INTRODUCTION

WE regularly talk about things like butter, potato chips,

toothpastes, razors, household care products, packaged food

and beverages, etc. But do we know under which category

these things come? They are called FMCGs. FMCG is an

acronym for Fast Moving Consumer Goods, which refer to

things that we buy from local supermarkets on daily basis,

the things that have high turnover and are relatively

cheaper.

FMCG Products and Categories

- Personal Care, Oral Care, Hair Care, Skin Care, Personal

Wash (soaps);

- Cosmetics and ries, deodorants, perfumes, feminine

hygiene, paper products;

- Household care fabric wash including laundry soaps and

synthetic detergents; household cleaners, such as

dish/utensil cleaners, floor cleaners, cleaners, air

fresheners, insecticides and mosquito repellents, metal

polish and furniture polish;

FMCG in 2006

The performance of the industry was inconsistent in terms of

sales and growth for over 4 years. The investors in the

sector were not gainers at par with other booming sectors.

After two years of sinking performance of FMCG sector, the

year 2005 has witnessed the FMCGs demand growing.

Strong growth was seen across various segments in FY06.

With the rise in disposable income and the economy in good

health, the urban consumers continued with their shopping

spree.

- Food and health beverages, branded flour, branded

sugarcane, bakery products such as bread, biscuits, etc.,

milk and dairy products, beverages such as tea, coffee,

juices, bottled water etc, snack food, chocolates, etc.

 - Frequently replaced electronic products, such as audio

equipments, digital cameras, Laptops, CTVs; other

electronic items such as Refrigerator, washing machines,

etc. coming under the category of White Goods in FMCG;

Sector Outlook

FMCG is the fourth largest sector in the Indian Economy with

a total market size of Rs. 60,000 crores. FMCG sector

generates 5% of total factory employment in the country

and is creating employment for three million people,

especially in small towns and rural India.

Soap is a surfactant used in conjunction with water for

washing and cleaning that historically comes in solid bars

but also in the form of a thick liquid, especially from soap

dispensers in public washrooms.

Historically, soap has been composed of sodium (soda ash)

or potassium (potash) salts of fatty acids derived by reacting

fat with lye in a process known as saponification. The fats

are hydrolyzed by the base, yielding glycerol and crude

soap.

Many cleaning agents today are technically not soaps, but

detergents, which are less expensive and easier to

manufacture.

How soap works

a diagram of the function of soap

Soaps are useful for cleaning because soap molecules attach

readily to both nonpolar molecules (such as grease or oil)

and polar molecules (such as water). Although grease will

normally adhere to skin or clothing, the soap molecules can

attach to it as a "handle" and make it easier to rinse away.

Applied to a soiled surface, soapy water effectively holds

particles in suspension so the whole of it can be rinsed off

with clean water.

(fatty end) :CH3-(CH2)n - COONa:

(water soluble end)

The hydrocarbon ("fatty") portion dissolves dirt and oils,

while the ionic end makes it soluble in water. Therefore, it

allows water to remove normally-insoluble matter by

emulsification.

Soapmaking
The most popular soap making processes today is the cold

process method, where fats such as olive oil react with lye.

Soap makers sometimes use the melt and pour process,

where a premade soap base is melted and poured in

individual molds, but this is not really to be considered soap-

making. Some soapers also practice other processes, such

as the historical hot process, and make special soaps such

as clear soap (glycerin soap).

soap differs from industrial soap in that, usually, an excess

of fat is used to consume the alkali (superfatting), and in

that the glycerin is not removed. Superfatted soap, soap

which contains excess fat, is more skin-friendly than

industrial soap; though, if not properly formulated, it can

leave users with a "greasy" feel to their skin. Often,

emollients such as jojoba oil or shea butter are added 'at

trace' (the point at which the saponification process is

sufficiently advanced that the soap has begun to thicken),

after most of the oils have saponified, so that they remain

unreacted in the finished soap.

Lye

Reacting fat with sodium hydroxide will produce a hard soap.

Reacting fat with potassium hydroxide will produce a soap

that is either soft or liquid. Historically, the alkali used was

potassium hydroxide made from the deliberate burning of

vegetation such as bracken, or from wood ashes.

Fat

Handicraft made Marseille soap

Soap is derived from either oils or fats. Sodium tallowate, a

common ingredient in many soaps, is in fact derived from

rendered beef fat. Soap can also be made of vegetable oils,

such as palm oil, and the product is typically softer. If soap

is made from pure olive oil it may be called Castile soap or

Marseille soap. Castile is also sometimes applied to soaps

with a mix of oils, but a high percentage of olive oil.

An array of quality oils and butters are used in the process

such as olive, coconut, palm, cocoa butter, hemp oil and

shea butter to list a few. Each oil chosen by the soap maker

has unique characteristics that provide different qualities to

soaps including mildness, lathering and hardness. For

example olive oil provides mildness in soap; coconut oil

provides lots of lather while coconut and palm oils provides

hardness.

Process

In both cold-process and hot-process soapmaking, heat is

required for saponification.

Cold-process soapmaking takes place at a temperature

sufficiently above room temperature to ensure the

liquification of the fat being used, and requires that the lye

and fat be kept warm after mixing to ensure that the soap is

completely saponified.

Unlike cold-processed soap, hot-processed soap can be used

right away because lye and fat saponify more quickly at the

higher temperatures used in hot-process soapmaking.

Hot-process was used when the purity of lye was unreliable,

and can use natural lye solutions such as potash. The main

benefit of hot processing is that the exact concentration of

the lye solution does not need to be known to perform the

process with adequate success.

