PESTLE Analysis Template Essay

Your notes Potential Impact: Implication and importance The list below is just to get you started. Remember to put these, and others that you add in the context of your organization or business. For example if you are a small private company the behaviours of a Wall Mart / Tesco or other large international player may well impact on you.If you are a local authority, government changes will change your priorities. In the NHS changes to treatments and public attitudes will also impact etc. About your organization.How might the factors listed on the left impact your business or part of the organization? H – HighM – MediumL – Low U – Undetermined Time Frame:0 – 6 months6 – 12 months 12 – 24 months 24 + months Type:Positive +Negative – Unknown Impact:Increasing >Unchanged = Decreasing < Unknown Relative Importance:Critical Important Un-important Unknown Political – SWOT Trading policies Funding, grants and initiatives Home market lobbying/pressure groups International pressure groups Wars and conflict Government policies Government term and change Elections Inter-country relationships/attitudes Terrorism Political trends Governmental leadership Government structures Internal political issues Shareholder/ stakeholder needs/ demands ___________________ ___________________ ___________________ ___________________ ___________________ Economic – SWOT Home economy situation Home economy trends Overseas economies and trends General taxation issues Taxation changes specific to product/services Seasonality/weather issues Market and trade cycles Specific industry factors Market routes and distribution trends Customer/end-user drivers International trade/monetary issues Disposable income Job growth/unemployment Exchange rates Tariffs Inflation Interest and exchange rates Consumer confidence index Import/export ratios Production level Internal finance Internal cash flow ___________________ ___________________ ___________________ ___________________ ___________________ Social – SWOT Consumer attitudes and opinions Media views Law changes affecting social factors Brand, company, technology image Consumer buying patterns Major events and influences Buying access and trends Ethnic/religious factors Advertising and publicity Ethical issues Demographics (age, gender, race, family size,) Lifestyle changes Population shifts Education Trends Fads Diversity Immigration/emigration Health Living standards Housing trends Fashion & role models Attitudes to work Attitudes to people doing certain types of work Leisure activities Occupations Earning capacity Staff attitudes Management style organizational culture Changes to education system ___________________ ___________________ ___________________ ___________________ ___________________ Technological – SWOT Competing technology development Research funding Associated/dependent technologies Replacement technology/solutions Maturity of technology Manufacturing maturity and capacity Information and communications Consumer buying mechanisms/technology Technology legislation Innovation potential Technology access, licensing, patents Intellectual property issues Global communications Inventions Innovations New discoveries Research Energy uses/sources/fuels Communications Rate of obsolescence Health (pharmaceutical, equipment, etc.) Manufacturing advances Information technology Internet Transportation Bio-tech Genetics Waste removal/recycling Email M-learning E-learning Collaboration tools Software changes RSI ___________________ ___________________ ___________________ ___________________ ___________________ Additional split of information if doing a PESTLE analysis rather than a PEST analysis: Legal – SWOT Current legislation home market Future legislation European/international legislation Regulatory bodies and processes Environmental regulations Employment law Consumer protection Industry-specific regulations competitive regulations ___________________ ___________________ ___________________ ___________________ ___________________ Environmental – SWOT Ecological Environmental issues International National Local Environmental regulations Customer values Market values Stakeholder/ investor values Staff attitudes Management style organizational culture Staff morale Staff engagement Global factors EU based factors ___________________ ___________________ ___________________ ___________________ ___________________ top Remember this is only a tool. Call it what you like – use whatever factors you feel are appropriate. Other variations include: PEST analysis (STEP analysis) – Political, Economic, Sociological, Technological PESTLE/ PESTEL analysis- Political, Economic, Sociological, Technological, Legal, Environmental; PESTEL analysis PESTEL analysis- Political, Economic, Sociological, Technological, Environmental, Labour (Labor) related; PESTEL analysis (rare no references available) PESTLIED analysis- Political, Economic, Social, Technological, Legal, International, Environmental, Demographic STEEPLE analysis – Social/Demographic, Technological, Economic, Environmental, Political, Legal, Ethical SLEPT analysis – Social, Legal, Economic, Political, Technological STEPE analysis – Social, Technical, Economic, Political, and Ecological ETPS analysis – Economic, Technical, Political and Social – Scanning the business environment PESTLE Analysis on an HR department or other internal function While the PEST or PESTLE analysis is primarily aimed at looking at the external environment of an organization, many HR courses ask students to use the PEST or PESTLE analysis model to look at their own function. In this context we need to imagine that the department (HR) is an organization in its own right and look outside. Factors to include in your analysis may include the following: Political What is the culture of the organization, How is the HR function viewed by other functions? Who are the political champions of HR (or its adversaries)? Shareholder views Economic What is the budgetary position of the department, Is more money available? Are our customers likely to spend more or less money on the services we offer? What is happening to the financial status of the organization Interest rates Inflation Salary trends in the sector Sociological Other departmental attitudes to HR Population shifts (age profile) Education Fads Diversity Immigration/emigration Health Living standards Housing trends Fashion & role models Age profile Attitudes to career Technological What changes may be coming our way? What new technology/ systems, How do we record attendance, performance? how might this change? Use of and encourage home working? Communications technologies changes of technology that will increase/ reduce the need for recruitment changes to HR software Legal What is happening in our sector that will impact what we do? Minimum wage, Working time, Food stuffs, Under 18 working, Occupational/ industrial Training etc. What changes will impact the services of the organization Environmental Staff morale Staff engagement Need to reduce storage needs Management attitudes (inside dept/ function) Organizational culture PESTLE Analysis for Schools or Education By rapidbi – Last updated: Sunday, April 19, 2009 – Save & Share – 2 Comments A PESTLE analysis is a tool that can provide prompts to the governors, management and staff involved in the analysis of the changes in the school’s environment that could impact future finance, planning and management decisions. It can enable them carry out a more comprehensive analysis. A PESTLE is usually used in commercial organisations as a part of the strategic development of a business and marketing plan, however a PESTLE analysis can be used as part of identifying the opportunities and threats (swOT) for operational planning within educational and school environments. The PESTLE provides a simple framework within which to consider external factors. PESTLE is used as part of a SWOT for identifying the external factors (OT) Political Schools being privatised (like the NHS) A government initiative creates the risk that the school may fail to deliver the policy or be diverted away from local priorities etc. Changes to the skills required to be a teacher/ tutor Changes to curriculum with short lead times Requirement to be self managing Requirement to be self financing Economic Central or local government funding decisions may affect school/ establishment finances Closure of a local industry may affect fund raising plans etc. Ability of parents to raise funds for optional activities The need to run breakfast/ after schools clubs Ability to invest ‘savings/ surpluses’ Cost of providing resources: Staff – teaching & support Basics – books/ paper Technology solutions laptops etc Interest rates Shortages of materials on national/ international markets Over provision of school places in the area resulting in competition from neighbouring schools The risk of highly valued, key staff moving on to more ‘up and coming’ schools/ academies Social Decline in birth rate, reflecting national trends Local population changes (increasing/ decreasing numbers) Demographic changes may affect likely pupil rolls or the nature of pupils needs e.g. pupils with English as a second language etc. Closure of local firms providing employment Inability to attract staff Social networking – blogs, facebook, twitter Changes to qualifications expected Integration with local community Integration of students with special needs parental preference – an increase in ‘parent power’ has allowed parents more freedom of choice over their child’s school the risk of highly valued, key staff moving on to more up-and-coming establishments Information is accessible to staff anywhere in the world via the Internet Staff were not given enough training or access to effectively change their habits and how they expected information to be made available Technological Changes to standards/ equipment required Risk of selecting the wrong technology at times of change (i.e. windows -v- open source) New computer viruses may affect school/ college operations, Disturbing/ illegal images on the internet may affect ICT security measures etc. Move from paper based books to e-book readers Computer hardware being out of date Computer software being out of date Time to manage IT systems Legislative new legislation may create risks of non-compliance with the law, create new administrative burdens etc Changes to child protection legislation Raise the age of school leaving age Raise/ lower the age of starting school. Nursery/ kindergarten Change to school opening hours Changes to funding of charity based organisations Health & safety legislation Environmental A new highway layout near the school may create new dangers for pupils etc Waste disposal Reduction of green space available for activities Changes to local bus routes Using a significant amounts of paper and photocopier toner to produce printed information. For a more comprehensive PESTLE article see our pain page. A PESTLE Template: Area being reviewed Factor: Is factor positive or negative? Political P – N P – N P – N P – N Economic P – N P – N P – N P – N Social P – N P – N P – N P – N Technological P – N P – N P – N P – N Legislative P – N P – N P – N P – N Environmental P – N P – N P – N P – N Remember this is only a tool. Call it what you like – use whatever factors you feel are appropriate. Other variations include: PEST analysis (STEP analysis) – Political, Economic, Sociological, Technological PESTLE/ PESTEL analysis- Political, Economic, Sociological, Technological, Legal, Environmental PESTEL analysis- Political, Economic, Sociological, Technological, Environmental, Labour (Labor) related PESTLIED analysis- Political, Economic, Social, Technological, Legal, International, Environmental, Demographic STEEPLE analysis – Social/Demographic, Technological, Economic, Environmental, Political, Legal, Ethical SLEPT analysis – Social, Legal, Economic, Political, Technological STEPE analysis – Social, Technical, Economic, Political, and Ecological ETPS analysis – Economic, Technical, Political and Social – Scanning the organizational environment Choose the acronym that most suits you or your organization. http://www.familybunker.com/forums/students-workshop/11967-swot-pest-analysis-part-ii.html Examples of SWOTs Strengths and weaknesses à ¨ Resources: financial, intellectual, location à ¨ Cost advantages from proprietary know-how and/or location à ¨ Creativity (ability to develop new products) à ¨ Valuable intangible assets: intellectual capital à ¨ Competitive capabilities à ¨ Effective recruitment of talented individuals à ¨ Competitive Advantage à ¨ Brand reputation à ¨ New product Opportunities and threats à ¨ Expansion or down-sizing of competitors à ¨ Market trends à ¨ Economic conditions à ¨ Expectations of stakeholders à ¨ Technology à ¨ Public expectations à ¨ All other activities or inactivities by competitors à ¨ Criticisms by outsiders à ¨ Changes in markets à ¨ All other environmental condition à ¨ Global Influences à ¨ Nothing PESTEL Analysis for Macro-Environment http://accalecturenotes.blogspot.com/2011/01/pestel-analysis-for-macro-environment.html PESTEL Analysis is used for the assessment of macro-environment (environment which indirectly affects business decisions) in which the business operates. Managers have to identify changes in macro-environment that influence their business decisions. These can be identified using PESTEL analysis. In exams, using this framework ensures that we have gathered sufficient information necessary to analyze the scenario. Other frameworks used are equally acceptable. Below discussed factors are interrelated, points discuss in one factor can be included in other. 1. POLITICAL. The following points to be considered when evaluating the political environment of the industry or business. 1. Availability of government grants or assistance in the form of cash or other asset perhaps upon fulfillment of some conditions. 2. Award schemes to enforce quality standards. 3. Stable or dynamic political environment i.e. is the government changes frequently resulting in changing policies being implemented by every new government or the country are under martial law or war? 4. Rules and regulations are polite or stringent. This indicates the venerability of the business to legal risk i.e. fines (can be discussed under legal also). 5. Barriers to entry and exit. Example by imposing licensing requirements. 6. Provision of training to workers. 7. Provision of infra-structure, includes sewerage, transportation and energy. 2. ECONOMICAL 1. Business cycle, identify the stage from which the business is suffering. The stages are depression, recession, recovery and boom. 2. Industrial cycle, identify the stage from which the industry is suffering. The stages are introduction, growth, maturity and decline. 3. Access to resources, finance at reasonable cost, workers at reasonable rates, material economically and easily and equipment with maintenance and spare parts. 4. Customers & suppliers, their availability and bargain power should be assessed. 5. Taxation policies i.e. direct or indirect taxation and rates 6. Inflation, interest and exchange rates. 7. National income can also influence demand for the firm’s product. 8. Level of unemployment in the country, high unemployment may suggest that employer has dominant position and can negotiate low wage rate with workers 9. Stock market condition rising stock market index means rising demand of shares in the stock market may suggest easily availability of finance at cheaper cost. 3. SOCIAL 1. Stakeholders demand, taste and behavior. Example customer, financers and supplier who may not support if your business conflicts their principles. 2. Increasing or decrease population. Increasing population may suggest that higher demand for younger people products e.g. toys while decreasing population suggests opposite. 3. Attitude to work. Are people committed to their work or they just comply with standards. Healthy workers are more productive than overstressed workers. 4. Income distribution, how wealth for the country is scattered among individuals, even distribution may suggest that majority of the people can buy our product while uneven distribution may suggest that majority is poor and minority is rich which create demand for high volume and low priced and low volume high priced products respectively. 5. Social footprint. Impact that business leaves on the society 6. cultural change should be identified e.g. identifying societies leisure activities, changes in customs. 4. TECHNOLOGICAL 1. Stable or robust. Stable environment may suggest longer product life cycle and low level of obsolesces while robust environment suggests otherwise. 2. New product developments may permit doing business more efficiently, cost-effectively and effectively. Employer may move towards automation, this is turn may affect other factors of the framework 3. Innovation leads to break-through in economy and it may affect society as well. Example facebook, youtube are the products which affecting youths behavior. 5. ENVIRONMENTAL 1. Green house effect has affected the way business trades. There are increasing demands of environment friendly products. Example using hybrid cars and paper bags instead of plastic bags. 2. There are increase emphasis on environmental footprints and sustainability. 3. There are legislations being enacted related to environment. This forces the business to change its policies (the way they do business) and disposal costs to business like restoration of site. 6. LEGAL 1. Competition law imposes restriction of mergers and acquisitions to promote efficiency gained through competition. 2. Employment legislation protects rights of workers by setting minimum wage requirements, anti-discrimination and anti-harassment legislation. 3. Health and safety legislation to protect workers. 4. Imposition of high import duties to protect home industries. 5. Licensing requirement as discussed above Students are advised to think as many points as possible so they can quickly identify if they come in the exam scenario. Having thought its impact on business activities can save you lot of time. PESTEL ANALSIS is frequently used framework in exams and in practice. It is worth spent some time on it.

