N. L.

Dalmia Institute of Management Studies and Research Srishti, Sector – 1, Mira Road (E) - 401104


Competitive Analysis of Toilet Soap Industry


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Introduction Porter five forces model PEST Analysis SWOT Analysis Value chain Analysis HLL (Overview & Swot analysis) Nirma (Overview & Swot analysis) Godrej (Overview & Swot analysis ) Suggestion & Conclusions

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Vishal Mungekar


Competitive Analysis of Toilet Soap Industry

Toilet Soaps- An Introduction The toilet soaps market is estimated at 530,000 tpa including small imports. Hindustan Lever is, of course, the market leader. The market is littered over with several, leading national and global brands and a large number of small brands, which have limited markets. The popular and premium brands include Lifebuoy, Lux, Cinthol, Liril, Rexona, and Nirma. Toilet soaps, despite their divergent brands, are not well differentiated by the consumers. It is, therefore, not clear if it is the brand loyalty or experimentation lured by high volume media campaign, which sustain them. A consequence is that the market is fragmented. It is obvious that this must lead to a highly competitive market. Toilet soap, once only an urban phenomenon, has now penetrated practically all areas including remote rural areas. The incremental demand flows from population increase and rise in usage norm impacted as it is by a greater concern for hygiene. Increased sales revenues would also expand from up gradation of quality or per unit value. As the market is constituted now, it can be divided into four price segments: premium, popular, discount and economy soaps. Premium soaps are estimated to have a market volume of about 80,000 tonnes. This translates into a share of about 14 to 15%. However, by value it is as much as 30%.

Vishal Mungekar


Competitive Analysis of Toilet Soap Industry

Market Segmentation
Size (In Lakh Tonnes)


0.8 Premium Popular Economy 2.2 Discount


Soaps are also categorized into men's soaps, ladies' soaps and common soaps. There are a few specialty soaps as transparent Glycerine soaps, sandal soaps, specially flavored soaps, medicated soaps and baby soaps. Specialty soaps are high valued but enjoy only a small share of the market in value terms. The market is growing at 7% a year. This means that the incremental demand generation is 5% over and above the population growth. With increasing awareness of hygienic standards, the market could grow at a rate higher than 8% annually. Interestingly, 60% of the market is now sourced from the rural sector. This means that the variance between the two segments is not very large. Since upper-end market focus is the urban areas, margins come from the urban sector. Factors affecting buying behaviour Price is the most important factor which effects the buying behavior of consumer, by which a consumer goes for the various segment of soap like premium, popular, sub-popular and carbolic which are basically decided by the cost factor and fat content in the soap. The buying frequency is either monthly that is done by the families or in case of bachelors it is more than once in a month. The occasions when premium soaps are

Vishal Mungekar


The promotional techniques help to boost sales.running brand antiseptic and medicated soap. in monsoon . the brands change as per the customers' need for that particular season.running brand popular and sub-popular most of the buyer take bath twice in a day specially in northern belt. One of the important points a soap marketer should note is that the soaps are usually purchased by women in urban areas as most of the day to day consumption of personal care products are made by women. buy one get two free. free gifts and other schemes help boost sales in short run and also help in clearing stocks. Men normally make purchase decisions in rural areas. Hence the marketer has to adopt different strategy for such a market.e.Competitive Analysis of Toilet Soap Industry purchased are usually when there are festivals and ceremonies. Moti Soaps are usually presented during festivals and occasions for presents and gifts. A point to note is that women use more personal care product than men do and hence premium soaps are mostly targeted at them.g. For e. Demand 2000-01 1998-99 Year 1996-97 1994-95 1992-93 1990-91 0 200 400 600 Tonnes Tonne s The market shows a seasonal behavior for some brands. Various tactics like the price off’s. in summer . i. Vishal Mungekar 5 . in winter running brand premium (moisturizer and creamy soap).

Lux Freshness – Liril. which the products have in market. Margo Baby – Johnson & Johnson.Competitive Analysis of Toilet Soap Industry Benefits sought by various customers from various brands are Beauty . Doy Care (moisturizing) Medicated – Dettol. is the penetration. Savlon. In case of soaps this has not been a major issue as the penetration in the rural area is as high as 97% and that for urban area is around 99%. Glycerine – Pears. Doy Cream – Dove. Vishal Mungekar 6 . Thus the approximately the penetration is around 99% for overall India. Cinthol Natural – Medimix. which affect the demand of soaps. Emami Penetration One of the factors.

Competitive Analysis of Toilet Soap Industry Market Share Market Share Others Players Godrej Nirma HLL 0 20 40 % Share 60 4. Earlier. Moti.8 In terms of market share. However. Hindustan Lever is the largest contributor to the toilet soaps market of India. Nirma Beauty Soap. Lifebuoy ruled the roost with health-conscious users as a hygienic soap. Jai. Breeze. Caress.8%. While the former brand remained the preserve of the high-end rich consumers. Nirma officials said their market share was in the region of 21 per cent. At the medium and lower rungs. In between came brands like Nirma Rose. with the second ranked Nirma Soaps placed at a distantly low share of 16. Liril made waves with its lemon touch and bathing acrobatics. Quite a few of the Vishal Mungekar 7 . It enjoys almost a two-thirds share. making each occasion to give a more vigorous thrust to the marketing effort. Rexona (third largest brand) were well supported by OK and later by OK NSD Bar. the data indicates that HLL had a market share of 64 per cent in the soap market. followed by Nirma at 16. and LeSancy.4 per cent. brands like Hamam.8 per cent and Godrej at 4. The brands have undergone a full foray of launches and relaunches. The products underwent up-gradations with the introduction of versions like International Lux and Lifebuoy Personal. Lux and Lifebuoy have held the sway of the market for almost fifty years. when contacted by ET.8 64 80 14.4 16. In 1993 came Dove.

P & G has now a fully-owned subsidiary in India and now it is concentrating more on personal care products. Crowning Glory was pitched for hair care. Commercial production commenced in 1993. Cinthol. Vishal Mungekar 8 . a project to manufacture the product for the world market at Khamgaon in Maharashtra. Ganga did well and a new version Doodh Ganga has been introduced.1 and Crowning Glory.as they represented a losing portfolio. Cinthol ranks third and accounts for 60% of all Godrej Soap's brands. Ganga had notched up a 5% market share but declined to 2% later with sales at Rs 350 mn. Biz and Trilo . for example. Key. No. Godrej Soaps was giving a tough competition to Hindustan Lever. fatty acids. Cinthol is perceived largely as a male soap. HLL undertook. HLL has also branched out into other toiletries like shampoos and related products like glycerine. Two variants were introduced in 1989 placing an added emphasis on their brand of soaps. While Pears has dominated as high profile specialty soap. Shikakai. Infact P&G is withdrawing itself from the premium soap segment like Camay. Godrej Soaps had a disappointing experience in forging an alliance with Procter & Gamble (P&G). Godrej found it convenient to shed the detergent brands Ezee. It is an old brand launched about five decades ago in early 1950s. Its deodorant and complexion soap is styled as Cinthol Spice. as Lux is a lady's soap. Fairglow. Godrej wants to revive it.Competitive Analysis of Toilet Soap Industry brands have been acquired: Hamam from TOMCO and Baby Toilet soap from Johnson & Johnson. To provide a sound base to its toilet soaps operations. while it has others to bother about such as Vigil and Fresca. The company expects a very high growth for Cinthol in 1997-98. Godrej retained all soap brands and transferred detergent brands to P&G in 1993. Godrej is promoting a number of brands. Ganga. in 1992. New Cinthol Lime and Cologne gave it a new look in 1985.

