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Hector Beverages’ Paper Boat: Diffusing Innovation through “Drinks and Memories”

CASE STUDY, CONSUMER BEHAVIOR
ET Cases, 11 pages
AUTHOR(S) : Vijay Kumar Tangirala and Dr. Nagendra V. Chowdary

Case Preview

Hector Beverages’ Paper Boat: Diffusing Innovation through “Drinks and Memories”

 

“The company (Hector Beverages) sells nostalgia, 250ml at a time.”

– Diksha Madhok, Ideas Editor, Quartz


Paper Boat, an ethnic drinks brand launched by Hector Beverages in 2013, found a ready audience among the urban Indian consumers who used to relish variants such as aam panna (a juice made from raw green mangoes) and jaljeera (cumin water) in their childhood but no longer had access to them in the urban areas. Besides developing variants that satiated the emotions of consumers, Hector Beverages increased the consumer base for Paper Boat by selling its products on airlines and five star hotels. Besides offering tastes that rekindled memories of one’s childhood, Paper Boat’s products contained no preservatives on account of using best practices available globally in packaging. This was a facet that also appealed to consumers. Stylish and elegant packaging and facility to order its products online also resulted in Paper Boat gaining prominence in the ready-to-drink beverage category. Hector Beverages also created advertising campaigns that adroitly established linkage between Paper Boat’s variants and consumers’ memories of their childhood. However, would Paper Boat be able to overcome the challenges related to sourcing of its unique ingredients and have the wherewithal to expand beyond the urban centres? ......................

Paper Boat: Floating with Innovations

Hector Beverages (HB), a company started by four friends (Neeraj Kakkar, Suhas Misra, Neeraj Biyani and James Nuttall) in 2010, launched an energy drink called Tzinga in 2011. Priced considerably lower than the market leader, Red Bull, Tzinga quickly pole-vaulted to the position of being the second largest energy drink brand in India. However, the very nature of energy drinks implied that Tzinga had only a few variants, resulting in increasing distribution expenses for HB..............

An Era Gone by

Neeraj Kakkar (Kakkar), Hector Beverages’ CEO remarked, “We have a treasure trove of ethnic drinks in India. They are immensely popular locally but unheard of in the rest of the country. We wanted to turn these local hits into national sensations…They (the ethnic drinks) have been traditionally had in pockets across the country. Our products cater to those who grew up with those drinks.” Several cool drinks prepared from local fruits, spices, flowers and pulses were a part of the country’s wide and deep footprint...........

Going from Strength to Strength

Since their debut, Paper Boat’s products witnessed heavy demand from the rich, urban Indian consumers. Buoyed by the success of the two Paper Boat variants of aam panna and jaljeera, HB launched the variants of aamras (a juice made from ripe mangoes), jamun kalakhatta (a juice made from jamun, a purple Indian berry), kokum (a berry found in Western Ghats in India), golgappe ka pani (concocted water forming a part of a renowned Indian Street food) and imli (tamarind)..............

“Drinks and Memories”

The indigenous beverages offered by Paper Boat triggered memories of a not-so-distant past when life in the country moved at a slower pace and when the impact of globalization was not as profound. Paper Boat’s tagline “drinks and memories” was reminiscent of the days gone. Shripad Nadkarni, Director, MarketGate Consulting and also the person behind the Paper Boat brand’s DNA observed,” Life has got very complicated with too many options and we all yearn for simpler times.”...........

Superiority in Other Key Aspects

Paper Boat did not use any preservatives and artificial drinks which also contributed to the rising demand for it among consumers. As Paper Boat’s variants majorly used natural ingredients, they faced challenges of withstanding hot Indian conditions and the possibility of a fruit juice’s chemical composition being altered. According to Kakkar, Paper Boat employed nature-identical flavoring to increase the robustness of its juices and minimize the possibilities of chemical changes..........

Invoking Nostalgia in its Marketing Campaigns

Paper Boat, in terms of the variants it offered and its positioning, tried to rekindle consumers’ memories of the days gone by. It evoked stories of how consumers, now in the age group of 25 and 40 years, played cricket in the by-lanes and how their mothers would offer them a glass of rejuvenating aam panna or jaljeera post the matches. Another story was of consumers, when they were young, would relax in their verandahs in the afternoon and relish aamras.............

Scalability of the Paper Boat Business: Any Constraints?

Industry observers, however, raised questions about the scalability of Paper Boat’s business given that it faced issues unique to the variants that it offered. Sourcing of raw materials was turning out to be a key challenge for HB. Biyani explained, “The flavours and products are so unique that you don’t have a back-end chain to supply the raw material.” He said that because there were several suppliers in the mango categories, it was not difficult to procure raw material for aamras..............

Assignment Questions

I. What are the key elements of the diffusion process? What factors contribute to consumers accepting a new product? Has there been any change to the pattern of adoption of new products over the years?

II. Was there anything innovative about Paper Boat’s marketing mix? What were the strategies adopted by Paper Boat with regard to its Customer Value Proposition, Customer Offering and Customer Communication that put Paper Boat in a different orbit? What was Paper Boat required to do at the backend to get the aforementioned 3Cs (Customer Value Proposition, Customer Offering and Customer Communication) right? Demonstrate how the diffusion of innovation happened in case of Paper Boat.

III..................