Sports Nutrition Market in India

1. Introduction This chapter deals with overview, objectives, methodology, sampling plan and limitations of the study. 1. . Overview of the study Business analysis of whey in India is not restricted to its well defined boundaries. Because of the nature of the product and its current status, it is traded globally and very small quantity is traded within the country. The study is intended to study the effect of global changes on trade. Similarly the emphasis is laid on the application of whey as a product for mass market. The idea is to understand capabilities required for the same and see if any company can fit into that specification. 2. . Objective of the study The study has been undertaken to meet following objectives: 1) To understand the structure, Conduct and performance of whey business in India. 2) To understand the evolution of Whey business in next five years. 3) To identify key opportunities for GCMMF in whey business. 4) To propose market entry strategy for GCMMF to enter into whey business 3. . Methodology followed The study has used personal visits to whey processing plants and modern format stores, questionnaire survey of gym visitors, unstructured interviews with trainers, dieticians, and unstructured interview on telephone with employees of these plants, use of checklist for retailers and distributors. Secondary data from internet and literature have been used. |Sr. No |Data required |Data sources |Tools used | |1. |Turnover, Supply. Market share, Main products, Production |Current Internet, Unstructured interviews with the | | |facilities-capacity, technology; Profits, Future estimates |players, |associated employees, Annual Report study, Indian | | |of demand ,area of operation, |supplier |Export Agency-internet | |2. |Manufacturers, Prices, Volumes, Consuming segment, Margins |Product |Internet, Unstructured interviews with the | | |in different formats, Channels for different formats. formats, |retailers, distributors, Annual Report study of | | | |Channel |players | |3. |Distribution c hannels, margins, mode of operation, |Channel |Internet, structured interviews. | | |incentives | | | |4. Institutional buyers, consumers-segment, consumer |Consumers, |Consumer survey, structured/unstructured | | |preferences, acceptability, product and brand recognition |Retailers |interviews/focussed group surveys, Retailer survey| | |,benefits, value for money ,future market-volume/sales | | | 1. 4. Sampling plan The consumer related result is based on fifty consumers surveys conducted in nine cities namely Anand, Ahmedabad, Mumbai, Pune, Delhi, Karnal, Panchkula, Chandigarh and Gurgaon. The retailers, distributors and Modern Format Stores were approached randomly without any restriction on numbers. The idea has been to get qualitative and quantitative information both. 1. 5 Limitations of the study 1. The number of consumers surveyed is not sufficient to generalise the results. However the results are indicative in nature. 2. Time allotted for the study is not sufficient. 3. Qualitative information has been used to understand different requirements of whey business in India. 4. Unavailability of authentic secondary sources for getting information related to gyms, medical stores, and whey utilisation in India etc. . Understanding Whey 2. 1. Whey: Introduction Whey is a by-product of cheese, Paneer and Shrikhand. It is a green yellowish fluid. It can also be called as the water of Paneer, Cheese, and Shrikhand . There are two varieties of whey based on acidity: sweet and acid whey. Similarly the classification of whey has been done on the basis of its source e. g. cas ein or cheese. The developed world has very high per capita consumption of cheese with respect to developing or underdeveloped world; therefore the whey production is mainly concentrated in the developed countries only. 2. 2. Importance of whey Whey contains very nutritive constituents like Whey proteins -Immunoglobulin, amino-acids both essential and non-essential, lactoferin riboflavin, lactose etc which are very important for the body. Whey protein has very High biological and Protein Efficiency Ratio . Thus it is rated as the best protein. Because of technological advancement, these constituents can be separated from the whey. The importance of whey therefore lies due to following reasons: 1. Highly priced: because of very sophisticated technology and high demand for the separated constituents, these are highly priced. 2. Whey has very high Biological Oxygen Demand and Chemical Oxygen Demand (>40000), therefore it poses serious threat to environment. The Government has made strict norms related to environmental pollution. ISO -14000 is basically meant for controlling the environmental pollution related to any manufacturing units. Above two reasons pose a challenge to the whey producing companies to efficiently utilise it. 2. 3. Properties and application of whey Because of the functionality of whey, it finds use in the manufacture of various fields and products. Table 1. Functionality and application of whey Functional Property |Application | |Whipping/Foaming |Egg less cakes, Dessert, Whipped toppings | |Emulsification |Sausages, Coffee whiteners, Soups, Cakes, Infant Formula, Biscuits | |Gelation |Meats, Baked foods, Cheeses, curd, yoghurt | |Viscosity |Soups, Gravies, Salad Dressings | |Water Binding/Mineral Binding |Cakes, Meats , Sausages, Nutritional foods | |Solubility |Beverages | |Browning |Breads, Biscuits, Confectionery, Sauces | |Flavour/Aroma |Baked goods, Biscuits, Confections | From above table it is very much evident that whey has very wide application in food and pharmaceutical industry. 3. Global Whey Business It has already been mentioned that the whey is a by-product of cheese which is mainly consumed in the developed world, particularly Europe and United States. Therefore its production is mainly concentrated in these countries. Global production of whey has been 177 mn MT in 2006 with a value of $ 9bn which is expected to grow annually at 2-3 % for next 5 years. The major contribution in production i. e. approx. 94% is due to Cheese whey and emaining is due to casein whey. Salient features of Global Whey business †¢ About 70% is utilised for industrial purpose and remaining is used for cattle feed, fertilisers and some quantity goes waste. †¢ Fifty six percent of the whey used for industrial purpose is utilised for manufacturing of Whey powders and lactose while nearly 35% is utilised for Whey protein concentrate and permeate and the remaining 9% is used for Dimineralised products and blends. †¢ Approximately 80% of whey products are traded as commodity while 20% is traded as value added products. †¢ In global trade, USA ranks first in export of whey powders(19. 4% share) and China leads in import with 15. % share. (See the annexure containing list of ten major exporting-importing countries) †¢ Majority of key global whey processing companies are located in US and European union. (see the figure 1 on next page) 3. 2 Lactose Lactose is a very important constituent of whey . The total global production was 870000 MT which is expected to grow at the rate of 5-6 % annually. This is mainly used in pharmaceutical, bakery, confectionery industry and in the preparation of infant formula etc. The major global producers of lactose have been shown in the figure 2. Figure 1: Global Whey processing companies [pic] Figure 2: Global lactose producers [pic] The production and application pattern of lactose is different across different part of the world . This is evident from following pie diagram: Figure 3: Global Lactose Processors [pic] Figure 4: Application of Lactose in EU and US [pic] As far its global trade is concerned, USA still is the leader. The realisation from lactose has increased from $ 670 mn in 2004 to $ 1930 mn in 2006 mainly because of spurt in demand. Table 2: Global whey exporters and importers [pic] 3. 3 Global Price rise Over the years there has been a steep rise in the prices of whey products due to increase in demand. Following table will explain the change in the global prices over last years: Table 3: Global Prices (European Union) |Year |WP ($/lb) |WPC($/lb) |Lactose($/lb) | |2004 |0. 284 |0. 588 |0. 1875 | |2005 |0. 316 |0. 82 |0. 1925 | |2006 |0. 489 |0. 69 |0. 3075 | |2007(May) |0. 727 |1. 35 |0. 4 | Source: USDA, NASS, Dairy Market Report, 2007 As the whey from India is traded in the global market, so the price fluctuation decides the volume of business from India. Since the prices of WPC, WP and Lactose have increased substantially in last 2 years and more importantly in early 2007, therefore the profitability of the business has increased. When we consider the price fluctuation of Skim Milk Powder (SMP) and Whey powder with same protein then we find that there has been clear cut price appreciation in WP prices over SMP prices and the difference between per MT prices has in fact increased between these two commodities. Figure 5: Price of SMP and Whey proteins Source: www. fas. usda. gov In 2007, the price rise has been very fast as evident from following graph showing the variation. Figure 6: Global Whey powder prices w. r. t SMP in 2007 Source: USDA, NASS, Dairy Market Report, 2007 4. Indian Whey Industry Whey business in India has been in existence for last 15 years when Cepham Ltd and Mahan Protein started operation in 1992-1994. This business over the years has expanded in terms of volume and value and more Indian private companies have entered into this business. 4. 1 Structure of Whey business in India The structure of Whey Industry in India can be explained below: 4. 1. The nature of industry: Whey is a part of food industry. There are relatively small numbers of whey processing companies in India unlike milk processing companies. Also there are less number of bulk domestic buyers of whey based commodities in India. The production is mainly export oriented. 4. 1. 2 Government regulation: whe y poses environmental threat because of very high B. O. D and C. O. D level. There are environmental regulations framed by the government unlike SMP which has become prone to export ban. Whey powders are not exposed to export ban till now. 4. 1. 3 Type of producers: The whey processing companies are mainly the private Indian players. None of the Multi National Companies and Co-operatives have ventured into this field as they are operating in mass market and don’t want to enter into commodity market . However many global producers are now eyeing India as a potential manufacturing location because of the increased demand of whey products in the global market. 4. 1. 4 Cost and production considerations: The technology of whey processing is more sophisticated than that for traditional dairy products. Globally three generation products are manufactured from whey. These are listed below. These require different kind of technology. Processing technology and product details has been mentioned in the following table. Table 4: Product manufactured and technology used in whey Generation product |Product name |Technology used | |First generation |Whey powder, WPC 35,Lactose |Ultra filtration / Nano-filtration | |Second generation |WPC-80,DWP,Sweeteners,Minerals |Ion -Exchange | |Third generation |Whey protein fraction s, Lactose derivatives, |Chromatography, fractionation technology | | |WPH,WPI | | The cost of production mainly depends on the procurement price of raw material like milk and the availability of milk through out the year . Due to unavailability of milk throughout the year , the production in many plants are stopped during the lean period i. e. April- July. 4. 1. 5 Major whey processing companies in India: Whey business has not been a big industry in terms of quantity of milk processed. When we consider the quantity of milk processed by all the Indian companies the quantity of milk diverted for whey production is less than 1%. Currently there are mainly eight whey processing companies in India. The daily milk handling capacities and production capacities of these plants have been mentioned in the following table 5. Table 5: Major whey processing companies in India: Name |Milk handling |Casein |WPC-WP |Lactose | | |Capacity |(MT/Day) |(MT/day) |(MT/Day) | | |(lakh lts /day) | | | | |VRS Foods Ltd |15 |40 |20 |25 | |Mahaan Proteins |6 |15 |10 |18 | |Modern Dairies Ltd |10 |25 |15 |18 | |Dynamix Dairies Ltd |5 |8 |5 |8 | |Milk food Ltd |8 |15 |10 |15 | |Cepham Ltd |6 |14 |8 |12 | |Bhole Baba Dairy |10 |24 |14 |15 | |Crown Milk Spl. Ltd. |5 |10 |6 |0 | |Total |65 |151 |88 |111 | |Annual(2007 Estimate) |17793. 75 |33069 |19272 |24309 | Source: informal, ex-employees. Most of these companies are situated in the northern part of India and the main reason sighted was availability of milk in these areas. From the table it s very evident that VRS Foods, Sahibabad is the leader with 22% contribution in the total milk utilisation followed by Karnal based Modern Dairies with production concentration 16%. One of the key features of the whey industry in India has been its fast evolution. There were mainly 4 whey processing companies in India till 2005,which increased to 8 in 2007,most of which have started operation in late 2006. The reason of this expansion has been the increase in demand of the whey based products and rise in global prices of these products. The evolution and expansion of the whey industry in India will be clear from following graph. Figure 7: Expansion of whey industry in India Thus the expansion has been by 120% in last two years. Looking the lucre in the industry more companies are thinking to enter into this business. Some the companies which are thinking to enter into the business are: a) Anik ,Etah b) Hatsun Agro,Chennai c) Doiba Foods, Palwal d) Nectar,Pathankoth e) VRS Foods,Sahibabad:It is going to start its new by-product unit in Nasik. These companies are expected to add 40 lakh ltrs of milk to the existing industry volume by 2009. As already been mentioned, these plants are using the casein whey . Only Dynamix Dairies Ltd. , Baramati is using some cheese whey for manufacturing whey powders. 4. 1. 6 Major buyers of whey products in India The whey Powders, Lactose, Whey protein concentrates, Dimineralised whey Powders etc are mainly exported. However in India these are used by many pharmaceutical, dairy, bakery, confectionery companies etc. Some of the major bulk buyers include Nestle, Glaxo-Smithclime Beecham Ltd, Wockhardt Ltd, Novartis, Cadilla. There are small buyers as well but these are mainly in bakery and confectionery industry. WPC has been used widely in Ice-cream industry. Similarly Lactose and DWP are being used in infant formula and neutraceuticals. Exact volume of industry wise utilisation in India is not available. However it has been said by the industry people that most (approx. 75-80%) of Whey powders and WPC are exported but lactose is consumed locally in more quantity. 4. 1. 7 Entry and Exit barriers in whey business industry India Currently the Indian whey industry is running and expanding because of the rise in the global prices of these products. As per the views of the industry experts some of the entry barriers in whey business include: a) The availability of raw milk: As most of the dairy plants are already into different dairy products manufacturing, so they are able to procure most of the milk of that region. The new entrant will have to divert milk from the existing players. It will mean more prices to be paid to the producers. This unavailability of milk becomes a major entry barrier. b) High investment: As the whey processing plants require relatively more sophisticated plant and technology, therefore a large amount of investment has to be made. For example, most of the existing whey processing plants have invested around 70-100 crores for 10 lakh ltrs plant. This is a key barrier. This high investment also becomes an exit barrier as these equipments cannot be used for other dairy products. And coupled with the above reason, there are les numbers of people buying out the machineries. This further discourages the existing players to exit. The live examples are Mahaan Proteins Ltd. and Ceepham Milk Specialities Ltd, Derabassi which are finding it difficult to procure milk in sufficient quantity and simultaneously unable to sale it off for better price. 4. 1. 8 Product differentiation: Currently the whey based powders are traded in commodity markets. So there is no differentiation in terms of brand and specificity. However, there some companies like VRS Foods, are making specific products like 28% Dimineralised Whey Protein Concentrate for Nestle. 4. 1. 