product conditions. So we have a growing prospect of customers of
“Coconut Sip”. Among the population I worked out few segments of customers who will
prefer our product most.

Market Segmentation and Targeting

Market Segments

I have observed and analysed the market and based on the nature of the market &
segmented the market in the following sectors:

Geographic Segmentation:

 Local Customers

Demographic:

 Individuals
 Family
 Sportsman
 Business buyer

Psychographic:

 Higher class
 Higher mid class
 Middle class

Behavioural:

 Sick people
 Health conscious
 Sophisticated who take the new product from the market

Target market and projections:

Analysing all the segments, I decided our target market according to our product category.
The target customers of “Coconut Sip” are sick people, health conscious people, sportsmen
and tourists. The company decided to charge Rs.40 for 250 ml bottles, Rs.70 for 500 ml
bottles and Rs.130 for 1 Litre bottles, if we consider price versus taste received then we can

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see that taste received is more in value. Therefore, charging the mentioned prices are
justified. The following graph gives a clear idea of our target market.

Target Market:

Health Conscious  – 32%

Sick people  –        43%

Tourists –        3%

General people –  22%

I have separated our target market into four different segments based on their geographic,
demographic, psychographic and behavioural characteristics.

Health conscious: Health conscious people basically the sports person is one of our
largest target markets. In this segment, we get lot of potential customers that we have to
concern about and provide a product, which is fit for them. About 900K people of this total
number are health conscious.

Sick people: Sick people is our major consideration. Children who suffer from diarrhoea
that need liquid food. Not only child but also the adult might suffer from those types of
problems.

Tourists: Every year a huge number of tourists visit Sri Lanka. we want to provide them
with “Coconut Sip”.

General Customers: Besides the above segments, the general customers will acquire a
significant portion of our target market.

Market Needs:

“Coconut Sip” wants to satisfy its customers need. That’s why it is important to identify the
market needs. Our first consideration is to provide the best product to its customers. That’s
why we offer three different sizes of bottle with different prices for its different segment of
customers.

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250 ml: The lowest price for the rural mid social class and individuals.

500 ml: Its target the sick people and tourist

1 litre: For a small family.

Competitive Analysis
The Soft drink industry is very much competitive. Many soft drink companies have acquired
a significant portion of the market. But the unique features of “Coconut Sip” will take it far
beyond the reach of the competitor. Because, no one has yet thought about selling green
coconut water in such a specialized way. To evaluate our prospect of “Coconut Sip” in the
current market, I have analysed the market situation in various ways. Following are some
demonstration of the analysis:

Competitor Analysis

The major soft drinks and juice companies of current market are:

 Elephant House
 Kist
 MD
 Pfanner
 Smak
 Coca cola
 Pepsi
 Foreign Products etc.

Distinct Competency:

These companies can try to enter our market by launching new product lines to compete
with us. Yet, we have distinct competitive advantage. That is our product is still brand new.
Other companies will take some time to enter the market. Till then we have a monopoly
market condition. Other advantage that we have is lower price. we will sell products in
reasonably lower price than other competitors do.

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Strategies against competitors:

To compete with the major competitors, We can adopt the following measures:

 Providing the best service to create high customer satisfaction.

 Reasonable and acceptable pricing.
 Promising and providing top quality product.
 Launching highly effective mass promotional activities.
 Continuous innovation and modification of the products.
 Creating and maintaining long term customer relationship.
 Creating “Brand Loyalty” among the target consumers.

3. Market Plan

Determining Demand:
Each price will lead to different level of demand and therefore have a different impact on
company’s marketing objectives.

Estimating costs:
we have estimated the cost and want to charge a price that covers the cost of production,
distribution and selling the product, including a fair return for its effort and risk.

Analysing competitor’s costs, prices and offer:

I have analysed our competitors’ price and found that Elephant House Cream Soda charges
Rs. 100 for 500ml bottle, Kist charges Rs.250 for 1l bottle, MD charges Rs.260 for 1l Pac.

Marketing Mix (4P’S):

1. Product
2. Price

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3. Place / distribution
4. Promotion

1. Price

Our company has decided where it wants to position its market offering. I have chosen our
objective to maximize market share. I believe that a higher sales volume will lead to lower
unit costs and higher long-run profit. we have set the lower price because we assume that
the market is price sensitive. Our overall objective is to capture the maximum market share
by setting lower price.