Nivea Creame soap and also internationally well know brands like Fa for other marketers.000 tonnes sale in just three years. GSL makes Rexona and Dettol for Reckitt & Colman of India and Johnson's Baby Soap for Hindustan Lever (Johnson & Johnson). rather less. One possible reason could be increased production in the small-scale sector . The consumption of soaps and detergents has shrunk substantially with volumes declining by 11. has state of the art technology oriented plants. "Soaps and detergents are at the back of the house and are not status products like TVs or refrigerators. It seems Indians have sacrificed hygiene at the altar of thrift. The evidence of this decline in consumption is somewhat perplexing in a country with a growing population as the consumption of soap and detergents should logically be directly proportional to population growth.5 per cent and consumption of detergents declining by 4. besides detergents sold as powders and bars. which is produced by organized players. Production of laundry soaps are reserved for the small-scale sector and data is not readily available. as well as their clothes.1 per cent in the year." explains an official at a leading FMCG firm.Competitive Analysis of Toilet Soap Industry Even Nirma has achieved a significant penetration and has notched up an impressive 60. Indians do seem to be washing themselves. Also companies like VVF Ltd. which they mostly use for producing brands like Dettol. It’s possible that consumers may be economizing on their use or buying cheaper brands during a downturn. a large quantum of detergents are sold in the form of laundry soaps. For instance. Godrej Soaps Limited (GSL) has been using its capacity by working for other producers. If numbers are anything to go by. There is also a large Vishal Mungekar 9 . And yet only half of its capacity of 71. which are used for washing clothes. Nirma Ltd has been putting up a backward integration plant to produce soda ash and linear alkyl benzene (LAB). Capacity utilization in the industry varies from as low as 50% to 80%.000 tonnes is being used. Data collated by industry certainly points to this rather unpleasant conclusion.

A detailed analysis of the data shows that sale of premium soaps. which deters the players to provide value for money product to the middle class consumer. for which reliable numbers are not available. However. There is another whacky hypothesis. used for personal wash. which was previously looking attractive. analyst say that it will grow at a meager rate of 3 to 4 per cent especially in the premium category. successful sachet marketing in shampoo seems to have now penetrated this market. Even though the market has shown de-growth in toilet soaps segment. But even the carbolic or discount soaps — the likes of HLL’s Lifebuoy or Nirma — saw volumes decline by 9. Many households earlier used soaps for twin purposes: for body wash as well as shampoo substitutes. Also due to high excise duty prices have remained high enough to keep the huge middle class chunk away from this market. which has directly impacted the sales of soaps. Another possible reason for the apparent decline in consumption could be the free samples of soap which have been handed out as part of incentive schemes. declined by 13. which attract high import duty. Thirdly 80% of the raw materials used in premium soap are imports. Vishal Mungekar 10 . All this factors lead to increase in cost.” said the official.9 per cent. which can be uncertain.Competitive Analysis of Toilet Soap Industry cottage industry producing cheap soap. This can be attributed to factors like excessive dependent of Indian rural sector on monsoon. say industry sources.1 per cent. the likes of HLL’s Lux or Godrej’s Cinthol. “The quantum of such samples may not be picked up in the data.

Competitive Analysis of Toilet Soap Industry Porters 5 Forces Model SUPPLIER POWER Supplier concentration Importance of volume to supplier Differentiation of inputs Impact of inputs on cost or differentiation Switching costs of firms in the industry Presence of substitute inputs Threat of forward integration Cost relative to total purchases in industry BARRIERS TO ENTRY Absolute cost advantages Proprietary learning curve Access to inputs Government policy Economies of scale Capital requirements Brand identity Switching costs Access to distribution Expected retaliation Proprietary products BUYER POWER Bargaining leverage Buyer volume DEGREE OF RIVALRY -Exit barriers RIVALRY THREAT OF SUBSTITUTES -Switching costs -Buyer inclination to substitute -Relative price performance of substitutes Vishal Mungekar 11 .

and Anchor to launch soaps in the premium category. There are companies like Marico. which directly purchases fatty acids of palm oil from the Indian manufacturers.Competitive Analysis of Toilet Soap Industry Buyer information Brand identity Price sensitivity -Industry concentration ratio -Fixed costs/Value -Industry growth Threat of backward integration added Product differentiation Buyer concentration vs. Oriflamme has entered the market recently with premium soap for the niche segment Milk & Honey (40 Rs 100 Gms) and Kopran has titled its new offering Shine & Smile. Kopran. The exporters of these countries could supply good quality soaps at rates less than the Indian competitors. The new entrants generally cater to small markets for e. industry Substitutes available Buyers' incentives -Intermittent overcapacity -Product differences -Switching costs -Brand identity -Diversity of rivals -Corporate stakes New Entrants The major raw material required for toilet soap is palm oil which is required to be imported from countries like Malaysia. China etc.g. there are a large number of soap manufacturers catering the local markets of southern states. Vishal Mungekar 12 . Most of these players are a part of the large unorganized sector. Palm oil is an expensive ingredient and this gives a low cost advantage to the soap industry of countries like Malaysia.

Premium Category. The switching cost for the consumers is not very high in the soap category.Competitive Analysis of Toilet Soap Industry HLL takes complete advantage of the economies of scale by procuring huge quantities of raw material and flushes the market with vast varieties of soaps with minor variations. Dettol created by existing players proves a hurdle for the new entrants like Doy Care (VVF Ltd. The duties applicable to this sector are very high and thus prove to be major barrier for the new entrant. Substitutes Generally one can point at two general broad substitute threats in the Premium soap category. Companies having a good distribution network are able to cater to a wider market across the country. Most manufacturers in the organized sector like import the machinery from Italy. Even in case of specialty soaps like J&J. although compared to other does enjoy a better Brand Loyalty.) but there are a large number of players operating at the local level. The specialty about this sector is that it has a high level of learning curve that improves with experience and therefore soap manufacturing is quite often called an art rather than a science. Lux. Though the use of these products forms a very small part of consumption this is 13 Vishal Mungekar . Santoor. Sales are volume driven and not value driven. Brands like Liril. Distribution is the key factor in this sector. One threat is from the use of products like body wash and face wash. The capital required for manufacturing process is very high in this sector especially if one needs to manufacture standardized quality soap. where Brand Loyalty is generally high.

