2012

Assignment on Repositioning Dabur

Sudeep Bir Tuladhar

Marketing Management Second Semester, EMBA Fall 2011 8/20/2012

1.

Analyse the reasons that impeeled Dabur to refine its Ayurvedic image to that of a herbal FMCG company?

Dabur India Limited was set up in 1884 by Dr. S.K Burman in West Bengal as a proprietary firm for the manufacture of Ayurvedic drugs. Later, the firm expanded its business in other sectors like family products, health care products, medicines etc. However, the image of the organization could not be diversified from its original Ayurvedic image despite having specialized in other sectors as well. The organization had to refine its Ayurvedic image to herbal FMCG Company because of the following reasons. As explained above, Dabur's image was known to the public as an Ayurvedic company although it specialized in many other areas and segments that include personal care, food products, and health products. This caused people to know only about the Ayurvedic products Dabur produced and the people had very limited information on other products such as family products, health care products and food products. Moreover, Dabur's image was associated with the age group of over 35, and with a very high percentage of youth in India which make up around 70% of the population, This meant that Dabur was definitely missing out on a massive market which are potential customers having high disposable incomes. This was considered a second driver that pushed Dabur to reposition itself so that it can target consumer of all age group. Thirdly, Dabur also witnessed low sales and profits which indicated slowing growth for the company. This encouraged Dabur to reposition itself and it also appointed a consulting firm to propose recommendations to boost the sales and growth of the company.

Besides, the FMCG herbal market is considered a huge market that is booming and is believed to be valued at around $40 billion. Also this market is considered to be the fastest growing product category within FMCG s with plenty of support from youth and Dabur wanted to position itself as specialist in this sector.

Finally, Dabur's product range was diversified into many and did not have one specific product line. So the customers were confused as to what exactly Dabur specializes in and hence got the wrong perception and image.

2.

What were the action plans Dabur undertook as part of its restructuring? How did they help close the chinks in its marketing armour?

Various action plans Dabur undertook for its restructuring are as follows: Dabur identified growth drivers such as personal and healthcare products that would leverage the herbal brand equity of the company. This would position Dabur as an Herbal specialist in the FMCG sector. Besides, they also set the scale very high targeting at least a strong double digit growth i.e. annual growth of 15-20 percent. Also, Dabur intended in cutting down its low contribution brand as it was slowing its growth. For example its skin care range was growing very slowly and its product in the segment like Gulabari did not hold a strong appeal for the youth. Moreover, Dabur had to fill in some missing products in the oral care and hair care market. It also had to set for itself a new brand strategy and enter new potential areas and target youth and students.

The branding strategy for Dabur was moved from the 'Umbrella Strategy' to Key Brand Strategy and categorized itself into five power brand that include: Dabur (Healthcare products), Vatika
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(hair care products), Anmol (personal care products), Real (juices), and Hajmola (digestive supplements). This strategy was to restrict Dabur to healthcare items and gradually distance it from other product categories. In order to reach out to new students and youth Dabur had a product line extension in the juice range by introducing new products. It introduced Coolers (low pulp), Real (high pulp), Real ACTIV (for the health conscious youth customers), and Real Juniors (for under 6 years kids).

Daburs earlier logo of banyan tree conveyed the message of healthy life but since Dabur wanted to have different images to different people according to their need, the logo was also changed. The company decided to follow up the logo change initiative with a complete redesign in packaging for Dabur products and also launched new products and fresh variants for existing brands.

All these strategies helped overcome the difficulties faced by Dabur. Firstly, the branding strategy which categorized the brand into five power brands restricted Dabur to only health care items and distanced itself from other products. This made people realize that Dabur specializes in products other than Ayurved products and it also reduced the confusion among people regarding what Dabur actually specializes in. Dabur's image was associated with the age group of over 35 but its diversified brands have helped tapping various target segments like Youth, Health Conscious People, School Children, Mothers and Existing Old age group. The branding strategy also helped to position Dabur as an Herbal specialist in the lucrative FMCG sector which was one of the objectives of Dabur before its restructuring.

