___________Marico’s Case Study

Padmashree Dr.D.Y.Patil University

Department of Business Management

International Business Management

“Case Study”
Marico: Emerging Indian Global
Competitor?

Submitted to:
Mrs. Surya Bhamre

Submitted by:
Anjali Vijay Kumar Gupta

MBA-Biotechnology (2009-11)

Roll No.: MBA-Bt 09006

By: Anjali Vijay Kumar Gupta (MBA-Bt 09006) 1

 ___________Marico’s Case Study

Date: January 2011

INDEX

Page
S.No Particulars
No.

1. Case 3

Q1) In your opinion, what are the factors responsible for

2. the success of Marico Ltd.?

Q2) What, according to you, are the likely challenges

3. that Marico Ltd. will face in the future?

4. References

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 ___________Marico’s Case Study

Case:-

Marico: Emerging Indian Global Competitor? – 20 marks

Marico Ltd. (Marico) a leading Indian business group in consumer products and services,
posted a sales revenue of Rs.19 billion in the year 2007-08.1 The group had been able to
achieve success by following a path of differentiation in all its product and service
offerings. In addition to the domestic market, Marico's products were sold in Bangladesh,
the Middle East, Egypt, and South Africa. The group's products included food products
(including edible refined oils), hair oils, post wash hair care, anti lice treatment, coconut
oil, and fabric care products.

In the skin care solutions, Marico was present through Kaya Skin Clinics (Kaya)
and the Sundari range of Spa skin care products. In the food products, the company had
the Saffola range of products. Marico's portfolio of hair oils comprised Parachute, Hair &
Care, Nihar, and Shanti Amla hair oil.

Saffola was one of the first brands in the country to equate health consciousness with
cooking oil. It leveraged on heart problems and positioned itself as an edible oil which
lowered the risk of a heart attack by reducing cholesterol.

In order to stay in tune with the changing tastes and preferences of the customer, Saffola
came in three variants, Saffola Gold, New Saffola, and Saffola Tasty Blend. The Saffola
brand was extended to salt and sugar management and cholesterol management products.

The focus across all the food products was on health and wellness and it was this focus
that the company used to differentiate itself from the competition.

Marico established Kaya skin care clinics to take advantage of the opportunities
presented by the the Indian beauty industry, which stood at US$3 billion as of 2007.
Starting with 11 clinics in the year 2005, the number of clinics had multiplied to 65 (56
in India and 9 in the Middle East) by 2007.

According to analysts, Kaya had filled a void in the country for skin clinics and helped
make people look good. Kaya had also expanded its services through 'Skin Zones', which
were information kiosks located at shopping malls that offered skin care counseling.

Experts attributed Kaya's success to the personalization of services for the customer and
the holistic solutions offered. Kaya's popular services were laser hair reduction and acne
scar and pigmentation reduction.

Kaya had also started selling a range of hypoallergenic products for sensitive skin. In
2007, Kaya Life was launched to provide holistic weight loss solutions.7 The weight loss

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solutions centered around lifestyle counseling, meal planning, exercises, and body
shaping.

In 2003, Marico acquired the Sundari range of luxury ayurvedic skin products. Sundari
was an established brand in the US and consisted of 20 products that sold at spas, high
end stores, and on the Internet. In 2006, Marico acquired Hair Code and Fiancee in Egypt
and the two brands gave it a market share of more than 50 percent in the Egyptian hair
care market.In the same year, Marico acquired Manjal, a herbal bath soap brand
established in Kerala, and the brands Camelia, Magnolia, and Aromatic in Bangladesh to
enter the Bangladesh market.

In 2007, Marico acquired the consumer division of Enaleni Pharmaceuticals, a South

African business firm present in hair care.

Marico was also a dominant player in the hair oil segment in India with its brands
Parachute and Nihar. In 2003, Marico entered the shampoos market and positioned itself
on the 'naturals' platform. It also introduced shampoos for children in the age bracket 4 to
12 years.

