DIVERSEY CASE STUDY

Rushin Mehta
MMS FINANCE 128

B2B Marketing
Diversey Case Study Solution

Q1. Apply Michael Porters model to the industry in which Diversey is a part of:

Bargaining power of Customers

High
Low Switching costs
Lack of awareness about the Brand
among Buyers
Lack of Brand identity
Sensitivity with respect to Price

Threat of New entrants

Medium
Low fixed costs required
Swaach Bharat campaign
may bring in new players
Industry growing at 10-12%

Rivalry
Medium
No dominant player
Low fixed costs
Low difference in the products
Few players in end to end
cleaning solution

Bargaining Power of Suppliers

Medium
Cost relative to total purchases in
industry is low
Suppliers are mostly international

Threat of Substitutes
High
Other methods like water cellulose
are available
Switching costs are lower
Price of substitutes are quite lower

In the case with respect to Diversey it can be observed that the industry with respect to
cleaning is highly untapped in India and has a good scope to grow. Diversey is very much into
end to end cleaning segment which is quite rare and they are very likely to enjoy the first mover
advantage. The awareness of the brand and the importance given to cleaning and hygiene can
be a disadvantage but with the help of marketing campaigns and increase in awareness, the
issue can be resolved.
Most of the suppliers are from international and hence, it is vital to source the materials from
local sources which are possible. Since it is a segment which is relatively growing strongly, there
is a food scope for the brand to make its presence known.
Q2. Write a SWOT Analysis on Diverse
Solution:
Opportunities

Strengths
Environment friendly products

Largely untapped market

After-sales service is a feature

Increase Brand Awareness

rarely seen

Industry growing by 10-12 %

End to End Cleaning solution

Campaigns like Make in India and

Skilled and dependable Work force

Swaach Bharat

Strong Research and Development

Threats

Weaknesses
Lack

Niche Market Segment

developed

in

Increased competitors

Pricing on the higher side

channels

change

perception

Poor Inventory management

Distribution

of

not

Price Sensitive
Unorganized Market

customer

Q3. What are the challenges faced by Diversey and perform a value chain Analysis.

The following are the challenges faced by Diversey:

Cost of Operations:
Most of the supplies are not sourced locally but are imported from International sources by the
company. As a result, the cost associated with the materials increases by a huge extent. The
company has to make sure it does source materials from local vendors and have certain
contracts in place with the local vendors in order to reduce the cost.
The vendors have certain associations with certain brands and hence it would be difficult to
break that bond. However, if their challenge has to be overcome, Diversey needs to negotiate
with these vendors and bring about the required contracts.
The Inventory management with respect to Diversey is very poor since they pile up huge
inventory and have old versions or products as well. These old products are used in case of
after sales and servicing but unnecessary stock pile leads to increase in cost.
Customer Perception:
The perception of the customer with respect to hygiene needs to be changed. Cleanliness is not
given such importance in the Indian Market and good hygiene is often overlooked instead of
low cost products.
The market is quite price sensitive even if the Diversey products are ling lasting, since they are
expensive, they do not appeal to the consumers who prefer low cost products.
Inexpensive substitutes are available and hence consumers prefer those products although the
products provided by Diversey are more added value.

