What is Lux soap's marketing strategy?

Answer 1

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Material! hll Value proposition Market segment Value chain structure Revenue generation & margins Position in value network Competitive strategy Nirma A low cost branded detergent offering high value for money People who want to wash clothes Raw materials from local suppliers.All non-core functions were contracted. Minimum overhead costs.Low cost of labor.Cheaper polythene packaging. Low margin. High volume. A branded detergent competing against all (un)branded soaps and detergents. Cost Focus HLL High quality branded safe detergent. People who are willing to pay a premium for the higher quality High tech plant.Multi layered distribution network. Higher cost of labour.Higher packaging cost. Higher margin. A branded product, which faces competition from quality detergent producers. Differentiation Elements of competitive strategy: Nirma Defining business arena and competitive terrain: HLL was in the business of selling high quality branded detergents to middle and high income group customers who wanted quality and were willing to pay premium for it. HLL served India's small elite who could afford to buy MNC products. Nirma Ltd., began offering detergent products for p . . . View the whole essay, without interruption Nirma's Competitive advantage Low Cost Product The product's cost was so low that its price automatically comes down. Deep Pockets HLL has very deep pockets. Strategies adopted by HLL to overcome of P&G Launch of Surf Excel HLL compressed its conventional method of product development and launched its new product in 4 months instead of 2 years. Distribution Network HLL has a very good distribution network catering to every nook and corner of the Country. Advertising: Change in advertising campaign showing the product's value in terms of 'quality and price'. Price: Discounts were offered to reduce price. They targeted only the premium segment. Price · As the operation cost of Nirma was very low, the price was also low. Distribution Network · Nirma followed a 3-tier distribution system compared to HLL's 4-tier distribution system, thus keeping its cost structure low. Ø To get rid of export commitment under FERA and to tackle labor problems, the marketing and distribution activity were given to a subsidiary unit called Stepan Chemicals. Strategies adopted by HLL to overcome the threats of Nirma were Changes in Marketing Strategy of Surf Packaging: Offering Surf in polybags than the more expensive cartons. Global Access HLL has global access of technology through its parent company Unilever. The Relaunch of Sunlight · Sunlight was relaunched at a much lower cost as its volume was dropping under attacks from lower cost producers. Loyal Distributors Nirma distributors displayed intense loyalty to Patel. It changed its cost structure so that it could afford to come up with a lower priced product which would still be better than Nirma. General Information (Data Analysis) Urban India: From 2001-02 to 2006-07, the market size is expected to grow at 2.68% p.a. from 297Mn to 339Mn population. In the period, very rich segment is growing at 15.9% p.a. from 11Mn to 23Mn (in population) which grew at 14.04% p.a. from 5Mn to 11Mn where as the consuming class has grown at 8.29% p.a. in Ist phase and is expected to grow at 8.92% p.a. till 2006-07. The other three segments in Urban India are showing negative growth. After taking 5% p.a. inflation into account, very rich segment earning would be 3.7Lacs and above and consuming class would be earning from 77K to 3.7Lacs. Rural India: From 2001-02 to 2006-07, the rural India's market size is expected to grow at 1.64% p.a. from 744Mn to 807Mn population. Here the very rich segment is expected to grow at 11.84% p.a. from 2001-02 to 2006-07 which grew at 12.25%. There is extraordinary grow is seen in the coming years in the consuming class. The consuming class that grew at 3.79% p.a. from 1995-96 to 2001-02 and is expected to grow at 11.93% p.a. from 2001-02 to 2006-07. The growth p.a. in the climber segments is dropping down to 3.6% p.a. in the second phase which grew at 7.37% p.a. in the first phase. In the aspirants and destitutes, the growth rate is negative. Class 1995-1996 2001-02 2006-07 Very Rich 215000+ 274404.5+ 367723.1+ Consuming Class 45,000 - 215000 57433.5 - 274404.5 76965.3 - 367723.1 Climbers 22,000 - 45000 28078.6 - 57433.5 37627.48 - 76965.3 Aspirants 16,000 - 22000 20420.8 - 28078.6 27365.44 - 37627.48 Destitutes <16,000 <20420.8 <27365.44 All Figures are in Rupees. Inflation is taken as 5% p.a. (average) Proctor & Gamble - Detergents The company has 2 detergents in the Indian market - Ariel and