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TABLE OF CONTENTS
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EXECUTIVE SUMMARY INRODUCTION INDUSTRY PROFILE SWOT ANALYSIS FMCG INTRODUCTION BCG MATRIX COMPANY’S PROFILE SWOT OF NIRMA RESEARCH METHODOLOGY FIVE FORCES ANALYSIS SWAOT OF HLL SWOT OF GODREJ FINDINGS & SUGGESTIONS CONCLUSIONS BIBLIOGRAPHY
FMCG industry is the most emerging industry nowadays in Indian as well as global market. In India it is the 4th largest market, which shows that how important the industry is and how much it contributes towards our economy. FMCG includes the personal care products also like soaps, shampoos, etc. so our project mainly focuses on the market and study of BATH SOAPS IN INDIA. It consists various multi national and domestic companies. Major players are Unilever(HLL), Nirma, Godrej, Johnson & Johnson, colgate-palmolive, etc. Our main focus is on Hindustan lever ltd, Nirma, and Godrej. HLL is having largest market share within our country which gives tough competition to other local and domestic companies also. Bath soap market is gradually developing very fast and day by day many new varieties, flavours, and fragrances, are added in it by various companies to exist in the market. Our project consists study of 3 major players of bath soap market and their SWOT analysis, BCG Matrix, 5 forces model of the industry and the companies. Various suggestions and recommendations are also been given to the FMCG sector bath soap segment. HLL is the most dominating company across the world in FMCG sector due to its vertical and horizontal integration. Then also Nirma and Godrej are trying to give tough fight to it. Main mantra for success of the companies is the diversification of their business and their products. Thus the study provides detailed study of FMCG sector with focus on bath soap industry.
whilst the French are credited with replacing the animal fat with Olive oil. In England during the 17th century under King James I. They noticed that the clothes became clean upon contact with the soapy clay which was dripping down the hill and into the water. the women were washing their clothes in a small tributary of the river Tiber. The story goes that in Rome in around 1.C. 4 . During the Eighth Century the Spanish and Italians began making what was more like modern soap from Beech Tree ash and Goat fat. Strangely. The ammonium carbonate in the urine was reacted with oils and fat in wool to form this 'soap'. soap makers were given 'special privileges' and the soap industry started developing more rapidly. leached from wood ashes and from carbonates from the ashes of plants or seaweed. below a religious site where animal sacrifice took place. The soaps made in this way were harsh and often rather unpleasant.. when Nicholas Le Blanc.INTRODUCTION History of Bath-soap Soap has been with us in one form or another for thousands of years. the Romans are credited with the making of a soap-like substance using urine. It was noticed later that this cleansing agent was formed by the animal fat soaking through the wood ashes and into the clay soil. in the first century A. Soap as we know it today did not come about until the 18th century. at a place called Sapo Hill. although soaps were generally still made using caustic alkalies such as potash.D.000 B. which forms the base with which soaps are made to this day. a Frenchman. discovered a reliable and inexpensive way of making sodium hydroxide (caustic soda). or lye as it is known to the soap maker.
mainly because transparent soaps tend to be more expensive and also don't last as long. • Growth of supermarkets and retail outlets.Further developments in soap making were pioneered in Britain during the late 18th century with the invention of 'Transparent' soap by Andrew Pears. This refined soap was known then as it is now as Pears Transparent Soap. • Increasingly talented advertising and market research agencies. the son of a Cornish farmer. • Innovative R&D for raw materials and finished products. • Growth of the media. opaque soaps have remained the favourite. • State of the art technology to enhance productivity and reduce cost. • High speed packaging machines and attractive packaging materials. • Liberalisation of markets and growth in free trade. Over the years and to the present day. 5 . especially TV • Improvements in transportation and communication networks. Factors likely to encourage soap marketing and consumption in developing countries in the future include: • More discriminating educated and aware consumers.
000 crore. • Household Care: fabric wash (laundry soaps and synthetic detergents). This industry essentially comprises Consumer Non Durable (CND) products and caters to the everyday need of the population. cosmetics and toiletries. sanitary). Product Characteristics Products belonging to the FMCG segment generally have the following characteristics: • • • • • They They They They They are used at least once a month are used directly by the end-consumer are non-durable are sold in packaged form are branded Industry Segments The main segments of the FMCG sector are: • Personal Care: oral care. household cleaners (dish/utensil cleaners. Colgate-Palmolive. Marico. floor 6 . Dabur and Procter & Gamble.INDUSTRY PROFILE The Fast Moving Consumer Goods (FMCG) sector is the fourth largest sector in the economy with a total market size in excess of Rs 60. Godrej Soaps. Major companies active in this segment include Hindustan Lever. personal wash (soaps). perfumes. hair care. paper products (tissues. shoe care. skin care. diapers. deodorants.
