BRCM COLLEGE OF BUSINESS ADMINISTRATION

LIBRARY ASSIGNMENT2012-13

MARKETING MANAGEMENT -II

SYBBA SEM-IV

DIVISION-I

TOPIC: APPLICATION PART OF PRODUCT, PRICE, PLACE AND PROMOTION

BRAND NAME: HORLICKS

BY,

36-GANDHI SANI B.

ROLL NO-36

SUBMITTED TO: DR. PRATIK PATEL

SUBMITTED ON: 30TH MARCH, 2013

Name of the product: Horlicks

Head question 1 (Product)

Answer: a classification of product

Classification of product: consumer good

Sub classification of Horlicks: convenience good

so Horlicks is the consumer good falling in convenience good category

Answer: b product life cycle

Horlicks is in maturity stage of product life cycle

Reason for Horlicks in maturity stage are listed below

1. Their sales are at peak level and increasing every year by year

2. Profit is very high

3. Their customers are of middle majority and having a child in home prefer to a health

drink and many prefer Horlicks

4. Their cost per customer is very less as fixed costs are decreased as number of customers

are more

5. Number of competitors are stable, their competitors are boost, bornvita, complan and

pedia sure etc and no new competitors have entered into this market

6. Their main objective is to maximize the profit and protecting their own market from

competitors.

Marketing strategies for Horlicks can be as following

1. Product :

o Here they can provide many diversified products from competitors. For example they

can offer product with new innovative flavors like mango, mix fruit different from

common chocolate and strawberry flavors. Or they can offer product which can

provide more vitamin or nutrition to babies. Or which can help in dieting as weight

decreasing helping product.

o So go for different and innovative product

2. Price:

o Here Horlicks can go for setting prices according to the price of competitors mainly

Bornvita, complan and pedia sure and boost as they provide tough competition to

Horlicks. For example if boost sets its price 200 rs then Horlicks should keep its price

between 190 to 210 rupees.

o If Bornvita is providing in the packet of 20rs than they also keep price of their small

packet around it.

3. Distribution channel :

o Here Horlicks should go for intensive distribution channel. Here they should go for

maximum distribution channel for ex. Three level distribution channel of

manufacture-wholesaler-dealer-retailer-customer. Company should have a

distribution channel by which a consumer can get the product at nearest store so that

customer will not prefer another product.

o For example if Horlicks is not available in nearest area and customer have to go 2

kilometers to purchase it and if bornvita and complan and pedia sure is available near

to them then they may purchase the other product

o So go for maximum distribution channels which available near to your customer.

4. Advertising:

o Here company should be able to express and stress about how their product differs

from competitors and how it is beneficial for them. For example they should be able

to express that our Horlicks is able to develop brain of child and is helpful for baby to

be a TALLER, STRONGER AND SMATER boy or girl and also helpful to pregnant

women and help to overcome from daily fatigue .This part refers to advertise in mass

media like television advertising or newspaper advertising etc.

5. Sales promotion:

o Her company should be able to generate brand switching which means motivating to

change brand. Here company can go for switching by showing how their brand is

better than competitors by using various methods of free sampling or providing your

product free with other products.

o So here show how your product is better than your competitors and make them to

change their brand.

Answer: c product level

Different product level of Horlicks can be as following showed in table

Horlicks

1. Core product Flavored milk drink

2. Basic product Testy, nutritious

3. Expected product Different flavors, vitamins, packaging in

durable bottles

4. Augmented product Brain developing and Bones protecting

drinks for women and babies

5. Potential product Special sweet health drink for diabetes

patients

Answer: d product items of Horlicks

Product items of Horlicks(health drink) are listed below:

1. Horlicks ninja

2. Junior Horlicks 1-2-3

3. Junior Horlicks 4-5-6

4. Mother’s Horlicks

5. Horlicks lite

6. Woman Horlicks

7. Healthy preschool combo

Answer: e product items of Horlicks other then Health drink

Product items of Horlicks( other than health drink) are listed below:

1. Horlicks biscuits

2. Horlicks corn flex biscuits and cookies

3. Horlicks Foodles

4. Horlicks Nutribic Digestive Biscuits

5. Horlicks Nutribic diabetes Biscuits

Answer: f: packaging

Answer f (I): Expert comment on Packaging of Horlicks

By evaluating the packaging of Horlicks we can say that it is the best packaging a company

is providing to it customer as brand identification is very easy and clear as name is written on

three side of bottle and bottle is too strong and durable that storage and transportation is done

very easily and it provides all the fundamental and other persuasive details so that no

confusion regarding product can be found and by the packaging of Horlicks one person who

is illiterate can easily identify that it is Horlicks bottle.