Cold-process requires exact measurement of lye to fat using

saponification charts to ensure that the finished product is

mild and skin friendly. Saponification charts can also be used

in hot-process soapmaking, but are not as necessary as in

cold-process.
Hot process

In the hot-process method, lye and fat are boiled together at

80 – 100 °C until saponification occurs, which the

soapmaker can determine by taste (the bright, distinctive

taste of lye disappears once all the lye is saponified) or by

eye (the experienced eye can tell when gel stage and full

saponification have occurred).

After saponification has occurred, the soap is sometimes

precipitated from the solution by adding salt, and the excess

liquid drained off.

The hot, soft soap is then spooned into a mold.

Cold process

A cold-process soapmaker first looks up the saponification

value of the fats being used on a saponification chart, which

is then used to calculate the appropriate amount of lye.

Excess unreacted lye in the soap will result in a very high pH

and can burn or irritate skin. Not enough lye, and the soap
is greasy and oily. Most soap makers formulate their recipes

with 3-15% excess oil so that all of the lye is reacted and

that excess fat is left for skin conditioning benefits.

The lye is dissolved in water and the resulting solution mixed

with fat. Once it has cooled to about 80-90 degrees

Fahrenheit, this lye-fat mixture is stirred until "trace", that

is, the two thin, clear substances become cloudy and

thicken. (Modern-day amateur soapmakers often use a stick

blender to speed this process.) After much stirring, the

mixture turns to the consistency of a thin pudding.

Essential oils, fragrance oils, botanicals, herbs, oatmeal or

other additives are added at light trace, just as the mixture

starts to thicken.

The batch is then poured into molds, kept warm with towels

or blankets, and left to continue saponification for 18 to 48

hours. Milk soaps are the exception. They do not require

insulation. Insulation may cause the milk to burn. During

this time, it is normal for the soap to go through a "gel

phase" where the opaque soap will turn somewhat

transparent for several hours before turning opaque again.

The soap will continue to give off heat for many hours after

trace.

After the insulation period the soap is firm enough to be

removed from the mold and cut into bars. At this time, it is

safe to use the soap since saponification is complete.

However, cold-process soaps are typically cured and

hardened on a drying rack for 2-6 weeks (depending on

initial water content) before use. If using caustic soda it is

recommended that the soap is left to cure or at least 4

weeks.
Purification and finishing

The common process of purifying soap involves removal of

sodium chloride, sodium hydroxide, and glycerol. These

components are removed by boiling the crude soap curds in

water and re-precipitating the soap with salt.

Most of the water is then removed from the soap. This was

traditionally done on a chill roll which produced the soap

flakes commonly used in the 1940s and 1950s. This process

was superseded by spray dryers and then by vacuum dryers.

The dry soap (approximately 6-12% moisture) is then

compacted into small pellets. These pellets are now ready

for soap finishing, the process of converting raw soap pellets

into a salable product, usually bars.

Soap pellets are combined with fragrances and other

materials and blended to homogeneity in an amalgamator

(mixer). The mass is then discharged from the mixer into a

refiner which, by means of an auger, forces the soap

through a fine wire screen. From the refiner the soap passes

over a roller mill (French milling or hard milling) in a manner

similar to calendering paper or plastic or to making

chocolate liquor. The soap is then passed through one or

more additional refiners to further plasticize the soap mass.

Immediately before extrusion it passes through a vacuum

chamber to remove any entrapped air. It is then extruded

into a long log or blank, cut to convenient lengths, passed

through a metal detector and then stamped into shape in

refrigerated tools. The pressed bars are packaged in many

ways.

Sand or pumice may be added to produce a scouring soap.

This process is most common in creating soaps used for

human hygiene. The scouring agents serve to remove dead

skin cells from the surface being cleaned. This process is

called exfoliation. Many newer materials are used for

exfoliating soaps which are effective but do not have the

sharp edges and poor size distribution of pumice.

History

Early History

Soapnut Tree (Reeta / Sapindus tree)

The earliest known use of a natural soap-like substance was

the powder of the Reeta(Sapindus) nut, which was used by

Indians since antiquity. Hindus in India were obliged to

bathe at least once a day, every morning, in accordance

with Ayurveda. Evidence of manufactured soap use are

Babylonian clay cylinders dating from 2800 BC containing a

soap-like substance. A formula for soap consisting of water,

alkali and cassia oil was written on a Babylonian clay tablet

around 2200 BC.

The Ebers papyrus (Egypt, 1550 BC) indicates that ancient

Egyptians bathed regularly and combined animal and

vegetable oils with alkaline salts to create a soap-like

substance. Egyptian documents mention that a soap-like

substance was used in the preparation of wool for weaving.

Roman History

It is commonly reported that a soap factory with bars of

scented soap was found in the ruins of Pompeii (79 AD).

However, this has proved to be a misinterpretation of the

[citation needed]
survival of some soapy mineral substance,

probably soapstone at the Fullonica where it was used for

dressing recently cleansed textiles. Unfortunately this error

has been repeated widely and can be found in otherwise

reputable texts on soap history. The ancient Romans were

generally ignorant of soap's detergent properties, and made

use of the strigil to scrape dirt and sweat from the body. The
word "soap" (Latin sapo) appears first in a European

language in Pliny the Elder's Historia Naturalis, which

discusses the manufacture of soap from tallow and ashes,

but the only use he mentions for it is as a pomade for hair;

he mentions rather disapprovingly that among the Gauls and

Germans men are likelier to use it than women.

