Soap Opera

Wipro's Santoor is largest soap brand in South India 23 Jul 2009, 0229 hrs IST, ET Bureau BANGALORE: Santoor, the flagship sandalwood soap brand of Wipro Consumer Care and Lighting (WCCL) the FMCG division of IT major Wipro has become the largest soap brand in South India. WCCL closed the first quarter with a 29% increase in profit before interest and tax (PBIT) to clock Rs 78.7 crore, against Rs 60.9 crore in the year-ago period. Santoor has notched up a market share of 15.1% (value terms) in South India in the first quarter, according to market research agency AC Nielsens figures. This was achieved on the back of a strong distribution network and communication in rural areas, president of WCCL, Vineet Agarwal, said. At the all-India level, Santoor continues to be the third largest soap brand with a 7.5% value market share in the first quarter of fiscal 2009-10. We have been growing faster than the entire soaps category. While the soaps market grew 10% in the quarter, we grew 18%. Overall we are at least 1.5% ahead of competition, Agarwal told ET. For the quarter to June 31, 2009, WCCL reported earnings of Rs 546.3 crore compared with Rs 512.7 crore, a growth of 6.55%. This was powered by an 18% growth in Santoor, and a 30% growth in ayurvedic-soap Chandrika. The FMCG divisions operating margins increased from 11.9% to 14.4% in the first quarter. Our margins have grown because we have managed to hold on to prices inspite of competitive pressures. Besides improving cost structures, our raw material purchases have been at the lowest market prices. Dettol Gains Ground, Lux Slips 23 Jul 2009, 0342 hrs IST, Ratna Bhushan, ET Bureau NEW DELHI: Reckitt Benckisers germ-protection soap Dettol gained maximum value market share among soap brands in the last 12 months ended June, while Hindustan Unilever saw its top-ranked brands Lifebuoy and Lux lose footing, as per data by market researcher AC Nielsen. Dettols share increased from 6.6% in June 08 to 7.7% in June 09, placing it ahead of Wipros beauty soap Santoor as the countrys third-largest soap brand by value. But Santoor retained the No 3 ranking on a cumulative basis during the last 12 months, with Dettol following close behind. The Rs 7,500 crore soaps market posted 11.8% growth in the 12-month period. Soaps is estimated to the second largest FMCG category after detergents in the non-foods segment. Analysts attribute multiple reasons for Dettols growth consistent positioning on the germ-protection platform, stable pricing and smaller packs. Dettol soap has grown share to 7.7% last month this is a rare feat in a mature category like soaps where penetration is close to 100%, Reckitt Benckiser CMD Chander Mohan Sethi said. The brand is available in four variants and was extended two years ago to a smaller 35-gm pack at Rs 7. The company expects to cross the Rs 1,000-crore mark for Dettol by year-end. Despite some of Bollywoods biggest stars including Priyanka Chopra and Aishwarya Rai promoting it, Hindustan Unilevers beauty soap Lux saw the biggest dip of 2.1% in value market share in the 12-month period ended June. Its share stood at 15.5% at the end of last month. Similarly, HULs germ-protection brand Lifebouys share dropped from 17.9% to 16.6% during the last one year. Both Lifebuoy and Lux, however, retained the top two rankings among soaps. HUL has been seeing market share slip across categories, which analysts say is because of focus on premium products, frequent changes in pricing and lack of innovation. The firms value-for-money soap brand Breeze also saw its share dip in the 12-month period. Its