But Horlicks Packaging is not perfect as sometimes people use Horlicks bottle for other uses

also and sometimes it is found that duplicate product is served in Horlicks bottle and

customers are not getting the original product as the bottle of Horlicks can be used as it is not

perishable after Horlicks powder is consumed.

Answer f (II) :

Various functions performed by the packaging of Horlicks brand can be listed below:

1. Protection is provided by Horlicks packaging as they provide it in glass and plastic

bottles and protection from external environment.

2. Packaging of Horlicks has product containment means its bottles can also again used for

household purposes.

3. Self services in big stores, super markets and ready for selling getting attention of the

customer

4. Consumer affluence and product attractiveness, specially it attracts many children as they

have used many colours and in some packets cartoons which attracts more customers

5. Company and brand differentiation can be done from packaging only and Horlicks have

totally different packaging then competitors.

6. Horlicks of packaging is an effective promotion tool, as Horlicks uses to good packaging

and very attractive and very different from their customer and act as a packaging tool.

7. Product identification is easy from Horlicks packaging.

8. As Horlicks frequently changes their packaging from time to time and hence creates an

innovation opportunities to company.

Answer f (III) :

Various objectives fulfilled by the packaging of Horlicks brand can be listed below:

1. Transportation and protection of Horlicks powder means packaging in plastic and glass

bottle helps to move product from one place to other place with ease and it also protects

from external environment.

2. The most important objective is Brand identification and here packaging of Horlicks

satisfies the Brand identification objective in true sense as they have totally different

packaging and can be identified very easily.

3. Assist at home storage means its bottles can be used to store product at home and can use

our product with convenience and its bottles can also be used for household purposes.

4. Details regarding use of Horlicks, where we always find that first take 1 cup of milk and

then add sugar in it and then add powder in it and shake it for time and your Horlicks are

ready to drink like related information is being satisfied by Horlicks packaging.

5. Conveying decrypting and persuasive information and details are displayed on package

of Horlicks.

Answer: g: labeling

Answer g (I)

Type of label is a Descriptive label because it gives details regarding use, care, performance

and etc.

Answer g (II): Horlicks labeling provides the following information

Date of manufacturing and expiry date

Name of the producer where it was produced (address)

Batch number of production

Ingredients used

Brand name

Gross and net quantity of the content

Direction to use

Precautionary measures

Nature of the product

Retail pricing

Suggestions to Horlicks for labeling can be as following:

As it provides full details and fulfils all the objective of labeling but it does not show

what to do after use of Horlicks powder, bottles are used for filling duplicate products

and served by the name of Horlicks and it happens because company is not telling

customers that how to destroy that bottle of package after use.

Answer g (III)

Various functions performed by the labeling of Horlicks brand can be listed below:

1. Labeling of Horlicks provides to give clear information and instruction about the uses of

product.

2. Price of Horlicks is printed and maintained so that frauds related to price can be avoided

and some misappropriation from middlemen can be avoided.

3. Easy identification of Brand as Horlicks in capital letter is written on three sides.

4. Standard product can be maintained and duplicate products can be avoided as company’s

logo is there.

Answer g (IV)

Various objectives performed by the Horlicks brand Labeling can be listed below:

1. The main objective of labeling is to provide information about the product, its uses, how

to use and other necessary information is served through labeling of Horlicks.

2. To give warnings against the Risk and to provide customer care number.

3. Basic aim of labeling is to provide Brand name.

Head question : 2 (Price)

Answer: a

Factors affecting pricing decision of Horlicks are listed below:

1. Competition : here Horlicks have to survive in tough competition with Bornvita boost and

maltova and many other companies and if they charge higher price than they will be out

of market and may not be able to survive in the competition. So Horlicks have kept their

pricing according price of Bornvita, complan and pedia sure and boost.