A story encountered in some places claims that soap takes

its name from a supposed "Mount Sapo" where ancient

Romans sacrificed animals. Rain would send a mix of animal

tallow and wood ash down the mountain and into the clay

soil on the banks of the Tiber. Eventually, women noticed

that it was easier to clean clothes with this "soap". The

location of Mount Sapo is unknown, as is the source of the

"ancient Roman legend" to which this tale is typically

credited. In fact, the Latin word sapo simply means "soap";

it was borrowed from a Celtic or Germanic language, and is

cognate with Latin sebum, "tallow", which appears in Pliny

the Elder's account. Roman animal sacrifices usually burned

only the bones and inedible entrails of the sacrificed

animals; edible meat and fat from the sacrifices were taken

by the humans rather than the gods. Animal sacrifices in the

ancient world would not have included enough fat to make

much soap. The legend about Mount Sapo is probably

apocryphal.

Arab History

The Arabs made soap from vegetable oil such as olive oil

and some aromatic oils such as thyme oil. Lye (Al-Soda Al-

Kawia) was used for the first time, and the formula hasn't

changed from the current soap sold in the market. From the

beginning of the 7th century, soap was produced in Nablus

(West Bank,Palestine), Kufa (Iraq) and Basra (Iraq). Soaps,

as we know them today, are descendants of historical

Arabian Soaps. Arabian Soap was perfumed and colored,

some of the soaps were liquid and others were hard. They

also had special soap for shaving. It was commercially sold

for 3 Dirhams (0.3 Dinars) a piece in 981 AD. Al-Razi ’s

manuscript contains recipes for soap. A recently discovered

manuscript from the 13th century details more recipes for

soap making; e.g. take some sesame oil, a sprinkle of

potash, alkali and some lime, mix them all together and boil.

When cooked, they are poured into molds and left to set,

leaving hard soap.

Historically, soap was made by mixing animal fats with lye.

Because of the caustic lye, this was a dangerous procedure

(perhaps more dangerous than any present-day home

activities) which could result in serious chemical burns or

even blindness. Before commercially-produced lye (sodium

hydroxide) was commonplace, potash, potassium hydroxide,

was produced at home for soap making from the ashes of a

hardwood fire.

Castile soap was produced in Europe as early as the 16th

century.
Modern History

1922 magazine advertisement for Palmolive Soap

In modern times, the use of soap has become universal in

industrialized nations due to a better understanding of the

role of hygiene in reducing the population size of pathogenic

microorganisms. Manufactured bar soaps first became

available in the late nineteenth century, and advertising

campaigns in Europe and the United States helped to

increase popular awareness of the relationship between

cleanliness and health. By the 1950s, soap had gained public

acceptance as an instrument of personal hygiene.

Rarely, conditions allow for corpses to naturally turn in to a

soap-like substance, such as the Soap Lady on exhibit in the

Mutter Museum.
 OBJECTIVE OF STUDY

The objective of the study is to understand the soap

industry in India. Also there are following points that we

wanted to cover among the Soap Industry.

1. Different players in the industry

2. Different types of soap.

3. Price comparison.

4. Companies involved and their various branding styles.

5. branding strategy of different players.

METHODOLOGY

Methodology is the major or the first step of any project.

If the plan for methodology is not streamlined then the

project cannot flow without interruption.

For our study we would majorly use secondary research

as our tool of research. We would be using the journal ,

past researches, articles, new paper, magazines , internet

as our source of data collection. We would strongly we

would be using different sites to collect data and then we

would analyze the collected data and then conclude the

project with recommendations.

 FINDING & ANALYSIS

ABOUT THE INDUSTRY

Soap Industry in India:

soap industry is one of the oldest Fast Moving Consumer

Goods (FMCG) industry in India. It is among the highest

penetrated category within FMCG sector reaching an

estimated 95% urban and 87% of the rural households. In

value terms the industry is worth Rs.45000 million and in

volume terms it is worth .53 million (in 2001 as reported by

Operations Research Group (ORG) Survey). The main

characteristic of the industry was severe competition and

high level of brand proliferation. The industry witnessed 7%

decline in value in year 2001 (Vanscom Database)8.

There were 45 leading national brands. None of the national

brands had more than 5% market share and many more

regional and unorganised sector/local brands. 9Hindustan

Lever was the market leader with about 30 (number) of

soap brands with a total market share of 67% in 1998-99 in

organised sector as seen from Table-1 below, which gives

the lead players and their respective market share.

The leading brands in the market are Dove, Pears, Lux,

Dettol, Liril, Rexona, Lifebouy, Nirma,

Palmolive and Hamam. A survey reported in Vanscom, which

was conducted in Ahmedabad,

showed that 103 s soap brands were available in this city

alone.

The industry had witnessed many innovative sales

promotion activities in the recent past.

Numerous factors were responsible for such a phenomenon.

One of the reasons being that the market being sluggish,

companies were trying to increase market share in stagnant

to declining (volume terms) market in order to retain

consumers, to encourage switching, to induce trials and

liquidate excessive inventories. Another reason possible was

that with the presence of so many brands the competition

had increased severally leading to fight for market share and

shelf space. Inflationary trend had made both the consumer

as well as trade deal prone. Hence, sales promotion

activities in soap industry posed a very interesting study

and consumer and retailer perceptions thereof.

On the basis of information collected on various brands and

their prices (see Exhibit-1), following three segments

emerge.
Table-2: Price Segments of Soaps

The brands in popular segments were found to be frequently

promoted as there was intensive price competition in this

segment. The brands could also be classified based on

medicinal benefits, cosmetic benefits, perfumes,

natural/herbal properties. For the purpose of this study,

only price segments were considered.