According to analysts, Marico had emerged as a proactive organization by recognizing

the needs of the market and capitalizing on the opportunities, whether it be in the edible
oils, skin care, or hair care segment. It was ranked among one of the eight companies in
Standard & Poor's list of Global Challenger companies in the year 2007.

Q1) In your opinion, what are the factors responsible for the success of Marico Ltd.?(10)
Q2) What, according to you, are the likely challenges that Marico Ltd. will face in the
future? (10)

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 ___________Marico’s Case Study

Q1) In your opinion, what are the factors responsible for the success of Marico
Ltd.?
Ans. There are various factors involved in Marico's remarkable transition from a
localized oil manufacturer to a health and wellness powerhouse. They are:

1. Differentiation in all its product and service offerings

The focus of the company across all the products was on health and wellness and it
was this focus that the company used to differentiate itself from the competition. Let’s
see the example of Saffola and Kaya skin care clinics.

1. Saffola : It was one of the first brands in the country to equate health
consciousness with cooking oil. It leveraged on heart problems and positioned
itself as an edible oil which lowered the risk of a heart attack by reducing
cholesterol. In order to stay in tune with the changing tastes and preferences of
the customer, Saffola also came in three variants, Saffola Gold, New Saffola, and
Saffola Tasty Blend. The Saffola brand was extended to salt and sugar
management and cholesterol management products.
2. Kaya skin care clinics: They were established by Marico to take advantage of
the opportunities presented by the Indian beauty industry. They filled a void in
the country for skin clinics and helped make people look good. It had also
expanded its services through 'Skin Zones', which were information kiosks
located at shopping malls that offered skin care counseling. Kaya's success was
due to the personalization of services for the customer and the holistic solutions
offered. It's popular services were laser hair reduction, acne scar and
pigmentation reduction. It also started selling a range of hypoallergenic products
for sensitive skin. Kaya Life was launched to provide holistic weight loss
solutions which centered around lifestyle counseling, meal planning, exercises,
and body shaping.
2. Diversified range of products

The product portfolio of the company includes coconut oils, edible oils, hair oils and
other hair care products, fabric care products, soaps, baby care products, processed foods
and skin care. It manufactures and markets its products under the brand names of
HairCode, Fiancee, Aromatic, Kaya, Caivil, Black Chic, Oil of Malabar, Manjal, Revive,
Mediker, Shanti, Nihar, Hair & Care, Sweekar, Saffola and Parachute.

3. Understanding of Consumer Needs

Marico always recognized the needs of the market and capitalized on the
opportunities, whether it be in the edible oils, skin care, or hair care segment.
Let us see the example of Parachute oil
Brand name: Parachute
Positioning: As a purity brand.

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Target Audience: The primary target audience of ‘Parachute’ is women of all ages in
both urban and rural population of India.
Pioneering idea: Parachute pioneered the idea of selling the coconut oil in plastic.
Communication: Mass communication on the platform of ‘caring’ with mother daughter
theme.
Innovation strategy:
Marico followed innovation as a major strategy in building Parachute brand. The
following strategies are followed by the company to offer a customized product in all
seasons, to grab the price conscious customers and to provide value for money.
1. 20 ml Parachute - a Rs 5 SKU that enables loose oil users to
upgrade to Parachute.

2. Flip Top Cap for Parachute bottles - to enhance the

safety and protect the purity of Parachute

3. Parachute Mini - a bottle shaped small pack being sold at

an MRP of Re. 1

4. Easy Jar of Parachute - to facilitate usage especially

during winters

Other extensions are:

5. Parachute Advanced refined hair oil and Parachute Jasmine
Target audience: Young and appearance conscious consumer.
Positioning: Focuses upon the fragrance aspect of the oil.

6. Parachute After shower Hair Cream

Target audience: Young men
Positioning: Focuses upon stylish look, non sticky and nourishing aspect.