Indonesia and China. Such moves result in new formulations that force suppliers to modify quality of inputs.g.e. Suppliers The major input for the soap manufacture is vegetable oil (around 80% of the raw materials). manufactured either from fatty acids or directly from the oil. soap can be Vishal Mungekar 14 . Soap for different skin types. the consumers from the premium category opting for the popular category soap. Any small change in the price of the Premium soap can cause in the shift of the price conscious consumer to opt for shifting to a soap in the Popular category. One can see in the some developed countries which have already registered a cent percent penetration. Nirma cater to both the categories. There are only few players who export palm oil from these countries and as such these exporters have a commanding position. Most companies like HLL. the consumption of soap has now decreased due to the customers upgrading to Body wash and Face wash. There are various grades of palm oil available and the manufacturer can switch between these grades to save on the cost of inputs. one had to shift to vegetable oils.Competitive Analysis of Toilet Soap Industry basically due to the high costs associated with such products. A prime example of this is the current trend towards producing higher quality soaps and the customization of the products for e. but after the Indian government banning animal fat. Earlier Animal Fat was used which was even cheaper. The soap manufacturers cater to the current and future needs of consumers through the development of new formulations and relate these to their suppliers. Besides. The second threat is from downtrading i. They are not available in India and thus have to be imported from countries like Malaysia.

even in the rural area are subjected to the media invasion and are well informed about the basket of products available in the market and thus take a rational decision. Earlier the decision for purchasing the soaps was equally balanced between man and woman (50:50). And this has forced the manufacturers to lower the prices or offer temporary discounts to woo the consumers who are either downtrading from the popular segment or graduating upwards from carbolic soaps. This sector faces low level of brand loyalty.Competitive Analysis of Toilet Soap Industry Companies like Godrej and VVF who previously used to supply soaps to other bigger companies have gone for forward integration and started selling their own brands. This proves the fact that today most soaps are targeted at the Indian woman. Premium Soap is a price sensitive market. Small players cannot afford to import Oils as the price of Oil keeps on fluctuating and these fluctuations. Buyer To a large extent. Now the decision ratio is 60:40 in the favor of woman purchaser. 2-on-1. So they directly purchase fatty acids of oils from large-scale Indian manufacturers who import Oil and convert them to fatty acids. Switching costs is very low and these results in price war and people are concentrating on value-for-money. Off late there has been an increasing trend towards downtrading. Vishal Mungekar 15 . The buyers. if on the higher side cannot be incorporated in the price of the product in this age of cut-throat competition. This forces a lot of players to go for frequent promotional schemes like 3-on-1.

as compared to other developed countries is a bare minimal (In the rural market. Capacity utilization in the industry varies from as low as 50% to 80%. even though penetration is high the frequency of taking a bath with soap is one out of 5 occasions). The market is littered over with several. There exist high exit barriers in the industry due to high capital investment. which have limited markets.Competitive Analysis of Toilet Soap Industry Industrial Rivalry As India has a low per capita consumption of soaps the growth in this sector has been stagnant. consumption in our country. Penetration though on an average is 95%. leading national and global brands and a large number of small brands. Vishal Mungekar 16 .

25 whereas in India it costs rs. 100 gms of soap in Indonesia costs rs. The Indian players are lobbying with the government agencies to reduce this duty which can bring down the cost of the final product. But. For toilet soap. the average expenditure per user household for low-income households is Rs. Since India is now a WTO member India will have to bring down the import duty rates to as much as 20% from 35%. 706 for high-income groups. Andhra Pradesh and Madhya Pradesh.Competitive Analysis of Toilet Soap Industry PEST Analysis: Political Factors: -Earlier the soap industry was under the Licence-raj restrictions. It then followed an incidence of adulteration of vanaspati by unscrupulous manufacture. after liberalization of economy by the Narshima Rao government there has been a spurt in the number of players in the organized as well as the unorganized sector. Gujarat.10 approximately. Government banned the import of tallow. Vishal Mungekar 17 . E.4. 237. Economic Factors Soaps in India cost very high in India as compared to other countries like Indonesia. a soap making raw material (which was requiring a very little processing to make soap). while it is Rs. This is primarily attributed to the high cost of imports due to high import duties. Also the excise rate at 16% forms formidable portion of the cost.g. The political system in India is undergoing vast change. A player like Henkel SPIC is good example of this. The sops given to new entrants like sales tax concessions and other incentives help encourage players to open their shops in these states. There has been competition between various states like Maharashtra.

sample this: the study says that the lower income group is expected to shrink from over 60 percent (1996) to 20 per cent by 2007 and the higher income group is expected to Vishal Mungekar 18 . The results of a survey done by National Council of Applied Research (NCAER) suggest that Indian FMCG space is all set to enter a new growth phase. Premium soap manufacturing though compared with other soaps manufacturing relies to an extent on technology (especially in the finishing stage). Technological Factors: The industry though capital intensive is not very technology intensive. and NGO’s towards inefficient PHC-primary health center also aggravates the problem.Competitive Analysis of Toilet Soap Industry Social factors: The social factor is very important when it comes to Premium soaps segment of the soap market. Investment in basic sanitation will make biggest improvement to health and also to the soap market. The growing reach of advertising medias like satellite and cable TV too is expected to give a boost to the market penetration initiatives of the industry players. Companies like HLL are working very hard towards such a system to rope up the entire small stores and retailers (Kirana Stores). the need for hygiene and personal / skin care becomes important. The more important is logistics management where marketing and distribution play a pivotal role. Here technology like (SCM) Supply Chain Management and (E-CRM) Electronic Customer Relationship Management will play a pivotal role. With the rising education and disposable income levels. Lack of good hygiene factor like availability of clear water for bathing purpose also discourages extensive use of premium soaps by vast population. Premium soaps are thus targeted at the audience to change their habits by raising their aspiration levels. Fragmented approach of govt.

Heavy launch costs Vishal Mungekar 19 . Weakness The duty structure: excise duty is at the rate of 16% on all toilet soaps and the sales tax structure varies from state to state with a minimum of 8 % in some states ranging upto 20 % in most of the southern states like Andra Pradesh. and Orissa India solely depends on the Imports for vegetable oil mainly from Malaysia & Indonesia and import duty is as high as 35%.Competitive Analysis of Toilet Soap Industry rise by more than 100 per cent. It looks. the industry is all set for a fast-paced race ahead. Tamil Nadu. The fairly high contribution from rural market makes this category sensitive to the fortunes of the agriculture economy The large-scale organized sector where the Technology and Capital Invested are high. The other popular and carbolic soaps are manufactured by small manufacturing units predominantly existing in the southern sector. SWOT ANALYSIS Strengths Soap penetration: soap has a very high penetration of 95% in the urban region while the rural region contributes to 85% penetration. Soaps is a Delicenced Industry. which symbolizes that any individual with finance and marketing skills can enter the industry. which shows a potential for growth in the rural sector.