UB and Shaw Wallace.6 million tonnes. Nirma and Reckitt & Colman. branded sugar. An exact product-wise sales break up for each of the items is difficult. cakes). of chocolates to be Rs 350 crore and of ice cream to be Rs 900 crore. of bread and biscuits to be Rs 8000 crore . the production of toilet soap is estimated to have grown by four per cent in 1999-2000 from 5. staples/cereals. vegetables and meat. bread. insecticides and mosquito repellants. soft drinks. The production of synthetic detergents has grown by eight per cent in 1999-2000 to 2. juices etc.30. of oral care products to be Rs 2600 crore. The size of the fabric wash market is estimated to be Rs 4500 crore. toilet cleaners. bottled water. of hair care products to be Rs 2600 crore. 7 . Godfrey Philips. coffee. Nestle. Major companies active in this segment include Hindustan Lever. of health beverages to be Rs 1100 crore. branded flour. metal polish and furniture polish). air fresheners. The cosmetics and toiletries segment has registered a 15 per cent growth in 1999-2000 as against an annual growth of 30 per cent recorded during the period 1992-93 to 1997-98. • Spirits and Tobacc Major companies active in this segment include ITC. branded rice. bakery products (biscuits. Cadbury and Dabur. dairy products. processed fruits. of personal wash products to be Rs 4000 crore. ice cream. In volume terms.000 tonnes in 1998-99. of household cleaners to be Rs 1100 crore. In the packaged food and beverage segment.10. chocolates. • Branded and Packaged Food and Beverages: health beverages. ice cream has registered a negligible growth and the soft drink industry has registered a six per cent growth in 1999-2000.000 tonnes from 5. snack food. tea. Major companies active in this segment include Hindustan Lever.cleaners.
Toilet Soap Industry in India:
Today, the FMCG sector is the fourth-largest sector in the Indian economy, with an estimated total market size of around Rs 450 bn. Further, the growth potential for all the FMCG companies is huge, as the per capita consumption of almost all products in the country is amongst the lowest in the world. Further, if these companies can change consumer's mindset and offer new generation products, they would be able to generate higher growth. For example, Indian consumers used to wear non-branded clothes for years, but today, clothes of different brands are available and the same consumers are willing to pay almost 5 times more for branded quality clothes. It is the quality and innovation of products, which is really driving many sectors. Thus, FMCG companies should use their imagination and respect the tastes of Indian consumers by offering quality products. Toilet 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.45000million and in volume terms it is worth .53 million . The main characteristic of the industry was severe competition and high level of brand proliferation. Toilet soaps account for more than 50% of the Consumer After expanding at a snail's pace, the market for personal wash products appears to have come to grinding halt in 2001. After posting a modest single digit growth in 1997-2000, figures for the first seven months of this year suggest that the market for toilet soaps has actually shrunk. Estimates about the extent of the decline of market size vary. Hindustan Lever, which straddles the category with a 59.9 per cent market share by value, says the market shrank by 4.4 per cent in value terms in the first half of 2001. The Indian Soaps and Toiletries Manufacturers Association, puts the decline at 1 per cent. Other industry sources suggest that the extent of `de-growth' in the first eight months of 2001 could be as high as 7 per cent.
This is despite the fact that this usually sleepy category has seen a spate of new players debut new offerings in recent times. Over the past couple of years, Nirma has launched a slew of lowpriced soaps under the banner of Nima and Nirma Beauty. Godrej Consumer, a long-standing player, has relaunched old brands such as Cinthol, apart from new ones such as FairGlow, Allcare, and Nikhar.
Henkel SPIC has made a maiden foray into the market with the Fa range of soaps. Colgate Palmolive has pepped up its soap range with extensions such as Palmolive Naturals and Palmolive Extra Care. The market leader HLL, has relaunched Breeze, apart from launching Skin Care and Sunscreen variants of its premium soap -- Lux International. If the shrinking market size suggests that Indian consumers have actually been cutting back on their use of toilet soaps, this is not really the case. In volume terms, the market for toilet soaps has continued to show a growth of 6 per cent in the first eight months of 2001. The major players have certainly managed to sell more toilet soaps by volume. But price competition in the segment and a slew of promotional campaigns have reduced the effective realisations per unit sold. This has probably neutralised the gains from volume expansion. Theories about the reasons for the shrinking the market size vary. Low-priced brands Industry players commonly attribute the `de-growth' in the soap market to downtrading. Toilet soaps are among the highest penetrated products within the FMCG market, reaching an estimated 95 per cent of the urban and 87 per cent of the rural households. The fairly high contribution from the rural market makes this category sensitive to the fortunes of the agricultural economy.