premium brand Dove was the only exception, gaining value market share of 0.4% in the past 12 months. ITCs Vivel, a relatively new entrant, clocked the second-highest percentage share gain of 0.8% for the 12-month period after Dettol, though on a smaller base. Wipros Santoor and Godrejs price-warrior brand Godrej No 1 also gained share. Brands that did not alter grammage of products or maintained pricing did well. Value packs at price points of Rs 5 and Rs 10 saw good offtake, Godrej Consumer Products executive director and president Hoshidar Press said. Chennai-based Cholayils Medimix lost share of 1.7% over the last 12 months. HUL plans makeover for Lux, Wheel to boost market share 24 Jul 2009, 0421 hrs IST, Ratna Bhushan & Kala Vijayraghavan, ET Bureau NEW DELHI | MUMBAI: Stung by falling market share, Hindustan Unilever (HUL) is reworking the marketing strategy for two of its largest volume brands Wheel and Lux. While the countrys largest consumer products company is planning to rejig the brand portfolio of price-warrior detergent Wheel by tweaking select packs, for beauty soap Lux it is planning to alter packaging and communication strategy. While Wheel is set to undergo some changes this month itself, Lux is scheduled for a makeover in September. The details of the forthcoming plans are being kept under wraps. But it is learnt that HUL has already alerted distributors about the changes. An HUL spokesman declined to comment on what he termed market speculation. Brand innovation and renovation is core to our business. Brand renovation is aimed at constantly renewing the product equity with the consumer by making it current and contemporary, he said. HUL had undertaken renovation activities on Lifebuoy earlier this year. The brand was relaunched with an improved formulation that reduces mush and signals better consumer value. The Rs 1,000-crore Lux brand is facing tough competition from rival brands such as ITCs Vivel, Godrej No 1 and Anchors Dyna. Dealers say companies are bundling products and offering big discounts and dealer margins to push volumes. The value market share of Lux eroded from 17.6% to 15.5% in the 12-month period to June 09, according to market researcher AC Nielsen. While Hindustan Unilever has begun improving grammage recently and slashed prices, consumers say regional brands have been offering better quality, a Mumbai-based wholesaler told ET. In addition, regional players are also offering higher dealer margins to push products. Godrej No.1 has risen to the third spot with minimal advertising support August 25, 2009, 0:00 IST, Byravee Iyer Mumbai: This should shake up conventional marketing wisdom. A brand gets minimal advertising support, yet leapfrogs to the third spot in a highly competitive market. This is exactly what Godrej Consumer Products has done with its No.1 brand of soap. Brought out of oblivion in 1998, it is now ranked third (market share: 6.45 per cent, up from 5.67 per cent a year ago, according to AC Nielsen) after Hindustan Unilevers Lifebuoy (16.6 per cent) and Lux (15.5 per cent). The Rs 7,500-crore soap market has over a dozen key brands and is growing at 8 to 9 per cent per annum. It became the first Godrej Consumer Products brand to cross the Rs 500-crore mark in sale in June this year. (A year ago, it stood at Rs 442 crore.) The heavily-promoted Cinthol has now been left way behind in the sweepstakes. The company, mind you, spends only around one per cent of the revenue from No.1 on its promotion. The norm in fast-moving consumer goods is 12 to 13 per cent. No.1 is the leading brand in the north and is doing particularly well in Punjab, Haryana and Uttarakhand. In these markets, the brand has bested Lifebuoy in sale value and Lux in volume.

Rise to the top No.1 is actually an 87-year-old brand. For a long time, No.1 sold in the premium end and was priced around the same as Cinthol and Hindustan Unilevers Lux. In the mid-1980s, it was priced at Rs 6 (for 100 gram) a good 50 paisa above Cinthol. However, No. 1 lagged far behind in sales. It was ranked a lowly 15th in the market. Experts believe that its appearance did it in. It was a chunky rectangular bar, an idea that its up-market target consumer group was averse to. They wanted something that looked sleek. But the company did not alter the design and the brand continued to languish. Finally, sometime in 1988, Godrej Consumer Products decided to withdraw it from the market. Around 1997, Godrej Consumer Products found that its flagship, Cinthol, had come under attack from lower-priced soaps like Breeze and Nirma. Consumers were found switching from Cinthol to these brands which carried lower price tags. We were losing out to lower-priced products and we needed something to counter that, says Godrej Consumer Products Vice-chairman Hoshidar K Press. That is when No.1, which had been mothballed, was brought out and put in the market as a price warrior almost a decade after its exit. It was priced at Rs 6.50 for 75 gram and Rs 10.50 for 125 gram way below Cinthol (now Rs 10.50 for 75 gram) but close to Breeze and Nirma. The soap brands fortunes began to change during the slowdown in the soap industry some time in 2000. There was a global meltdown as the dotcom bubble went bust and the stock markets tanked. For the first time perhaps, consumers began to down-trade heavily on FMCG products. Brands that were competitively priced were in great demand. Though overall soap sales fell 9 per cent, the sub-popular segment (the lowest priced) grew as much as 16 per cent. That set the ball rolling for the brand. By 2001, it had become a Rs 25-crore brand. Still, nobody could have told that in eight years its turnover will rise to 20 times. Actually, the real upturn in No.1s fortunes has come in the last two years. The urban markets slowed down. Consumers began to down-trade once again and thus started the hunt for value-for-money products like No.1. At the same time, the rural economy gained strength. The farm-loan waiver and the rural jobs scheme helped purchasing power in the farm sector. The government had for some years regularly raised the support price for various crops and rains till last year had been bountiful. No.1, with its attractive price tag, began to fly off the shelf. That was also the time when commodity prices shot up to unheard of levels the world over. Hindustan Unilever, the market leader, imposed steep price hikes on its soaps on account of higher palm oil prices. Lux became dearer by Rs 1 to Rs 18 (for a 100 gram bar) and Lifebuoy also saw its price rise by Rs 1 to Rs 13. But rural consumers were in no mood to pay more. Godrej Consumer Products increased prices later and at a lower rate than its rival Rs 47 to Rs 50 for its pack of four a full three months after Hindustan Lever. No.1s prices went up a few months later and that was when people began to take notice and appreciate the brand, says Godrej Consumer Product Managing Director Dalip Sehgal. No doubt the positioning is very good, but its biggest gains have come from the economic slowdown, says Anand Shah, an analyst with Angel Broking. Sehgal, on his part, says there is more to No.1s success than down-trading alone. In fact, in terms of value and product, consumers are up-trading. Besides, how does one then explain the fact that weve gained from cheaper brands such as Nirma? The price game, to be sure, is now being played by all. With the softening in palm oil prices, all soap makers dropped prices in March 2009. Luxs pack of four fell from Rs 75 to Rs 66 and Breeze saw a discount of 12 per cent. But the first movers advantage seems to have gone to No.1 which is growing two-and-a-half times faster than the market. The good news for Godrej is that once a customer leaves a particular brand, its a challenge for any company to get him back, Shah points out. Re-launches vs variants