7. Parachute Sampoorna
Target audience: Women customers
Positioning: Focus on providing strong hair.

8. Parachute Advansed Starz Gentle Shampoo

Target audience: Children
Positioning: Focus on enriching hairs with coconut proteins & vitamin with
fragnance of strawberries

9. Parachute Therapie
Baseline: 45 Day hair fall solution

10. Parachute Advansed Ayurvedic Hot Oil

Positioning: On the platform of ‘Naturals’ which makes hair healthier.

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4. Entered Global markets

In addition to the domestic market, Marico's products were sold in Bangladesh, the
Middle East, Egypt, and South Africa.
With many global acquisitions Marico group’s global arm, International Business
group (IBG), is a great contributor in group’s overall turnover.

• In 2003, Marico acquired the Sundari range of luxury ayurvedic skin products.
Sundari was an established brand in the US and consisted of 20 products that sold
at spas, high end stores, and on the Internet.
• In 2006, Marico acquired Hair Code and Fiancee in Egypt and the two brands
gave it a market share of more than 50 percent in the Egyptian hair care market.
• In the same year, Marico acquired Manjal, a herbal bath soap brand established in
Kerala, and the brands Camelia, Magnolia, and Aromatic in Bangladesh to enter
the Bangladesh market.
• In 2007, Marico acquired the consumer division of Enaleni Pharmaceuticals, a
South African business firm present in hair care.
• Recently acquired the Code 10 brand from Colgate Palmolive in Malaysia.

Since their growth internationally has been a mix of organic and inorganic growth
Marico have brands like Hair code, Fiancee, Code 10, Caivil and Hercules that are
unique to international operations. Parachute hair cream is an example of a format that
was launched internationally first and brought to India later. It is a leading brand in
Bangladesh and the Middle East. Men’s styling brand Hair Code is the market leader in
Egypt, while Caivil operates in the ethnic African hair care space.

Reasons For Global Success

1. Its international success is due to the ’global’ mindset that the company has
adopted. An Indian company needs to stop thinking of an India-forward mindset
and start playing by the rules of that market. The key is to participate in formats
relevant to that market as opposed to transporting the India portfolio on an ‘as is’
basis.
• In the Middle East, Marico reformulated Parachute hair cream to work effectively
under high chlorine conditions prevalent in the region.
• In Egypt, where soccer is almost a religion, Marico run’s programs to leverage
the soccer fever.
2. The emerging economies in Asia and Africa like Bangladesh, the Middle East,
Egypt, and South Africa were chosen because
• They have low-to-medium penetrations in some of the FMCG categories. This
signifies considerable headroom for growth in the mid-term.
• Favorable macros, changing attitudes of the consumers and progressive policies
of the governments make these markets attractive destinations.

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• Some of them also offer inorganic entry possibilities that can create access to
mainstream distribution, manufacturing and talent.
Thus Marico listed their wholly owned subsidiary in Bangladesh on the local stock
exchange. And in Egypt, where Marico acquired family-run organisations, professional
managers were sent.
3. Critical success factors that were involved in a post-acquisition integration of
Marico were pace, philosophy, people, physical execution and providence; five
Ps.
4. Typically, it is found that gestation periods tend to be longer as one needs to go
up the learning curve in a new market. Thus to reduce this gestation period
,Marico before entering a new geography always interacted with non-competing
Indian companies that have established themselves in that market and learnt from
their experiences.

5. Distribution network
It has a large distribution network all over India which includes a wide rural
market reach. Marico's distribution width and penetration is acknowledged as one of the
best in the industry and is a leverage able strength. Every month, 56 million consumer
packs are sold to about 1.8 million households through 1.6 million retail outlets spread
across the country. Marico's distribution network covers almost every Indian town with a
population of over 20,000. Thus, 1 out of every 10 Indians is a Marico consumer.

Distribution Alliance:
Marico’s distribution strength has been recognised by Indo Nissin Foods Ltd. through
their association with it for the distribution of Top Ramen products on a national basis.

Rural Sales & Distribution:

Marico's parallel rural sales and distribution network ranks among the top three in the
industry and contributes 24% to the company's top line.

Its infrastructure comprises direct distributors, super distributors, catering to many small
stockists and van markets. A dedicated team of Territory Sales Executives and Pilot Sales
Representatives distribute Marico's as well as alliance brands through this vibrant
network.

