Question of the Report

Identify a Bangladeshi product in toiletries industry which is based on cost leadership strategy and
investigate how different the product is in terms of price, comparing with its Bangladeshi alternatives.
After identifying the product, you need to do PEST and Five Forces model analysis for the specific
industry and have to identify any strategic gap.

Answer of the Question

Industry Toiletries
Strategy Cost Leadership
Product Body Soap
Company Keya Cosmetics Limited

Company Profile
Keya Group (KG) is one of the most well known conglomerates in Bangladesh. Boasting 3 spinning
mills, KG holds a leading position in the manufacturing and exporting of knitted garments. At present
Keya Group operates 6 industries and employs more than 10000 people. For more than 20 years KG has
proudly made its presence felt, both in Bangladesh and abroad in countries like Europe, Australia,
China, USA and other countries in the Southeast Asian region..
Incorporated in the year 1996, Keya Cosmetics Ltd is one of the leading cosmetics manufacturing
companies in Bangladesh, and a popular brand name for superior quality products available at affordable
prices. With an objective to never compromise with quality, Keya Cosmetics Ltd. has established state-
of-the-art facilities, equipped with the latest European machinery, and also ensures that each stage of
production undergoes rigorous testing and quality assurance.

Products of Keya Cosmetics Limited

 Keya super beauty soap
 Keya glycerin laundry soap
 Keya ball soap
 Keya ice magic powder
 Keya lifeguard soap
 Keya active tooth paste
 Keya prickly heat powder
 Keya saving cream
 Keya petroleum jelly
 Keya glycerin
 Keya lip gel

Product Introduction
Brand Name:
Keya beauty soap its sister unit Keya Cosmetics Limited. It has strong brand image in urban area.
Quality Level:
The quality of Keya super beauty soap is very standard. Key beauty soap is made through the use of
vegetable fat.
 Design:
It is oval shape soap. It uses simple design on the soap. They use their logo on surface of the soap.
Packaging:
Keya did not use any kinds of human picture on their packet. But packet is simply gorgeous. But few
messages are written on packet like a 100% Halal soap and 100% vegetable fat. After all it is beauty
care soap.

Cost Leadership Strategy

Cost leadership means the lowest possible cost of operation in the industry. In recent years, more and
more companies have chosen cost leadership strategy as they want to be the market leader. The main
benefit of this strategy is to gain profit and grabs more market share within short period of time over
competitors by reducing operation costs below that of others in the same industry. Though the company
uses this strategy, they did not produce goods which are of inferior quality at comparatively cheap rates.
The cost leadership strategy can be highly successful, but it could be difficult to employ.

Cost Leadership Strategy of Keya Beauty Soap

“Keya Beauty Soap” under Keya Cosmetics Limited that follows cost leadership strategy. Keya
beauty soap has been very popular among the urban, sub urban, middle income, rural people, beauty
conscious women of the country for ages because of its high quality product in lowest possible cost.
Though Keya is the pioneer of the Bangladeshi toiletries, Keya beauty soap was introduced in
Bangladesh at 1996. In a very short time period this product made a very good identity into the
customers’ mind. The attractive and colorful packaging of Keya Soaps attracts the customer and gives
them a unique feeling of different flavored soaps. Packet colors are being selected as per different soaps.
Since Keya has various kinds of Soaps, its packaging contains abstracts and images of flowers or may be
image of lemon. The soap somewhat includes some girly designs to attract women. And the brand logo
is visible so clearly in the middle of the packet.

Enriched with
100% Halal vitamin E and Vegetable Fat
Cocoa Butter

Super Beauty
Soap

Figure: Features of Keya beauty soap

Portfolio
Name Weight Price
Keya Super Beauty Soap Pink 100gm BDT 30
Keya Super Beauty Soap Green 100gm BDT 30
Keya Super Beauty Soap White 100gm BDT 30

Differentiation in terms of price

Soap Name Weight Price
Keya 100gm 30 taka
Tibet 100gm 32 taka
Keya 100gm 32 taka
Savlon 100gm 42 taka
Cosco 80gm 30 taka

Differentiation in terms of cost

Category Meril Keya Tibet Savlon Cosco
Resources High High Moderate Moderate Very low
Distribution cost High Moderate Moderate Moderate Low
Marketing cost High Low Low Moderate Very low
Raw material cost Moderate Low Moderate Low Low
Operational Cost Low Low Moderate Moderate Moderate

Low Price High Price

High Quality

Keya Meril

Savlon

Tibet

Cosco
Low Quality
Figure: Positioning Map

PEST Analysis:
A PEST (Political, Economic, Social and Technological) analysis is a major part of the environmental
scanning section of strategic management and it is used by companies during market research and
strategic analysis. Using a PEST analysis helps a business to understand various macro environmental
factors that they need to take into consideration when determining the decline or growth of a particular
market.

PEST factors of KEYA:

Political factors:
Politically KEYA is facing a problem on the import of raw materials. Government has banned the
import of tallow which is one of the basic requirements for soap. There has been more competition
between organized and unorganized sector. The political scenario is changing day by day and new
entrants are posing on threat by giving concession on tax.

