Implications on Market Players

Buying Behaviour Summary (carried over from previous submission)

From our previous study we found that the two major challenges that lie ahead with Marketers are a) Penetration- or increase in per capita consumption and b) Building up of credence and moving their products from low involvement to high involvement across majority of the user base. On the basis of these we will study the implications of these on two market players, one of which is an MNC- HLL now known as Hindustan Unilever and another National level player- Cavin Kare.

Why was their heightened competition for Market Share in India  Teeming millions  Burgeoning middle class  Westernized youth  low penetration levels

 Huge untapped market

Market from 2001 to 2009- The Players and the 4Ps

In January 2001 the Shampoo Market was worth Rs. 85 million according to ORG-MARG. However Market Penetration was just 36% in the urban market and 12% in the rural areas.

Urban Penetration
36% Users 64% Untapped

Rural Penetration
12% Users 88% Untapped

HLL now know as Hindustan Unilever was the leader with a market share of 68% followed by Procter & Gamble and Cavin Kare. In the period of consolidation for the Market the segmentation for the product became more visible. The platforms were 1) 2) 3) 4) Beauty Health Anti-Dandruff Herbal/Natural

Implications on Market Players

The pricing cards were played and Cavin Kare emerged as a major price player by coming up with low consumption units of Chik which increased penetration of Shampoo in the rural market. Later all the companies followed the packaging mode albeit they were differently priced. The Great Price War in 2003 HUL started it by giving a bottle free on purchase of Sunsilk or Clinic Plus. P & G retaliated by reducing price of Pantene by 16%. HUL reduced the price of Clinic Plus by further 23%. Both the companies projected that the reduction was to give more value to the customer. P & G also introduced a new product Rejoice at a low price level and continued pulling it down further. Indian companies like Dabur and Cavin Kare were the biggest losers as there market share took a beating. By 2004 the market had grown up to Rs. 100 mn and Sachet were the major growth drivers.

Packaging
30% Sachet 70% Bottle

In In

2005

HUL remained the leader with a value share of 52% in the Rs. 120 mn market

2006 the market grew up to Rs. 142.5 mn as there was huge support from the rural

market. Clinic was the clear market leader with a share of 24.5%.

Implications on Market Players

Sales

Clinic 24.50% 39.90% Sunsilk Head &Shoulder 13.50% Pantene Rejoice Others 11.50% 2.70% 7.90%

Implications on Market Players

In

2007

the market saw steady and continuous growth along with some major changes.

In terms of market an integration across the market segment by introducing Dove Shampoo for the upmarket customers and at the same time launched Rs 0.50 Sunsilk sachet to cover the bottom segment. New users were being added continuously to the bottom of the pyramid as the shampoo became personal with each family member having his own pack. This became a strong driver of growth for the entire market. In

2008

HUL hiked the the prices of its brands by 3.5-4 % and the price of Sunsilk was

increased by 10%. This was carried out along with a very aggressive campaign especially of Sunsilk which roped in celebrities. HUL was confident the Dove would not cannibalize the other brands in its protfolio as there was visible super-segmentataion happening in the market. Analysts felt that rising input costs were responsible for the price hike but othere were of the opiniion that gross margins were good and remarked that companies were in a position to demand higher prices because of increasing customer at both ends of the pyramid. The market share was still very low and this looked like an opportunity across the entire chain.

Per Capita Consumption- India compared to other emerging economies

350 300 250 200 150 100 50 0 Shampoo

India Indonesia Thailand

Implications on Market Players

Marktet Share of the Top companies in the Indian Shampoo Market- 2007 Last Qtr.

Sales

16.50% HUL 12% 47.80% P&G Cavin Kare Others 23.70%

By 2008, Market was estimated at Rs. 21.41 billion per annum growing annually at a rate of 14.5%. Competition in the market has intensified with the entry of ITC, Marico, Godrej, and MNC like Garnier.