Internet is fast emerging as a strong distribution channel and the new players are finding it easier to launch assaults through this medium very effectively.Competitive Analysis of Toilet Soap Industry Opportunity Indian Exports for Soaps are quite insignificant. herbal and special categories like fairness soaps. In the world of cut throat competition ‘Quality’ at an affordable price is the new mantra. Malaysia and China. Companies are trying every measure to improve the quality of the product by maintaining or at times even decreasing the price to make the product affordable and competitive. Indonesia and China have Palm Oil available in abundance. where the soap segment registered actually a negative growth leading to saturation. Presence of a large unorganized market: branded products can wash the unorganized market by providing value for money products at competitive market Threats Industry Growth – the entire soap Industry is growing at a minimal rate of 3 % and the entire FMCG industry is passing through turmoil. which has a low freight cost structure and also a substantially low cost of manufacturing. Vishal Mungekar 20 . The only players we see are the low (cheap) quality soaps from countries like Indonesia. Hence exporting Soaps becomes an expensive proposition. India can concentrate on exports of specialty soaps like ayurvedic. The reason being other South Asian countries like Malaysia.

right place Beginning of the value chain Supplier of value for money Variety to suit the needs Intense & Extensive NOW Supply Chain Management SOAP-THE NEW (OUT)LOOK End of the value chain Only support function Supplier of product Intermittent Few Brands THEN Advertising & Sales Promotion Role of Manufacturer Distribution Customer Offering 21 . Companies like HLL have become a leader in the soap sector because of this vertical integration. this is especially true in the commercial soap business. offerings from firms have become varied and cater to the specific need Vishal Mungekar Important role -right product. In the case of FMCG companies. Instead of a constant and predictable demand pattern. Also. At present however. firms used to work with a high level of outsourcing. Earlier. The supply chain is fast evolving (see figure above). vertical integration is the preferred option and is increasingly gaining importance. The customer is now at the top of the chain. firms now have to deal with tremendous variations in demand patterns.Competitive Analysis of Toilet Soap Industry Value Chain Analysis There has been rapid change taking place in the way firms function as a result of changes in the external environment. instead of limited product offerings. firms now have a wide range of products to offer – soap manufacturers manufacture as many as 350 different brands today.

The focus at soap manufacturers is equal on all the above factors as these are interlinked to large extent. Thus by using the second method soaps manufacturer sell glycerin and reduce cost of actual final product i. Logistics both inbound & outbound. competition is high and there is high level of price war that induces players to provide the value for money product for the customer. Vishal Mungekar 22 . These costs can be controlled by good procurement system that will minimize the inbound logistics cost.e. Quality is linked to Total Fatty Matter (TFM) which increases the cost of the soap.Competitive Analysis of Toilet Soap Industry of the customer. From Fatty acids where you get glycerin as a byproduct. These go a long way in controlling and at times minimizing costs of raw material that can then add value to the final product. soap. Transporters are graduating from offering merely the transportation of goods to providing end-to-end logistics solutions. But the technology is far more superior when it comes to using the second method that increases the fixed cost of manufacturing soap. Soaps are manufactured by two methods. The duty rates on the higher side coupled with the fluctuating price of imports make it very important to have good procurement system. Directly from oil where you do not get glycerin as a byproduct. Quality improvement. Companies are now focusing on logistics both inbound as well as outbound which will supply product to the lowest level of the value chain that is the end user. This is because this fatty matter is imported which attract high import duty. There are three important and inter-linked variables in the supply chain    Cost reduction.

A proper management of channel using computerized (SCM) Supply Chain Management system along with good outbound logistics support enhances the value of the product. At every stage margins (stockists 2-6 %. a good out bound logistics support will help in reducing cost of the product by providing the product at the right place and at the right time with minimum inventory levels. distributors and retailers.Competitive Analysis of Toilet Soap Industry While inbound logistics helps to minimize cost at input stage. distributors 6-10 %. retailers 5-10 %) are added to the product cost which increase the price of the product. These margins are added for non value adding activity. An important factor in soaps industry is that there are many channel of distribution like stockists. Vishal Mungekar 23 . HLL envisages its success on this factor as it has a very good distribution and channel management system.

HLL has also branched out into other toiletries like shampoos and related products like glycerine. 90% of the rural population is concentrated in villages with a population of less than 2000. live in 6. Dove. It enjoys almost a two-thirds share. Liril. Hamam.000 villages in rural areas.27. fatty acids. the largest selling soap in India. While the former brand remained the preserve of the high-end rich consumers. The products underwent up gradations with the introduction of versions like International Lux and Lifebuoy Personal. Rexona (third largest brand) were ruling the roost. Caress. Lifebuoy ruled the roost with health-conscious users as a hygienic soap. a project to manufacture the product for the world market at Khamgaon in Maharashtra. Earlier. with the second ranked Nirma placed at a distantly of 16 %. Rexona. Denim is HLL’s franchise for Men’s toiletries. In between came brands like Breeze. Before we look at its distribution network. brands like Hamam.Competitive Analysis of Toilet Soap Industry HLL-The FMCG Giant Hindustan Lever is the largest contributor to the toilet soaps market of India. or 70% of India's population. Around 700 million people. Pears. Commercial production commenced in 1993. HLL undertook. Moti. Lux. Lux and Lifebuoy have held the sway of the market for almost fifty years. let us reflect on the rural India scenario. At the medium and lower rungs. Breeze. Some of the big brands in Soaps are Lifebuoy. in 1992. the best so far in this country. Jai. and Savlon. LeSancy. 24 Vishal Mungekar . While Pears has dominated as high profile specialty soap. To provide a sound base to its toilet soaps operations. In 1993 came Dove. Liril made waves with its lemon touch and bathing acrobatics. The Core Competencies of HLL is its nation wide strong Distribution network.

credit and full-line availability. HLL has traditionally focused on the rural market. Several of our company's major business categories. sheer product availability can determine brand choice. Therefore. the key issues that need to be addressed are the 3 important A’s viz. Particularly for HLL. awareness and overcoming prevalent attitudes and habits. the size of the rural market makes it essential to tap. which markets Packaged Mass Consumer Goods (PMCG) of everyday use. volumes and market share. availability. To service rural markets. Each of these sub-stockists is located in a rural market. such as Fabric Wash. The pivot of Streamline is the Rural Distributor (RD). Extending Availability Data on rural consumer buying behaviour indicates that the rural retailer influences 35% of purchase occasions. As part of the project. who are based in these very villages. is provided to rural trade.Competitive Analysis of Toilet Soap Industry The statistics is daunting. already get over 50% of their sales from rural areas. in terms of frequency. Project Streamline was conceptualized to significantly enhance HLL’s control on the rural supply chain through a network of rural sub-stockists. who has15-20 rural sub-stockists attached to him. The sub-stockist then performs the role of Vishal Mungekar 25 . Rich Company Poor Consumers: The Plan of Action HLL realises that there is much more that needs to be done. The principle of Project Streamline is to leverage HLL’s scale and organizational synergy to increase reach in rural markets. giving HLL a substantial competitive edge over the next decade. Personal Wash and Beverages. higher quality servicing. Thereby.

which will reach villages with a population below 2000 and influence income as well. Project Bharat’s influence was restricted to raising penetration and awareness levels. the project now aims to expand our coverage to 50% of rural population by 2003. In the process. generating employment and incomes for themselves.Competitive Analysis of Toilet Soap Industry driving distribution in neighboring villages using unconventional means of transport such as tractor. HLL’s rural growth engine raises incomes of rural families by channel intervention through rural Self . bullock cart. which they will then directly sell to consumers. On the anvil. the project has been rolled out in select states of the country where the terrain or poor stage of market development typically makes any distribution system unviable. doubles communication reach. From 1998. is a new rural program.750 per month) taking micro-credit from banks. The model consists of groups of (15-20) villagers below the poverty line (Rs. This path-breaking venture aims to facilitate the doubling of our share of the rural consumer's wallet in three years.Help Groups (SHG). and other means of transport. creates a platform for influencing attitude changes and raising incomes. Vishal Mungekar 26 . the number of HLL brands and SKUs stocked by village retailers has gone up significantly. which operate like direct-to-home distributors. and using that to buy HLL’s products. The Streamline system has extended direct HLL reach in these markets to about 37% of India's rural population from 25% in 1995. The model is unique in that it influences all the variables that influence growth. Most important. Influencing Affordability Influencing affordability Project Streamline focused on extending distribution. The model triples physicals reach. Having done that. and increasing the reach of their products.

