Impact of Surrogate Advertising on Liquor Sales

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<p>SUMMER TRAINING PROJECT REPORT ON impact of surrogate advertisment on liquor salesSUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE MASTERS DEGREE IN INTERNATIONAL BUSINESS (MIB)</p> <p>OF H. N. B. GARHWAL UNIVERSITY, DEHRADUN</p> <p>SUBMITTED TO: INTERNAL GUIDE Richa sinha Asst. professor IMS Dehradun EXTERNAL GUIDE ranvijay singh ub group dehradun</p> <p>SUBMITTED BY: Chunan kumar (MIB 11A20)</p> <p>INSTITUTE OF MANAGEMENT STUDIES, DEHRADUN BATCH 2011-13</p> <p>ACKNOWLEDGEMENTThe completion of a project is never a unilateral effort. Through this sentence I wish to make a modest effort to thank and express my gratitude to all those who extended their co-operation and assistance for this project. I am highly indebted to professor richa sinha, our internal guide ims dehradun, for her inspiration, guidance and encouragement during the course of this Research work assigned to me. She was our guiding force right from the inception of the research till its completion.</p> <p>Chunan kumar MIB 11A20 (2011-2013) Ims dehradun</p> <p>2</p> <p>CERTIFICATE</p> <p>I</p> <p>have</p> <p>the</p> <p>pleasure</p> <p>in</p> <p>certifying</p> <p>that</p> <p>Mr.</p> <p>/Ms.</p> <p>.....</p> <p>..is a bonafide student of IInd Semester of the Masters Degree in International Business (MIB), Batch 2011-13, of Institute of Management Studies, Dehradun under H.N.B.Garhwal University Roll No. ... . He/She has completed his/her project work entitled</p> <p> .. under my guidance. I certify that this is his/her original effort &amp; has not been copied from any other source. This project has also not been submitted in any other Institute / University for the purpose of award of any Degree. This project fulfils the requirement of the curriculum prescribed by this Institute for the said course. I recommend this project work for evaluation &amp; consideration for the award of Degree to the student.</p> <p>3</p> <p>Signature Designation Date</p> <p>: : : </p> <p>Name of the Guide : </p> <p>4</p> <p>(To be made on Company Letter Head)</p> <p>CERTIFICATE</p> <p>This is to certify that Mr. / Ms. ________________________ (Mention your ID), S/o. / D/o. Shri ______________________________, student of Masters Degree in International Business (MIB), Batch 2011-13, at Institute of Management Studies, Dehradun has successfully completed his / her compulsory Summer Training with us, as part of his / her Course Curriculum. The duration of his / her training was from _____________ to _____________ on the project _______________________________________________________ ________________________________________________________________ *under the supervision of Mr. / Ms., Designation . During the training we found him / her quite sincere, hard working and his / her conduct &amp; behavior was good. We wish him / her all success in his / her academic endeavours and in life.</p> <p>Signature Name</p> <p>: ____________________ ** (HR Manager) : ____________________</p> <p>5</p> <p>Designation : ____________________</p> <p>*, **</p> <p>: To be used only when the certificate is given by HR Department.</p> <p>6</p> <p>Contents Topic Page No</p> <p>Rationale of the study ----------------------------------------------------6 Introduction-----------------------------------------------------------------7 Industry Structure and developments----------------------------------8 Opportunities and Threats -----------------------------------------------10 Future Outlook ------------------------------------------------------------ 12 DEFINING SURROGATE ADVERTISING ---------------------------13 LIQUOR ADS ON TV -----------------------------------------------------16 -KABHI WHISKY, KABHI RUM---------------------------------------20 Allowing socially responsible ads by Liquor Company------------------ 22 Advertising in the Liquor category on Televisio-------------------------23 Surrogate advertising Needed, a spirited attack -------------------26 Liquor Companys uses overseas series to Circumvent ad ban: -----------30 Kingfisher, Wills spared from surrogate ad ban: ---------------------- 32 Surrogate liquor ads flow into FM radio: -----------------------------------34 I &amp; B Ministrys Slashing of Surrogate Ads ------------------------------35</p> <p>7</p> <p>Foul Cry by Major Liquor------------------------------------------------------39 Bacardi origins ------------------------------------------------------------------40 BACARDIS WAY OF SURROGATE ADVERTISING--------------------46</p> <p>UB Group.48 PROMOTIONAL MOVES OF UB GROUP FROM TIME TO TIME.53 Methodology..59 Questionnaire60 Analysis and Graphs.62 Conclusion..70 Bibliography -----------------------------------------------------------------------72</p> <p>8</p> <p>Rationale of the studyLiquor Industry has one of the fastest growing markets in India. The liquor industry does make campaign to entire customer, therefore the assurance of the customer are increasing day by day. In an industry where change is the only constant, survival depends on the quickest reaction time. When technology advances happen at the blink of the eye, one has to keep pace or else get left behind. To achieve this, the Cos have to lay emphasis on total customer satisfaction through improvements by their own capabilities and teamwork, for this products should be backed by strong R &amp; D,9</p> <p>continuous up gradation of technology, customer oriented marketing and unique background integration process in manufacturing.