2009- Market Trends in the Shampoo Market and its effect on the Players.
Smaller players like Dabur and CavinKare started chipping away share from fast moving consumer goods (FMCG) biggie Hindustan Unilever (HUL) in the hair care market. During the first quarter (April-June), HUL lost share in both volume and value terms in the fast growing shampoo market. While Dabur increased its share and occupied 7.3% of the market, HUL's share with brands like Sunsilk dipped to 50% (51.5%) and in value terms to 45.4% (46.5%) during the quarter. Procter & Gamble (Head & Shoulders and Pantene) also increased share marginally, while CavinKare (Nyle and Chik brands) maintained its share, according to AC Nielsen data. Overall, the shampoo market growth was pegged at 14% a year. Analysts said that cheaper variants of rival companies and a stronger marketing push might have led to the biggie losing market share. Regional players have been chipping at shares of the larger players. The shampoo market is driven mainly by rupee one small packs, with over 90% of the rural market dominated by

Implications on Market Players

sachets. In cities, sachets account for about 40% of total sales. Small packs have helped in increasing penetration in rural areas where pricing plays a major role. CavinKare is more of a regional player, and is active in the south, while Dabur leverages Vatika on the 'natural' plank. Implication, Strategies and Marketing Plans for MNC HUL and Local/National Player Cavin Kare

HUL
Strategies & Marketing Plans While everyone was going into stores, HUL went into consumers homes to find out what she wants. This is part of their 4M of marketing market development, market share, margins and mood of the consumers. They took the urban market. Over the years, the market has fragmented from the generic kaale ghane baal (dark, thick hair) market to speak about a sharper concept of damage, dryness, breakage of hair. The SEC A (well-educated, senior professional category) woman was willing to look at these issues. These are women who are willing to pay a premium. Dove spoke of these issues and in a short span of three years, they have 10% share in urban India June, 2010). It is the largest hair care brand in modern trade channel across India, with a 18.3% share. The hair conditioner business is the market of the future. In many markets, conditioners are about one-third of the shampoo market. In India, it is virtually next to nothing. This is a `200 crore category today and growing at 40% to 50%. The category was non-existent three-four years ago. HUL is the market leader in this

Cavin Kare
In a highly competitive FMCG category that seemed impenetrable to most marketers, Chik Shampoo (Cavins brand) identified humongous opportunity in rural and semi urban India and created waves with its entry into these markets. Cavin Kare targeted lowermiddle class, semirural, females in the age group of 16+. Combining innovative sachet packing, strategic pricing (at Re.1 and 50p) and a strong and motivated distribution network, Chik Shampoo transformed the very nature of shampoo packaging and usage. For Promotion, they used the powerful appeal of cinema and radio among masses. Popular southern stars endorsed Chik Shampoo They also encourages trial through a consumer scheme, where anyone could take the 4 empty shampoo sachets to a retailer and take home a Chik sachet free. They went to the rural areas and showed people how to use it by giving live demonstration. Asked people to feel and smell hair after use.

Implications on Market Players

category. While HUL is doing well in market share, their eye really is on building the market. That is the big opportunity. This will translate into other opportunities like serums, masks and treatments. They have all this in Dove and will build these markets one at a time as well. Rural market is a key opportunity for consumption building. There is an opportunity to educate consumers to use more. In terms of having tried shampoo or knowing what shampoo does, there is an 80% penetration. In the course of the last one year, 80% of consumers would have tried shampoo. Over here. it is not about benefits like damaged hair. Many of them have to be taught how to use the products. The good thing is that here, consumers are willing to embrace a regime if they see a benefit and value. HUL is running one of its largest consumer connect initiatives hereKhushiyon Ki Doli. It allows them to go deeper, to villages that are media dark with populations of 5,000 people. Close to 30-40% of rural UP (Uttar Pradesh) is media dark. The commitment is to build (sales) in media dark villages, which are the markets of the future. Recent Ambush Marketing The story starts on July 23, when Mumbai woke up to hoardings that screamed: A Mystery Shampoo!! 80% women say is better than anything else. P&G, it was later found, was planning to unveil the new Pantene on August 1.

Implications on Market Players

When the suits at HUL found out, they saw an opportunity to score a point. They ambushed P&G. On July 28, even as the P&G hoardings stood tall on its skyline, Mumbai woke up to another hoarding that was upfront, and suggestive of its source of inspiration. It said: There is no mystery. Dove is the No.1 shampoo. Dove is one of the four brands in HULs shampoo portfolio.

LIP to HIP

Some years ago, penetration was the key task. People had to be told or explained that they try this product. HUL has now moved beyond that. Its now about what is the benefit of using this product more often or using it the right way. Thats the next big learning. HUL is very well positioned because they have the right portfolio of brands and they are operating at various price points. So it allows them to give value proposition for everybody at the right price point. Sun Silk From an normal hair washing shampoo HUL transformed this product into a unique experience by introducing various types based on the requirements of the modern go-getters women.