Sales Capacity:
They have made significant progress in the areas that enhance sales capacity. Quality of
our distributors Quality and number of the distributor field force upgradation in the role
of the company's front-line sales force.

Technology (IT) in Sales:

Marico has been making investments in IT to ensure:
• Supply Chain efficiencies
• Availability of the SKU at the right distributor point,
at the right time in right quantities
• Timely availability and reliability of Sales

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• MIS, which help in taking prudent decisions on a real time basis.

In order to reap maximum benefits from its sales and distribution network, Marico
embarked on an internet-enabled application - MI-Net - to establish a network between
Marico and its distributors through a web interface. This project is aimed at providing
real time information on the status of various business operations between Marico and its
distributors. This initiative is expected to provide business benefits in the form of
increased penetration by the sales force, reduced communication costs, reduced working
capital requirements, etc.

6. Management oriented towards innovation

Harsh Charandas Mariwala is the Chairman and Managing Director of Marico. Mr.
Mariwala has adopted an open office culture (everyone in his office calls him Harsh) as
the first step. Over 250 MBAs from top-notch institutes now work with him and Mr.
Mariwala -- who lacks an MBA degree -- realised he had to "upgrade (his) knowledge
base" if he had to speak their language. He had done courses in IMD, Switzerland is a
regular participant at C K Prahlad's CEO Forums, and reads all five business dailies and
at least four business magazines.
Since innovation is the key to the success of any FMCG brand, he himself attends
numerous sessions with target customers (from doctors for endorsing Saffola to barbers
for Parachute after-shower cream) just to understand their needs.
The changes that the company went through were in four different buckets:
1. Transition from oils to value-added FMCG products (Saffola Gold, for example)
2. From a purely Indian firm to a global entity (the company has huge operations in
Bangladesh and has made a string of acquisitions in South Africa and Egypt
3. From low-value to high value-added products (Saffola atta mixes and Parachute
gels)
4. From being only in the products space to becoming a solutions player (the highly
successful Kaya clinics with their own range of skin care products).
7. Marico’s speciality
One of the key reasons for Marico's success (over Rs 1,900 crore -- Rs 19 billion)
turnover in 2007-08 and growing at over 20 per cent annually) is its constant ability to
pick its spots in the crowded segment. For instance, edible oil is a huge category, but
Marico occupies a small, high-end segment selling oil supposed to be good for the heart.
This ensures higher margins and avoiding the chance of getting caught in a price war.
That explains Marico's entry into the anti-lice shampoo segment where MNC presence
is negligible. Even in South Africa, the company has concentrated on the ethnic hair
category, which is growing at a scorching pace. That's also the reason why Marico has
quickly exited the baby oil category where MNCs have a dominant presence.
8. Marico focusing on margins than volumes

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Vegetable oil prices are notoriously volatile and its consumers very price-sensitive.
But Marico is taking a different route from its competitors to distance itself from the
"commodity" tag
The edible oil category has been facing stiff competition from large-scale volume
players whose business model is based on low margins and pure price play. In this
situation, Marico have consciously chosen not to get drawn into price wars and instead,
have kept reiterating their brand's value proposition to consumers. As a result, while
volumes may have dropped, their margins on Sweekar have moved up. It is said that they
may be the most profitable in the edible oils business.
Low priced packs, coupled with packaging innovations, have helped the brand retain
its market leadership, amidst rising local competition in the coconut oil segment.
In fact, Marico is investing aggressively in a pipeline of new products to improve its
margin profile such as anti-lice oil.

9. Unique advertising strategies

Marico had test-marketed Parachute Therapie 45-Day Hair Fall Solution on radio,
which was reportedly a big hit. Radio City partnered the effort and helped Marico to
build brand credibility through word-of-mouth advertising.