</p> <p>10</p> <p>OBJECTIVES OF THE STUDY</p> <p>My research objective is to find out that How successful has Surrogate Advertising been in promoting the liquor Brand Is surrogate advertising actually for launching a new product or is it for manipulation of the existing liquor brands for sales? We get a 100% recall value for the actual liquor products even though surrogate versions were being mentioned on T.V.</p> <p>11</p> <p>INTRODUCTIONLiquor Industry has one of the most lately growing market values in India. The liquor industry does make about by campaign to entire customer. Therefore the assurance of the customer is increasing day by day this is mainly due to the advertising. In an industry where change is the only constant, survival depends on the quickest reaction time. When technology advances happen at the blink of the eye, one has to keep pace or get left behind. To achieve this, the companies have to lay emphasis on total consumer satisfaction through continuous improvements by their own capabilities and teamwork. For this products should be backed by strong R &amp; D, continuous up gradation of technology, customer oriented marketing and unique background integration process in manufacturing.</p> <p>12</p> <p>There is a surrogate approach towards liquor advertising in India. There is not much that they can do except market themselves through promotions with the latest celebrity. Hollywood films like Scent of a Woman have helped in brand endorsement.</p> <p>13</p> <p>14</p> <p>Industry Structure and developmentsThe Indian Made Foreign Liquor (IMFL) market consists of Whisky, gin, rum and vodka. The all important whisky market is further segmented into low priced, regular, and deluxe, semi premium, premium and Scotch. The most competitive segment in the IMFL category is the regular segment whisky. This segment has more than 30 brands competing with each other. The size of the organized IMFL industry stands close to Rs.200 billion and comprises of approximately 25 IMFL manufactures. The low price IMFL and country liquor segment accounts for approx. Rs.120billion. Now low priced IMFL is a distinct category as opposed to country liquor, with products in the latter category typically sold at lower prices. The total IMFL market todays stands at around 70 million cases per annum which is been growing at a rate of 10% to 12% over the past 5 years. India is one of the very few liquor markets in the world where the growth rates are positive. Particularly, the cheap liquor segment has shown a growth of more than 25% over the past 5 years. Also,</p> <p>15</p> <p>which is estimated to be more than the size of the IMFL market? The market is heavily skewed in favor of whisky, accounting for around 60% - 65% of the IMFL market. There also exists a huge unorganized sector (estimated to be as large as the organized sector) involved in the production and safe of cheap liquor (which is distinctly different from excise duty paid country liquor). This trend is witnessed most in the rural areas of the country. The Indian Liquor industry is also characterized by the presence of immense competition amongst the major domestic liquor companies. Regulation The liquor business is among the last few industries that are still under the licensing policies of the Central Government and will likely see the most significant growth over the next 2/3 years on account of more progressive regulation. Liquor, in India, is a state subject, not a central one, in that each state controls the excise duty structure and also the distribution of liquor. The event, liquor manufactured in one state is sold in another state, the incidence of import duty and export duty results in high product</p> <p>16</p> <p>prices at the consumer end. It is this non uniformity of the duty structure coupled with different types of distribution arrangements dictated by the state governments that makes manufacturing and marketing of liquor a very challenging task for Indian companies. Distribution while unregulated in some states such as Maharashtra and West Bengal is regulated in some others such as through auctions (Haryana &amp; Rajasthan, Bihar, Jharkhand) or through government controlled procurement agencies (such as Tamil Nadu and Andhra Pradesh). There are around 100,000-110,000 licensed liquor outlets in India, with another 10, 0000 outlets such as bars and restaurants. Advertising is also regulated by the Central government and liquor players are not freely allowed to advertise on electronic and print media.