9 Location advantage: Most of the plants are situated in northern part of India particularly Haryana, Punjab and Uttar Pradesh. Some companies like VRS Foods have locational advantage as they are present in the area where milk production is maximum and there is no control of any co-operative and Multinational companies in terms of milk procurement. So, they are open to procure more milk at comparatively lower rate than in those areas where there are co-operatives and MNCs having firm procurement base. The locational advantage however does not help more in case of saving transportation cost as most of the manufactured products are meant for export only. 4. 2. Conduct of the whey processing companies in India As already mentioned, the Whey processing plants are operating in commodity market. So there is no advantage in terms of brands. The advantage however lies with respect to availability of technology. Some of the compaies like VRS Foods have dimineralisation facilities unlike others. The summary of the conduct of the whey processing companies can be represented through table 6 provided below. Table 6: Conduct of whey processing companies in India Name |Name of |Major selling |Any alliance |Future | | |Brand |activity | |Targets/Remark | |VRS Foods Ltd |Paras |Export, Nestle |Nestle-Production |Handling capacity to | | | | |Contract |increase by 6 lakh/Day | | | | |(28%DWPC, | | | | | |600MT/Month-Lactose | | |Mahaan Proteins |Mahaan |Export, |   |UF line revamped | | | |Wockha rdt, GSK, | | | | |Novartis | | | |Modern Dairies Ltd |Nulife |Export |Olam International |Handling capacity to | | | | | |increase by 5 lakh | |Dynamix Dairies Ltd |- |Export ,Nestle, |Olam International |- | | | |Pharmaceutical companies | | | |Milk food Ltd |Milk Food |Export |- |- | |Bhole Baba Dairy |Krishna |Export, |- |- | | | |Pharmaceutical companies | | | Thus from the table we get that Dynamix Dairies Ltd and Modern Dairies Ltd sells their products to Olam International. For lactose, however Dynamix has local agent situated in Mumbai. Other companies export on their own brand. VRS Foods, Modern Dairies and Mahaan proteins are already thinking of increasing their handling capacities. This is likely to be operational by next year. 4. 2. 1 Where are the whey products exported? As already been mentioned, most of the whey products are exported to various countries. The export has also increased drastically during last two years. The major exporting destinations have been listed in the following table. Table 7: Exporting destinations of whey products from India |Country Name |2004 |% share |2005 |% share | |KOREA RP |391 |72. 11% |279 |10. 30% | |Canada |97 |17. 88% |0 |0 | |Bangladesh |40 |7. 6% |0 |0 | |BAHARAIN |11 |1. 99% |3 |0. 13% | |Oman |2 |0. 43% |82 |3. 05% | |Sri Lanka |1 |0. 23% |0 |0 | |Thailand |0 |0% |0 |0 | |CHINA P RP |0 |0% |2,091 |77. 30% | |Japan |0 |0% |174 |6. 4% | |Malaysia |0 |0 |75 |2. 78% | |Total(000, USD) |542 |   |2704 |   | |Annual Growth (%) in export|398. 9 |   |   |   | Source: www. apeda. com From the above table we find that the major exporting destinations for India are china, Korea, Japan, Malaysia and Oman. There has been change in the contribution in export from different countries. China has become the main ex porting destinations with more than 77% share in total export in 2005. This is primarily because of the rise in demand for whey based products due to emphasis of china government on sports and upcoming sports events. 4. 3. Performance of whey business in India The performance of whey business in India could be understood through performance under following parameters: 4. 3. 1 Efficiency of production: Efficiency of production mainly relies on the consistent and regular supply of raw material mainly milk . It has been observed that in lean season there is unavailability of milk and therefore the plant runs at lower capacity and thus efficiency reduces. As per the comments of industry experts, the output has been more than 100 % during flush season when there is regular and sufficient supply of milk. 4. 3. Profitability: The profitability of whey business is highly dependent ion the global prices foe WP, WPC, Lactose and the procurement price of raw milk. Over last two years it has been very profitable as the price of milk has remained same and the global ; prices of the products have sky rocketed. The profitability ranges from 10-30 % depending on price fluctuation as reported by industry persons. 4. 3. 3 Size of industry output: The size of Whey industry has been estimated to be around 45000 MT in India in 2007which is expected to grow very fast. With respect to global scenario, the Indian whey industry is expected to grow at more than 20% over next 4-5 years. 4. 3. Technical progress: Currently India is manufacturing generation one whey products. There are some cases (VRS Foods) where ion exchange etc has been added which lead to 2nd generation products. But in next 4-5 years the concentration is likely to remain on the production of 1st generation product only. 4. 3. 5 Growth: The whey industry is expanding very fast. As been mentioned earlier the daily processing of milk is likely to rise from 65 lakh ltrs/day to 105 lakh ltrs/day in India. Thus the growth is likely to be 60% over 2007 by 2009 in volumes. Similarly the export is likely to increase by more than 75% in next two years. 5. Value added products of whey proteins Whey constituents are used in various areas ranging from bakeries, confectionery to health products like infant formula and protein supplements. Apart from these, the use ranges from a normal whey drink to whey protein based drinks. Protein supplements have been classified into two broad categories based on its manufacturer. These are: Pharma protein supplements and Non-Pharma Protein supplements . Pharma protein supplements are manufactured by pharmaceutical companies while Non-Pharma Protein supplements are manufactured either by a nutrition or food company. 5. 1. Pharma protein supplements market in India 5. 1. 1 Some of the key features of protein supplements made by pharmaceutical companies are: 1. These products are consumed by the recommendation of doctors mainly and in some cases the past experience related to product use is the force to purchase these products. 2. This is an organized market and the players are well established in the market. 3. These products over the years have also become Over the Counter (OTC) products. It has been found that brands like proteinex symbolizes all range of protein supplements. Table 8:Indian Pharma Protein Supplement market. |Year:2006-07 |Volume (Ton) |Value | | | |( US $ mn) | |Proteinex sales |4274. 941 |95. 0197 | |Protein supplement market-sales(estimated-2007) |15267. 65 |270. 6537 | |Annual growth rate of protein supplement category (%)|17 |   | |Annual growth rate of proteinex (%) |25 |   | |Market share of proteinex (%) |   |28 | Source: Source:www. eac. dk/eac_en/ir/pr/2002, www. wockhardt. co. uk Some of the major brands of protein supplements available in India have been listed below in the table. Table 9: Major brands of Pharma protein supplements in India Brand |Manufacturer | |Proteinex |Wockhardt | |Protenose |Allembic | |B-protein |Britishbiologicals | |Spert |Novartis | |Alprovit |Alchem | |GRD |Cadilla | |Ultrich |Wallace | |Promolan |Piramal | |Resource |Novartis | 5. 1. Distribution channel of Pharma Protein supplements in India As already been mentioned, the Pharma protein supplements market in India is organized in nature. To understand the value chain of these products the proteinex channel has been used. The table shown below explains the distribution channel of proteinex. Table 10: Distribution channel of Pharma protein supplements in India. |Channel |Price at different levels(Rs/200 gm proteinex*) |% Margin | |Manufacturer |68. 5 |20 | |Superstockist |68. 5+27. 5=96 |3 | |Distributor |96+4. =100. 1 |7 | |Retailer |100. 11+9. 59=109. 7 |20 | |Consumer |109. 7+27. 4=137 |0 | Source: Informal talks with retailers and wholesale dealers in Ahmedabad. 6. Non Pharma Protein Supplement mar ket: Current Scenario Non pharma protein supplements market in India is at nascent stage . This is relatively less organized market when we compare it with the Pharma protein supplements. Basically there are two kinds of Non-Pharma Protein supplements based on their place of manufacturing: 1. Domestic: Indian 2. Imported 6. 1. Imported Protein supplements As the name suggests these are manufactured mainly in countries of European Unions, USA, and Australia. 6. 1. 1 These imported protein supplements have following key features in Indian context: 1. These are premium priced. 2. In many cases, these supplements don’t have traceability in terms of their manufacturers and importing-exporting agencies. In some cases however it was found to have these information. 3. These products have high protein concentrates, mainly whey proteins. 4. There are sole whey protein supplements available in the Indian market. Whey protein ranges from 35 % to 100%. 5. These supplements are having packing size ranging from 2. 2 lb to 10 lb. 6. The final price in the Indian market is dependent on the retailer as it was found to be reprinted on the jars/containers. 7. These products do not have consistent supply as expressed by some of the distributors. 8. These products are mainly sold by the gym owners and dedicated protein supplement stores. These products are largely unavailable in medical stores and Speciality stores. However in some cities like Mumbai, some Modern Format Stores like Big Bazaar is keeping this product. 6. 1. 2 Major imported brands in India Globally some of the famous brands of Non-Pharma Protein supplements have been mentioned below: AST Sports Science, Beverly Internationa, Biotest, Champion Nutrition, Cytodyne, Cytosport ,EAS Gaspari ,Instone Nutrition, Labrada Nutrition, Met Rx, MuscleTech, Optimum Nutrition, Pinnacle ProLab ,SAN Nutrition, Twin Lab, Universal Nutrition, VPX Supplements. However not all of these brands are available in India. Some of the famous brands which are available in India are: Optimum,Prolab,Hercules,Muscletech,EAS,Universal,Labrada, Amway etc. It was observed that Optimum brand has maximum reach in terms of placement. These brands have different variants based on whey protein content, special ingredients like Branched Chain Amino Acid (BCCA), other essential micronutrients etc. 6. 1. 3 Distribution channel of Non-Pharma Protein Supplements The distribution channel of N-PPS could be understood through following figure Figure 8: Distribution channel of imported N-PPS [pic] Thus we find that there are mainly 6 channels of distribution. Based on the responses of the gym owners, retailers, distributors, Modern Format Stores employees, the margin available for the intermediaries is between 40-50%. This further increases when the prices have been reprinted on the product. It has been expressed by these intermediaries that the distributors have a margin of 15-20% while retailers have margin of 25-30 %. These retailers and gyms have higher margin based on the number of intermediaries in the channel, the less the number of intermediaries, the more the margins available. Thus for modern format store as a placement point, the margins available for sharing is around 40-45% ,from which they can give discounts to consumers up to 5-10 % . This trend was seen in Mumbai unlike other metropolitan cities such as Delhi. Similarly, in some medical stores these products were kept and the discount was not available to the consumers. These retail points were garnering 30% of the margin. 6. 2. Indian Non Pharma Protein Supplement market  : current scenario The Indian non-pharma protein supplement market is unorganised in nature . There are many small players operating in different regions of the country. It has been observed that these players are not able to reach different regions of India. These protein supplements have not become a brand in India. 6. 2. 1 Some of the important features of Indian Non pharma protein supplements are: 1. It is manufactured by local and very small players. 2. Prices are kept higher to give it quality product look. 3. The exact composition i. e. protein source, its concentration etc is not mentioned. 4. The manufacturing date, location etc are not mentioned. Labelling is a problem in many cases. 5. These products are strongly thought to be having very harmful side effects. 6. These products have very high margins. It has been observed practically that the margin ranged from 40-60% for the retailer on these Non-pharma protein Supplements. 7. These products are mainly sold in packing size of 500gms, 1 kg, 2 kgs and 5 kgs. 8. These products find good penetration in medical stores and gyms. But these gyms and stores are of relatively lower category. 6. 2. 2 Some of the major Indian brands of non-pharma protein supplements are: 1. Nutramen 2. Endura 3. Stamin 4. Bodyplus 5. ESN 6. Some brands owned by gym owners like Talwalkers. These are the gym chains. They manufacture protein supplements for their own consumers. 6. 2. 3 Distribution Channel of Indian Non-pharma protein supplements The existing distribution channel for Indian non-pharma protein supplements have been explained using following diagram. Figure 9: Distribution channel of Indian N-PPS [pic] From above diagram it could be understood that there are three channels of distribution unlike imported NPPS. The margin available for the intermediaries is around 40%. These products however are sold mostly through gyms and medical stores. Supplements stores have very little share in the total off take, the exact quantity not available. From the diagram it is also very evident that the margins available for the distributor is 15 %. In some cases when he himself becomes the retailer i. e. the gym owner then he has margin of 40% from which he also gives discounts to the consumers. 7. Survey analysis 7. 1. Gym Goers Some of the key findings of the consumer survey based on nine cities have been listed below: 1. Profile of the gym goers: these mainly belong to class A1, A2, B1 category of SEC (Socio Economic Classification). Although the age ranges from 15 yrs to 60 yrs but mostly the gym goers are between 20-40 yrs of age range. They are students (mainly), professionals, executives, government employees, housewives etc. These people wear sporty, reputed and contemporary outfit. 2. Category of gym goers: 65-70% of members are male and 30-35 % is females. In small cities however the % of females is slightly less (20%). 3. Joining health clubs and gyms has become one of the key options for the people to keep themselves fit. 4. Awareness about the whey protein supplements is not adequate. People are not able to differentiate between sports, health and fitness drinks. 5. Most of the consumers, gym trainers and dieticians surveyed responded that whey protein is the best protein. 6. The gym goers perceive the fear of harmful effects of protein supplements. They think that these contain steroids. 7. Protein supplement users: approximately 30-40% of the gym goers are the regular members. On an average the % of gym goers is 10-12% of the total members. 8. The average member size of gym ranged from 250 in Karnal to 757 in Mumbai. The average of all these cities being 524 members per gym. 9. The average gym density varied from 38000 in Anand to 75000 in Delhi. Gym density is the population of the locality divided by the number of gyms in that locality. The average is around 53000. 10. Around 0. 98% of the population goes to the gyms. 0. 37 % of the total population are the regular members of the gyms. 11. Average Per capita monthly consumption of protein supplement by the protein supplement users is 830 gms and the per capita monthly expenditure is Rs 1370. 12. The purchase from the influence of gym trainers is 63%. More is in case of smaller cities than the bigger cities. 13. The aggregate demand of the N-PPS in Urban India is 2383 MT having value 427 crores. 14. Consumers view superior and high protein content, absence of any side effects, presence of other essential nutrients and mass building capacity of the product as the key attributes of the product. Price, brand, taste, and packaging did not find significant importance. Powder was understood product format for them. 15. Most of the consumers completely agree with Amul brand signifying quality, value for money and easy availability. 16. Most of the consumers somewhat agreed with the fact that big companies can enter into the N-PPS business . But they agreed that Amul can become a leader. 17. Developing value for money product, creating awareness and identifying the right distribution channel will be the key for Amul to become market leader. 