In the process we aim to increase access. The goal is to reach 2. unconventional media including ambient media. etc. create a channel to raise awareness of its brands and catalyze affluence in rural India Enhancing awareness Mass media reaches only 57% of the rural population. Generating awareness. both consumption and penetration of Soaps is quite low. walls and wells are other media vehicles that we have utilized to heighten brand and pack visibility. United Nations' Development Programme (UNDP).Competitive Analysis of Toilet Soap Industry HLL is tying up with various Non-Governmental Organizations. and only six use washing powders. and a message reach of 65% up from the current TV reach of 33%. 75% of the population up from 43% today.000. then. Project Bharat. or shampoo and skin care products. as occasions for brand communication. which has the most high penetration amongst the other PMCG. In Soap category. HLL has been utilizing events such as fairs and festivals.35. the first and largest rural home-to-home operation to have ever been mounted by any company. Overcoming attitudes and habits Creating distributive reach is not sufficient to tap the rural markets. and voluntary organizations to propagate health and hygiene messages. For instance. Market development can be a difficult task because in rural India. even for other personal care products only three out of 10 people in rural areas use toothpaste or talcum powder. Cinema vans shop-fronts. sought to address many of these issues. The exercise was started by the Personal Products Division in 1998. and covered 13 million households by the Vishal Mungekar 27 .000 villages up from the current 85. means utilizing targeted. the consumption is barely once per five bathing occasions. The operation was conducted in high-potential districts of the country. influence attitudes.

However. they will continue to buy into the categories. sampling once is not adequate to convert non-users. and the affordability of the pack sizes on offer.000. which was interspersed with product communication. Vishal Mungekar 28 . attitudes and habits. as consumers in rural areas get exposed to such value-added. The project saw a 100% increase in penetration. The project. value-for-money alternatives. Hopefully.Competitive Analysis of Toilet Soap Industry end of 1999. Thus we generated awareness of its product categories and the availability of affordable packs. thus. company vans visited villages across the country and distributed sample packs comprising a low-unit-price pack of soaps. the Integrated Rural Promotion Van (IRPV). So Personal Products rolled out a follow-up program. Consumers were also made aware of the superior benefits of using our products visà-vis their current habits (example: stress on hygiene). to once more target villages with a population of over 2. user-ship and top-ofmind awareness in the districts targeted. In the course of the operation. The distribution was supported by explanation of product usage and a video show. successfully addressed issues of awareness.

SWOT Strengths Local Subsidiary of Unilever. was to provide desired products and quality service to the company's customers. Phase 2: The focus of the second phase.Competitive Analysis of Toilet Soap Industry HLL . against cash payment. The Registered Wholesaler was given a nominal margin of 1 per cent to cover the cost of warehousing and financing the Vishal Mungekar 29 . which ensures that the products reach across the length and breadth of this vast country. Goods were sent to these markets. He would then distribute stocks from the Registered Wholesaler through distribution units maintained by the company. one wholesaler in each market was appointed as a "Registered Wholesaler. providing innovative incentives to retailers and organizing demand generation activities among a host of other things." a stock point for the company's products in that market. and the money was remitted to the company. In order to achieve this. Cutting edge distribution network in place. which spanned the decades of the 40s. Maintaining favorable trade relations. The company salesman still covered the market. with the company salesman as the consignee. canvassing for orders from the rest of the trade. world’s largest manufacturer of Consumer Goods. The salesman then collected and distributed the products to the respective wholesalers. which comprised almost 30 per cent of the total orders collected. Large retailers also placed direct orders. The company salesman grouped all these orders and placed an indent with the Head Office. The evolution of HLL's distribution network – 4 Phases Phase 1: The first phase of the HLL distribution network had wholesalers placing bulk orders directly with the company.

The C&FAs acted as buffer stock-points to ensure that stock-outs did not take place.Competitive Analysis of Toilet Soap Industry stocks held by him. This system helped in transshipment. The RS was required to provide the distribution units to the company salesman. providing manpower. reporting sales and stock data. increased the distribution reach of the company to a larger number of customers. providing service to retailers. and as a stockpoint to minimise stock-outs at the RS level. The most important benefit has been improved customer service. This knowledge led to the establishment of the "Company Depots" system. a significant change has been the replacement of the Company Depot by a system of third party Carrying and Forwarding Agents (C&FAs). Vishal Mungekar 30 . Phase 3: The highlight of the third phase was the concept of "Redistribution Stockist" (RS) who replaced the RWs. The Registered Wholesaler system. therefore. The second characteristic of this period we realised that the RS would be able to provide customer service only if he was serviced well. Financing stocks. screening for transit damages are some of the functions performed by the RS today. The role performed by the Redistribution Stockists has also undergone changes over the years. The RS financed his stocks and provided warehousing facilities to store them. extending indirect coverage. The C&FA system has also resulted in cost savings in terms of direct transportation and reduced time lag in delivery. Phase 4: In the recent past. bulk breaking. implementing promotional activities. The RS also undertook demand stimulation activities on behalf of the company.

The operations involve 2. Some manufacturing facilities. The Hindustan Lever Research Centre (HLRC). like the Khamgaon soap plant and the Sumerpur detergent bar unit. have been recognized as among the best in the Unilever world. The company's units at Mangalore. These include factories in Khamgaon and Yavatmal (Maharashtra). located across the length and breadth of India. Silvassa (Dadra & Nagar Haveli) and Pondicherry. Dabgram (West Bengal). many with post-doctoral experience acquired in the US and Europe. Many of HLL's factories. improving benefits and quality of existing Vishal Mungekar 31 .000 suppliers and associates. with facilities in Mumbai and Bangalore.Competitive Analysis of Toilet Soap Industry Nationwide manufacturing facilities The diverse product range of this giant is manufactured in close to 100 factories. have already received ISO 9002 certification. Rajpura and Gajraula all bear testimony to this achievement. HLL has an enviable track record in taking over sick enterprises. State-of-the-art research facility HLL has traditionally been a company. Chhindwara (Madhya Pradesh). HLRC’s aim is to develop new products and processes. Equally. HLL has saved precious jobs and developed local economies. Orai and Sumerpur (Uttar Pradesh). the first Unilever factory in the Central Asia & Middle East region to get the award. in recent years. In fact. including the export-dedicated units. and converting them into viable operations. has over 100 highly qualified scientists and technologists. Set up in 1958. The Sumerpur unit has also been conferred with the Total Productive Maintenance (TPM) award for excellence by the Japan Institute of Plant Maintenance (JIPM). which incorporates latest technology in all its operations. all major investments of HLL. About 28 factories are situated in backward areas. in response to requests from government authorities. In the process. have been either in A-Category backward areas or No-Industry Districts.