Besides product line extension strategy adopted by Dabur also had the following benefits. It attracted different target audience, renewed interest and liking for the brand by introducing new variants, increased its market share, diversified without much risk and it moved from its core strategy and hence gave customers something better and different.

Thus we can clearly see that the restructuring of Dabur has been successful in achieving all its objectives of closing the chinks in its marketing armour.

3.

Dabur targeted sales of Rs 200 billion by 2006. Hence it needed to grow annually at a rate of 15-20 percent in years 2004, 2005 and 2006. Comment on the growth strategies adopted by Dabur.

As a part of restructuring the image of Dabur, they targeted sales of Rs 200 billion by 2006 which would be possible only by annual growth rate of 15-20 percent in years 2004, 2005 and 2006. Following are the growth strategies adopted by Dabur. Price:

Competitive pricing was one of the growth strategies adopted by Dabur. Dabur maintained very competitive prices for selling their products. As, Dabur had different sub-categories it came out with variable pricing to reach each and every target segment For example, one litre of cooler was priced at Rs. 50 and this was 15% cheaper that its other premium product Real which targets higher income people. Moreover, Dabur could have charged high prices in their Ayuvedic products but they kept their prices competitive with other players in the market. To increase demand, Dabur introduced Rs. 5 smaller pack segments which included baby oil, toothpaste, hair

oil etc. It also slashed the price of Vatika shampoo by 20% after proper planning. Dabur also introduced Rs 1 Vatika shampoo sachet in order to reach people in the rural areas and increase market share by doubling the volume of usage. Thus, Dabur chose to stand out against its competitors by cutting prices.

Product: As explained earlier, all the products were divided into five power brands of high quality available in different sizes. This gave many benefits like Dabur could specialize in non Ayurved products, tap consumers of various age groups, position itself as an Herbal specialist in the lucrative FMCG sector etc. Dabur also introduced new products looking at demand and different trends in the market. Dabur already had 55 percent market share in packaged fruit juice market but it still wanted to launch more flavors of fruits and vegetables Similarly, Dabur also targeted Rs 19 billion toothpaste market by introducing Dabur Lal Dant Manjan, Dabur Red Toothpaste, Babool, Meswak etc and increased its market share from 1.8 percent to 8 percent. Besides, they also produced products in various sizes like they introduced small packs of baby oil, tooth paste, hair oil etc. They produced different products for different class of people like Real Activ as targeted for consumer belonging to SEC A while Real was target for SEC B and C consumers.

Place: Dabur constantly kept on increasing its geographical spread to increase its sales revenue. From 8 percent of Dabur sales from South Indian Market in 2003, Dabur improved its sales to 10 percent in 2004. It has expanded its market in the international arena very successfully. Dabur has its branches in over 50 countries with subsidiaries being established in Nepal, Nigeria, Bangladesh and Pakistan and this international business has added Rs 1.28 billion to Daburs turnover in
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2003-04. Main focus areas include countries like Afganisthan, Russia, Asia Pacific and other CIS countries.

Promotion: Dabur is well known for its promotional campaigns. Dabur signed Mr. Bachchan for a sum of Rs 80 million for advertising campaigns undertaken by Dabur. Dabur also signed cricketer Virendra Sehwag and his wife for Oral, Hair and Healthcare products. Moreover, different brands have their own marketing and advertising teams for example Dabur Foods marketed fruit juices, cooking pastes and tea. Besides, redesigning the packages of Real, communicating through advertising capsule of Real are some of the promotional activities of Dabur. Apart from this Dabur also adopted integrated marketing communication program which included ground promotion, sampling exercise, mass media advertising, institutional promotion etc.

Thus it can be seen that Dabur has done well in all four Ps of marketing mix. No wonder they have achieved their objectives successfully. However, they just cannot relax with this success but have to continue their relentless effort of striving for success. With proper combination of marketing mix, Dabur will be able to compete with the established players in the market like Hindustan Lever, Proctor and Gamble, Godrej Consumer Products etc.