7. 2. Key findings from Retailers and distributors interview/interaction These are based on the qualitative interaction with the current intermediaries in the distribution channel of the N-PPS. 1. Most of the retailers indicated higher margin in absolute term being the motivation for placing these products in their stores. 2. It has been observed that the off take of the product is more from gyms and recommended stores. The recommendation actually playing significant role in product off-take. 3. Retailers were agreeing on the fact that side effect is the main concern for consumer. 4. A trusted brand is needed for these products to be consumed by more aspiring people. 5. Amul could be successful provided it offers the similar kind of incentives in absolute terms to the placement points like retailers-gyms, Stores etc. 6. How Amul Creates and spreads awareness will decide the penetration of the product. 7. Purchase from retail outlets like big bazaar is possible when consumers are aware of these products. 7. 3. View points of dieticians and the food scientists Based on the views of the scientists of reputed institutes like National Dairy Research Institute, Karnal, the key factors which will decide the acceptance of these products will be development of products based on Indian likes (e. g. taste, flavour etc. and communication of these products to the consumers. The scientists expressed that the consumers must be educated about the whey protein being the best protein, and the convenience protein as it easily mixes into the blood. The dieticians at various gyms were acknowledging the fact that whey proteins are the best proteins. They also said that t he consumers are very anxious about the results. They expect quick results. Whey proteins because of very high Biological value produce fast result. Whey proteins can also be used for fitness and efficiency building. It can be used by fat and obese people. It not only compensates for their energy requirement but also provides lean muscle. Dieticians expressed that Body to Mass Ratio (BMR) is a very good indicator for protein requirement. 8. Estimation of Demand of Non-pharma protein supplements in India As already mentioned the Non-pharma protein supplement market in India is highly unorganised and very less secondary information is available in related to number of gyms, gym density, per capita NPPS consumption, market growth rate etc. Therefore primary research was done using consumer survey questionnaire, and checklist for retailers particularly gyms. Nine cities were taken into consideration. 8. 1. Following assumptions have been taken into consideration while estimating demand of NPPS in India: 1. The N-PPS are consumed mainly by the gym goers. 2. The list of the number of gyms available from internet and the number of gyms reported by the gym owners in each city were considered together. The former was given 30% weight and the later was given 70 % . The basic idea was to make an approximation based on the response of the gym owners, consumers and the available list. 3. The annual multiplication factor has been calculated based on the consumption pattern of protein supplements users. Generally a consumer uses the products for 7 months in a year. Around 20% of consumers leave the product in a month, while 80% continue for above mentioned period. Also 80% of the protein supplement users actually continue for 7 months. Thus multiplication factor = 0. 8*0. 8*7+0. 2*1=4. 68. 4. Average per capita monthly consumption of protein supplements (among users only) and their monthly expenses on it are the parameters used for demand estimation in terms of quantity and value. 5. The response of the retailers and gym owners regarding growth of the market has been considered for finding the average annual growth rate and using it for projecting demand for next 5 years. 6. The amount of N-PPS consumed is a mixture of 40 % and 70% whey protein powders. So, the final demand estimated will represent 55% whey protein containing N-PPS. Table 11: City wise demand estimation of N-PPS |Cities |Population |Number of gyms: | Listed gyms: |Estimated gyms |Gym density | |   |2007(approx. |response based |internet based |ratio:(70/30) |   | |Mumbai |19264521 |500 |214 |414. 2 |46510 | |Pune |4408248 |120 |71 |105. 3 |41864 | |Delhi |15095075 |250 |81 |199. 3 |75740 | |Gurgaon |1000000 |30 |   |21 |47619 | |Panchkula |200000 |12 |   |8. |23810 | |Chandigarh |900000 |40 |   |28 |32143 | |Karnal |200000 |10 |   |7 |28571 | |Ahmedabad |5304257 |100 |26 |77. 8 |68178 | |Anand |400000 |15 |   |10. 5 |38095 | |Total |46772101 |1077 |   |871. 5 |53669 | †¦ continued (table horizontally associated with next one) |Average gym |% of people |Avg monthly |Avg monthly |Supplement |Monthly | |goers/gym |going gym |consumption(gm) |budget(Rs) |user/gym | consumption(MT) | |757 |1. 63 |825 |1750 |74 |25. 14 | |580 |1. 39 |733 |1400 |65 |4. 99 | |471 |0. 2 |925 |1540 |59 |10. 90 | |467 |0. 98 |733 |1233 |65 |1. 00 | |367 |1. 54 |600 |850 |48 |0. 24 | |450 |1. 40 |1250 |1500 |39 |1. 37 | |250 |0. 88 |750 |1550 |40 |0. 21 | |450 |0. 6 |950 |1300 |33 |2. 40 | |500 |1. 31 |700 |1200 |40 |0. 29 | |524 |0. 98 |830 |1369 |   |46. 55 | Table 12: Demand estimation of N-PSS of top 35 cities of India |Population |Number |Total Population- |% representation |Representative |Annual |Annual | |20L-40L |5 |14329950 |13. 6 |Gurgaon, |83. 5 |117238752 | | | | | |Chandigar h | | | |40L-80L |5 |30816617 |31. 52 |Ahmedabad, |109. 7 |190222388 | | | | | |Pune | | | |>80L |3 |49839421 |68. 94 |Delhi, |244. |485241953 | | | | | |Mumbai | | | |Total |35 |126885770 | |Red bull |Energy |47 | |Monster |Energy |12 | |Rock star |Energy |11 | |Gatorade |Sports |85 | |Powerade |Sports |13 | |Lucozade |Sports |1 | In India however very few global brands like Red bull, Power House and Gatorade are available. 10. Demand Estimation of Sports and Fitness drinks in India 10. 1. Following features of sports and fitness drinks consumer could be used to estimate the demand of these drinks: 1. These are consumed by relatively rich class and upper middle class people. 2. Sports drinks are popular among 15-30 yrs while Fitness drinks popular among 30-60 yrs people. 3. These are sporty in nature and try to adopt the sporty culture very fast, so they like to wear brands related to sports. 10. 2. U. K sports drink market The U. K sports drinks market was estimated to be of 110 mn ltrs in 2006 by Zenith international, a market research agency. Per capita annual consumption has increased from 0. ltrs in 2000 to 1. 8 ltrs in 2006. Following graph shows the Per Capita Consumption of Sports Drinks in U. K. Figure 12: Per capita consumption of sports drinks in U. K [pic] The growth in per capita consumption can be understood from following diagram. Figure 13: Growth of U. K sports drink market [pic] From the a bove diagram it is quite evident that the growth rate was very high initially around 2000-02 but it declined in subsequent years and almost remaining constant at 13-14%. This pattern could be used to further project the demand. 10. 3 Some of the assumptions being made for demand calculations are: 1. The pattern of consumption of U. K has been used as an indicator. 2. Adoption of sporty culture has been considered as a comparing parameter. 3. Per Capita annual Income of U. K people has been used to identify the potential consumer. 4. The relationship between Per Capita annual Income and Per capita annual consumption has been used to find out demand for similar kind of Indian consumers. 5. Urban population has been considered only. 10. 4 Steps followed 1. The relationship between PCI and PCC for U. K consumer is estimated using simple regression analysis. The relationship was significant and the model was robust. The relationship obtained is: PCC (Ltrs) =-2. 51175+0. 00123PCI (PPP) 2. The segment of population having comparable income to PCI of U. K is found out from secondary data available at www. ncaer. org. The PCI data is converted from nominal to PCI -PPP (Purchasing Power Parity) in dollar terms using 1$ =Rs 42 as conversion factor. 3. Conversion factor for PCI (nominal) to PCI(PPP)=Current PCI (PPP) of In dia/Current PCI(nominal) of India=$4031/$885 =4. 55 4. The Urban population belonging to age group 15-30 yrs and 30-60 yrs has been taken from www. censusindia. net . For both the population 0. 6 multiplication factor has been used assuming all males and only 20% of the females as the customers. 5. The adoption of sporty culture has been calculated from the responses of the consumers while conducting consumer survey. The brands like Nike, Adidas, and Reebok have been used for this purpose. 50% of the consumers were of this category. So to the total consumers estimated in step 4, 0. 5 has been multiplied to obtain the potential customers. 6. By using the relationship in step 1 and Income from step 2, PCC of sports drinks can be calculated. This has been multiplied by the number of potential customers obtained in step 5. This will give the total demand of the sports and fitness drinks. Following table shows the demand of Sports and Fitness drinks in Urban India. Table 14: Calculated Demand of SFD in India [pic] 1. Amul Capabilities To understand whether Amul could be able to tap this lucrative market, following capabilities have been analysed: 1. Availability of raw materials-whey 2. Technical capabilities. 3. Marketing capabilities. 11. 1. Availability of raw materials-whey Currently the sources of whey for Amul are: Paneer, Shrikhand and Cheese. Following table shows the current availability of the whey for Amul. Table 15: Sources of whey in Amul [pic] As mentioned in the above table, the annual growth rate for cheese, paneer and shrikhand demand could be used to project the availability of whey in next five years. Based on following information the gap between the availability of whey and its demand could be estimated: 1. One Kg of whey protein could be obtained from 143 kgs of liquid whey as liquid whey has 0. 7% whey protein. 2. The sports and fitness drinks will have 5% whey protein. 3. The average whey protein concentration of the N-PPS demand calculated is 55%. Figure 14: The future projections of Whey production in Amul [pic] Following table shows the aggregated gap between the availability and total demand of whey protein based sports and fitness drinks and N-PPS. Table 16: Estimation of gap between the production of whey and demand of whey based substances (N-PPS/SFD).    |Lakh ltrs |Lakh ltrs |Whey proteins |Demand- |Whey protein |Equivalent | | | | | |NPPS | | | |Year |per day |Available |available(MT) |55% (MT) |Content |Whey(Lakh ltrs) | | | | | | |(MT) | | |2007 |2. 19 |658 |461 |2374 |1306 |1865. 3 | |2008 |2. 91 |872 |610 |2843 |1564 |2233. 8 | |2009 |3. 88 |1164 |814 |3419 |1 880 |2686. 4 | |2010 |5. 21 |1562 |1094 |4130 |2272 |3245. | |2011 |7. 03 |2109 |1477 |5011 |2756 |3937. 2 | †¦ (Continued horizontally) |SD/FD |Total Whey Required |Difference |% Whey availability | |(lakh Ltrs) |(Lakh ltrs) |(Demand-Supply)-MT | | |67 |1932 |1274 |34 | |163 |2397 1525 |36 | |285 |2972 |1808 |39 | |438 |3683 |2121 |42 | |628 |4565 |2456 |46 | Thus the whey available is able to meet around 35% of the total demand of N-PPS and SFD. 11. 2. Amul Technical Capabilities: Size of the Whey processing plant Amul currently does not possess any whey processing plant. As there is availability of whey already, to operate efficiently i. e. leverage upon economies of scale it will have to divert some milk for whey production. It has been observed that the whey processing plant in India is having handling capacity between 5-10 lakh ltrs per day . The capital investment on these plants have been from 60-100 crores. Assuming the plant of capacity 10 lakh ltrs/day, the amount of whey generated will be 67% i. e. 6. 7 lakh ltrs. So the initial difference would be 4. 5 lakh ltrs of whey i. e. 6. 7 lakh ltrs of Skim milk (S. M). Assuming Amul to capture share of 50% of current demand, the capacity required after 5 years hence will be around 8 lakh ltrs of whey i. e. 12 lakh ltrs of S. M. So ideally the plant handling capacity could be 12 lakh ltrs per day. Table 17: Realisation from By-product plant at current market price.    |Qty(Kg) |Price(Rs) |Total(Rs) | |Skim Milk (S. M) |100 |13 |1300 | |Casein |2. 7 |350 |945 | |Whey protein-35 |2. 00 |250 |500 | |Lactose |3. 40 |100 |340 | |Realisation on S. M | | |485 | |% Realisation on S. M | | |37 | |All other [email  protected]% | | |325 | |Net realisation | | |160 | |% Net realisation | | |12. 31 | For 10 lakh ltrs milk per day or assuming 300 working days, the net realisation will be Rs 48 crores. The investment made on the plant is around Rs 120 crores for 10 lakh ltrs plant. Return on capital employed would be=48*100/120=40%. Currently Amul has two facilities for product development: 1. Vidya Dairy ,Anand 2. Khatrej Cheese Plant 11. 3. Marketing capabilities of Amul For product like Protein Supplements and sports and fitness drinks it is very important to assess the marketing capabilities before launching the product as these products require non-conventional distribution channel and promotion activities. 11. 3. 1 Analysis of Amul as a brand It is very important to understand the popularity of Amul Brand among the potential customers. This will indicate the acceptance of Amul products. The analysis included consumer survey. The consumers were asked the question what Amul is known for. The responses were scaled from 1 to 7, 1 being ompletely disagree, and 4 being neither agree nor disagree and 7 being completely agree. The responses have been summarised below. Table 18: Amul as a brand |Features of Amul brand |Mean |Median |Mode |Remarks | |Quality |6. 15 |6 |6 |Strongly Agree | |Fair Price |6. 08 |6 |6 |Strongly Agree | |Value for money |5. 93 |6 |6 |Strongly Agree | |Amul market leader |5. 5 |6 |6 |Strongly agree | |Availability of product |5. 59 |6 |5 |Strongly Agree | |Big company entry |4. 2 |4 |4 |Don’t agree | |Amul fit into sports nutrition |5. 3 |5 |5 |Somewhat agree | |Amul capability |5. 28 |5 |5 |Somewhat agree | |Existing Distribution/Branding |4. 53 |5 |6 |Somewhat agree | From above table it is evident that most of the consumers strongly agreed that Amul is known for its quality, value for money, fair price, and availability of products. Amul can become market leader is well accepted by the consumers. However the challenge lies in fitting the Amul brand into sports nutrition and identifying suitable distribution channels for such products. The consumers also hinted that by creating awareness this problem could be sorted out 2. Market entry strategy for Amul It has already been identified that the whey business is highly lucrative both as a commodity and in mass market. However sustenance of profitability with less risk lies in mass market. Amul should take the advantage of being the first mover into this category in India . It can leverage upon its brand. The market entry will include following marketing decisions: †¢ Market segment †¢ Target customers †¢ Positioning †¢ Product, Price, Place and Promotion related decisions. 12. 1 Market segmentation: The market for these products i. e. Non-Pharma Protein Supplements (N-PPS) and Sports and Fitness drinks (SFD) could be segmented on the basis of age, location, lifestyle, income, household category etc. The segmentation for N-PPS has been shown in the following table. Table 19:Market segmentation for N-PPS [pic] Similarly the segmentation for SFD consumers could be done as follows. Table 20: Market segmentation for SFD. Age group |15-30 yrs for sports drinks,30-60 yrs for Fitness drinks | |Sex |Male/female, mainly male | |Place |Urban | |Profession |Upper middle class, Rich class | |Occupation of the head of the family |Middle to senior executives, Professionals | |Household category |A1,A2 | |Clothes and sports |Reputed, branded, s porty | |Culture |Westernization | 12. 2. Target segment This is very important as it gives idea about those customers which have maximum potential to purchase these products. To accurately identify the target customers for N-PPS, Discriminant analysis (see below) was done . The results show that those customers who have very high Value for Money (VFM) are most likely to buy these products. So the target customers for N-PPS will be 20-25 years old, gym- goer males. [pic][pic] Eigen value, Wild’s Lambda and significance were 0. 71, 0. 58 and 0. 00 respectively which shows that the model is robust. Here 1 and 2 signify those customers who will buy and will not buy Amul products respectively. Initially the target customers for SFD will be high income category gym going p

