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Marketing Strategy for Liril

Marketing Strategy for Liril

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Published by mith_22_nitw
To formulate marketing strategy for Liril to increase its market share
To formulate marketing strategy for Liril to increase its market share

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Published by: mith_22_nitw on Jan 30, 2011
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08/17/2013

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Assignment 
Strategic Marketing
Marketing
 
Strategy
 
for
 
Liril
 
Soap
 
in
 
India
 
By
1.
 
Abhishek Tandon (2009A08)2.
 
Jerrin Jacob (2009A18)3.
 
Kumar Mithilesh (2009A44)
 
1
 
Objective
 
To frame marketing strategy to increase the market share of Liril brand (HUL) from 1% to 3% in India bythe end of 2012.[
LIRIL:
 
 Liril is a popular brand of soaps owned by FMCG major Hindustan Unilever Limited (HUL). It basically caters to a premium market where customers prefer a high quality bathing soap providing freshness.
]
 
Industry
 
 Analysis
 
1.
 
Industry
 
dominant 
 
economic
 
traits
 
 A]
 
Market 
 
Size:
 
 Market for toilet soaps in India is currently estimated at about 9,000 Cr.
Toilet soap industry is one of the oldest Fast Moving Consumer Goods (FMCG) industries inIndia. It is among the highest penetrated category within FMCG sector reaching an estimated 98% urbanand 70% of the rural households. In volume terms, the toilet soap market in India is estimated atapproximately 13 million MT (
metric ton
).
B]
 
Rising
 
input 
 
costs:
 
Most FMCG companies use palm oil for their soap, which needs to be importedfrom countries like Malaysia. Vegetable oil prices have increased significantly in the past one year due tosurge in consumption demand for bio fuels and shift in acreage in favor of corn and wheat. This is likelyto impact margins of various FMCG players, especially HUL and Godrej.Increase in Excise Duty has put further pressure on the margins of big players. The hike in customs dutyon diesel and petrol, coupled with a 5% increase in the import duty on crude, will negatively impact thetransportation and packaging costs, thus affecting the entire FMCG sector.
C]
 
Growth
 
Drivers:
 
The soap market is expected to grow moderately at 4.5-5% in the near term. Someof the major growth drivers are:
 
 
Growing consumer demand:
Rising income levels and growing aspirations, coupled with lowerpenetration levels, have fueled a strong demand for Lifestyle and Value-added products. Sales arevolume driven and not value driven.
 
Rural India driving incremental growth:
FMCGs are seeing a volume growth of just 6-7% inmetros, their growth in rural markets is over 20%. Rural income levels are on the rise, driven largelyby a continuous growth in agriculture for four consecutive years and the Government's continuedfocus on rural development initiatives, fuelling a fresh demand for FMCG firms.
 
New Product launches:
In a bid to garner a higher market share and sustain long-term growth, mostFMCG companies have launched new products, largely in the form of variants/extensions of theirexisting brands, to boost growth.
 
Segmental
 
Shift:
 
Over the years, the
‘popular' 
segment has witnessed rapid growth and has beenthe category driver. Consumers shift from the premium segment as and when they see better value inthe popular category; at the same time, consumers upgrade from the economy segment due toincreased aspirations and affordability.
 
 
2
 
2.
 
Competitive
 
forces
 
(Porter’s
 
five
 
forces
 
analysis)
 
 A]
 
Threat 
 
of 
 
Intense
 
Segment 
 
Rivalry
 
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.
B]
 
Threat 
 
of 
 
New
 
Entrants
 
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.
3.
 
Change
 
drivers
 
and
 
their
 
Impact 
 
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.

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