Tide. From April this year company has intensified the price war with HLL products. Ariel's ½ Kg pack is currently priced at Rs 50/ whereas Tide's ½ Kg pack is Rs 23 whereas the sachets of 20 gms are available at Rs 1.5 and Re 1 respectively. P& G has a mere 5 per cent share of the detergent market, which HLL dominates with a share of 40 per cent. Product: On this front my strategy would be: • Localizing R & D towards new production development: I feel there is a space in detergent market for premium product after reducing the price of Ariel to about half from last one year. The new product would have superior offerings than the existing Ariel and that would be indigenously developed on the local customer needs. The new product 'Ariel Turbo Boosters' would be positioned for the urban very rich segment. The urban population, looking at the growth rate would have one product in the premium range. The add-on benefits in the new product would be better fragrance, better enzymes for dirt fighting etc. For rural population that is generally perceived to be price conscious, I think Ariel should be positioned for rich segment and Tide should positioned for the consuming class to climbers. I personally feel that slight changes in the existing products over a time interval could be good strategy. This strategy would be the same as HLL acquired for Pepsodent toothpaste. From the last one year, it's known that sachets sales have increased sharply. I will be launching the products in the sachets of Rs 5 and Rs 10 as the price point has greater impact in consumer buying behaviour especially when they are price conscious. Price : On price front the company has already squeezed it margins by dropping it two times in last year. I don't thing further price drop would be a good strategy unless its competitor HLL is dropping the price range of its products. The pricing of the new proposed product would be in the range of Rs 75-85 per half kg (taking inflation rate of 5% p.a. from now into account till 2006-07) to offer product in the premium segment to urban rich population. The price of existing Ariel and Tide would increase after taking inflation, raw material costs and competitors price into account. Promotion: For urban population, the T.V. media promotion (on the channels like Starplus, Sony Zee TV, Sab TV Aaj Tak, Star News, NDTV etc) would be more effective. For metros, FM radio would also be better option. By 2006-07, the cable T.V. penetration to rural population and interior villages would also be increased. Apart from that hoarding on the outskirts of metropolitans would be good strategy considering the visibility and the movement on the national highways passing through big cities. Apart from that several promotional schemes with free offers would also be considered. For rural population, T.V. as well as promotion on radio would be better. Place: The strategy would be to develop the marketing channels as strong and penetrated as that of HLL. The national coverage would be dealt with by increasing the company's warehouses and creating C&F agents in the smaller cities. Rural penetration on the lines of competitor would be better strategy. Emphasis would also be on increasing wholesale dealer in small towns and tehsils who can cover the nearby villages. In this context my strategy would be to provide the wholesalers a scheme for buy delivery vans by funding 50% of the price of delivery vans and rest to be paid by wholesalers in installments. The number of distribution van would again depend upon the distribution path covered by each individual wholesaler, the number of villages nearby a small town and certain demographic factors. HLL - Toilet Soaps In toilet soap market HLL has 63% market share. This is the product segment where HLL has seen growth over last year but the growth is not as high as there is expansion in the market for toilet soaps. The cash cows for HLL include Lifebouy, Lux, Liril, Rexona and Breeze. The company's premium soap include Dove, Pears. The company has come up with a new product offering i.e. Fair & Lovely soap. The strategy for 2006-07 would be to increase the market share from existing 63% to 70%. The strategic changes taking 4 P's into consideration would be: Product: I would continue with the existing portfolio of the products and would concentrate on coming with new fragrances on different soaps than launching new soaps. I would position Dove and Lux International soap very urban rich women who are extra conscious for their complexion. Pears, Lux International would be positioned for the urban and rural rich. For the consuming urban class, Liril, Rexona, Pears and Lifebouy International would be positioned. I would also come up with 40gm