Buying Behavior & Market Analysis Essay Example | Topics and Well Written Essays - 1250 words

Buying Behavior & Market Analysis - Essay Example In this case, the company uses the ideal task of the internet of moving information to its benefit. This business model around eBay has gained a lot of success in the local American market. Moreover, the model has been taken to numerous foreign markets gaining a lot of success. Case in point, the model has been successful in the European markets in countries such as Germany, France, and England. However, replicating this success has proved to be a huge challenge for eBay in its Asian markets. In effect, there has been a failure of the model by eBay in Korea and China while its operations in other Asian markets experience slow growth. Therefore, this expose elucidates the factors contributing to eBay’s failure in establishing itself while using the global marketing concepts. The Korean subsidiary of eBay, Internet Auction, dominated the auction market over the internet in South Korea in 2004. In this case, the eBay subsidiary revenues accounted for a third of eBay’s reve nues in the Asian market. However, a Korean upstart called Gmarket overtook Internet Auction in terms of the market share and consequently revenues earnings significantly dropped. It is noteworthy that eBay’s principal rival, Yahoo!, held a 10% stake in the startup. Effectively, by the end of 2006, Metrix pointed out that the 17.2 million unique visitors in Gmarket surpassed the 17.1 million visitors for eBay (Ihlwan, 2006). On the other hand, Eachnet’s--the subsidiary unit of eBay in China--chief executive unexpectedly resigned. According to market analysts and researchers, the reason for the resignation was eBay’s loss of its top position in the Chinese internet auction market. In this case, Alibaba.com’s Tao Bao ranked first while eBay’s Eachnet followed. It is important to note that, the chief rival, Yahoo!, held 40% of Tao Bao’s venture. According to an agency, partly owned by the government, called China Internet Network Information Ce ntre quasi, Tao Bao led the online auction market in China with a 67% share while eBay’s Eachnet held 29% of the market share (Mangalindan, 2006). One factor that eBay never considered was that, the global approach in which online auction firms offered products across nations was practical in instances that competition was limited. In this case then, since eBay controlled the Asian market prior to entry of its competitors, it never did enough timing to know when to change its auctioning strategy. In addition, being the dominant player made eBay become more complacent. The complacency, critics claimed, was evidenced by eBay’s move in transferring its Chinese operations’ decision-making responsibilities to its headquarters in the United States after acquiring Eachnet. In fact, critics say that this strategy caused a collapse in communication with some instances where it took weeks to correct typos on their website (Lou & Feng, 2010). Meanwhile, eBay’s compe titors paid attention to grievances by eBay’s clients and vendors. Failure to time its entry into the Asian market, more so in Japan influenced heavily its Asian success. The company’s move to join the market five months after its rival Yahoo! failed in its quest to establish itself as the leader in the Asian online auction market. In this case, there is the significant beneficial factor in establishing a foothold by a first-mover in the online auctio

Types of Communication Method for Organization Essay

Types of Communication Method for Organization - Essay Example With these necessary factors established, potential future steps for this project include determining the best way to decipher this information. In regard to determining which communication method works best, it seems that it would be most effective to survey a sample of customer service based organizations to see which method they use to get their information out. In addition to these aspects, the final draft needs to include information on what distinguishes these methods as better than others. With these necessary factors established, potential future steps for this project include determining the best way to decipher this information. In regard to determining which communication method works best, it seems that it would be most effective to survey a sample of customer service based organizations to see which method they use to get their information out. In addition to these survey choices, there is also the option to send out survey questionnaires to customers to see what communication methods they feel work best in building their relationship with the companies. The potential issues with this notion are the ideas that customers could give a generic response or not respond at all. Other curveballs that may interfere with this type of information garnering include gauging how businesses use these communication methods for their various purposes. For example, if organizations use Lotus Live for a meeting, that would have different In moving forward, I feel these steps would be the best because there needs to be a correlation between the gathered evidence to produce an effective and sound argument for the final paper.  