PRICE RANGE
It could be inferred from the above table that upper income

segment showed greater preference for premium brand of

soaps like Dove, Pears, Nivea with the exception being Lux.
The soaps were available in different sizes - 75 gms. 100

gms., 125 gms. and 150 gms. The popular sizes were 75

gms. and 100 gms.

DIFFERENT SOAP PRODUCTS IN INDIAN MARKET

INTERNATIONAL PLAYERS

Hindustan Lever Soaps (Lux, Liril, Lifebuoy, Breeze, Rexona,

Pears, Pears Glycerine, Dove, Le-Sance, Ayush)

Nivea, Ponds, Johnson baby soap, Dettol, Camay, OK,

Clearsil

DOMESTIC PLAYERS

Mysore sadal soap, Mysore baby soap, Margo, Godrej

(Cinthol, FairGlow), Santhoor, Keshnikar, Chandan,

Chandrika, Nirma, Himani, Jasmine, Kastoori, Neema, Gold

smith, Rose, Gramodhyog soaps

Pears Soap Box of 3

by Pears

4.4 oz ea box of soap

$6.95

Mysore Sandalwood Soap

by Mysore

125 g bar

$3.00

Nag Champa Beauty Soap

by Satya Sai Baba

5 oz bar

$3.67
Medimix Soap Large

by Medimix

125 g bar

$2.95

Pears Body Wash

by Pears

8.5 oz shower gel

$7.50
Sandalwood Soap

by Chandrika

75 g bar

$1.95

Pears Original Transparent Soap

by Pears

4.4 oz bar

$2.50
Chandrika Soap

by Sorya Lab

2.62 oz bar

$1.50

Dettol Liquid Soap

by Dettol

250 ml liquid soap

$5.50
Nag Champa Bar

by Satya Sai Baba

4 oz bar

$4.35

Mysore Sandal Soap

by Mysore

75 g bar
Sandal Soap

by Moti

5.25 oz bar

$3.50

Sandalwood Ayurvedi Soap

by Herbal Vedic

2.62 oz bar

$2.95

Lux Black Honey Soap

by Hindustan Lever
100 g bar

$2.50

Mysore Gold Sandalwood Soap

by Mysore

150 g bar

$4.50

Sandal Soap #1

by Godrej Soaps

75 g bar

$1.95
Medimex Soap

by Medimex

75 g bar

$1.95

Aloe Vera Soap

by Dabur

125 g soap bar

$1.95
Moti Rose Soap

by Moti

150 g bar

$2.50

Limda (Neem Soap)

by Nirmal

75 g soap bar

$1.95

Tulsi Neem Mitti Soap

by Ayur

75 g soap bar
$1.95

Dettol Soap Large

by Dettol

125 g bar

$2.50

Gulab Soap

by Moti

5.25 oz bar
$2.50

Lavender Ayurvedic Soap

by Herbal Vedic

2.62 oz bar

$2.95

Cinthol Soap

by Godrej Soaps

75 g bar

$1.95

Hamam Soap

by Hamam
100 g bar

$1.95

Liril Soap

by Liril

75 g bar

$1.95
 COMPANIES INVOLVED AND THEIR VARIOUS

BRANDING STYLES

"More washes!" "More suds!" So declares a "hawker," or a

sometime sales rep from Hindustan Lever Ltd., the local

subsidiary of Dutch giant Unilever, the world's largest

consumer-products manufacturer. The rep makes his case

with a microphone and a truck well stocked with detergents,

soaps, and toothpastes. His rival, standing a few feet away

and armed with a megaphone, pitches Lever knockoffs.

"Costs less!" "Cleaner wash!" The spirited volley of pitches in

Kannada, the local language, attracts a jostling crowd.

Welcome to the new frontier of global capitalism, the spot

where state-of-the-art marketing meets the dirt road. The

typical family in this town earns 4,800 rupees (about $103)

a year from raising crops and from working occasional jobs

in the city. Most wash their clothes and their bodies in

nearby ponds or at community water taps. If soap is used at

all, it's usually whichever brand is cheapest -- and people

tend to use that soap for everything: their bodies, their hair,

and their garments. In this country, the notion of brand and

brand loyalty is fleeting, to say the least.

But Hindustan Lever, in ways at once ingenious, dogged,

and culturally sensitive, is changing all of that. Over the past

two decades, the company has built a remarkable

distribution system that moves its soaps and detergents to

every corner of India. Now it has started to leverage that

valuable infrastructure to expand its reach to a huge and

overlooked group of consumers: the rural poor. "Everybody

wants brands," argues Keki Dadiseth, 55, who is in charge of

home- and personal-care products worldwide and who is

also a director of Hindustan Lever. "And there are a lot more

poor people in the world than rich people. To be a global

business and to have a global market share, you have to

participate in all segments."

M. (Venky) Venkatesh, 42, is one of Hindustan Lever's field

generals in this campaign. He is regional sales manager for

a chunk of India (total population: more than one billion)

that is home to more than 200 million people -- as many as

reside in Russia and the Ukraine combined -- comprising

some 150,000 villages. His mission: to sell Lever products to

rich and poor alike.

Venkatesh takes that mission seriously. A 20-year Lever

veteran, he still spends two days a week visiting stores and

markets across his region. When he spots Lever products

hidden behind another brand in a storefront, he walks in and

rearranges the display. He smells soaps to make sure that

the scent is fresh. Thanks to the spreadsheet on his IBM

Thinkpad, he can recite the demographics for every village

on his itinerary -- from the number of bank deposits above a

certain amount to literacy rates. In two years, his team has

driven Lever products into 47% of the state of Karnataka, up

from 30%. "Rural consumers want value, not just volume,"

Venkatesh says.
Venkatesh strikes up a conversation with Mahaboobjan, an

open-shirted man selling incense from a weathered wooden

cart at the haat. Mahaboobjan has been peddling his wares

in the region for 20 years. His long-standing relationships

with customers position him as a reliable expert and adviser

to local villagers. Venkatesh asks him what he thinks of the

pitch being delivered by the Lever hawkers on the truck.