2. Objective of company : here company’s objective is survive in market from competitors

and maximizing their profit so for achieving their objective they have pricing policy is to

price at average price means they charge less then Boost and Bornvita and same as

complan and pedia sure and Maltova because Maltova and complan and pedia sure are

their biggest competitor and they charge same in all size of packaging so that they can

survive through pricing and through publicity they can achieve maximum market share.

3. Nature and type of customer : here company is targeting children and aging more than 30

women and pregnant women so they have to price different for each group and pricing

policy of Horlicks is different where company is targeting children with chocolate

Horlicks and kesar-pista Horlicks and its price is kept low while pricing of women and

mother Horlicks is high as if they like Horlicks if it is beneficial for their physicality then

they will purchase it any price.

4. Distribution channel : here company have three level distribution channel viz,

manufacturer to wholesaler to dealer to retailer to customer and commission of all

intermediaries are there in price so they have not kept price too low but a middle price so

that all intermediaries also get satisfied and customer do not have to pay high.

5. Quality : here quality of the product is kept at its maximum level as they provides 23 vital

nutrition in their product and hence there price of women Horlicks and mother Horlicks is

high and for junior Horlicks also they are charging high price.

Answer: b price discrimination

Yes price discrimination is possible here.

Bases for discrimination can be as following

1. Customer segment pricing

Here price can be charged by Horlicks may be different for each segment. Here company

has segmented market in categories as following:

children of aging between 1and 3 and for them Horlicks 123 is there

children of aging between 4and 6 and for them Horlicks 456 is there

special Horlicks for women aging above 30 for strengthening their bones and here they

have women’s Horlicks

Mother’s Horlicks for pregnant women and they are charging high for pregnant women

for providing special health drink.

2. Product form pricing

Here price may be different from where it is sold. For example if it is sold in small shop

then shop keeper may charge full 200 rs for a bottle but if it is sold in big mega store like

big bazaar may be less ranging between 180 to 190. Hence here price discrimination is

also possible.

Answer: c price discounts and allowances to customer and intermediaries:

Here company provide following discount and allowances:

1. Functional discount:

Here Horlicks gives certain amount of discount to wholesaler and various intermediaries

if they perform various functions like storage, transportation, selling, providing feedback

to company about product from customers etc. Probably 25 to 30% discount is offered to

intermediaries.

2. Quantity discount

Here discount is given if customer or retailer or wholesaler is going to purchase in large

quantity. If one bottle is of 200rs for 1 bottle and if one is going to purchase 2000 bottles

then company may provide one bottle at 195rs.

Answer: d pricing method:

Here company have adopted going rate pricing where the Horlicks charge the price on the

bases on prices of Bornvita, complain, boost, and maltova. Here Horlicks charge almost

same price for their products like chocolate Horlicks, kesar-pista Horlicks and other

flavors of Horlicks are charged almost same price as competitor’s price.

While prices of junior Horlicks are charged as per the prices of Pedia sure and Maltova

which is also made for preschoolers.

It is based on market situation. Here Horlicks will adjust its own price policy in time with

the general pricing structure prevailing in the industry.

Alternative pricing method is Mark up pricing method:

Here Horlicks can have Mark up pricing method in which Horlicks have to decide the

mark up on production cost for example 20% on total production cost.

For example if a Horlicks 1kg bottle have following cost structure then,

Variable cost per unit= 80 rs,

Fixed cost 50, 00, 00,000 rs

Expected unit sales is 100, 00,000 bottles

Then unit cost= variable cost + (fixed cost/unit sales)

=80 + (50, 00, 00,000/100, 00,000)

=80+ 50

=130

So here unit cost of Horlicks is 130 rs per bottle of 1kg

And if company have mark up of 40% then

Mark up price= unit cost/ (1-desired return on sales)

= 130/ 0.60

=217rs

So according to mark up price Horlicks can sale 1 kg bottle at 217 rs

Head question: 3 Distribution channel

Answer: a levels of distribution channel

Here company is providing daily use product as consumer don’t make more effort to buy

such product so Horlicks have tried to make it available as near as possible to customer

reach.

Alternative distribution channel:

The alternative distribution channel can also possible where Horlicks can also make their

outlets from where wholesaler, retailer and customer can directly purchase Horlicks from

there.