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Q2) What, according to you, are the likely challenges that Marico Ltd. will face in the
future?
Ans. It is always better to analyse the challenges that a company will have to face in the
future, so that new strategies to counter these challenges can be found out. This will help
maintain and increase the market share. Some of the likely challenges that Marico Ltd.
will face in the future are:-

1. Stiff competition in the FMCG market

From large brands to local brands all compete in this popularity and price scale.
Some of the present competitors of Marico are Hindustan Unilever, Dabur India, Godrej
Consumer, Colgate Palmolive, Emami, Godrej Industries, Gillette India, P&G Hygiene,
Nirma, Jyothy Laboratories, Bajaj Corp, Reckitt Benckiser, Henkel India, Fem Care
Pharma etc. In future the number of competitors can increase as FMCG market is always
extremely competitive.Therefore competition from the diverse players present in the
market may cause loss of market share.

2. Oil prices
Marico uses strategy of Margin over Volumes. And till to date this strategy is
successful but for how long? New brands are coming up with similar proposition and at
cheaper rates. Since inflation is a top issue these days consumers will tend to incline
towards low prices over brand name. At that time company would need to bring up
improvised prices for its products to stay ahead in the market.

3. Similar products

Original brand Similar packaged brands

As one can see from above picture that two different brands viz Malabar and
Cocoraj sell similar product pure coconut oil in similar packaging as of Parachute at
lower prices. This is a great threat to Marico’s brand Parachute as Price sensitive
consumers will buy those other brands thereby snatching market share of Parachute.

4. Strong Brands like Garnier, Loreal at less prices

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Strong international brands like Garnier and Loreal are coming up with sachets
for price sensitive consumers. When such strong brands come up with cheap and
affordable products, consumers tend to prefer them over other local products. Thus it
becomes a threat to Marico.

5. Reduced trade barriers and Globalization

The countries where Marico's products are sold i.e. Bangladesh, the Middle East,
Egypt, and South Africa are all developing countries. With increase in globalization and
reducing trade barriers many multi-national companies would enter these markets in the
near future and this would directly reduce market share of Marico.

6. Not strong within the shampoo segment, having hardly any share.

Marico Industries has also decided to stretch the strongest brand in its kitty,
Parachute, to a shampoo. Positioned again on the naturals platform, Parachute Natural
Shampoo contains ingredients such as coconut, almond and hibiscus. The new shampoo
brand is expected to carry the baseline - Baalon mein sehat ka jadoo, developed by its
agency, Orchard Advertising.

Although in the past, Marico has tried to extend the strong equity of Parachute
into more oil variants, the foray into shampoos is not perceived too well by industry
observers. While Parachute is a strong brand in hair oils, its chances of success in
shampoos is low. Because hair oil is in the ethnic category while shampoos have a
foreign connotation. Although both the applications are in the same part of the body, in
the consumers mind these are different products which should ideally have different
brand names.

7. Need to concentrate within the various other market potential zones like hair
colorants etc.

Marico industries can also concentrate on various other market potential zones
like hair colorants. This segment also has great potential.

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Refrences:

1. http://strategicbrand.blogspot.com/

2. http://economictimes.indiatimes.com/opinion/interviews/Having-a-glocal-
mindset-is-crucial-Vijay-Subramaniam-CEO-Marico-
IBG/articleshow/5833698.cms

3. http://sunnymarketing.blogspot.com/2009/05/swot-analysis-of-all-fmcg-
companies-in.html

4. http://www.rediff.com/money/2008/dec/09the-secret-of-marico-success.htm

5. http://www.thehindubusinessline.com/2004/02/24/stories/2004022401750200.ht
m
6. http://info.shine.com/company/Marico-Limited/797.aspx

7. http://www.dnaindia.com/money/report_fmcg-price-hikes-may-give-small-packs-
the-miss_1430622

8. http://www.reportlinker.com/p0342227/Marico-Limited-531642-Financial-and-Strategic-
SWOT-Analysis-Review.html#ixzz1AsaOvQwN

9. http://fmcg-marketing.blogspot.com/2007/12/maricos-distribution-network.html

10. http://www.thehindubusinessline.com/2003/10/21/stories/2003102100420600.ht
m

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