Mahaboobjan grabs the microphone. In classic salesman's

patter, he begins talking about Lux, the soap that film stars

use, and about the power of Wheel detergent. He keeps up a

barrage of conversation to drown out an amplified tape

recording used by the rival selling knockoffs. The market is

transformed as villagers flock to the Lever truck. In less

than an hour, Mahaboobjan sells soap to 15 customers,

nearly half of that morning's sales. Venkatesh offers him a

hawker's position on the spot.

The moral of the story? Even the poorest of the poor, when

given a choice, can be choosy about brands. In a nation

where more than one-third of rural consumers watch TV

(everything from Ally McBeal to religious soap operas), and

even more visit commercial centers, people aren't naturally

inclined to settle for throwaway versions of the real deal -- if

the companies that make the real deal bother to explain the

difference. If you only have two rupees (about four cents) to

spare, you want value for your money -- and quality

products for your children. Casting a glance at the Wheel

knockoffs in the market, a silk sari-clad woman named

Maryamma sneers, "Only village people buy duplicates. I

want the real thing."

How far should a giant company go to understand poor

customers in faraway markets? How does such a company

manage to sell its product profitably to hundreds of millions

of people, dispersed and isolated, with hardly any disposable

income to spend? How does it develop brand loyalty in

markets where, for generations, people have chosen to buy

the product that was cheapest or the items that a store

actually had in stock -- if they bought anything at all?

These are not questions that occupy the minds of high-level

strategists and marketers at most powerful global

companies. They are too busy trying to sell high-priced,

high-profit products to middle-class customers in the richest

countries. Hindustan Lever, the largest consumer-goods

company in India, has embraced a different strategy. It sells

everything from soups to soaps by going wherever its

customers are, whether it's the weekly cattle market or the

well where village women wash their clothes. Why bother?

Because it is the smart (and the right) thing to do. Poor

people, the company's executives believe, can become just

as discerning about brands as rich consumers. And if brands

exist as a store of value -- a promise about a product's

distinctive qualities and features -- then offering poor

consumers a real choice of brands means offering them a

slightly better quality of life. Marketing well-made products

to the poor isn't just a business opportunity; it is a sign of

commercial respect for people whose needs are usually

overlooked.
To be sure, plenty of companies peddle low-quality products

at cheap prices to maximize their profits. But that's not the

Unilever model. Poor countries, it believes, may hold the key

to the company's long-term prosperity. Unilever (annual

revenues: $43 billion) anticipates that by 2010, half of its

sales will come from the developing world, up 32% from its

current sales. Hindustan Lever is the model and the engine

for that shift. India's rural people, who comprise 12% of the

world's population, present a huge untapped market. What

the company is developing now are the strategies and

tactics to reach that market, even as its competitors waver

in their commitment.

It is a crucial growth opportunity for Hindustan Lever,

perhaps the most effective way for it to retain its number-

one position in consumer goods. The company reported

continuous sales growth in India for three decades. Then,

late last year, sales were nearly flat and actually declined in

some categories. "Given the large scale of the company,"

says M.S. Banga, 46, chairman of Hindustan Lever, "our

biggest challenge is to keep growth rates where they are."

That's why every Lever management trainee begins his or

her career by spending six to eight weeks in a rural village,

eating, sleeping, and talking with the locals. Marketing

executives make frequent two-day visits to low-income

areas. Why all of this trouble? "It's important to ensure that

our sales guys are connecting with our consumers," says

Banga, whose tenure with the company began in a village.

"Once you spend time with consumers, you realize that they

want the same things you want. They want a good quality of

life."

Indeed, Lever recognizes that meeting the demand of poor

consumers isn't just about lowering prices. It's about

creativity: developing products and processes that do more

with less. Hindustan Lever creates markets where most

companies see only problems. Somehow, this company of

36,000 employees -- a notorious bureaucracy -- nurtures a

willingness to constantly redefine markets, marketing, and

brands. Its growth in rural India is a case study in strategic

reinvention.

Change Who Does the Selling

On November 28, 2006, in a meeting hall in Nalgonda in the

southern state of Andhra Pradesh, Hindustan Lever

assembled a group of about 150 women. The women had

come by bus or by train, some at the company's expense,

from 50 villages with fewer than 2,000 residents. Many were

illiterate, agrarian workers who were hard-pressed even to

say which products Hindustan Lever makes. They wanted to

start a business, and the program's name -- Shakti, or

strength -- validated their bold decision.

The women belonged to self-help groups that ran

microcredit operations. Each of them had saved money from

their daily wages or crop sales and were committed to

finding ways to make their collective savings grow. So Lever

pitched to them what seemed like an exciting proposition: If

they used some of their savings to buy the company's

products at cost, they would learn how to sell them to their

friends and to other community groups and how to sell them

at a profit. Amway and Avon had already pioneered a similar

strategy for the middle class in urban India. But for

Hindustan Lever, the direct-sales model was a huge

departure from stratified distribution channels and highly

trained sales reps.

"It's not enough to give people access to money," says

Pratik Pota, 32, a marketing manager on the new-ventures

team (or New Adventures, as it's dubbed). "We have to give

them opportunities and train them in what to do with their

savings. Our growth prospects are inextricably linked to

these women's income generation."