The downside for No.1 is that Hindustan Lever is taking some very serious steps to resurrect. Price cuts apart, the company has re-launched brands like Lifebuoy and Breeze. Brand activation gets noticed but it will be a slow and steady journey for Hindustan Unilever, adds Shah. Given its low promotion budget and miserly ways, its unlikely that No.1 will see any re-launch. We dont want to surprise consumers with re-launches and new packaging, says Sehgal. Instead, hes decided to concentrate on variants. Nobody has understood the variant story the way we have and thats why weve consistently given a whole new experience without having to re-launch. Thus, twice a year the soap gets a new variant. Much thought is given before launching any variant and a pulse is kept on the latest fad and trends. For instance, Asian trends show that consumers have moved from flowery fragrances to fruity ones. Hence Godrej Consumer Products came out with the Papaya Lotus variant. Similarly, Strawberry and Walnut was launched with moisturising benefits for premium imagery. The latest to be added to the portfolio is Lime and Aloe Vera. The Lime variant gave No.1 0.5 per cent of the soap market within just three months of launch. Though its appearance not so long ago got the thumbs down from consumers, today No.1s packaging is its unique sale proposition. Of all the soaps available in the market, No.1 is the only one without a womans face on its jacket. Reports from the market place have indicated that this bodes well for the company as consumers have a higher recall of it. The uniqueness of packaging in a crowded market gives us an edge, says Sehgal. Remodelling the Ps No.1, it so happens, is a Grade I soap (Grade I soaps have less talc/filler and a high total fatty matter or TFM of over 76 per cent) and therefore lasts longer when compared to rival Lux which is a Grade II soap. This gives No.1 anywhere between four and five extra baths. All this at an attractive price point seems to have got the consumers attention. For each brand, there is a hypothesis and the Ps can be modelled differently. While others depend on promotion spends, No.1 relies on the product, says Sehgal. The price-product proposition perhaps explains why the promotional spend for No.1 is so low. Weve always depended on word-of-mouth publicity. We were always aware results would come in later. But if we had to advertise that would mean taking the price up and we wanted to stay with our price points, says Godrej Consumer Products Chief Operating Officer RK Sinha. The low price points of Rs 5, Rs 10 and Rs 50 for a pack of four are critical for the brand, especially in regions characterised by low per capita income. This is not to say the brand has been left totally without advertising support. Once consumers started using No.1, Godrej Consumer Products used a combination of below-the-line marketing and increased distribution to capitalise on it. As for mass media, No.1 advertises only on Doordarshan because it is cheaper and has just the reach the product needs. Keeping the rural markets in mind, the company came up with on-ground marketing initiatives that included participating in exhibitions and local puppet shows. It even organised vans to travel from village to village. Shah of Angel Broking believes that the campaign the company undertook during its master brands re-launch one year ago also rubbed off on No.1. Distribution too has played a key role. In the past, No.1 was considered weak in rural markets. In recent times, its distribution there has really picked up. At present, the soap is available in 1.8 million shops covered by 4,000 sub-stockists and 1,250 direct distributors. It is available in around 20,000 villages directly. In Uttar Pradesh alone, distribution has doubled in just a couple years. The return on the measly investment has been high. Less tangibly, the brand has given Godrej Consumer Products carriage into a lot of markets with its distribution prowess and reach. Godrejs other soap brands are Cinthol, FairGlow, Evita, Vigil and Shikakai. No doubt, No.1s success sounds enviable. But the fact remains that No.1 is still penny pinching with media spends. While Hindustan Unilever has cut back prices, No.1 has not. At the same

time, brands like Reckitt Benckisers Dettol and Wipros Santoor are growing at a fast pace. And with Hindustan Unilever all set to up the ante, will this minimally marketed brand sustain its performance? Wait for the soap saga to lather up. Questions 1. Do you think that contemporary marketing is significantly different from conventional marketing in Indian Bathing Soap Industry (IBSI)? Justify your opinion with reference to Soap Opera. (8) 2. Map competitive scenario of IBSI with the help of Porters Model. (6) 3. Explore SWOT analysis of IBSI with reference to Godrej No.1. (6) 4. Suggest consumer value models for different bathing soaps like, Lux, Santoor, Dettol, Lifebouy and No.1. (10) 5. What type of product-mix strategy would you like to suggest to HUL for preventing further loss of value market share of Lux and Lifebouy. (10)

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