The alternative channel can be as following

Final customer

Outlets of Horlicks

Retailer

Wholesaler

Retailer

Manufacturer (Horlicks)

Answer: b list of various type of intermediaries involved in distribution channel

merchant wholesalers

Jobbers ( full function wholesaler)

Small shops keepers

Mega stores like Big bazaar and Dhiraj sons

Super stores

Medical stores ( In certain stores women Horlicks and mother Horlicks is available)

Departmental stores

Answer: c functions of intermediaries

Function of merchant wholesaler and jobber :

Here functions performed by wholesaler can be as listed below:

1. Selling and promoting:

Here they try to promote sales by using various promotional tools and try to

generate more demand and sale more which benefits company.

2. Buying and assortment building

Here wholesalers purchase various products of Horlicks and assort them category

wise so at the time of sales it is easily available. For example they buy all Horlicks

product and arrange them in category like women Horlicks , junior Horlicks when

sales are done no problem of assortment are found.

3. Bulk breaking

Wholesalers purchase in large quantity and save a lot by purchasing in large

quantity as company provides quantity discount and it ultimately benefits retailers

and customers only.

4. Warehousing

They store the various Horlicks product in their warehouse and reduce inventory

cost of suppliers.

5. Transportation

They can provide quicker delivery to buyer as they are closer to buyer and retailers

6. Financing

They provide Horlicks customers and retailers on credit bases and facilitate

financing for them.

7. Risk bearing

They reduce some risk by taking the ownership of the goods and bear the cost of

damage, spoilage and obsolescence.

8. Market information

Wholesaler supply information regarding complaints and feedback to the company

taken by them from customers.

Function of small shop keeper, mega store and departmental store :

1. Personal service to all customers

2. Two way communication where they provide information to customers regarding use

of the product and on other hand supply information regarding complaints and

feedback to the suppliers taken by them from customers.

3. Physical movement and storage of Horlicks is taken care.

4. Extend credit facility to customers.

5. Create demand by window display as customer will see that Varity of Horlicks

product is available and motivates them to purchase.

6. Sales promotion they do by showing benefit to children and women as it has 23 vital

nutrition in it.

7. Risk sharing by taking the ownership of the goods and bear the cost of damage,

spoilage and obsolescence.

Answer: d factors affecting choice of channel distribution:

Market consideration

1. Nature of market

Here large number intermediaries are hired as it is a consumer market and to reach

each customer more number of intermediaries are required.

2. The number of potential customer

Here the potential customers are more in number so company requires more

intermediaries to reach each customer.

3. Geographical concentration of market

Here direct selling is not possible as India is a very market and here to sale more

large number of intermediaries are required.

4. Customer buying habit

Here as it is a convenience consumer product customers are going to purchase it

frequently and hence more intermediaries are required.

Product consideration

1. Unit sale value of product

Here the unit value of the Horlicks is low so to gain more profit we require more

sales so for sale more number of intermediaries are required

2. Nature of product line:

Here the product line is narrow having only 7 to 8 products only and hence more

number of intermediaries is required.

3. Newness and market acceptance

Here company having high degree of acceptance indirect distribution channel is

more possible.

4. Perishable product:

Here Horlicks is perishable product having expiry date within 36month of

packaging so here more number of intermediaries is required.

5. Standardization:

Horlicks is ISI marked product and hence Indirect distribution channel is beneficial.

Company consideration

1. Reputation

Here intermediaries are proud to be a part of such reputed company and Horlicks is

also such reputed company and hence it is beneficial to have a indirect channel.

2. Market control:

Here price are more or less stable and hence indirect channel is also helpful.

Middlemen consideration

If intermediaries are able to provide good facility of storage transportation and able

to facilitate more sale and able to generate more sales then number of intermediaries

hired should be high.

Consumer consideration

Here buyers purchasing more quantity and at frequent interval and they are

geographically widely spared and hence large number of intermediaries is required.

Answer: e various physical activities involved in channel distribution:

Inventory management

The location of inventory and number of sites from inventory is supplied by Horlicks is

affected by the total sales and mode of transportation.

Storage

o Here Horlicks decides where they have to store their finished products.

Warehousing

o In this part it involves assembling, dividing and preparing for transportation, for

example caps of bottles are fitted on bottles.