Economic Factors:
The cost of soaps in Bangladesh is very high as compared to other countries like India Indonesia. This is
mainly accompanied by the rise in cost of import duties. The import duty rates have increased from 20%
to 35% and the excise rates have also increased at a speed of 16% that forms a major portion of
the cost. KEYA has been the number one soap in Bangladesh with the highest market share and strong
equity among consumers, Keya is the market leader with a share of around 38% among the local
company.

Social Factors:
The need for hygiene and personal skin care is very important nowadays with the increasing disposable
income levels and rise in education. Being a member of the World Trade Organization it is very
important to maintain the necessity of skin care and personal affection towards health. Therefore KEYA
targets the audience to go for Premium Soaps by enhancing the aspiration levels. NGOs towards
inefficient PHC- primary health center and fragmented approach of government alleviate the problem.
The rate at which advertising media like cable TV and satellite are growing to give a emphasis to the
market penetration initiatives of other competitors in the market.

Technological Factors:
The industry should focus on technology intensive opportunities rather being a capital intensive
industry. The company should focus on manufacturing premium soap comparing with other soaps. The
company should also focus in logistics management where distribution and marketing plays a pivotal
role. Also the company emphasizes on Electronic Customer Relationship Management (E-CRM) and
Supply Chain Management. The company is also trying to cope up with small stores and small retailers.
This company should cater to high income group as it is expected to rise by more 100 percent.
Porter’s 5 Forces for toiletries industry (KEYA SOAP):

Threat of new entrants

There are many companies right now that are entering the cosmetics and toiletries industry. There are
new competitors constantly entering in this industry for this reason they gain market share and existing
company louse their market share. Because this is not an industry considered to have high barriers, it is
not seen difficult for a new firm to step into the industry, therefore, it makes the threat of new entrants
high. it makes it easier for new firms to enter the industry which lead to increased competition.

Bargaining power of buyers

Consumers always want to buy quality products at a cheaper rate. Since the price level of KEYA is low,
Consumers feel interested in buying KEYA and other brands also offer moderate quality product in soap
category at a cheaper rate. So buyers have high bargaining power which somehow causes Keya to lose
some market share.

Bargaining power of suppliers

There are plenty of suppliers in the market to supply raw materials to soap producing companies and
they compete among each other. As a result of which KEYA enjoys the facility to get suppliers
providing good quality raw materials at a cheaper rate. So the analysis of this situation says that
bargaining power of suppliers is very low.

Threat of substitute products

The fourth force is the threat of substitute products which is extremely high in this industry. There are
direct and indirect substitutes for KEYA available in the market. Among them face wash and Body wash
are two major threats for KEYA as substitutes. As people are getting more conscious of their skin and
health, they are focusing on most appropriate things that they should be using and this is posing KEYA a
huge threat in terms of revenue and also compromising its market share. Another threat is the adoption
of soaps from other brands due to premium price that KEYA charges on its consumers.

Rivalry among existing competitors

The brand KEYA has got huge market share in and Bangladesh. If we focus on the other brands in soap
category in Bangladesh, we can see that there are lots of strong brands present in the market. Meril,
Savlon, Tibet, Cosco and others soap so that is how it’s competition level becomes even tougher.
Needless to say that KEYA is the market leader in Bangladesh, though Meril, Savlon and other
competitors lead to a little bit decline in KEYA’s profit level. However, KEYA is earning revenue and
doing business in a lot of countries around the world. So if we simplify it from every aspect, KEYA’s
degree of rivalry is really high

Strategic Gap:

 Though Keya is a local brand but still they focus only girls. So, it’s like gender discrimination.
KEYA is known as a perfumed soap or beauty soap and that’s why they prefer girls rather than
boys. But the true fact is boys and girls everyone wants to look beautiful.As an example we can
say about Savlon soap. It is a soap which kills bacteria. But Savlon use male, female & children
 in their advertisement. They don’t emphasis on only one group. So, I think this is the strategic
gap of KEYA soap.
 Another strategic gap is liquid body soap which segment is still untouched by local soap
company that may help to create competitive advantages if they can bring it.
 Strategic gap is that there is untouched area of different portfolio like ayurvedic variant or kid’s
special soap. Keya can produce these unseen products in the market.
 One of the strategic gaps is there is no cool soap. It is demanded in hot weather. So Keya can
produce that flavor.
References:
www.wikipedia.org

http://www.keyagroupbd.com/keya-cosmetics-ltd/

http://www.mintel.com/blog/personal-care-market-news/soap-innovation-4-innovative-ways-bar-soap-
is-revolutionising-bath-time

http://jbbc.co.jp/wp-content/uploads/2014/08/A-Report-on-Cosmetics-Toiletries-Industry-of-
bangladesh.pdf

http://www.assignmentpoint.com/business/marketing-business/a-report-on-marketing-strategy-of-
square.html

http://www.assignmentpoint.com/business/marketing-business/market-analysis-lux.html

www.unilever.com/ourbrands/personalcare/.lux.asp

www.unilever.com.bd

Report on “Competition Scenerio in Bangladesh”.

-Prepared by Bangladesh Enterprise Institute

http://www.assignmentpoint.com/business/organizational-behavior/consumer-perception-keya-
cosmetics-limited.html