packaging for different products. I will also be thinking of extending popular brands of cosmetics in the toilet soap segment by that decision would be based on the popularity and acceptance of that particular brand (Brand Extension). Price: I would be try to customize the packaging of various products on the basis of price points. e.g. I will come up with the pricing of Rs 5, Rs 10 and Rs 15 for different products. I would try to experiment it with the products positioned for consuming class. Promotion: For promotion, apart from continuing the existing strategy of concentrating on T.V. channels, I would try to focus on the promotional campaign in rural sector. I would also concentrate on promoting through radio and sponsoring the programs e.g. 'Krishi Darshan' and 'Aap ka Swasthaya' programs that have greater number of audience. The advertising for them would have a pastoral and cultural looks. I would chalk out the rural promotion scheme for those areas where the cable T.V. has not reached. Under this scheme I would try to include 'Gram Panchayat', 'Swasthaya Parishad' and other local bodies by offering knowledge for using good and anti-germ products. Place: As the marketing channels of the company are already established I would try to increase the penetration in the rural sector to the extreme remote areas which are not touched till now. I would try to reduce the delivery time of the products by choosing and increasing the strategic locations of warehouses. I would also track the distribution path of the wholesalers in small cities through marketing team and would establish a platform or team at a zonal level for all the wholesalers and would try to take their feedback on the market developments. These kinds of congregations could also increase the brand loyalty in the wholesalers and they would be motivated to push HLL products. Colgate Palmolive - Oral Hygiene Products Colgate Palmolive is the market leader in the Indian oral care market, with a 51% market share in the toothpaste segment, 48% market share in the toothpowder market and a 30% share in the toothbrush market. Presently it is facing competition from no. 2 player HLL and more recently from small local players ( Meswak, Babool, Anchor ) and other MNC's such as Smithkline ( Acquafresh ). The future strategy of the company in Oral Hygiene Products for 2006-07 on the basis of 4 P's would be: Product: CP would come up with another strong brand name other than Colgate and Cibaca. I would recommend for a new product development and emphasize on R&D. I would try to position some innovative toothpaste with a brand name other than Colgate but under the umbrella of Colgate Palmolive. In toothpowder, I would endorse the development of 'Colgate Ayurvedic Toothpowder' focused toward rural rich and consuming class. I would come up sachets of these tooth powder and position toward rural population who buy in smaller lots. For Urban population, I would come up with the products suiting to young generation. For Urban rich and consuming class, I would come up with the products on the basis of functional benefits. E.g. I would expand Colgate Herbal brand to herbal clove flavor, herbal lime and mint flavor etc. For toothbrush, I will concentrate on functional benefits and would launch different toothbrushes for different age groups. I would also launch a special toothpaste and toothbrush for kids in the age group from 4-10 years. Price: The price would largely be based on the competitor's price. From the niche products e.g. Colgate herbal, Colgate Blue etc, I would charge higher premium than the generic dental white crème that would be focused on consuming and lower income classes. The pricing would be done on the basis of price points and the packaging would be customized on the basis of price points. Promotion: I would be positioning Colgate dental white crème and toothpowder towards rural rich segment. For rural consuming class I would be endorsing Cibaca toothpaste. Most of the promotional expenses would be T.V. media as it would have better reach to both urban and rural population by 2006-07. Apart from T.V., FM radio for urban population and MW and SW radio would also be used for promotion towards rural population. For urban population hoarding on national highways outside the metros would provide better eye catch. Place: I would try to increase product penetration to rural population as by 2006-07 the rural population who is rich and consuming class would be 209Mn which is not much lesser than urban rich and consuming population of 253Mn people. I would try to increase the wholesalers to smaller towns and would track the distribution path so that they are covering all the village areas around the towns.