HLL has also developed the capability to design and manufacture machines in-house or have them assembled by third parties as per given specifications. The company has many achievements in these areas.000 tonnes per annum in the early nineties to 10. The latest technology to produce Distilled Fatty Acid for soap making and the resultant plant capacity expansion has drastically brought down specific energy consumption while improving distillation yields. HLL has received the Government of India's prestigious award for import substitution. size and shape can be improved. which.2 billion in foreign exchange. Product and process innovations Valuable insights have also been gathered in understanding soap phases and how soap properties such as the feel. The capacity of a toilet soap line has gone up from 6. lather. appearance. resulting in better performance. It focuses on Skin Research to meet both global and regional requirements in these two core product categories. with 169 patents till date. optimal use of resources. thus substantially increasing capital productivity. Vishal Mungekar 32 . One of the most significant breakthroughs of HLL’s research initiative has been the development of a technology to use non-conventional forest seed oils for soapmaking. colour. its sixth worldwide and second outside Europe and North America. This enables the company to set up plants at half the cost of others. Such technological developments have also led to significant improvement in productivity. Development of Structuring Technology for soap manufacturing also helps save costly conventional oils without any compromise on product performance and quality.000 tonnes per annum now.000 tonnes per annum to 25. Unilever has set up an International Research Laboratory in India. energy conservation and pollution control. Research into how soap gets its rigidity has enabled development of bars containing liquid actives. while that of a detergent bar line has gone up from 7.000 tonnes per annum now.Competitive Analysis of Toilet Soap Industry products. since the 1970s has helped save around $1.

Vishal Mungekar 33 . Savlon specially targeting the health conscious family members who need a soap to fight bacteria and germs. HLL is making a bold decision of appealing consumers in the Premium. Close on its heals is Liril. Product Innovations & Niche markets HLL has fragmented the market and has soap for every segment. Lux International Skin Care. HLL has thus been very successful to have a product positioned in every segment. Dove cleverly positioned as not soap but a ‘moisturizer’ which takes special care of your skin. And Denim. Lifebuoy is a major cash cow of HLL which currently enjoys the place of being the largest selling soap brand in India.Competitive Analysis of Toilet Soap Industry Strong Brand equity While other players are concentrating on the popular and sub-popular segments.the Beauty bar of film stars has managed to tap the aspiration levels of Indian woman and today enjoys a big chunk of the Premium market. ‘ab dhoop se kya darna’ claims the beautiful Aishwarya Rai facing the bright sun. Lux. with Lifebuoy plus and Lifebuoy Gold and has been successful. almonds and honey keeping with the popular natural theme. A pear is doing very well as the translucent soap and has a popular catch line of ‘Kuch Nahi’. a innovative patented formula which protects your skin from the sun. Lux is now re-launched with extracts of mil. The company in this stagnant market has made a bold decision to relaunches lifebuoy in the popular segment. Fair & Lovely soap. as the name symbolizes soap targeted to the rugged masculine male. again dominating the Premium market and enjoying a strong brand equity. launched after the immense success of its parent F&L Fairness Cream (Leader in the fairness cream segment) promises to change the melanin of your skin by making you fairer.

This attitude partly explained why people didn't wash their hands after washing clothes in the river or feeding the cows. a low-cost soap with more of a beauty pitch. In all. The village street theaters represented a more emotional play. While the pilgrims came to bathe at the confluence of India's sacred rivers to cleanse their souls. recruited local magicians. In total. 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. Ogilvy coordinated twohour performances at 2. and religions. Marketers waved an ultraviolet-light wand over attendees' hands to show where germs and dirt resided. Vishal Mungekar 34 . a key cause of disease transmission. Although the connection was clear in the executives' mind. Scripts were changed for different dialects. they had to create a similar urgency and emotional connection to soap for the consumer. education levels. increased from 22% to 30% over the six months that the performances were running. Lever and Ogilvy Outreach. the unconventional marketing arm of Ogilvy & Mather. dancers.005 haats over six months. Executives wanted to show that dirt is always present.Competitive Analysis of Toilet Soap Industry Constant Marketing Initiatives – Few Examples Soap executives at HLL realized that people who didn't see dirt on their hands thought that their hands were clean. and actors who knew each market and village that the company wanted to target. the religious festival held every 12 years. though often invisible. Awareness of Breeze. The results seem compelling. they also learned to keep their hands free of pathogens. 50 teams of 13 performers were recruited to serve as connections between the brands and the residents.

therefore. early signs of certain changes are clearly visible. HLL is countries one of the largest five exporters. retail chains are on the rise regionally. Evolution of retail policies As organised retail chains come into vogue. Quality of transportation infrastructure.Competitive Analysis of Toilet Soap Industry Opportunities Converting the users of the Popular segment to the Premium segment. The value will begin to shift and retail chains will demand higher margins and their share of profits. but exports in the soap segment are bare minimal. Presence of a large unorganized sector. would be a key factor in determining the penetration of organized retail chains. Vishal Mungekar 35 . This would. A major determinant here would also be the real estate costs. make it imperative for companies to evolve a new set of retail policies that would be radically different from traditional retail policies of companies. special intra-city road networks. Indeed. which seemed unlikely to take off in a major way. and a major influx is expected to take place in the future. Reduced travel time would help in the growth of organized retail chains. Challenges and opportunities for the future in the urban market While it is difficult to predict the exact nature of developments that would take place in future distribution networks. is the shift from intermediation to dis-intermediation. A clear trend. in turn. intermediaries would start to dwindle. The concept of organized retail chains (the one-stop shops). has now been accepted as an area of major growth for the future. who find it difficult to import oil from south east Asian countries hence buy oil from local manufacturers and cannot produce on the economies of scale.

in particular the pricing and advertising strategies of main competitors. facilitate flow of information and enhance efficiency in the distribution system. B2C too will grow. Business to Business connectivity B2B connectivity (between a company and its supply chain partners) would help reduce costs. Threats Major threat. to divest the reaching mechanisms to thirdparties like stockists/star-resellers. Competition activity. HLL would therefore. switch from high to low-priced brands resulting in a de-growth in the Premium segment. especially to the Premium soaps of HLL is that of Down-threading. The challenge for companies in B2B would be to ensure that all supply chain partners operate on a common platform and packages. etc. As companies aggressively compete to get a higher share of the rural pie. This can lead to the cannibalization of its own brands in the segments. This would be particularly of interest to HLL in the personal products business. and it would continue to increase in the future. need to consider lending support to their supply chain players to bring about uniformity of operating platforms. but will not be a major strategic focus for companies selling low-value items. Vishal Mungekar 36 .Competitive Analysis of Toilet Soap Industry Increase in Discretionary Spends Discretionary spends of consumers is already on the rise. that is . An effective way to achieve reach in rural markets would be to farm out. competitive advantage will lie with those who have a higher reach. the prolonged drought in the North and West of the country (until 2000) and the sharp fall in the farm disposable incomes has persuaded the households to downtrade. improve inventory management. The rural markets are expected to witness a different kind of a shift.