With a tropical climate round the year, it is indeed a difficult task to maintain hair softness and shine. Added to this, tangled hair has come to be the most common complaint of girls and women. The Research and Development team at Cavinkare recognized softness and manageability to be the key issues in the maintenance and nourishment of hair. This paved the way for a unique formula Active Double Conditioners that cut across age, sex and loyalists of other shampoos to adopt Chik Shampoo. Further, extensive communication targeted at the rural and semi urban masses showcased the possibility of soft and manageable hair.

Product Launches

Sunsilk - HUL undertook a global rebranding exercise of its Sunsilk shampoo range, which involved a new formulation, packaging and marketing campaign. Dove Launched the new brand with range that addresses specific needs like hair fall, smooth hair etc.

Chik -

Shampoo Chik Black Chik Jasmine Chik Egg.

Chik Satin Shampoo Strawberry extracts for soft hairs. Green apple extracts for tan free hair Papaya extracts for bouncy

Implications on Market Players

hairs. Lever Ayush Consumer heavyweight Hindustan Lever (HLL) pulled out its ayurvedic brand - Lever Ayush - from the traditional retail channel after the brand review was done. Clinic All Clear Has been primarily launched to address the problems of Dandruff and categorically. It has been further launched to address separate problems for men and women. In May 2010, Chik Shampoo has witnessed a re-launch. In order to meet evolving consumer needs, th winning product has been reformulated to give great nourishment to hair. There has be an addition of a new ingredient namely Vitamin H which promis nourished soft hair. The new Chik Shampoo also has a refreshing fragrance which has been significa liked by consumers. Chik Shampo now comes in an exciting new pac with a contemporary look and eye catching design. Nyle Herbal Shampoo Based o the herbal platform Meera Badam Shampoo Again based on the herbs and Badam

Performance

2007- 2008 According to retail measurement figures released by AC Nielsen, market leader HULs share grew from 46.9 per cent in JanuaryMarch last year to 47.8 per cent in the October-December quarter. HULs share in the shampoo market registered a marginal increase from 46.9% (in terms of value) in the March quarter to 47.5% in the June quarter, while rival P&Gs share dipped from 25% to 24.8% in the same period, ACNielsen said. Shampoos is a very large market, well over `3,000 crore, fast growing market in both urban and rural areas. It offers a fundamental consumption

ACCOLADES In 2003, Chik Shampoo was declared the winner of the best performing brand in 2003 by AAAI, amongst the top ten brands in household availability.

The overall market for shampoos in India is estimated at Rs 2,000 crore a year. The popular segment, where Chik Satin has been positioned, commands an estimated 25 per cent of this market. According to a Cavinkare executive, 75 per cent of Chik sales come from the rural market, while the industry sells only 52 per cent of its shampoo brands in the rural markets.

Implications on Market Players

opportunity. They now have a volume share of 50.5%. They continue to invest in market development while increasing our lead versus competitorsbig or small. In the Indian shampoo market, where sachet (7ml) format accounts for 75 per cent of the total sales, Chik has been bringing in 90 per cent of its sales in this format

Implications on Market Players

SWOT Analysis of HUL

Threats: Tax and regulatory structure. Mimic of brands

Opportunities: Large domestic market over a billion populations.

Untapped rural market Removal of import restrictions resulting in replacing of domestic Changing lifestyles & Rising income brands. levels, i.e. increasing per capita income of consumers. Temporary slowdown in economy can have an impact on the FMCG industry Export potential and tax & duty benefits for setting exports units.

Weakness:

Strengths

Me-too products which illegally Strong brand portfolio, price quantity mimic the labels and brands of the & variety established brands Innovative aspects Strong Competitors & availability of Presence of established distribution substitute products networks in both urban and rural areas Low export levels High price of some products High Advertising costs. Solid Base of the company Corporate Social Responsibility (CSR)

Implications on Market Players

Implications on Market Players

SWOT Analysis of Cavin Kare

Threats:

Opportunities:

MNC Brands swamping market with Large domestic market over a shampoo based on patented billion populations. technologies. Converting the success of rural Temporary slowdown in economy can market to the urban mass have an impact on the FMCG industry Changing lifestyles & Rising income Other Regional players cutting into levels, i.e. increasing per capita income of consumers. the Market Share- Dabur. People accepting local brands,

Weakness: Local Brand sometimes has connotation. products a low

Strengths which Strong brand portfolio, price quantity quality & variety Strong Presence in especially South India. rural areas

Non-acceptance of Premium range.

Strong Competitors & availability of Ability to play on the traditional herbal plank as its a National player substitute products Regional Player High Advertising costs. Lack of highly established distribution network in urban and rural areas across India.