Shakti represents a huge cultural challenge in India. And in

many places, Pota faces tough going. In the village of

Pochampally, he visits the home of Anjamma, a promising

participant. Anjamma is the local leader of the Telugu

Desam political party, and she runs one of the larger

women's microcredits. She's blunt: It's hard to sell products

to local villagers, she says, pointing to the boxes of soap

bars and shampoo sachets stacked in the corner of her living

room. Though accustomed to charging interest on her

group's loans, she's struggling with how to sell the products

at a margin.

But in the next village, Ravenpalli, Pota finds evidence of

progress. In their spare time, a group of women weavers

have taken to selling soaps and detergents to their

neighbors. "I thought that we could sell the products for less

than at the store and still make a profit," says Maheshwari,

the leader. Though she's never sold before and has just a

second-grade education, her billing book is perfectly

organized. Sitting cross-legged on her dirt floor, Pota looks

pleased.
"We're not doing this out of charity," Pota says. "But if you

can contribute to a social cause while being profitable, then

why not?"

Change How You Market

As twilight sets on a weekly cattle-and-trade market in a

village in Bihar, buyers collect their wares and gather in

front of a stage. A performer lights a small fire on a plate to

purify the stage. A mythological tale of romance begins.

Then the performers -- magicians, singers, dancers -- offer a

bit of local news and call out to surrounding villages.

In the next scene, performers are acting again, this time in

the role of rural laborers. One man is worried that he's not

strong enough to do his work. The other tells him, "Your

body can't breathe if it's covered with mud." What he means

is, if you're not clean, you're not strong, and you can't

support your family. Variations of this message are sung to

a catchy tune. The backdrop: a banner advertising Lifebuoy,

Unilever's 106-year-old mass-market brand of soap in India.

Is rural folklore the best way to explain useful hygiene

practices? Or does it co-opt a centuries-old tradition in the

interest of crass consumerism? Cultivating poor consumers

is often a series of long-term gambles that test the line

between what's creative and what's exploitative. After

producing 7,000 such live shows across rural India to

promote Lifebuoy and five other brands, Hindustan Lever

itself is unsure of the best method for connecting with

consumers. But complicated circumstances call for a

willingness to experiment.

In Bihar and in other villages of the more rural states of

northeastern India, the landscape is different from that of

the south. Television ownership is less widespread. Men,

rather than women, go to the weekly haats. Here, swaying

consumers doesn't involve switching from counterfeit brands

to Lever brands. Instead, it involves switching people from

infrequent to everyday washes using soap without making

them feel profligate or inauthentic. The marketing challenge

is to integrate the product into consumers' lives.

One strategy relied on science. Soap executives realized that

people who didn't see dirt on their hands thought that their

hands were clean. This attitude partly explained why people

didn't wash their hands after washing clothes in the river or

feeding the cows, a key cause of disease transmission.

Although the connection was clear in the executives' mind,

they had to create a similar urgency and emotional

connection to soap for the consumer.

And what better place to educate people about the

importance of frequent soap use than where 70 million

people come to clean themselves? Hindustan Lever joined

the pilgrims visiting Allahabad for Kumbh Mela, the religious

festival held every 12 years. Executives wanted to show that

dirt is always present, though often invisible. Marketers

waved an ultraviolet-light wand over attendees' hands to

show where germs and dirt resided. While the pilgrims came

to bathe at the confluence of India's sacred rivers to cleanse

their souls, they also learned to keep their hands free of

pathogens.

The village street theaters represented a more emotional

play. Lever and Ogilvy Outreach, the unconventional

marketing arm of Ogilvy & Mather, recruited local magicians,

dancers, and actors who knew each market and village that

the company wanted to target. In total, 50 teams of 13

performers were recruited to serve as connections between

the brands and the residents. Scripts were changed for

different dialects, education levels, and religions. In all,

Ogilvy coordinated two-hour performances at 2,005 haats

over six months.

The results seem compelling. Awareness of Breeze, a low-

cost soap with more of a beauty pitch, increased from 22%

to 30% over the six months that the performances were

running. Awareness of Rin Shakti, a moderately priced

detergent bar and powder brand, increased from 28% to

36%, a company spokesman says. And in all five states,

sales of Surf Excel, a premium washing detergent, shot up in

the first half of 2000 compared with 1999, while sales of Rin

shot up in four states.

More than that, Hindustan Lever may actually be improving

health conditions. "It's not enough for the company to look

at market-share increase," says Anand Kripalu, 42, the

company's head of detergents and a creative thinker behind

many of the company's rural-outreach strategies. "We want

to spread the message of hygiene and really use the

Lifebuoy brand to deliver that benefit to consumers. This

isn't just good for us as a brand; it's good for the country."
Change How You Develop Products

Most big companies assume that developing products for

poor consumers requires less strategic flexibility, less

marketing inspiration, and less expensive R&D than

developing products for rich consumers. Hindustan Lever

has learned that, in fact, the opposite is true. It takes a

genuinely creative company that is filled with highly

imaginative product developers to reach the poorest of the

poor.

Consider Indian women and their hair. India is home to 16%

of the world's population but also home to 28% of the

world's hair, thanks to the long tresses that Indian women

maintain throughout their life. In a culture in which many

poor women still avoid any appearance of self-indulgence,

hair grooming is often their one luxury. Even women with

faded saris and little jewelry rarely leave home with a hair

out of place.
Which means that women look for unexpected opportunities

to care for their hair. This insight led to two product-

development strategies. One reinforced a prevailing

consumer habit, that of using soap for hair and body wash.