2. Place / distribution

In the initial stage, We will distribute the products with our sole distribution channel. When
our market will spread out, we will distribute our products through dealers. we will set our
own outlets in few core market positions. When we go to mass marketing, we will supply
our product nationwide through dealers. Our dealers will take the products to every district
of the country. “Coconut Sip” will be available in all retail stores of the country.

3. Promotion

To acquire a strong position in the market, we need to give special emphasis on effective
promotional activities. In order to get the maximum market share we will have to use all
four tools of marketing promotion. Specially, advertising through mass media will support us
a lot.

I have also planned to apply some promotional tools. Initially for sometimes we will
distribute our product at 50% discount just make our new product familiar with the
customers. This will be the market-testing period for our product. Later, we may apply the
strategy of giving gifts, lucky coupons, tour tickets depending on the market and competitive
situations.

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4. Types of cost and level of production:

There are two types of costs:

a) fixed cost

b) variable cost

In our project fixed cost is Rs. 7,000,000.

Fixed cost includes- machinery, monthly bills, and salaries of employees and so on,
regardless of output.

There are some variable costs like-cost of bottle, packaging and so on. These costs tend to
be constant per unit production. I have estimated that per unit variable cost is Rs. 14.4 for
250 ml, Rs. 28.8 for 500 ml and Rs. 57.6 for 1 litre.

Following Table and graph show our expected sales for the coming five years:

250 ml.
Expected Sales (Per year) 500 ml. bottle 1 Litre bottle
Bottle
600, 675,0 250,0
First Year
000 00 00
700, 725,0 275,0
Second Year
000 00 00
800, 775,0 300,0
Third Year
000 00 00
900, 825,0 325,0
Fourth Year
000 00 00
1,000, 875,0 350,0
Fifth Year
000 00 00

5. Profit and Loss Projection

For 250 ml.

Item Year 1 Year 2 Year 3 Year 4 Year 5

24,000,00 28,000,00 32,000,00 36,000,00 40,000,00
Total Sales 0 0 0 0 0

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 15,640,00 17,080,00 18,520,00 19,960,00 21,400,00
Total Cost 0 0 0 0 0
8,360,00 10,920,00 13,480,00 16,040,00 18,600,00
Total Profit 0 0 0 0 0
668,8 873,6 1,078,4 1,283,20 1,488,0
VAT 8% 00 00 00 0 00
7,691,20 10,046,40 12,401,60 14,756,80 17,112,00
Net Profit 0 0 0 0 0

For 500 ml.

Item Year 1 Year 2 Year 3 Year 4 Year 5

47,250,00 50,750,00 54,250,00 57,750,00 61,250,00
Total Sales
0 0 0 0 0
26,440,00 27,880,00 29,320,00 30,760,00 32,200,00
Total Cost
0 0 0 0 0
20,810,00 22,870,00 24,930,00 26,990,00 29,050,00
Total Profit
0 0 0 0 0
1,664,80 1,829,6 1,994,4 2,159,20 2,324,0
VAT 8%
0 00 00 0 00
19,145,20 21,040,40 22,935,60 24,830,80 26,726,00
Net Profit
0 0 0 0 0

For 1 Litre

Item Year 1 Year 2 Year 3 Year 4 Year 5

32,500,00 35,750,00 39,000,00 42,250,00 45,500,00
Total Sales 0 0 0 0 0
21,400,00 15,840,00 17,280,00 18,720,00 20,160,00
Total Cost 0 0 0 0 0
11,100,00 19,910,00 21,720,00 23,530,00 25,340,00
Total Profit 0 0 0 0 0
888,0 1,592,8 1,737,6 1,882,40 2,027,2
VAT 8% 00 00 00 0 00
10,212,00 18,317,20 19,982,40 21,647,60 23,312,80
Net Profit 0 0 0 0 0

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Conclusion

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References
1. http://www.harti.gov.lk/

2. http://www.statistics.gov.lk/

3. ISMM Graduate diploma marketing management module book

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