Japanese Beverage Company

C: Why particular interest in India and why now, are there any reasons behind it?

I: India is a growing economy and hence an interesting market. The company had tried entering the market earlier but failed due to incorrect choices of products, partners & launch strategy. We have advised them on all these fronts.

What factors would you consider while selecting the product(s) that should be launched?

C: I would consider the current market size and competition for different products. Due to existing market competitors and saturation, we can eliminate Fizz drinks, concentrates & juices. We can also eliminate alcoholic beverages due to stringent legal regulations and compliances required. With these products eliminated we can support current consumer preferences and follow recent trends resulting in the growth of health drinks, RTDT and RTDC products.

I: This makes sense, so how would you estimate the market size (liters/year) of RTDT in India? Our RTDT is also very healthy, minimal/no sugar and many health benefits.

C: We can assume that most of the consumers of our product will be in the higher income group of the urban market. Our primary consumers will be in the age group of 20-60. We would assume suitable consumption rates based on age, pack size, frequency & competitor's cost. These factors should help us arrive at the total market size for our product.

I: Okay, once you arrive at the market size, how would you go about the pricing of the RTDT?

C: Since we are a premium offering we should be priced accordingly. Hence, cost-based pricing will not make sense for us. We should also be priced higher than competitors because we are healthier. Hence, we should follow a value-based pricing.

I: Right makes sense. How would you go about determining the value-based pricing?

C: There are three cases I would consider -

Case I: Here I am assuming the vitamins are the key value add. So, pricing will be based on the market price of those vitamin pills given the RTDT had no other health impact. Otherwise, I would follow case II to manage that.

Case II: Assuming that less sugar, and hence fewer calories is the key value add. Here we can determine the cost of the time (based on average salary) and effort (based on gym membership costs) for the difference in calories.

Case III: In case nobody cares, a 10-20% mark-up should do, as pricing value adds of health is tricky and not fair.

I: Okay and given the information about the client, should the client produce/bottle/ship in India?

C: Considering the 10-year timeline and failure earlier while entering India, bottling or shipping are more viable. We will have to look closely at the costs before taking a final call. Setting up a factory in India right at the start does not sound like a good idea unless we have long term collaborations set.

I: That is right, so we can then quickly discuss the market entry strategy. Let us say the company wants to enter in a partnership. What factors would you consider?

C: To enter a partnership I will firstly look at synergy to determine if the companies complement each other's product range. I will also ensure they do not sell any substitute products as products like that could cannibalise our offerings. Post this I would look at the distribution network to understand the company’s footprint and determine if they cater to the right audience.

If other parameters are favourable, we can look at the company's mindset - Japan is known for very different work ethics and the target is also quite long visioned, building on it, what were the reasons that the previous entry failed, I will need details around those to understand company's vision and mission better. Finally, I would consider the scope of the partnership and determine if the company can be trusted with trade and product secrets.

I: Any top companies/chains on top of your head?

C: I could look at companies which cater to the premium segments, like health centers and food chains (like Subway). Secondly, high-end hotels, banquet halls. Lastly, exclusive tie-ups with high-end retail stores with a promise for aggressive advertising (as drinks work a lot on what you see and how accessible it is) can also be considered.