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Case Study 3: Lakme Pure Defense: An Antipollution Cream

Atanu Adhikari and Sanjit Kumar Roy Introduction Unilever is known all over the world with a huge product range targeting various segments of customers. In April 2008, Hindustan Unilever Ltd was embarking on the launch of its product range of antipollution cream called Pure Defense. This new range was developed in India with the help of Unilever skincare technology. Launching a new product type needs long-term research and effort and every department of the company is involved in evaluating every detail, the pros, and cons and then based on their evaluations, the managers decide whether to go ahead with the launch.

Background of Hindustan Unilever Ltd and Its Beauty Products The first Indian subsidiary was set up by Unilever in 1931, followed by three more subsidiaries: Hindustan Vanaspati Manufacturing Company, Lever Brothers India Limited, and United Traders Limited. They merged and formed Hindustan Unilever Ltd (HUL) in 1956. Later Tata Oil Mills Company merged with HUL in 1993 and then Lakme Limited, another subsidiary of Tata, formed a 50:50 joint venture called Lakme Unilever Limited, with HUL in 1996 and was completely taken over by HUL in 1998. Kimberly-Clark Lever Ltd and HUL also formed a 50:50 joint venturein 1994. The famous tea brand, Brooke Bond later merged with HUL as well. In 2000, HUL was awarded with 74 % equity in Modern Foods by the Government of India. In 2003, HUL acquired the Cooked Shrimp and Pasteurised Crabmeat business of the Amalgam Group of Companies, a leader in value added Marine Products exports. All these mergers and acquisitions led to an expansion of HULs product range. Their direct-to-home business was launched in 2003. Hindustan Unilever campus was established in Mumbai and includes their Customer Insight & Innovation Centre (CiiC). HUL now owns numerous brands including several food, home care, personal care, water, nutrition, health, hygiene, and beauty brands.

Indian Beauty Products and the Market India has witnessed enormous economic growth since 1991 due to liberalisation of the economy. Several taxes were reduced or removed and international companies were allowed to enter the Indian market. This has lead to the growing disposable income of the population and a huge middle class. The purchasing power for beauty products is increasing. Indian beauty products include baby care, bath and shower, colour cosmetics, deodorants, depilatories, fragrances, hair care, mens grooming, oral care, sets/kits, skin care, and sun care products. According to a report published in 2009 by market research firm Kline & Co, the beauty market in India was growing four times faster than mature beauty markets and twice as fast as the global market. This data shows that beauty market is one of the fastest markets in India. Although the growth rate of beauty market was in the double-digit figures, the market penetration of cosmetics and toiletries products in India was very low in 2009. In comparison, the market size is rising 20 % a year [1] Purchasing power of consumers is increasing because female population began to earn own money and media has positive effect on female population. Different Competitors and Their Products Many companies are involved in the beauty market in India and competition is quite tough. For instance, multinational players such as J.L. Morrison, Palmolive, Ponds, Unilever, and Colgate and international players such as Maybelline, Avon, P&G and LOral are all big players in the beauty market. P&G with its strong infrastructure and earnings is one of the biggest rivals along with Olay for HUL. Olay has a similar product range which is even bigger than Lakme [2].

Behavior of Beauty Product Consumers in India Initially Indian consumers preferred functional products. In other words, they paid attention to product functions such as colour, quantity and permanence. However, the booming middle class, rising disposable income levels, westernisation, and pervasive media, all have had a huge impact on the beauty market in India. Slowly consumers started to choose more attractive products rather than functional products. Nowadays, they want to be cool and fashionable and also feel good. Furthermore, there is an increasing awareness of health

issues. Consumers are increasingly concerned about the safety and quality of the beauty products.

The Product: Lakme Pure Defense The Lakme Pure Defense product range was launched with the aim of protection from the sun and pollution. The most crucial aim of their products is to protect from pollution and UV rays and to feed the skin. Detoxifying facial wash deep cleansers, detoxifying serum, protective day lotion, and restorative night cream are the most popular products. Consumers reviews about Lakme Pure Defense products are generally very good.