Consultancy Project Essay Example | Topics and Well Written Essays - 500 words

Consultancy Project - Essay Example This will also help the company to identify its customers and gain knowledge about their needs and interests which in turn makes positioning quite easy. We strongly recommend that the marketers should play an active role in identifying the targeted customers. It is also recommended that the company should open its own restaurants in convenient locations after conducting market research. Frequenting local festivals is not the best way of establishing a new business enterprise in an area. If the company opens its own restaurants, it becomes visible even to passersby who may be tempted to try the products offered by the company. It becomes easy for the company to market its products by virtue of being visible to many people. Company owned restaurants also have an advantage in that the customers can relax and enjoy their meals and they can interact with the staff members. This helps the employees to get feedback from the customers which can be used to improve the operations of the firm. We also recommend that the company should adopt an integrated marketing communication strategy rather than relying on social media and limited advertising. Integrating the firm’s various communication channels will help it to deliver clear and consistent messages about their products. Other strategies that should be used by the firm in this case include personal selling, sale promotion and direct marketing. It is our strong belief that personal selling will help the marketers to interact directly with the customers which can help them to provide the necessary information about their brands. This goes hand in hand with direct marketing which creates direct contact between the marketers and the consumers. We also believe that sales promotion will significantly help to appeal to the interests of the new customers since this is also a new business entity in the area. Last but not least, we recommend that the company should strive to employ local people who have

ASSIGNMENT 1 CRIMINOLOGY REPORT Essay Example | Topics and Well Written Essays - 1500 words

ASSIGNMENT 1 CRIMINOLOGY REPORT - Essay Example Their seminal work "Relative Deprivation" (1984) had gained considerable attention in the debate between left and right realism approach to crime alleviation. In their work Lea and Young (1984) address the concept of relative deprivation, and explain that it is not a new phenomenon but an old left realist concept. They explain that crime is the by product of material deprivation and poverty. However, they are of the view that relative deprivation occurs where individuals and groups feel they are deprived of social amenities when compared to fellow group members of similar settings and outlook. Relative deprivation is the term they use to categorize criminal behaviour of individuals in groups who may be considered relatively economically sound but due to other causes and factors, motivate them to engage in criminal or deviant behaviour. This explains the behaviour of religious uprising, social movements, disputes, and similar radical movements. Relative deprivation is unlike absolute deprivation which is a biological deprivation phenomenon. Moreover, they explain that relative deprivation helps explain the criminal behaviour of individuals within an otherwise economically sound environment. Riots, uprising and social movements etc. are the collective responses of relative deprivation. This is different than individual crime and, collective criminal activities. Relative deprivation helps one to understand social, religious and political disorders; but more importantly it helps sociologists and policy makers to understand and respond to crime and deviance from a multi-causal perspective. Lea and Young are of the view that there is no single factor which accounts for criminal behaviour. Instead, criminal behaviour comprises of subculture behaviour, relative deprivation and marginalization. When these are linked with other factors such as economic, social or religious etc., then the significance of the crime is explanatory under relative deprivation theory. The

Jainism, Sikhism Essay Example | Topics and Well Written Essays - 500 words

Jainism, Sikhism - Essay Example Sikhism is considered to be a new religion in India when compared to that of other religions such as Jainism or Hinduism. The religion has been founded by Guru Nanak. Some of the unique characteristics of the religion are that they do not belief in pilgrimage, superstitions, fasting as well as other such kinds of rites. It tries to provide services to the community and thus tries to extend its help to the ones who need them. The Sikhs are supposed to dress as per the Guru Gobind Singh’s order. According to the religious doctrines, the Sikhs should also wear turbans. Regular pray and meditation is done by means of repeating the name of the God. The Khalsas’ in the Sikh religion are expected to monitor five K’s such as Kaccha, Kara, Kirpan, Khanga and Kes. This religion does not follow any symbolism or ritualism. There are not any altars or idols in the Gurudwara. The fact that every Gurudwara keeps the holy Sikh Scripture, which is also known as Guru Granth Sahib or Satguru, is a unique characteristic (Pecorino, â€Å"Philosophy of Religion†). It can be mentioned that both the religions namely the Sikhism and the Jainism are of the belief that they are inhabitants to the Indian subcontinent. It was found that like Sikhism, Jainism also refused the power of the Vedas and thus developed independent textual norms and traditions that were based upon the words as well as the illustration of their early teachers. It finally evolved complete new ways of communicating their thoughts with the common people (Apex Learning, â€Å"3e Jainism and Sikhism†). The main similarities of both the religions are that both of them commemorate Diwali, a festival of lights. Jains are strictly vegetarians but the Sikhs are non-vegetarians. However, it can be observed that in Gurdwaras, the food that is served is completely vegetarian so that it is capable of obliging all the segments of the

Medium Fidelity Prototype Assignment Example | Topics and Well Written Essays - 2000 words

Medium Fidelity Prototype - Assignment Example The primary goal of this interactive user interface design is to create a user friendly system that is easy to use by any registered voter. Just like using cash machines (ATM), the voters will simply be required to have an electronic voting card before thy can log into the system and vote. Generally the central principals of adopting the new e voting prototype will be to present all the potential voters with a equal right to participate in a secure, free and fair elections. The first step of the electronic voting process will involve proof of the identity of the voters by the election officials in present in each electronic voting terminal. Consequently the voter will be required to present identity documents to the relevant election officials at the designated polling station. After verification, the election officials will then provide the voter with an electronic voting card. The pictures of the candidates and their assigned voting numbers will appear on the screen as shown in the diagram below. The dynamic user interface will be integrated with a number of interactive features such as drop down menus to allow voters scroll down the list of candidates and select their preferred one. After successfully entering the number of your preferred candidate and pressing OK, the information of the selected candidate will appear on the screen and the voter will be able to confirm whether they have voted for the correct candidate. A message indicating that the voting process is complete! Will appear on the screen and the voter will be prompted to remove the voting card and take it back to the election officials. In the case where you have entered an incorrect number, press clear and enter again. However if you enter a voting number that does not belong to any of the candidates on the list, an error message will appear on the screen and to continue, the voter

Compare Martin Luther and Jesus Essay Example | Topics and Well Written Essays - 1000 words

Compare Martin Luther and Jesus - Essay Example However, Luther and Jesus differ considerably in the context, goals, and methods of their respective positions, which results in diverse rhetoric between the â€Å"Gospel† and the â€Å"Appeal.† On the basis of these differences, one may make claims about the roles that the two men play in their respective societies. From the beginning of Luther’s appeal to the German upper-class, one is unavoidably struck by his extreme modesty—a necessary courtesy in his period. Classifying himself as a â€Å"poor† and â€Å"insignificant† individual, Luther attributes his desire to reform the Church to the will of God and not to his own personal â€Å"arrogance† or â€Å"perversity.† In spite of this modesty, Luther continues to claim significant weaknesses in the â€Å"three walls† of the Romanists, which stand for the three arguments that the Catholic Church presents in favor of their system of maintaining Church doctrine. Knowing th at Luther is appealing to Germany’s most powerful people, and that he is being necessarily modest in doing so, it seems apparent that Luther is attempting to reform the religious institution (and its political extensions) from the inside. Undoubtedly, he sees a revolutionary approach to change as both unnecessary and as personally threatening; instead of taking Christianity and religion as such in a new direction, Luther still believes in the tenets of the Christian religion—but so strongly as to demand fundamental changes. The Gospel of Mark reveals no such modesty about Jesus, who knows he is the Son of the Lord. In Mark 8:27-33, Peter receives the revelation that Jesus is truly the Christ. Jesus tests his disciples for their belief in him as the true Christ. And, as the Son of God, Jesus is devoted to achieving fundamental changes to the ways of life of his people, both in a religious and political sense. Jesus proves to people, through his miracles in Mark 7:31-37, 8:1-10, and elsewhere of his ethos for speaking about deeply fundamental religious concepts. In the Gospel of Mark, Jesus works on establishing this ethos, or credibility, while Luther seeks in his â€Å"Appeal† to both strengthen and undermine his own ethos at the same time: strengthening by admitting his own smallness in comparison to his audience, and undermining by emphasizing this smallness in the first place. Luther does not try to claim any special sort of revelation, such as the revelation that Jesus claims to have with respect to his knowledge of the world. Jesus, in contrast to Luther, is attempting to carve out an entirely new area of human life to preach to and from that to achieve a sinless world. Nevertheless, one should not forget that, like Jesus, Luther is attacking the establishment in a very harsh way. The Pope, Luther claims, is solely allowed the power of interpreting the Scriptures, which is a mistake of the â€Å"spiritual estate.† Since all Chr istians are truly of the spiritual estate, Luther believes, every one of them has the right to interpret Scriptures, and there are no differences among any of them. Accordingly, what Luther lacks in ethos, he makes up for in logical argument that appeals specifically to the educated and free-thinking social elites of his society. It is also noteworthy to see that Luther is appealing to the group of people who are on a more level playing field with the Pope that he himself is.

