Penetration level of soaps is around 92% and therefore, price-wars and promotional schemes are almostfrequent in this industry. The market is littered over with several, leading national and global brands anda large number of small brands, which have limited markets. There are many established players likeGPCL, Nirma, ITC, P&G, Wipro Ltd. etc. going aggressive about their target markets.
Entry in this industry is fairly easy due to which a large number of players with good distributionnetworks have entered. ITC has already made headway with its premium brand
Fiama di wills.
Companies like Marico, Kopran, and Anchor are likely to launch soaps in the premium category. Thereare a large number of smaller/regional players who are also eating away the market share of biggies.
C] Threat of Substitutes
A major threat comes from the use of products like body wash and face wash. Due to high costsassociated with such soaps, Body wash and Face wash may make use of soaps less frequent. Also, theconsumption of Liril may not pick up because customers may be down-trading to popular categorysoaps.
D] Threat of bargaining power of Buyers
To a large extent, Premium Soap is a price sensitive market. Of late, there has been an increasing trendtowards down-trading. This has forced the manufacturers to lower the prices or offer temporarydiscounts to woo the consumers who are either down-trading from the popular segment or graduatingupwards from carbolic soaps. The buyers, even in the rural area, are subjected to the media invasion andare well- informed about the basket of products available in the market and thus take a rational decision.
E] Threat of bargaining power of Suppliers
The major input for the soap manufacture is vegetable oil
(constitutes around 80% of the raw materials)
.They are not available in India and thus have to be imported from countries like Malaysia, Indonesia andChina. There are only few players who export palm oil from these countries and these exporters havemore bargaining position.
A] Value consciousness:
The penetration level of soaps is ~92 per cent. With increase in disposableincomes, growth in rural demand is expected to increase because consumers are moving up towardspremium products. However, in the recent past there has not been much change in the volume of premium soaps in proportion to economy soaps, because increase in prices has led some consumers tolook for cheaper substitutes.
B] Increasing aspirations:
Continued income growth coupled with increased willingness to spend willsee consumers’ up-trading, creating demand for higher priced and increased functionality (real orperceived) products. The size of this segment will be large.
C] Evolving categories:
Many consumers will move up the ladder and will shift from basic “need” to“want” based products. In addition evolving behaviour and emphasis on beauty, health & wellness willsee increased requirements for customized and more relevant product offerings.