Principles of Marketing

Assignment 2
Name: Sai Aditya Garlapati Student ID:18125760054

Problem Statement:
You are Business Head of a company which deals with different products. The company wants
to bring out new products in the market which previously the company did not have in its
portfolio. You are instructed to make a preliminary study in the market about the prospect of
success of the product. Use Porter’s Five Forces Model for your analysis. (P.N. You can take
any product of your choice and do the analysis as per the current market scenario. The report
should be minimum of 2000 words / 2 pages)

Introduction of Acme Group of Companies

Me being a Head of Acme Consultancy Services which has been providing IT services since a
decade, Me being Managing Director of Acme Canned Food company providing best canned
food to the market.
Now I am trying to Expand my company Parent Company Acme, by creating a child brand
named Kaboom Breweries and entering into Beverages industry. Since Acme is a Famous
Company in IT industry and Canned food Industry, Giving the same name would create
different opinion on the Brand, I do not want to disturb the previous Brand Image that it has
created, Thus, created this Child brand.

Kaboom Breweries:
The Kaboom Breweries Company is an Indian beer brewing
company headquartered in Bengaluru, Karnataka, that was
founded in January 11, 2018 by the Acme Group of Industries.
The company has brewing facilities Across India Allahabad, Goa,
Hyderabad, Bengaluru, Chennai, cochin, Noida. with its parent
company's corporate operations and international operations to
remain separate and independent of the Child company Kaboom
Breweries.
Areas of Focus while considering Porter’s five forces model:

Porters five forces Model Definition:

Porter's Five Forces Framework is a tool for analyzing competition of a business. It draws from
industrial organization (IO) economics to derive five forces that determine the competitive
intensity and, therefore, the attractiveness (or lack of it) of an industry in terms of its
profitability. An "unattractive" industry is one in which the effect of these five forces reduces
overall profitability. The most unattractive industry would be one approaching "pure
competition", in which available profits for all firms are driven to normal profit levels.
Analysis of Porters Five forces model on Kaboom Breweries

The bargaining power of suppliers

The suppliers of raw materials to Kaboom Breweries Company are mainly farmers. Therefore,
the threat for power of supplier is high. The bottle supplier for Kaboom Breweries is provided
by Indian Glass Corporation which is fully supplied the green and brown bottles for the
worldwide distribution of Kaboom Breweries beer. There is then Tin Supplier which is for
Canned Beer which is Supplied by Bengaluru Tin Factory. It has been the sole supplier of Tin
for Kaboom breweries Since the Beginning.
In the past i.e. 2018, Kaboom Breweries kept only 40% its stake in Indian Glass Corporation in
order to secure the supply of high export-quality bottles at a Pocket-Friendly / Lower cost, to
meet the needs for demand but now Kaboom Breweries has kept 100% stake in 2019.
Beer is produced by water, barley, hops and yeast with a mixture of any sort of flavours like
(Fruits, Rice, Wheat). These ingredients are supplied by Indian Local farmers. They are
Available in plenty as India being an Agricultural Country, so in this case of Fruits, Cereals and
Ingredients suppliers like local farmers they have a average or medium bargaining power, as
there are plenty of suppliers available in this category. Kaboom Breweries is Facing a great
competition for agricultural products from the biofuels industry, it is affecting kaboom
Breweries costs.

The bargaining power of buyers

Generally, a Buyers in my case are MRP Outlets, Bars and Pubs. A typical buyer atleast makes
an order or 25 cases per week. And may go till 300 cases per week in a pub.
The buyers in this industry have many choices as there are many companies serving beer. This
will increase the choice of the customer and hence the threat for power of buyers is high. For
example, for serving customer at the pub, there are a lot of beer brands for them to fit their
taste such as Guiness, Carlsberg, Bira, Heineken, Corona, Kingfisher, Budweiser, Millers etc.
There are competitors from local brands to international brands.
There are some pubs which have a personal Micro Brewery license. Therefore, buyers now
have a choice to choose the one they like. As a result, choosing of customer for what kind
beer they want to drink will bring threats for Kaboom Breweries.
Being a new entrant in the industry its very much difficult to create customer base in this
highly competitive field, So Initially Creating a Loyal Customer base and generating the Brand
value. And concentrating on bringing in more buyers would help.
Buyer power partially does determine the overall attractiveness of a company in that industry.
Since the kaboom Breweries is a new entrant, bringing out interesting flavours and interesting
Sales schemes can lower the bargaining power of buyers
The threat of potential new entrants
Nowadays, an explosion of smaller brewers has entered the market during the past decade
that making the industry much more competitive. Kaboom Breweries is aiming to become
one of the largest brewers in the world and they have to share market with another brewer.
The barrier in the beer market is low. Therefore, the threat of potential new entrants for
Kaboom Breweries is high. But except for Micro-Breweries investment is huge for any entrant
in this market. There is a minimum investment of 50 crores for a medium sized brewery which
can handle up to a district sized market. and it can be scaled up-to 2000 crores for handling
or to be competitive to a nation level brand.
But being a pioneer in the IT field and generating a lot of Revenue in it. Parent company Acme
Consultancy services will be a backbone of Kaboom breweries and invest a huge amount of
capital until kaboom breweries gain a decent market share and sustain by itself.
This will make Kaboom Breweries considering to create innovation or uniqueness into their
product that can sustain competitive advantages in the beer market.

The threat of substitutes

Beer is a kind of beverage which contains alcohol. However, people can switch to drink wine
which also is alcohol drink. Customer’s taste is not similar so that they have right to choose
what they want to enjoy, so this will affect the beer market as well as Kaboom Breweries
Company. As a result, the threat of substitute for beer market is high. Even sometimes non-
alcoholic drinks are also substitute for the beers. Sodas, aerated cool drinks and mocktails
and cocktails are substitutes of Beer.
Compared to Beer, sodas and cool drinks, breezers are cheaper. Mocktails and cocktails are
tastier. There is a good chance that people will be opting these drinks if people don’t want to
spend more or want to taste something else.
There are some exotic competitors in the Indian market local made rice and wheat beers in
hill stations , “Tati kallu” a local drink which is extracted from trees.

The extent of competitive rivalry

Being a new entrant to the market kaboom breweries has done so well till now. Due to the
support or Acme company being its parent company. There is proper capital support
whenever required. It has understood the market before entering it.
But still there are lot of competitors in brewery industry there are big players like Heineken,
corona, millers etc. who have created a stable customer base in the market. It very much
difficult to get customer base until unless there is a USP for the beer that kaboom is selling.
Offers on selling price of the beer, improving sales buy conducting contest. Competitive
pricing are some techniques to tackle the competitive rivalry.
Kaboom Breweries has achieved the economy of scale in the market especially in India. It
holds about 15% of market share in Indian beer market. Since the beer market is growing, so
the competitors will try to attain their growth targets. The large brewer like Kaboom
Breweries tends to enforce their own strategies to the beer industry and due the economies
of scale they will produce higher quality and unique products which can make their own place
in the market, hence keep themselves growing to achieve their target.