Inhibitor Improves Learning Essay Example for Free

Inhibitor Improves Learning Essay The article is entitled, Peripheral Delivery of a ROCK Inhibitor Improves Learning and Working Memory. Title of the journal the article was published in and date published: This article was published in the journal entitled Behavioral Neuroscience in February 2009. The journal is published by the American Psychological Association. Describe the topic and the experiment conducted. What did they do? The article noted that in related studies, the RhoA/ROCK/Rac pathway is involved in the cognitive processes. Thus, they postulated that if this pathway could be inhibited, learning and memory can be enhanced. The article explained that fasudil has been used in experiments for the treatment of vasospasm and angina but not for learning and memory. Hydroxyfasudil is an active metabolite of fasudil. The study subjects were 27 rats who were 17 months old and 18 months old at the time of actual behavioral testing. Specifically, the study used Fischer-344 male rats who were bred at the aging colony of the National Institute on Aging at Harlan Laboratories (Indianapolis, IN). All the rats were acclimatized before the actual experiment according to IACUC standards and all the procedure done were with the approval of the local IACUC committee. NIH standards were followed. The study was done in Arizona State University. The study grouped the rats into three experimental groups. The first group of rats received saline and was labeled as the â€Å"aged vehicle† group. The second group received 0. 1875 mg hydroxyfasudil and was labeled as the â€Å"aged low dose† group. The third group received 0. 3750 mg hydroxyfasudil and was labeled as the â€Å"aged high dose† group. Of the 27 rats, nine belonged to the â€Å"aged vehicle† group, another nine rats in the â€Å"aged low dose† group, and another nine rats in the â€Å"aged high dose† group. Since hydroxyfasudil has a half-life of around 5-7 hours in humans, the drugs were all administered in the morning before behavior testing was done. All injections were given by subcutaneous injection at the scruff of the neck of the rat. All experimenters who performed the behavioral testing and succeeding dissections of the rats’ brains were blind to the respective treatment groups of the rats. The behavioral testing used the Water Radial Arm Maze to test working and reference memory, and the Spatial Reference Memory Morris Maze to test for spatial learning and memory. The performance of the rats in these two mazes were compared and used as basis as to whether cognitive functions were enhanced or not with the administration of hydroxyfasudil. Summarize the most important results. What did they find and what does that mean? 4 pts The results of the behavioral testing done using the water radial-arm maze, the â€Å"aged high dose† group was superior in all measures evaluated: learning index scores for total errors, working memory correct errors, and working memory incorrect errors. Better learning was indicated by having a higher learning index. Aged high dose† group showed better learning on all three measures. The group’s learning index when compared to the â€Å"aged vehicle† group was significantly higher. As for the â€Å"aged low dose† group, it still had a higher learning index when compared to the â€Å"aged vehicle group† but only marginally for the working memory incorrect errors. For the other two m easures, the group still had a higher learning index but no longer marginally, but intermediate between the â€Å"aged high dose† and â€Å"aged vehicle† groups suggesting that the relationship may be dose-dependent. Another important result noted was that hydroxyfasudil did not significantly alter spatial reference memory performance in either maze. 5) What implications do these results have for future research? What should they look at next? The implications of study would mean that if hydroxyfasudil can inhibit events that influence cognition, the next step would be to confirm this in result in a larger number of mice or even in rabbits. They should also look into the side effects of hydroxyfasudil and a good start would be to look for the same side effects found in its parent compound which is also being currently studied. ) Does this study reveal anything that could be useful to society (the general population, not science), and if so, what is it? This study showed that if hydroxyfasudil does improve cognitive function by improving spatial learning and memory, then science has found another possible answer to age-related or neurodegenerative-related memory dysfunction. To put it simply, hydroxyfasudil, if safe and effective in improving spatial learning and memory, will help patients who suffer from age-related or neurodegenerative-related memory dysfunction. ) What are some possible confounds or errors that this study should have controlled for, but did not? Essentially, what would make this a better study? In my opinion, this study was a good one with very negligible confounders. One thing that might have made the study better though was the possible side effects of hydroxyfasudil on the short term and also long term. 8) What did you learn that you did not know before? What did you find most interesting? I found that fact that such a drug as hydroxyfasudil being a possible treatment for those suffering from age-related memory dysfunction, fascinating. I did not know this until I read this article. If it is indeed a possible cure, many people all over the world would live a better life in their advanced age since their memory will serve them better and they will depend less on their children and thus, have a less likely chance of being placed in homes just because families have difficulty caring for them.