Just over half of consumers, especially low-income

consumers, use soap to wash both their hair and their body

every day, Lever's research shows. Rather than fight it,

marketers decided to create an opportunity. Two years ago,

Hindustan Lever marketers thought of testing a prototype

hair soap. But that development still didn't acknowledge the

fact that consumers use one soap because it's more

convenient and because it costs less.

And so came the idea for a low-cost soap that cleans the

body and the hair. Product developers spent a year in the

lab before finding the right formula. Marketers had already

built a strong beauty brand in Breeze, a discount soap. Now

marketers could build the Breeze brand even further. The

new soap is called Breeze 2-in-1, and distribution is targeted

at smaller towns and rural areas. "It's an example of product

marketers piecing together insights from the field and

stretching their imaginations," says Mukul Deoras, 38, head

of the personal-wash business.

It's also an example of how Lever gets consumers to buy

higher-quality products, or how it gets them to buy "up the

value chain," as company executives say. Deoras

acknowledges that this brand may cannibalize users of

Lever's other discount soaps and shampoos. But, he says,

"even if there's cannibalization, it's okay. Consumers are

buying a value-added product, which is likely to increase

loyalty."

The other strategy targeted women who weren't even willing

to try shampoo, because they thought that it was too harsh.

Marketers decided to tackle the harshness issue head on. An

ad campaign showed a straw broom (what happens to hair

with soap) alongside soft tresses (the benefits of shampoo).

Coupled with this campaign, the company developed a

sachet of Lux shampoo. It capitalized on the Lux-soap

brand, and it cost less than any other sachet: just 50 paise

compared with two rupees. The visual cues and sachet size

were so powerful that in the test state of Andhra Pradesh,

volume sales of shampoo jumped by 50% in just three

months.
 BRANDING STRATEGY

Segment-wise Frequency of Schemes

Thirteen schemes (47%) announced were found to be on

popular segment (Rs.8-15 for 75 gms.) of soap brands. This

was closely followed by 11 schemes (40%) in premium

segment (> Rs.15 for 75 gm.). Thus it could be inferred that

companies were trying to upgrade consumers of

economy/popular brands to popular/premium soap

brands respectively.

Nature of Schemes

With respect to the nature of the schemes, premium (free

gifts) were found to be the most frequently used schemes in

both premium and popular segment of soap industry. No

such scheme was offered by any brand in the economy

segment. It could be inferred that as the price of soap in this

segment was less than Rs.8, it might not be

possible for the companies to offer this type of premium

promotion. Secondly, the consumers in this segment were

likely to be price sensitive and such a promotion might not

be of value to them compared to price offs.

Premium (Free Gift) Offers

Six out of 13 premium offers were a part of the companies

own portfolio e.g. on buying 2 Dettol soaps, a Dettol Talc, 18

grams worth Rs.25 was given free.

Underlying Objectives

Based on Table-3, a set of underlying objectives behind the

various sales promotion schemes were inferred:

1.5.1 Bonus Packs:

• To reward existing loyal customers

• To off-load inventory at factory and distribution level (to

attain push)

• Bonus pack schemes (Buy one get one free/more for the

same price) were used to load the consumers so that they

would not buy competitive brand at least for short period.

1.5.2 Premium (Free Gifts):

• To reward and retain existing loyal customers and to

enhance brand image through interactions/associations.

• To act as a constant reminder of the brand.

• To encourage brand switching amongst deal prone

consumers through innovative gifts.

• To induce trial of new products of the company by

leveraging on the existing brand and its equity e.g. giving

(new) Mysore Sandal Talc free with the purchase of 2

Mysore Sandal soaps.

1.5.3 Price-offs:

• Contrary to belief, premium soap brands were giving price

offs (3 price off out of 11 scheme announcements in this

category – Table-3). The underlying objective could be to

offload inventory by pulling customers from popular soap

segment, as the size of the premium segment especially the

higher end of the premium segment might be very small

e.g. Dove (priced at Rs.45 for 100 gm) Rs.10 off. It could be

inferred that frequent use of sales promotion activities in

premium segment might dilute the brand’s exclusivity, which

could lead to dissatisfaction and disillusionment among the

regular users.
Incentive Price (outlay) Ratio

The incentive price ratio was calculated by taking the

monetary value of the incentive offered to the consumer and

dividing it by the amount of money he/she needs to spend in

order to avail the offer. The ratio varied from 0.15 to 1.00

among various brands . The ratios in premium brands varied

from .15 to .71. For example, in case of Mysore Sandal and

Palmolive Natural (premium soaps) the incentive ratio was .

15 and .17 respectively. With this level of incentive neither

regular premium soap users will feel rewarded or get

attracted, nor the popular soap users will be motivated to

switch. The highest incentive ratio in case of Fair and Lovely

soap was an introductory offer. Such a high incentive again

was not likely to generate desired response in terms of trial.

Instead the company could have leveraged on its parent

brand namely Fair & Lovely Cream which is well entrenched

in the market. So with the purchase of Fair & Lovely tube

free soap would have given better results in our opinion.

Willingness to buy on sales promotion offer

Sixty-three per cent of the sample did not show willingness

to buy a brand due to promotion while 27% showed

willingness and 10% were not sure. This indicates that

when 27% showed willingness, and 10% consumers who

were not sure, these groups might be lured through

innovative and lucrative sales promotion offer.

Ability to induce trial

Forty per cent of the respondents had said that sales

promotion had the ability to induce trial which reinforces the

above inference (3.4).