Segmentation, Targeting and Positioning Lakme Pure Defense targets lower and middle income class and consumers who want to protect their skin against pollution and UV rays. In other words, their target market consists of consumers who pay attention to their skin health and want to clean their skin. Moreover, the range is targeted at working women who spend most of the time outside looking for protection against the sun and pollution.

Pricing Lakme Pure Defense products prices are lower than Olays products. HUL tries to appeal to lower and middle income class. However, middle income class is increasing day by day in Hindustan. For this reason, HUL should increase a little their price and so their margin will rise up.

Distribution HUL prefers retail outlets to distribute Lakme Pure Defense because lower and middle income class usually goes to the retail outlets. In addition, salespeople communicate with customers more efficiently in retail outlets than other distribution ways.

Advertising and Promotion In advertising and promoting the new launch of Lakme Pure Defense, HUL has deviated from the traditional mode of advertising and opted for a different strategy. The company has deployed beauty advisors at 1,200 Lakme retail outlets across the country to promote its new launch ignoring the conventional mass media ad campaigns. On the other hand, HULs nearest competitor Procter & Gamble India (P&G) has started an aggressive consumer activation programme to popularize its skin care brand Olay in Mumbai. Clearly, the accent seems to be on direct consumer contact in the Rs 2,200 Crore ( 26 Million) Indian skin care market. On Lakmes new initiative, Anil Chopra, vice-president, HPC Hindustan Unilever Ltd said Our strategy is not to use mass media advertising to promote Lakme Pure Defensethe first of its kind across the globe. Instead, we have opted for the education route to create awareness for our new product [3]. Industry analysts opined that Indian skin care majors are increasingly opting for direct marketing concept to create awareness for their products. One business analyst in Mumbai said that: Recognising the growing significance of targeted marketing, HUL and P&G are now using this method to attract consumers at different retail outlets including malls, medium retail outlets and departmental stores.

Prospective Marketing Dilemma and Challenges The top management of HUL wants to initially concentrate on distributing trial versions and promotions. Their reasoning was that, consumers would be willing to try out smaller packs and then if they liked it, they would go and buy big packs and recommend it to their friends and family members as well. HUL knew that customers experiences were crucial for other customers and they are thinking of going for contacting consumers directly using well-educated and motivated salespeople. However, Procter & Gamble which is their main competitor has a strong market presence all over the world and has a stronger customer base as compared to Unilever. P&G pays more attention to detergent and shampoo sector more than face hygiene products and is leading in cleaning products with brands. They are also in the process of rolling out an aggressive marketing campaign titled Total Proof. Total Challenge led by cine actor Tisca Chopra [4]. According to the spokesperson from P&G India, they hoped that this initiative would lead women to swap their moisturisers with for Olay Total Effects.

Questions 1. Develop a marketing strategy for Lakme to launch pure defence. 2. What HUL should do to minimise cannibalisation of its existing product? 3. What are the pros and cons of the direct marketing strategy of HUL for such innovative product like Pure Defence? 4. What pricing strategy should HUL follow for its new launch? 5. Which segment of market is most attractive for Pure Defence, and how should HUL target them? References 1. Bhattacharya, P. (2009). India Quarterly: Indian beauty market roundup. http://www. gcimagazine.com/marketstrends/regions/bric/38826982.html. Accessed 10 December 2012. 2. Euromonitor (2012). Country report: beauty and personal care in India. http://www. euromonitor.com/beauty-and-personal-care-in-india/report. Accessed November 2012. 3. Rise of the Indian beauty market. http://cosmetics.indianetzone.com/1/rise_indian_beauty_ market.htm. Accessed 10 March 2012. 4. Srinivasan, L. (2008). Lakme steers clear of old marketing strategy, The Financial Express. http:// www.financialexpress.com/news/lakme-steers-clear-of-old-marketingstrategy/269671/2. Accessed 10 March 2012.