Success of new launches in the niche segment by the competition Volume growth in personal products and ability to protect market share Raw material (Palm Oil) prices as cost increases cannot be passed on fully. giving others a cost advantage. in a competitive scenario.Competitive Analysis of Toilet Soap Industry Backward Integration resorted by other players (Nirma producing Caustic Soda). Vishal Mungekar 37 .

even among large Indian groups. Nirma's strategy appears to have become a fashionable mantra. Nirma pioneered a lower-cost manufacturing method.Competitive Analysis of Toilet Soap Industry Nirma: The David challenging Goliath. Nirma. has his rivals in lather. advertising will ensure steady growth for Nirma in future. a run for their money. Nirma’s formula for cleaning up? Sell at lower prices than the competition by cutting costs throughout the production and distribution chain. It recorded sales of Rs15 billion (US$345 million) for the year ended March 1999. In three decades. packaging. A cost-conscious approach forced Nirma into backward integration by setting up an 80000-tpa LAB (linear alkyl benzene) plant in 1998 and a 400000-tpa soda ash plant in 2000. Nirma Ltd. has grown from a one-man operation to a cleaning-products empire that employs 12.000 people. And it's giving multinational rivals. Nirma's low-cost strategy is putting rivals through the wringer. has been putting up a backward integration plant to produce soda ash and linear alkyl benzene. Nirma’s success is based on the premise of consistent and effective delivery of value for money equation to our customers.8%. including Hindustan Lever and Procter & Gamble. Nirma’s strategy is particularly applicable in a developing country such as India where consumers are price conscious. Before Nirma entered the market. Nirma has achieved a significant penetration and has notched up an impressive 16. These benefits along with betterment in the areas of distribution. second stand in the industry in just three to four years. a 55-year-old chemist. Karsanbhai Patel. Non-premium products account for 92% of Nirma’s revenues. his company. rivals had used high-cost foreign technology to produce detergents. Karsanbhai Patel says that Nirma’s strategy is to get into a niche market.and it spends little on promoting its premium labels like Nirma Premium. He looks Vishal Mungekar 38 .

Nirma is setting up another plant to produce a second ingredient that's used in making his cleaning products: soda ash. Why is Nirma investing crores in raw materials that are in oversupply? The three major LAB makers --Reliance. The factory churns out 75. Nirma saw vertical integration as a way to slash those costs and remove uncertainties in supply. in which cartelisation is said to be rife -. So it set out to have the company manufacture the key raw goods it needed itself. Raw materials had accounted for almost 80% of his manufacturing costs before 1998. 1997-98 saw a 15. Vishal Mungekar 39 . so it isn't even as if Nirma is being cheated as a domestic buyer Nirma's over 8-lakh tonne detergent volume makes it highly dependent on LAB. If anything. Nirma is a giant to challenge with and it has moved up the value chain.Competitive Analysis of Toilet Soap Industry for ways to save costs throughout his organization. Nirma’s new strategy includes: Bringing together the distributors and retailers so as to ultimately eliminate carrying and forwarding agents. is a byproduct. they hit a high of about Rs 50.000 tonnes of soda ash each year.000 per tonne against Rs 39. wildly at times. Iodized salt. Worldwide there is a glut since most detergent brands now prefer enzymes or another chemical called STPP. another commercial commodity.8 billion in a plant that makes linear alkyl benzene. a key ingredient for Nirma detergent. Investment in its own fleet of 400 trucks to cut transportation costs. And prices in India are aligned to global prices. It invested Rs3.000 tonnes of it a year.prices fluctuate. Tamil Nadu Petrochemicals and Indian Petrochemicals Corporation Ltd (IPCL)--were more or less serving the market adequately with their combined 2 lakh tonne-plus capacity. The Rs10 billion factory will make 420.000-tonne surplus that was exported. Now. Recently. Today.000 at the end of last year.

Nirma prices its products 25-35% lower than major competitors. Wide distribution network. Less presence in premium segment. Strengths: Strong Brand equity. Market leadership in detergents market and fabric wash industry and second largest player in Toilet soaps industry. is now second in market share after Hindustan Lever. Nirma has today forayed into toiletries such as bath soap. though a late entrant in bath soaps. Nirma is a Rs. Soaps & Personal Care market. toothpaste and shampoo. Produces a range of industrial chemical products which primarily serve as raw material or intermediates for Soaps & Detergents business.Competitive Analysis of Toilet Soap Industry Discarding dependence on contractors.17 billion umbrella brand offering consumers a broad portfolio of products at multiple price points in the Detergents. Lack global tie ups and thus lacking in export markets. Vishal Mungekar 40 . Weaknesses: High interest burden. That strategy is paying off: So Nirma. Even in the premium categories.

Emergence of small but strong regional players.Competitive Analysis of Toilet Soap Industry Opportunities: Exports. Vishal Mungekar 41 . Acquisitions for strengthening its distribution tie ups. Entry into other categories apart from soaps like shampoos. Threats: MNCs coming to India particularly in Toilet and Soap industry. toothpastes and fabric whiteners.

GSL makes Rexona and Dettol for Reckitt & Colman of India and Johnson's Baby Soap for Hindustan Lever (Johnson & Johnson). And yet only half of its capacity of 71.Competitive Analysis of Toilet Soap Industry Godrej Soaps – All’s ‘Fair’ in Love and War Godrej is currently the number three player. The product meets a stated need of the consumer at no extra cost or effort and has met with universal acceptance by the trade and consumers. Godrej Soaps has been using its capacity by working for other producers. It still makes Camay and has arrangement to produce it for two more years. Godrej has the distinction of being the first company in the world to develop technology to make soap with vegetable oils. It is also manufacturing for other players in the Industry. Renewed focus on Institutional sales and sales to Canteen Stores Department led to growth in sales value in this segment.1 soap launched keeping with the rising popularity of ‘natural’ variants in the soap industry. volume wise in the Industry. A correction in the prices of inputs resulted in better margins in the soaps business as compared to the previous year. The highlight was the launch of Fairglow which is the first innovative breakthrough soap offering in the Indian market for many years. Contract manufacturing of toilet soaps registered a 20% volume growth but grew by only 7% in value terms to Rs618mn. Sandal and Natural variants of No. This has led to the re-launch of Cinthol targeted for the entire family unit. Cinthol its flagship brand has recorded since the past few years decline in its sales. Godrej has come out with a number of innovative consumer and trade offers.000 tonnes is being used. Currently even when the market is declining Godrej is recording a high sale in terms of value of 24% by competing vigorously in the marketplace. Capacity utilization in the industry varies from as low as 50% to 80%. Vishal Mungekar 42 . way back in 1930.

The company expects a very high growth for Cinthol in 1997-98. Ganga. Marvel. Evita and Crowning Glory. HLL launched Fair & Lovely an extension of its largest selling fairness cream. Cinthol is perceived largely as a male soap. It also set up a fatty acids distillation plant with a 75 tpd capacity.Competitive Analysis of Toilet Soap Industry The company manufactured 45530 tons of toilet soap in 2001. But Godrej FairGlow had the first mover advantage of being the India’s first Fairness soap. FairGlow has been a part of innovative marketing since it was a technological innovation. Its deodorant and complexion soap is styled as Cinthol Spice. while it has others to bother about such as Vigil and Fresca. It set up new toilet soap finishing lines with a 48 tpd capacity each at its Vikroli and Malanpur factories. Two variants were introduced in 1989 placing an added emphasis on their brand of soaps. Godrej FairGlow which created a segment in the Industry for the color conscious Indians. SWOT Strengths The new product launches from Godrej have been a major success. Shikakai. Cinthol. Godrej Soaps undertook an expansion programme. It is an old brand launched about five decades ago in early 1950s. Its Marvel for women. Capacity utilization of toilet soaps has improved from 46% in 2000 to 64% in 2001. Godrej FairGlow in just a year of its launch managed to garner 1 % of the total market share. In 1996. as Lux is a lady's soap. Looking at the success of FairGlow. who demanded a gentler soap than Lux Vishal Mungekar 43 . Godrej Soaps was giving a tough competition to Hindustan Lever. It is promoting a number of brands. Ganga had notched up a 5% market share but declined to 2% later with sales at Rs 350 mn. Cinthol ranks third and accounts for 60% of all Godrej Soap's brands. New Cinthol Lime and Cologne gave it a new look in 1985. Godrej wants to revive it. Ganga did well and a new version Doodh Ganga has been introduced.

