Pricing strategy

This document is about how the three brands like Emamis fair and handsome, HUL PureIt and Levis are following preicing strategy. Warish Jain 7/1/2011

Introduction
Although non pricing factors have become quite important in the last few decades, price still remains an important factor in determining sales and profitability of an organisation. Price is not just a number that one pays for the goods and services that we use. The price that we pay includes all cost and profits the company wants, rebate and dealers incentives and other such factors. In the later part I would discuss how products like Emami Fair n Handsome, HULs PureIt and Levis Jeans are priced and how pricing played the role in the success of these products. Ill also discuss about their pricing strategy and how these strategies are affecting consumers mind.

EMAMIs FAIR AND HANDSOME

Brief History:
Emami, a conglomerate born out of Bengal, created a history in Indian market by launching a first fairness cream for men. They found from a consumer study that Indian men spend an average of 20 min in front of the mirror each morning, higher than 18 min average for Indian women. They came up with Fair & Handsome cream in 2005 after making the research which revealed that 30 percent of the fairness cream users are men. HUL followed with the launch of Fair & Lovely Mens Active when they realize that Emami is doing great in this segment. Later, other companies also came up with various Men cosmetic products like Marico Launched Parachute Aftershower range which includes a gel, anti dandruff nourishing hair cream. Companies such as Loreal as well as Nivea have also come out with products specifically for Mens segment.

Category Equivalent pricing Mass Premium Mens Fairness Creams

Major Competitors Fairever, Fairglow, Himalaya, Nivea, Vicco, Emami Garnier, Perfect Radiance, Revlon Fair & lovely Menz Active

Pricing Strategy: Maximum Retail Price of Emami Fair n Handsome: ` 68 for 60 ml and ` 40 for 30 ml The company unleashed Fair And Handsome, the mens fairness cream in 2005. The cream was a runaway success doing business of `27 crores in the very first year itself. Even after big daddy HLL launched the Fair & Lovely Menz Active, Fair And Handsome continued to rule the market with business of `40 crores in 2006. Emamis prices are higher like HLL, because they were not into economical products. At the same time, they never wanted to be priced the way global brands like Nivea, LOreal are. Their pricing has been lower than that of those products. Proper pricing and an Indian image has made them different from brands like Nivea, LOreal. Emami Fair and handsome can be considered as price setter, being the first product in India in mens segment, when other big brands like HLL came up with their Fair and lovely Menz Active they followed the price strategy set by Emami. HLLs product even can be considered as economical but the Emami was taking a bit a higher price and at the same time also not charging very high as other premium products do. Emamis pricing strategy is not for survival, even not to get maximum market share in their category as they already have but to gain maximum profit and also to maintain their brand image of being a better product than that of HLLs Fair and Lovely Menz Active, their major competitor, as in India people believe that higher the price as so higher the quality. In short they are following the value strategy in pricing Fair and Handsome.

Hindustan Unilevers PURE IT (Water Purifier) Brief History:

HUL launched PURE IT water purifier first in Chennai and than in later part of India. They had competitors like TATA, Kent, Eureka Forbes but these products other than TATAs use electricity to purify water and were costlier. HUL came up with PURE IT with fully automated and No electricity. This product does not require boiling of water, electricity or continuous tap water supply. Pureit, however, does not reduce salinity level in water. The company has patented its germkill battery technology used in the water purifier. After the launch of Eureka Forbess Kent HUL came up with totally another product PURE IT MARVELLA and were successfully claim to take customers from right under their noses. And interestingly their USP still remains the same Fully Automated and No electricity as this product requires no electricity and there is an automated mechanism which will stop the inlet of water when it is not required.

PURE IT
Category Water Purifier Mass Premium Non electric Water purifier

PURE IT MARVELLA
Major Competitors TATA Swach, Canon Aqua Star, Other Steel Purifier Eureka Forbes Aqua Guard, Kent Purifier TATA Swach

Pricing Strategy: Maximum Retail Price: PureIt - `2000 and PureIt Marvella Around `4000 HUL was first to launch a water purifier that works without electricity. PureIT, as water purifier was the cheapest product in this segment apart from steel and other general water purifier as it challenges to offer purified water equivalent to boiled water, until TATA came up with TATA Swach worlds cheapest water purifier. HUL therefore can be said following low price strategy as well as price setter in this segment, as other big brand like TATA also found this segment profitable and launched product at much lower cost than Pureit. TATA is not into picture right know, might be just because they launched it recently and in few cities, but they might hit HUL at a large. HUL is now differentiating their products by applying value strategy. When Kent purifier came up with low cost electric purifier and HUL found this might affect their market share, they came up PureIt Marvella, again following their Non - electricity thumb rule. Again they followed low price strategy keeping their price lower than Kents and with fully automated thing.

Levis India Brief History:

The Company, Levis Strauss Co. Ltd., was founded in 1853 by Levis Strauss primarily selling wholesale dry goods. Then they used copper rivets in cloth to reinforce the point of strain in paints. They purchased patent of this idea. Levis India is changing the marketing strategies for its Denims and Non-Denim brands. On the one hand it is seeking to expand its presence in the Premium and Super-Premium segment by launching more products in this segment. On the other hand, it is seeking to strengthen its Value Brand Signature. Levis also launched new mid market brand Denizen in India. Denizen products ranging 799 to 1399 could replace Levis Strauss Signature. When someone plans to purchase branded jeans, its quite possible that the very first name come into his/her mind is Levis. They are currently operating in about 60 countries. In India they used star appeal to advertise their product and took very reputed stars from Bollywood to advertise.

Category Apparels Mass Premium Low Price Apparels

Major Competitors Killer, Koutans, Wrangler, Spykar Wrangler, Spykar Koutans, Charlie Outlaw, Barcelona & Non branded Apparels

Pricing Strategy: Maximum Retail Price: Starting from `699 to about `7000 Levis India is changing the marketing strategies for its Denims and Non-Denim brands. On the one hand it is seeking to expand its presence in the Premium and Super-Premium segment by launching more products in this segment. On the other hand, it is seeking to strengthen its Value Brand Signature. Launched last year and priced between ` 599 - ` 999 in small towns and up to ` 1399 in larger towns, Signature seeks to capture a large share of the Value segment of Branded Jeans. In the Premium segment the prices are in the range of Rs 2000-4000, Super premium has price range of Rs 4000-6000 and Connoisseur segment is Rs 6000-12000. Levis wants to increase its presence in these segments. It however does not want to be present in the Mid Price Segment i.e. Rs 1000-2000. Thus Levis India is following the International trends where Value and Premium segments are expected to do better than the mid priced segments. The Value offering of Signature is Levis take on the local Indian brands who are selling decent jeans in the range of Rs 600-Rs1200/ but who do not have the brand value of Levis. The estimates for the market of Premium and Super Premium denim in India are about 7 million and 3 million and offer substantial possibilities for growth for brands like Levis. However, the going will not be as smooth since Levis will not be able to offer great washes in its Signature line and washes are one of the biggest factors for purchase of Jeans by the young.