Distribution centers

o Here an integrated system is developed for the flow of products and acceptance

and execution of orders and their deliveries.

Material handling

Horlicks prefer to proper material handling system to reduce the time and cost where

mechanized equipments are used to move material internally while containerized

equipments are used for external movement at Horlicks.

Inventory control

A proper inventory control will help to reduce capital blockage and fluctuation in in

inventories and fulfillment of orders are done in time. Inventory control involves ordering

cost and inventory carrying cost.

Horlicks always prefer to order right amount of order quantity by using the concept of

economic order quantity.

Order processing

This step involves billing, credit extension; invoice making and collection of dues and

Horlicks Company have to make decision regarding procedure for doing billing, credit

extension, invoice making and collection of dues.

Transportation

Here decisions regarding the mode of transportation and specific carrier company and

selecting the mode from railway, truck, ship, airplanes and here for Horlicks railway and

trucks are only appropriate and economical.

Head question: 4 communication process

Answer: a: promotional tools

Advertisement

o This is very commonly used by Horlicks and they give advertisement on

television, targeting mass market and show various advantages of using Horlicks

as a Health drink.

o They also sponsor some program as a part of advertisement.

o by using advertisement Horlicks were able to gain following advantages

I. Sales were increased and sales targets were found to be achieved.

II. They were able to influence buyer to purchase Horlicks.

III. They made women and pregnant ladies familiar with women and mother

Horlicks and they were also gave information regarding benefits of using

junior Horlicks as a health drink.

Sales promotion

o Here for promoting sales company tries to increase sales by giving certain free

gifts like Horlicks printed Mugs, Shippers, water bags etc. and few years ago they

gave small toy cars to influence small children to purchase Horlicks rather than

other Brand.

o Here they used experts who told about advantage of using Horlicks, and they took

Dr. Varsha, nutrition specialist who also preferred to use women Horlicks.

o By using sales promotion Horlicks got following benefits:

I. Immediate return through increase in sales

II. Sales promotion made Horlicks most popular health drink brand.

Events :

o Here Horlicks do promotion by showing an advertisement on certain program like

zoot review where they show advantage of using Junior Horlicks 123 and 456 on

small babies and preschoolers and their overall development.

o By using events they were able to influence customer more as many experts were

used to promote Horlicks.

Answer: b: appeals used by Horlicks

Rational

o Here company tries to increase sales by generating self interest and here Horlicks

always tells advantage of using mother Horlicks by a pregnant women to her

upcoming child’s health and how women Horlicks is helpful to 30+ women in

their day today life where they have to work to hard in their household works.

Informational appeals:

o Here Horlicks do appealing by giving the information why some kids do not have

appropriate price or why they are not able to remember what they read and they

always inform that due to some vitamins and nutrition they are not able to grow

up by what amount others have grown up and they inform that Horlicks have all

vitamins and nutrition that will help their Kids to achieve their desired level of

growth. And for such they use Zoot review and such program to appeal to

purchase junior Horlicks for their kids.

Indirect appeals:

o Here Horlicks always try to appeal that their product is superior then complan

when complain during an advertisement tried to show that how complain is better

than Horlicks then Horlicks also indirectly appealed that they have 23 vital

nutrition that complain don’t have.

Answer: c: Type of communication channel used by Horlicks

Here Horlicks uses non personal communication channel which can be as following.

1. Media :here media consists of following parts

I. Print media: through news papers, magazines, direct mail promotion

II. Broadcast media: promotion through radio and television and Horlicks

uses television media up to a large extend.

III. Electronic media: promotion of Horlicks by webpage and website and

videotape.

IV. Display media: Horlicks uses posters and hording for promotion.

2. Sales promotion:

o Here for promoting sales company tries to increase sales by giving certain free

gifts like Horlicks printed Mugs, Shippers, water bags etc. and few years ago they

gave small toy cars to influence small children to purchase Horlicks rather than

other Brand.

o Here they used experts who told about advantage of using Horlicks, and they

took Dr. Varsha, nutrition specialist who also preferred to use women Horlicks

3. events

o Here Horlicks do promotion by showing an advertisement on certain program

like zoot review where they show advantage of using Junior Horlicks 123 and

456 on small babies and preschoolers and their overall development.

o By using events they were able to influence customer more as many experts were

used to promote Horlicks.