Weakness Even though the new products of Godrej have done reasonably well. The premium segment is estimated to grow.000. 10. Godrej Soaps had a disappointing experience in forging an alliance with Procter & Gamble (P&G). was for those who like non-carbolic soaps. but Godrej believes in concentrating on the Popular and sub-popular segments. Its sales. the Equity Capital of Godrej Soaps has expanded from Rs 600 mn to Rs 3200 mn. Godrej has also realized the gap in some segments and is giving Lifebuoy and Savlon competition in the form of its offering Godrej All Care. The promoters and associates own most of this. In volume terms. Besan has always been an household name. Godrej has a presence only in soap and Hair Dye segment (where presently it enjoys a major market share). Godrej has doubled its advertising & promotion spends since 1999 and it amortises advertising and publicity expenditure on major product launches over 12 months from the product launch. registered a decline of Rs 930 mn from that of the previous year. Crowning Glory was pitched for haircare. it does not offer soaps at a high end of the segment. the sales dropped from about a little over 40. Unlike other major FMCG companies (HLL. marking a decline of 25%.000 tonnes to over 30. signifying Pricing plays an important role in the niche segment. Godrej has priced all its new launches in the popular band of Rs. This reduced its market share to 5. P & G has now a fully-owned subsidiary Vishal Mungekar 44 .Competitive Analysis of Toilet Soap Industry and Vigil. Godrej has used Besan (along with ‘haldi’) as an ingredient and is marketing it as a sopa doing well in the northern parts called as Godrej Nikhar.5%. which were placed at a little over Rs 6000 mn. In the process of restructuring. Nirma).

Technology and R&D innovations in the segment would further come out with new products like Multani Mitti. and also delivering products at the same (or cheaper) price points. concentrating only on popular and sub-popular segment and substantially reducing its costs and increasing net margins by backward integration. & Neem. Godrej is a very tiny player in an arena dominated by subsidiaries of Global companies (HLL) and other players like Nirma who refuse to enter in the niche segment. Threats Unorganized sector. the company is now undertaking the marketing of toilet soaps while the distribution of consumer company products has been handed over to Godrej Hi-Care. Godrej found it convenient to shed the detergent brands . During all this while other entrants like Nirma went past Godrej and currently acts as a challenger to HLL. Building strong Brand Equity and being leader in the niche segment. Vishal Mungekar 45 . Key.Ezee. and other Asian countries. Exports of niche soaps like Fairglow in Middle East. After the divorce from P&G. Opportunity To create more out of Niche and driving volumes in a stagnating market. Innovations in the manufacturing technology. especially in the south also catering to the niche segment having variants like ayurvedic.Competitive Analysis of Toilet Soap Industry in India. natural. Godrej retained all soap brands and transferred detergent brands to P&G in 1993.as they represented a losing portfolio. etc. as it currently have an excess capacity and is manufacturing for other players in the market. Biz and Trilo .

Shikakai. Rexona) . The rest of the market is highly fragmented. Positioning of the product is very important in this market. Breeze. as well as their clothes. Data collected by the industry certainly points to this rather unpleasant conclusion. Low margins and high volumes characterize the industry.Competitive Analysis of Toilet Soap Industry Summary & Conclusion It seems Indians have sacrificed hygiene at the altar of thrift. However. rather less. Penetration of toilet soaps is very high However per capita consumption levels remain low India's per capita consumption of soap at 460 gms per annum is lower than that of Brazil at 1. It’s possible that consumers may be economizing on their use or buying cheaper brands during a downturn. There is another whacky hypothesis explaining the decline in consumption. The leading players in this market are HLL (Lux. leading to shrinkage of margins.100 gms per annum. FairGlow. Nikhar). Competition amongst the MNCs has intensified. successful sachet marketing in shampoo seems to have now penetrated this market which has directly impacted the sales of soaps. The consumption of soaps has shrunk substantially. Soaps are at the back of the house and are not status products like TVs or refrigerators. If numbers are anything to go by. Godrej Soaps (Cinthol. and Reckitt & Benckiser (Dettol). Lifebuoy. Indians do seem to be washing themselves. Many households earlier used soaps for twin purposes: for body wash as well as shampoo substitutes. Nirma (Nima). The evidence of an absolute decline in consumption is somewhat perplexing in a country with a growing population as the consumption of soap and detergents should logically be directly proportional to population growth. with companies having strong presence in select Vishal Mungekar 46 . While the level of disposable incomes determines the overall sector growth. the market has already been segmented and sub-segmented.

Competitive Analysis of Toilet Soap Industry segments or a regional presence only. 75% of India's population is in the rural areas. Price offs and consumer offers will be predominant. in volume terms. we know that an innovative product will make a success In terms of distribution. Key factors to success are distribution (in rural markets) and advertising (in urban markets). 3. A lower price differential between the organized and the unorganized sectors from reducing excise duties allows the former to grow at the expense of the latter. Through experience. Merchandising will also be of core importance. Intense Distribution welfare will prompt companies to give more freebies and better margins to retailers. except at the premium end. Thus pricing would also be important Rural demand growth is expected to occur mainly with consumers moving up towards premium products. But in the past. visibility will be of vital importance with the retail shelves getting overcrowded with more and more brands and new products. hence about 50% of the soaps are sold in the rural markets. Soaps are available in 5 m retail outlets in India. the proportion of premium soaps to economy soaps has not changed much. The organized sector also has a superior distribution reach. even as consumers would want to have a value-formoney product in FMCG. Therefore availability of these products is not a problem.75 m of which are in the rural areas. This is because as some Vishal Mungekar 47 . this will put tremendous pressure on companies to make their products more visible on the retail shelves. Innovation holds the key. which will involve getting the POPs right to attract consumer attention. Product would reign supreme. Brand loyalty is very low. Better sophistication will come about in terms of merchandising so as to increase visibility. New innovative products will grow the category.

as growth in soap prices has generally outpaced overall consumer inflation. Even as toilet soaps market faces a slowdown in growth. there is still potential to stoke growth through increasing product usage. Product innovation. some consumers move down looking for cheaper substitutes as prices move up. Deeper penetration in urban areas also holds the key to unlocking growth potentials especially in the Premium Segment. smart merchandising and distribution would be of key importance for FMCG products to become a success in the coming years.Competitive Analysis of Toilet Soap Industry consumers move up the value chain with increase in disposable incomes. The only reason is not that markets have matured. FMCG marketers also warn against being laid back to the fact that retail shelves are overcrowding by the day. This has been the case especially. but that usage and consumption of a particular product per person is still low. While marketers will need to explore new areas of growth potential. Thus. The manner in which marketers tap this growth potential in the years to come . Vishal Mungekar 48 .will be worth watching.be it through advertising or creating awareness through below-the-line activities .

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