Exhibits

Exhibit I: A Paper Boat Promotion

Exhibit II: A Comparison of Paper Boat’s Pricing with Few of its Competitors

Exhibit III: Childhood Memories Projected by Paper Boat

Exhibit IV: Variants’ Packs from Paper Boat

Exhibit V: A Still from the Social Media Film

Exhibit VI: Stills from Paper Boat TVCs

Teaching Note Preview

Hector Beverages’ Paper Boat: Diffusing Innovation through “Drinks and Memories”

 

Synopsis

This case study serves as an example of how thoughtful innovations can be diffused through engaging consumer communication that would propel a better adoption, especially for newly launched products. Paper Boat, a ready-to-drink juices brand launched by Hector Beverages in August 2013, quickly gained market acceptance in India’s beverages category. By October 2014, it was selling 1.5 million packs per month. This was primarily on account of offering variants that were missing from the urban landscape but were very much a part of childhood of adult Indian consumers. Some of these variants were aam panna and jaljeera. Hector Beverages employed innovative distribution channels for Paper Boat products such as airlines, five star hotels and ecommerce to get Indians familiarized to its unique variants. Other key factors that helped urban Indian consumers to lap up Paper Boat’s variants were the non-use of preservatives, attractive packaging and advertisements that rekindled memories of the days gone by. However, would Paper Boat’s growth be constrained by its supply chain challenges and premium pricing?

Prerequisite Conceptual Understanding (PCU)/Before the Classroom Discussion

This case study presupposes an understanding of the concept of diffusion of innovations. The participants were asked to read the following to help them better connect the concepts:

  • • Leon G. Schiffman, et al., “Consumers and the Diffusion of Innovations”, Consumer Behavior, 10th Edition, Pearson Education Inc., 2010 – To understand the concepts of diffusion of innovation, including the channels of communication and social system, newness of product with regard to cultural association and consumer innovators

 

The students should be encouraged to view the following social media video and advertisements of Paper Boat:

  • • “A Paper Boat Ride Down the River of Memories”, https://www.youtube.com/watch?v=t7I6zYp0CU8, March 12th 2015
  • • “Paper Boat’s Jamun Kala Khatta”, https://www.youtube.com/watch?v=kZCGwipK2XE, March17th 2015
  • • “Paper Boat’s Aamras”, https://www.youtube.com/watch?v=dzAdsXpKun4, March 17th 2015
  • • “Paper Boat’s Aam Panna”, https://www.youtube.com/watch?v=yyVPgxIbO0I, March 17th 2015
  • • “Paper Boat’s Jaljeera”, https://www.youtube.com/watch?v=rdPnF2YTFdw, March 17th 2015
  • • “Paper Boat’s Rasam”, https://www.youtube.com/watch?v=KGFQ3lbWYoU, March 17th 2015

 

Case Positioning and Setting

This case study is positioned for discussing the aspects that companies have to factor in when designing new products and how they can go about creating markets for such products. Ideally suited for “Consumers and the Diffusion of Innovations” chapter of Consumer Behavior course, this case study can be used in MBA, Executive MBA programs and Product Development module.

Assignment Questions

  • I. What are the key elements of the diffusion process? What factors contribute to consumers accepting a new product? Has there been any change to the pattern of adoption of new products over the years?
  • II. Was there anything innovative about Paper Boat’s marketing mix? What were the strategies adopted by Paper Boat with regard to its Customer Value Proposition, Customer Offering and Customer Communication that put Paper Boat in a different orbit? What was Paper Boat required to do at the backend to get the aforementioned 3Cs (Customer Value Proposition, Customer Offering and Customer Communication) right? Demonstrate how the diffusion of innovation happened in case of Paper Boat.
  • III. ......................

 

Case Analysis

The classroom discussion was facilitated under three broad sections as explained in Exhibit (TN)-I...........

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Abstract

Best Selling Case Study
This case study's objective is to sensitise the participants/students to the process of innovation diffusion and the role of culture in product innovation. It enables a discussion on how a company can tap culture to create a new product that can quickly gain acceptance among consumers. It also throws light on what other factors a company should take into account when developing a product that is perceived to have an edge over existing offerings in the market on certain aspects. Paper Boat, a beverage launched by Hector Beverages in 2013, offered ethnic juices that were very much a part of India around 25 years back, but today are difficult to access at least in urban areas. Its variants such as aam panna and jaljeera found ready audience among the rich urban consumers. Paper Boat used no preservatives and stood out on a crowded retail shelf because of its attractive pack design. The case study further throws light on how Hector Beverages employed innovative distribution channels such as upmarket hotels and an e-Commerce website to reduce the impact of a fledgling distribution network. This was besides using a tagline and marketing campaign that effectively rekindled memories of one's childhood. However, will supply chain challenges restrict Paper Boat from launching new variants and will premium pricing limit its expansion plans?



Pedagogical Objectives

  • To introduce the theoretical constructs behind nuances and importance of innovation diffusion process and discuss on how the innovation diffusion process, through its myriad contours, affects the consumer behavior
  • To relate innovation diffusion process to Hector Beverages 'Paper Boat' ethnic beverage and analyze how Paper Boat's innovation has spiralled through various dimensions of a new product launch and penetration
  • To discuss and debate on the impending and innate challenges for companies that opt for a niche positioning i.e., in the name of differentiation, would such companies be closing the doors behind them?

Case Positioning and Setting

This case study is positioned for discussing the aspects that companies have to factor in when designing new products and how they can go about creating markets for such products. Ideally suited for 'Consumers and the Diffusion of Innovations' chapter of Consumer Behavior course, this case study can be used in MBA, Executive MBA programs and Product Development module.

 



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