History Of The Fiat Strategic On The Market Marketing Essay

History Of The Fiat Strategic On The Market Marketing Essay The intention of this marketing strategy proposal is to examine FIATs current and historical marketing strategies and apply academic models and principles to make recommendations for their future marketing strategy. We will examine what the Agnelli family and its shareholders want to achieve for the company, which direction they are prepared to take the company to achieve their goals, and what techniques they use to evaluate their success. It is important to refer to FIATs long history, to understand some of FIATs marketing strategy options available today, and appreciates that even in this modern constantly changing environment, FIAT understands that it cannot completely lose sight of its underlying principles. History The FIAT brand was started by Gianni Agnelli in 1899 under the name Società   Anonima Fabbrica Italiana Automobili Torino (Turin). In the 1920s, utilising the same methods as those employed by Ford, FIAT began mass producing its first four seat automobile, the 509. Post World War II, Italys economy was booming and much of this can be attributed to the automobile industry. FIATs cars and farm machinery production grew rapidly due to the new production facilities that FIAT set up worldwide. In 1967 FIAT released the 124 model, a model that went on to win FIAT its first title of Car of the year  [1]  . FIATs success continued into the mid 1970s when the world experienced the oil crises which began when the Middle East declared an embargo on the U.S. During the 80s and 90s when it was experiencing heavy competition, FIAT promoted itself-lf as an innovative brand proposing avant-garde technological solutions at affordable prices.  [2]  and turned its focus to producing vehicles i n developing markets. Post Millennia Fiat was falling behind with the times and invested into changing its core structure, examining its corporate culture and building a relationship with the customer through quality and design innovations and to symbolise this new start, FIAT changed its traditional round badge to a square more formal badge. Chapter II 2.1. The FIAT BRAND FIAT has changed and developed as a car manufacturer through more than a century of existence. The company has had seven logos, symbolising the different development stages, time, age and current position. FIAT has been selected nine times directly and three times through its subsidiaries as the overall winner of the European Car of the Year award. No other company has received this premier automotive award more times than FIAT. The FIAT brand today has the power to evoke all the stages that have made the history of FIAT and its cars: being close to people, their needs and desires, with concrete answers that are flexible and customised.  [3]   2.2. Why did FIAT need the new start? Once the primero name in the Italian automobile market, due to increasing competition from international manufacturers such as the Japanese, Fiat had been unable to hold on to the number one spot. Historically imported cars were prohibitively expensive as high taxes were levied at customs so most people bought domestic cars, which contributed to the success that Fiat enjoyed for decades. Today these tariffs have been removed and Fiat is losing out to the Asian car producers who have the technological advantage with processing and production.  [4]   FIAT has been struggling and losing business over the past 10 years. A failed collaboration with General Motors (GM) only made this position worse.  [5]   FIAT has concentrated in designing small cars, rather than producing a gamut of models like its peers. The lack of segregation of Fiat model range and the placement of the brand means that its almost unidentifiable in the market. Fiat is predominantly reliant on the home market and concentrates its efforts there. Fiat cars are sold at competitive prices, but it is these low prices that are potentially having a detrimental effect on sales. FIAT cars are considered by many as being of an inferior quality which might very well be the physiological consequence of FIAT targeting a lower price. 2.3. Automotive Industry The automotive industry is one of the largest industries in the world. Although the traditional markets have reached saturation point for the conventional combustion engine (excluding vehicle replacement), emerging markets such as China and India are driving new demand. 2.4. Internal and External Analysis 2.4.1. S.W.O.T. Analysis The Internal analysis of strengths and weaknesses focuses on internal factors that give an organisation certain advantages or disadvantages in the market. 2.4.1.1. Strengths Fiat has a strong historical brand name. Fiat is very good at producing small cars such as the Fiat 500. Fiat has a strong presence of Plants overseas. The senior management of Fiat are open-minded to new technologies and are very good at reviewing different ways to organise the organisation. Fiat has a strong senior management team. 2.4.1.2. Weaknesses Poor economies of scale. Fiat tries to put into operation economies of scale, even though it does not the financial power to sustain them. Fiat is rarely a pioneer in introducing new models for the target market. Fiat has a weak marketing network. Their marketing department does not understand market trends and customers expectations. Meaning that Fiat tries to sell something which is not in line with what the customers wants. Poor product quality. Focus on small car segment which has lower margins. The External analysis of opportunities and threats focuses on external factors that exist in the environment. Both of them exist separately of the firm. 2.4.1.3. Opportunities Emerging markets such as the Chinese market or the Indian market. The Chinese automotive market is one of the most rapidly growing in the world. Fiat wishes to focus on expanding into third world countries, markets believing that they are the only markets where firms can expect growth. With less stringent safety requirements, and people happy to trade off non-essential features for a cheaper car, Fiat does not need to invest in development of new models and features. For example, most lack air-conditioning. In fact, Fiats specialisation in smaller cars puts it at a benefit in those markets. A general trend of reintroducing classic models, or models inspired by classic models to try and take advantage of the prestige on the cachet and cool that they generated the first time around. For example, the Beatle by VW and the Mini by BMW. The technology of fuel cells, and hybrid cars presents new opportunities for the industry, and the environment. Government scrappage schemes that encourage people to purchase new cars with the incentive that their old vehicle will be scrapped in exchange for a generous minimum payment, even when this far outweighs the value of the car. 2.4.1.4. Threats The recent macroeconomic downturn has also affected the demand for automotive products worldwide. Manufacturers have had to resort to widespread sales tactics to stimulate demand. Most automobile manufacturing companies around the world face innovation rivalry from Japanese manufacturers, from high technology, through just-in-time production to extensive warranties. Raw material costs are increasing. In the last decade, North American, Japanese and European markets saw a slow progress in demand. Conversely, strong demand is present in emerging Eastern European and especially in Asian markets. Both developments may stimulate price competition between firms as we approach world over-capacity. Safety standard requirements are increasing which requires more research and development, more testing and other costs associated with compliance with external bodies. 2.4.2. P.E.S.T. ANALYSIS FIAT GROUP This type of analysis is used to determine the external driving factors in the automobile industry which can affect the performance of FIAT and the automobile industry altogether. These encompass political, economical, social and technological factors. 2.4.2.1. Political Factors 2008-2012 According to the Kyoto protocol, all the participating countries including the UK have to decrease greenhouse gas emissions by an average of five per cent over the five-year period. Nearly 200 countries have deposited their ratification paperwork. The most notable country that has not ratified the protocol is the United States of America The recent expansion of the EU between 2004 and 2007 should be taken into consideration, which in May grew from 15 to 27 States, including the following countries; Poland, Slovakia, Malta, Estonia, Cyprus, Lithuania, Hungary, Czech Republic, Slovenia, Latvia, Romania and Bulgaria. 2.4.2.2. Economic Factors The Chinese automobile market is growing rapidly. In the past decade it has gone from an also ran to the largest producer and market in the world. Recent instabilities in the price of oil have affected the price at the pump. The price swings have been so great that fuel retailers have been unable to smooth out the price using the recognised method of buying exchange traded futures contracts or over-the-counter forward contracts. The general move to hybrid and all electric vehicles is being assisted by penalising conventional combustion engine vehicles by offering discounts on more environmentally friendly models and governments introducing progressive taxes based on carbon dioxide omissions. 2.4.2.3. Social Factors Most world conflicts relate to oil production/transportation (e.g pipelines) or at least involve a country that has a significant oil supply/infrastructure, which adds to the price volatility. The increasing importance of environmental factors and the effect this has on consumers spending should not be ignored. People are gradually becoming less interested in owning a high performance, petrol guzzling car, and would rather drive a more efficient, less polluting green vehicle. This social consciousness of population extends to people who use public transportation, which is well supported in Europe. 2.4.2.4. Technological Factors The demand for oil will outstrip global oil (ASPO, Association for Study of the Peak Oil Land Gas, 2005). Consequently, automobile producers are researching into alternative fuels. For instance, Iceland hopes to be self-contained in energy in another 40 years by using hydrogen fuel cells. 2.4.3 PORTER GENERIC STRATIGIES Porter summarised that there are three main strategies for a successful business model. Cost leadership, differentiation and market segmentation. Companies that pursued moderate market share often suffered the hole in the middle problem, giving them the lowest profit. Fiat Group utilises all three of these strategies, cost leadership through its relatively low cost small cars, differentiation through commercial and agricultural vehicles, aviation, financial services and publishing, and niche markets through its acquisition of Ferrari and Maserati. So one might instantly consider that by covering all three strategies, it runs the risk of spreading itself too thinly and suffering the fate of low profitability. However, Fiat has been careful keeping its different activities separate, allowing each business to focus on its core strategy, so that each one can achieve optimum success. These successful enterprises are then combined at the group level for the purpose of differentiation to make the group more resistant to market shocks. 2.4.3. FIAT FIVE FORCES 2.4.3.1. Competitive rivalry within the industry There is always intense competition between companies in the automobile industry that focus both on the international and national markets. Fiat has pursued advancing itself compared to its competitors through product differentiation, improving quality and implementing producer process innovations. For example, Fiat began to look seriously at outsourcing more contracts and cutting component costs in the 1990s. FIGURE 1: Porters Five Forces for FIAT (Cammarata et al., 2006) In a continuously changing market, there is always a threat of rivalry from overseas. Intense competition from Japan and Korea has rewarded them with piece of Fiats domestic market share. 2.4.3.2. Threat of the new entrants Fiat strategic aim is to expand its portfolio through acquisition. Firms can choose to merge in order to remove barriers to entry in new markets. Nearly all the main automobile companies, for instance, Toyota, Honda, Renault and Nissan acquired separate divisions or merged into a group such as Volkswagen Group and many find themselves in a very complicated cross-ownership network. In addition, Fiat has to be able to manage brand identity to keep away the threat of new entrants to its markets. 2.4.3.3. Threat of the substitute products Although in the strictest sense there is not an equivalent substitute for the car, there are many alternative brands. Fiat is focused on cheaper models, good design and quality. 2.4.3.4. Bargaining Power of Customers Selecting a low price point compared to its competitors reduces the ability that customers have when bargaining over the price. With its range of models and levels of equipment it can find a suitable vehicle to satisfy the customers wallet. 2.4.3.5. Bargaining Power of Suppliers Fiat produces many components in house, or from within the Fiat Group. Fiat has a strong relationship with its outsourced partners. 2.4.4. PRICING STRATEGIES 2.4.4.1. Premium Pricing . The practice of setting a high price for desirable and/or unique products. Fiat Group utilises this strategy for its premium marques such as Ferrari and Maserati as they have a substantial competitive advantage due to their prestige and brand loyalty. 2.4.4.2. Penetration Pricing Here the price is set low initially to encourage take up, and then increased once the popularity rises. The initial low offering may result in losses which will be covered once the price is raised. Fiats pricing strategy is always to be low cost, so there is less scope to reduce prices at launch. Some naysayers might say that its Fiat motor car brand is lower quality than other mainstream produces, so this strategy might not be available to Fiat. 2.4.4.3. Economy Pricing Costs of marketing and manufacture are kept at a minimum to create a product that is available to the masses. Fiat has always had the strategy of penetrating the market by setting consistently low prices, partly due to concentrating on producing small cars and partly due to avoiding competing on quality. Only recently has Fiat started investing more heavily in marketing. 2.4.4.4. Price Skimming Is where a new product is released at a high price point and typically targeted at those that are early adopter and are price insensitive, or need the product at any cost. Having high prices, and more importantly high margins attracts competitors, which drives the price down. In a mature market such as the car market, price skimming is not a viable option except for possibly in the car accessories market e.g. satellite navigation when it was first introduced. Along with the four main pricing strategies, there are other approaches to pricing 2.4.4.5. Psychological Pricing This approach targets the consumers emotional responses, rather than their rational response. One common trick is to select a price point such as  £19,950,  £19,990, or even  £19,999 rather than  £20,000. 2.4.4.6. Product Line Pricing This is where the product is priced based on the benefit relative to other products in its range. Fiat sells its cars based on size and performance which helps the buyer understand the price relative to a, for example, a smaller model with a lower price and a high performance variant with a higher price. 2.4.4.7. Optional Product Pricing Here a basic product is advertised and sold. Optional extras will then be adding to the overall price of the vehicle. Fiat, as well as all car manufacturers create a fully safety compliant vehicle with a standard engine to get people interested in their car. Once the buyer is interested then it is up to the retailer to promote the advantages over performance, styling and functionality of the optional extras 2.4.4.7. Captive Product Pricing Manufacturers will charge a low price initial and recoup its margin through complementary purchases or maintenance. A recent trend in the motor industry is to sell the vehicle at low price but recoup extra money through after service and high costs of parts and labour. To counter this other companies have introduced up to a 7 year warranty. 2.4.4.8. Geographical Pricing Geographical pricing is where there are variations in price around the world. Variations may occur due to shipping costs, local competition, laws and regulations. Most of Fiats vehicles sell to mainland Europe and so have the steering wheel on the left. However in the UK and elsewhere in the world the steering wheel is on the right. In tropical countries cars do not need to be fitted with a heating system, likewise in cold climates air condition need not be fitted. Car manufacturers usually create a basic model to be sold in developing countries 2.4.4.9. Value Pricing In the current recession, people have less disposable income and are more likely to put off large purchases such as a vehicle, hence Fiat has to reduce margins further to present extra value to the customer. 2.4.5. MARKET SEGMENTATION Market segmentation is the process of identifying subsets of a market made up of individuals demanding similar products based on attributes such as price, function or style. A true market segment is distinct, homogenous, reacts to stimuli and behaves in the same way to stimulus. Market Segmentation, includes but is not limited to the following bases Geographical continents, countries, town, region Demographical Age, Gender, Social Class, Family Type Psychographic Cultural, Activities, Interests, Opinions, lifestyle, religion Geodemographic a combination of Geographical and Demographical Behavioural usage rate or loyalty Fiat selects models and equips vehicles based on the geographical segment of the market that they are to be sold. For example, in countries with unsealed roads it sells 4 wheel drive models, rather than sports models. In hot countries air conditioning is standard and heating is optional, likewise in cold countries the opposite is true. In South America, cars are modified to run on compressed natural gas, and ethanol fuel is used as an alternative to petrol or diesel Demographically, Fiat aims smaller, economical models at the young, performance cars at 25-45 year old men, estate/hatchback cars at young families and large saloons at senior businessmen and retirees treating themselves to a quality car that will last. Psycho graphically, electric/hybrid models aimed at the environmentally conscious. The redesigned Fiat 500 or other stylish models at trendy young people, who consider themselves a bit different Behaviourally, Appeals to those who have owned a Fiat before. The Fiat 500 is also targeted at nostalgic middle aged people who probably had one, or at least wanted on the first time around, as a second car. 2.4.5.1. Fiats Four Ps Jerome McCarthy proposed the 4 Ps for describing the marketing mix Product Various models, sizes, configurations, equipments standards Price Fiats cost leadership means that its customers pay a low price Place Fiat has a worldwide presence for direct sales and distribution. Promotion How effectively Fiat can market its products through direct and indirect advertising, public relations, word of mouth and point of sale. The original four Ps can be extended by a further three Ps for marketing services People: includes employees, management and consumers Process: Procedure, mechanisms and flow of activities Physical Evidence: The environment in which the service is delivered. Both tangible goods that help to communicate and perform the service, and the intangible experience of existing and potential customers 2.4.6. Bowmans clock An expansion of Porters three generic strategies, Bowman compares price against value. The strategies form around the central spoke hence the comparison to a clock. ValuePrice Low Price Medium Price High Price High added value Hybrid. By carefully off-shoring, Fiat can reduce production costs whilst still delivering the same product Differentiation. Investing in exciting new models to build its customer base and brand loyalty Focus Differentiation. Hybrid cars and Electric cars currently have a high price, to recoup the costs involved to bring this high value attribute to the market Mediocre added value Cost Leader. Through low prices, Fiat attempts to be a cost leader Raise Price. High Margins for its premium car brands. There is a possibility of losing sales to competition, but it is unlikely to be price related Low Added Value Fiat retails budget, low specification variants to developing nations Increased Price and Low Value. With the amount of competition in the car industry, this option is not really viable. Selling such a big ticket item, people weigh up the cost vs benefits 2.4.7. Boston Matrix Created by the Boston Consulting group, this chart is used to plot a companies business units to allow a company to make decisions on strategic marketing and brand marketing. Detailed in the chart are 4 specific business units of the Fiat brand. Its important to note that even with low market share and low growth, satisfactory profits are still possible. High market share low High Star question mark / problem child growth of market cash cow dog Low European Car Market Chinese car market South American market Financial services Chapter III 3.1. Direction of Growth 3.1.1. Ansoffs Matrix 3.1.1.1. Market Penetration This theory advocates the strategy that the company markets its existing products to its existing customers. By promoting the product and repositioning the brand the company can gain competitors customers, increase sales to existing customers and gain new customers that are considered part of the existing market but have not yet invested. 3.1.1.2. Market Development This theory advocates the strategy that the company markets its existing products to new customers. The product remains the same although it may be repackaged physically and metaphorically for a new audience. The product may be exported to reach a new international market. FIGURE 2: ANSOFFS MATRIX (Source:http://tutor2u.net/business/presentations/strategy/ansoff/default.html slide3) 3.1.1.3. Product Development This theory advocates the strategy that the company markets new products to its existing customers. The company may develop innovative replacement products, complementary products to existing products, or sell entirely disconnected products to its existing customer base. For FIAT this means updated existing models or replacing them to be marketed to existing customers, or offering complementary products such as car accessories or finance. However, Fiat divested its insurance sector in 2003. Fiat also offers aspirational brands to its existing customers in the form of Maserati and Ferrari. 3.1.1.4. Diversification This theory prescribes the strategy that the company markets new products to new customers. The company diversifies into new markets where it previously had no presence. This diversification takes two forms, related diversification, where the diversification remains in the industry or market where the company is established, or unrelated diversification, where the company enters a new industry in which they have no market experience Fiat diversified itself in the related personal transportation market through its Piaggio motorcycle brand, which in 1999 it sold to Morgan Grenfell Private Equity, through the related, components, metallurgical products, production systems, commercial vehicles, buses and services vehicles, agricultural and construction equipment. It also diversifies itself into less related and unrelated industries through aviation, IT, finance, leisure, publishing, communication and even sponsorship of the Jamaican bobsledding team!  [6]   Chapter IV 4. The Method of Development 4.1. Merger or Acquisition of FIAT Apart from in its home country where FIAT is well received, it cannot rid itself of the perceived and genuine quality issues internationally. To combat this FIAT should consider recommencing its attempted allegiance with General Motors or seek a well known domestic manufacturer with a track record of delivering quality. If neither of these options are viable, FIAT could look to other strategic alliances perhaps with the Japanese, or with a German Manufacturer, highlighting the qualities that these partnerships bring when promoting their vehicles in the UK. Only by pursuing a joint venture or by associating itself with a recognised service provider will FIAT be able to be a contender in Europe. This approach will invariably be a costly one, but if the sincere objective is to increase the market share of the brand, FIAT has to follow this determined approach. Along with the failed allegiance with General Motors, over its history FIAT has had many associations (and attempted associations) with various European producers which have all ultimately failed. The reason for failure is down to two imperative reasons. Firstly any substantial agreement with an external entity would require a considerable shake-up of the production capabilities which would result in a substantial reorganisation for the employees of both parties. Secondly the outcome would change the dynamics of the Agnelli family involvement and control of the company, vastly reducing its impact in the management and running of the company. If FIAT had reached a satisfactory resolution with General Motors the combined business would have been able to win market share from its competitors by leveraging off of the synergies created by the two entities in engine, and component design. The union between the two would have allowed for the Agnelli family to control the implementation of the agreement in the Europe market.  [7]   This united company would surely be a definite force in the emerging markets of Russia, Brazil and other South American countries, particularly with its existing exposure unsurpassed by its Chapter V 5. Conclusion The analysis shows that Fiat is not a well represented and truly desirable universal brand. Its goal, and therefore its marketing effort must be to change consumers attitude and perception of the brand and promote Fiat as being superior to its competitive peers such as Vauxhall and Peugeot. By identifying rivals in the industry such as these, its possible to access relative strengths and weaknesses, similarities and disparities so as to gain an insight into the changes that must occur for the company to be successful in achieving the companys target. Similarities Differences FIAT vs. Vauxhall -Both are targeted as familiar or traditional (associated with practicality over style.) Impersonal sales -Similar notion about prices (but FIAT is considered cheaper) Vauxhall target customers are slightly older FIAT is poor quality while Vauxhall is medium quality Vauxhall is recognised for the full range of car types, FIAT is recognised for its small vehicles FIAT is less popular Fiat vs. Peugeot -Similar notion about prices -Equally reliable Peugeot is considered good quality (well built and comfortable to drive) while FIAT is poor quality. Peugeot is well designed with more has better performance Due to Fiats competitive price strategy, and its position of being a cost leader, it is considered by many as offering an unreliable, low quality alternative to the other majors. However, it is not the actual quality of FIAT cars that is driving this belief, but the customers perception of quality based on their competitive price point. Purchasing a motor vehicle is an expensive investment, and an investment that will reduce in value over time. Buyers use a combination of rational values and emotional elements when making their selection decision. Rational values involves all the costs associated with the vehicle and affordability and the emotional elements involve the selection process of choosing a vehicle or brand that you identify with and which one you would be most happy living with for a number of years. One must consider the Points of Parity and Points of difference when marketing a brand. This table is related to the points of parity and difference of each brand. Points of parity Points of difference FIAT   Traditional, rudeness Leader in cost Vauxhall   Familiar, comfortable, rust Many models (you can choose for different purposes) Peugeot   Comfortable, good design   Sportive design People need to identify with a car, feel that the car represents them. Fiat does not employ a strong enough emotional message to distinguishing it from its competitors, and offset its negative perception and creating desire am