</p> <p>Market Size (IMFL)o</p> <p>Market: 95 million cases17</p> <p>o o</p> <p>Past growth 15 % @ per annum Brown spirits - particularly whisky, rum &amp; brandy account for over 75 % of this market</p> <p>o</p> <p>South and North share 60% of market</p> <p>Industry Structureo</p> <p>Industry in the organized sector - an industrial license is required to start manufacture</p> <p>Major brands (manufacturers): Signature, Blue Riband (UB Group), Aristocrat (Jagjit Industries), Smirnoff, Gilbeys Green Label, Malibu, Archers Peach Schnapps (International Distilleries India), Passport (Seagrams), VAT 69, Black &amp; White, Black Dog (United Distillers India)</p> <p>18</p> <p>19</p> <p>Opportunities and ThreatsOn April 1, 2001, India, under commitment to the WTO, removed quantitative restrictions (QR) on bottled in origin (BIO) liquor imports and placed them under the OGL (Open General License) category. Further, it is expected that the important duty of foreign liquor would also be brought down to a committed level of 150%, the WTO bound rate over the next 2/3 years. This would lead to the entry of large Liquor Multinationals companies in the country. These Multinationals will make strong inroads in the higher priced categories of the market such as super premium and premium end of the whisky market consisting of price levels of Rs.450 and above per bottle of 750 ml. It is believed that these segments are those where the Indian liquor industry will face maximum competition over the next 3 to 4 years. Already, domestic brands are losing substantial market share top India specific brands of Multi nationals companies. The competition in this segment is bound to intensify still further.</p> <p>20</p> <p>With duties coming down over a period of time and imported liquor coming under the purview of OGL, there have emerged excellent opportunities for their trading in the domestic market products like imported, wines, beer, breezers and coolers etc. should have good opportunities for an aggressive player. Taking advantage of this opportunity, Radico has already entered into exclusive marketing distribution arrangements with earnest and Julio Gallo, California, USA, the owners of the largest winery in the world distribution of their wines in India and also with Interbrew, of Germany for the distribution of Becks beer in India. The company is also planning to introduce Ready to drink products like Bacardi breezers and coolers through a tie up with major foreign players. This segment is likely to see good growth in future as consumers get acquainted with the product gradually.</p> <p>Future Outlook It is believed that the Indian liquor industry is set to grow exponentially over the next 4 to 5 years on the back of a major</p> <p>21</p> <p>unshackling of the regulatory structure governing it. In the last 2 years, at the State level, the Delhi Government has thrown open retail distribution to private parties, the Uttar Pradesh governments new excise policy has substantially increased the contribution per case of country liquor for most distillers in the state, the Tamil Nadu Governments decision to allow 100 ml packs of IMFL to wean indications towards this direction. At the central government level, there is a proposal to charge a uniform excise duty as opposed to state specific excise duties.</p> <p>22</p> <p>DEFINING SURROGATE ADVERTISINGSurrogate advertising can be defined as advertisement of a brand extension in such a way that brings clear recalled of the core product in the mind of the consumer. The concept of surrogate advertising in India emerged due to certain regulations enforced on the promotion of certain products mainly liquor and tobacco (products). Here the companies are producing these products in order to avoid legal complications, and also in order to remain in the minds of the consumers, use reminder adverting by way of resorting to surrogate advertising. These companies advertise their brand extensions for the promotion of the core brand. An advertisement of any thing whether it is product, service or event in the name of core brand by which the actual product is recalled is surrogate advertisement. Cigarette companies have used the vehicle of surrogate advertising to reach the minds of consumers from time to time giving for example Gold Flake which produces gold Flake expression greeting cards, Red and White which sponsors bravery awards, and wills which advertises wills cigarettes on the sports wear which we have witnessed time and again on the T-shorts</p> <p>23</p> <p>worn by the Indian cricket team. Wills lifestyle is also an example of surrogate advertising. Moving ahead the liquor companies have successfully used the name of the core brand with some other products like Royal Challenge. Similarly, Bacardi extends its brand name by producing Bacardi cassettes, Teachers advertises in the name of Teachers Achievement Awards, McDowells in the name of the Soda, Aristocrat, 8 PM, Contessa and AC Black go ahead in the name apple juice, and Gilbeys and Kingfisher in the name of water etc. He also talked of an advertisement (surrogate in nature) in which a small line of 6-/8 front size statement reading CDs and Cassettes of the 100pipers pure music series are available in select outlets whereas no CD, cassette or...</p>

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