Long-term impact

In order to understand ability of the promotions to increase

long-term sales, respondents were asked about continuity of

purchase of a brand after the withdrawal of promotion.

Eighty per cent of the respondents indicated that they would

not continue. But 20% said they would. Thus, it could be

inferred that promotions in this category (low involvement

products) might encourage trial and brand switching but not

long term loyalty.

Preference of Schemes:

Price off was the most preferred type of scheme. Sixty-three

per cent of the respondents ranked price-offs as number one

or two. This was from an upper income (biased sample, in

which 18 out of 30 were from income group category

>3,00,000/- p.a.

Perceived Quality:

Ninety-three per cent of the respondents had a perception

that the quality of the promoted brands remained the same

during promotion, while 7% felt that it was inferior than

before. It can be inferred that promotions were not leading

to negative brand quality perceptions. It was further

reinforced when 53% of the respondents said that sales

promotion would not weaken their loyalty towards the

brand.

Perceptions regarding underlying company

motivations
On tapping perceptions regarding underlying company

motivations for sales promotion, “to increase sales” was

ranked highest followed by “to attract switchers” and “to sell

excess stocks”. While providing value to customers” and “to

reinforce company image” were ranked lowest. This

indicates that consumers believed that companies were

undertaking such activities only for their own benefit and not

for the benefit of consumers.

Corroborating findings from retailer and consumer

perception studies, it is evident that there was a matching of

perceptions regarding nature of scheme (price offs as most

preferred type of scheme mentioned by consumers and

retailers’ perceptions about consumer preferences).

Since retailers observe consumers instore beahviour were

frequently and directly, their perceptions regarding providing

consumer behaviour are likely to be accurate. Such inputs

from the retailers would be useful to companies.

The retailers had the perception that those schemes which

were announced through mass media had better response.

This was reinforced by the consumer survey which showed

that recall in case of heavily promoted schemes on TV was

found to be very high.

Retailers’ prediction of companies’ motivation for offering

sales promotion were matching with the consumer

perception regarding the same. Thus both viewed that

companies were using sales promotion activities mainly to

increase short term sales or encourage switching or selling

excess stock and not really to give value benefit or reinforce

brand/company image.
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD

BRAND
 CONCLUSION & RECOMMENDATION

The findings of the empirical study indicate that unless the

brand to be promoted is in the consideration set of the

consumer, sales promotion by itself is unlikely to have any

major impact. Clearly this shows that managers need to

invest into brand building exercise so that his/her brand

appears in the consideration set of the target consumers.

Only after this should he spend time, money and energy on

sales promotion activities. Sales promotion should not be

used in isolation but need to be integrated with other tools

and in line with the overall positioning of the brand. Also the

importance of the role of mass media came out clearly in

both the studies. Companies need to create sufficient

awareness about sales promotion schemes through mass

media in order to create awareness The role of retailer in

influencing consumer in brand choice decision in a toilet

soap category was found to be insignificant which also

supports the above observations. Toilet soaps are low

involvement products characterized by switching

behavior. Also the person going to the shop for the purchase

of soap is the final decision maker of the brand. Hence it is

essential that companies need to design attractive, striking,

visible POPs for scheme announcements.

With respect to nature of scheme, the finding suggested that

premium (free gift) was popular with companies. While both

retailers and consumers preferred price offs. So it is

necessary that the perceived value of a free gift has to be

appealing and high for the target consumers. Repetitive use

of the same premium (soap dish) for a prolonged period

may have negative effect on the loyal customers. When the

company is giving its own product free as premium, it needs

to ensure the quality of the product from it as it is likely to

jeopardize the image of both its products.

The findings exhibited that both the retailers and consumers

perceived that sales promotion activities carried out by the

companies for increasing sales in short term and clearing

excess stocks. What it implies is that companies need to use

sales promotion synergistically and communicate so that

they provide value to the target audience and enhance

brand quality/image perceptions.

Companies need to systematise information flow regarding

sales promotion activities particularly at dealer � retailer

level. Ensuring proper information flow and devising checks

and measures to reduce misappropriations and

implementation flows should be considered critical aspects

for the success of sales promotion activities by the

companies. As retailing is fragmented, direct reach by

companies is next to impossible. Through dealers and proper

feedback mechanism, companies keep in touch with the

market. From the study it was found that smaller retailers

felt neglected and not enthused to implement the schemes,

particularly when additional handling, stocking, accounting

was required on the part of a retailer without compensatory

margins. It can be seen that the retailer and consumer

perceptions matched with respect to preferences of

schemes, underlying motivations and role of mass media.

This implies that the retailer would be a rich source of

information about the consumer and the likely response to

sales promotion activities. Developing a system to tap such

responses from time to time both at retailer and consumer

level would be helpful for planning future sales promotion

activities. In order to build trust and commitment companies

should tap preferences, perceptions of retailers as well as

consumers.
SWOT ANALYSIS OF SOAP INDUSTRY

Strengths:

1. Low operational costs

2. Presence of established distribution networks in both

urban and rural areas

3. Presence of well-known brands in FMCG sector

Weaknesses:

1. Lower scope of investing in technology and achieving

economies of scale, especially in small sectors

2. Low exports levels

3. "Me-too" products, which illegally mimic the labels of

the established brands. These products narrow the scope

of FMCG products in rural and semi-urban market.

Opportunities:

1. Untapped rural market

2. Rising income levels, i.e. increase in purchasing power

of consumers

3. Large domestic market- a population of over one

billion.

4. Export potential

5. High consumer goods spending

Threats:

1. Removal of import restrictions resulting in replacing of

domestic brands

2. Slowdown in rural demand

Tax and regulatory structure