Q.4. Do the SCM analysis of Diversey. Suggest ways and ideas to improve the current situation.
SCM analysis
Manufacturing:
Regional hubs were present in north, south, east and west. The North hub procured most of the
chemicals. The Manufacturing hub in the north was owned by Diversey while the West acted as
an import hub. There were 5 contract manufacturing unites as well in all the 4 areas.
Inventory Management:
Inventory management was a key area of concern for Diversey India. Diverseys policy that
ensured the availability of cleaning equipment spare parts for 10 years helped in gaining the
customers confidence and trust. This was done even for the discontinued models.
Majority of the SKUs were slow moving with irregular demand patterns. However, the need for
a timely replacement of a spare part was critical for strict time-bound SLAs because the
installations were with large customers like railways, metros, airport, hotels and hospitals. Also
longer lead times were required to import components.
Diversey maintained a huge inventory base for the spares, accompanied with significant costs
for ongoing training of technicians. The average warehouse inventory maintained by the
company accounted for more than 15% of its India sales. Diversey faced challenges in inventory
management of spare parts. The company was unable to decide on a rationalization strategy
for SKUs. This posed the biggest challenge for growth and put enormous pressure on margins.
Sales & Marketing:
Sales and marketing team played a key role in promotions, getting new clients and building
awareness through demos of products and services. Diversey had a strong network of
distributors to deliver offerings to existing clients and generate future demand projections. The
sales support team helped in handling support issues. There was a Customer service team that
acted as an interface between sales team, suppliers and distributors.
Ideas to improve the current situation

Preventive maintenance of the sold equipments would ensure less breakdown and
prolonged life.
Service Level Agreements would enable in specifying cost sharing parameters with
clients
Reduction in lead time for imported components to reduce pressure on inventory
Joint procurement of multiple SKUs from a common supplier effectively reduces
costs

Minimization of redundancies: Only those SKUs that maximize profits should be

given importance.

Q.5) Analyze the segmentation of the Market and Diverseys approach towards each
As mentioned in the case, Diverseys target segments were based on the industry type and
customer size. The industry types included Building Service Contractors, Hospitality and
healthcare, Food and Beverages, and Retail. The customer size segment included large
international and domestic accounts, mid size hotels, hospitals and offices, and small road side
eateries, offices and shops.

Building Service Contractors

TASKIFully integrated
solutions including floor care
machines

Hospitality and Healthcare

RoomCare Total cleaning
solution comprising right
products, training, support
and cost control.

QuattroSelect Unique
dilution system providing
optimum cleaning capability,
complete control

Oxivir Environment
friendly cleaner disinfectants

Retail & Food Service

Food & Beverages

SmartDose Mixing
concentrated cleaning
products.

Bottlewashing, cleaning in
place, machine diswashing,
membrane cleaning, open
plant cleaning, aquacheck,
track treatment

Suma Optifill System for

manual dishwashing.

Q.6) Explain how the structure of Diversey enables/disables it to approach the Indian Market

With the ongoing modernization, the labor intensive cleaning industry shifted focus to a more
scientific and automated approach.
But as we know, these changes are immediately visible only in the upper strata of society. India
was still very much into labor intensive cleaning. Diversey was a cleaning solutions provider
which came into picture after its acquisition by Molson Group, which was a leading company in
the hygiene business.
Post that, Diversey was acquired by Unilever and then Johnson acquired Diversey Lever. If we
see the Diversey India organizational structure, there are 4 lines of businesses, all reporting to
the Vice President of Operations in India. Channels team caters to the Tier II and III customers.
There was a Finance, Marketing, Operations & and HR team.
Research & Development was head by a technological and innovation team. R&D in a company
like Diversey is very important to ensure survival and growth. The clients of Diversey were
mainly restaurants, offices, hospitals etc. Continuous R&D was something that it banked upon
to touch the untapped markets.
Q. 7) Design a plan to tap the SME market in India

The SME market in India is huge. It comprises of family run businesses, eateries, private clinics,
small pathology labs, coaching centres, laundries etc. There are a number of small players in the
market who have similar products and cleaning solutions like Diversey. Hence, it is important
for the company to position itself in a better and different manner.
It may not be feasible for the company to compromise on the price of the products, but what it
could do is possibly:
a. Come up with a smaller range of products to cater to the SMEs. These could be sold in
different packaging with a lower price range.
b. Begin by offering trial packs and product bundling with other essential products that
SMEs use.
c. Provide solutions without compromising on quality. This will help in building brand
loyalty.
d. The distribution channels for SMEs should be different from that of the big players.
e. Tap a very important segment in this category; the Dhobis. It will be very interesting to
see how Diversey can come up with effective products for the dhobis.