The prolonged drought in the North and West of the country (until 2000) and the sharp fall in farm disposable incomes (brought on by falling farm product prices) has probably persuaded low9
income households to downtrade, that is, switch from high- to lowpriced brands. This is indeed supported by the fact that within toilet soaps, it is the discount segment (soaps that cost between Rs 5 and Rs 8 per 75 grams) that has registered the highest growth rates over the past year. HLL, too appears to endorse the phenomenon of downtrading. ``There has been an inter-sectoral shift in the soap market, with consumers downtrading from premium and popular to discount soaps'', explains the company's spokesperson. However, Mr Hoshedar K. Press, Godrej Consumer Care, begs to differ. ``We think consumers have already pre-committed their incomes for instalments on durables. The substitution of soap with shampoos for hair wash has also impacted growth'', he said. Better quality The crowded market place has also brought a few benefits to the consumer as marketers of soap have tried to woo consumers through upgraded offerings and better quality soaps. Aided by low input prices, the marketers of toilet soaps have increased the TFM (total fatty matter) content in their brands, to offer better quality soaps at a lower price. Industry watchers say that the TFM content on some brands has moved up from the 50-60 per cent earlier to over 70 per cent of late. Therefore, per unit realisations on soaps have declined, the marketers of soaps have actually sacrificed a part of their margins on hiking the TFM content. Tough times ahead With competitive pressures on the rise and a larger number of brands jostling for consumer attention in a sluggish market, the soap market is likely to remain a difficult one for most players. Smaller players such as Godrej Consumer and Henkel SPIC have been in a position to report robust sales growth in the category over the past year despite the bruising competition. However, this is partly due to a relatively small base of comparison. Unless the market expands, the frenetic promotional
even if a good monsoon translates into a higher agricultural output. This year. In multinational companies such as Unilever and Procter & Gamble. Nature of the global Industry The global soap market is dominated by a small number of multinational companies. It may be better to wait for concrete signs of a pick-up in rural demand. Evidence from the past does appear to suggest that a sharp rise in rural incomes would have a cascading effect on FMCG demand. there could be a substantial time lag before higher rural incomes translate into better FMCG demand Third. However. it appears to be a bit early in the day to call it a revival. after a year of sluggish growth in 1998. The fact these two regions account for 55 per cent of the demand for FMCG products strengthens this argument. Soap is only one sector of their product ranges. which is certainly some way off. while the northern and western regions have received satisfactory rains. there is the question of whether this will actually expand or shrink farm incomes. soap and detergent ranges typically account for less 11 . Second. These factors suggest that it may be premature to take investment exposures in companies focussed on toilet soaps in the hope of a revival. The pick-up in volume growth in the soap market in 1999. reports of a good monsoon in the northern and western parts of the country have sparked off speculation about a revival in FMCG growth rates. Therefore. For one.A wild card It appears that a genuine boost to the market size for toilet soaps will still have to come from a revival in rural demand. the key crisis in agriculture over the past year has been that farm product prices have dropped sharply in response to a build up of surplus foodgrain stocks. And when it comes to sustaining a high decibel promotional campaign. southern India has been the victim of a very erratic monsoon. given that the good monsoon in the current year succeeds two or three consecutive years of drought in some regions.activity may soon tell on the growth rate of the players. Rural revival -. demonstrated that a recovery in agricultural output does have an indirect impact on sales volumes of FMCG products. HLL's size certainly gives it the wherewithal to do it.
Hindustan Lever's share of the soap and detergent market was dented severely by the Nirma (an Indian national. Where the market is crowded. and subsequently position their products. fail to break the barrier of routine buyer behaviour.41 7. companies are having to deal with and reconcile two conflicting elements in marketing strategy – namely profitability and market share. The largest toilet soaps and detergents only company.in evident competition to Godrej's FairGlow fairness soap. In India. which has strong presence in all regional markets in the world. companies try to differentiate their products by new forms or new packaging concepts. Position 1 2 3 4 Company Unilever Procter & Gamble Gillette Group Colgate Palmolive % Value of World 10. Greater market share involves higher marketing costs and lower profitability. A teaser ad on Lux soap recently unleashed by FMCG-major Hindustan Lever (HLL) gives an indication that the company is planning to launch a soap which protects fairness -. The top ten leading manufacturers and distributors of soap worldwide account for more than 55% of total sales by value in 1999. is the Unilever Group. privately owned company) strategy of developing a product especially for the poor. “metoo” looking products.than 20% of group turnover (in 1999). They proceed to determine whether to target the mass market or a niche market.66 4. Very often. despite their superior performance.5 Promotion and branding Soap manufacturers start their marketing strategy by first identifying whether a marketing opportunity exists. totalling in excess of US$80 billion. until Lever managed to develop its own product. by volume sales. 12 . With the increase in both domestic and global competition.07 7.
by using the soap.900 crore industry has reached saturation levels in penetration in both urban and rural markets. the proposed Lux product talks about protecting fairness by offering sunscreen benefits. is in the pipeline. Given that the Rs 2. The only catch here is that while Godrej Soaps directly claims delivering fairness through FairGlow. the ad does not reveal the name of the product. 13 . albeit on the fairness plank. one can block the sun rays from tanning the skin surface. the product is expected to be launched in the next fortnight. But it clearly signals that a new product offering from the Lux stable. FairGlow has marked a breakthrough in the stagnant toilet soaps market and has kindled hopes of fuelling growth with the creation of a new category. The move is seen by industry observers as a knee-jerk reaction to combat the launch of FairGlow. it is becoming increasingly challenging for marketers to develop value-added soap products in the market. The industry was rife with speculation that market leader HLL would follow in the footsteps of Godrej Soaps to launch a soap product on the same USP. Industry analysts point out that manufacturers will have to design products which offer unique benefits so as to stoke volumes growth. For Levers. It is not surprising then that FairGlow is targeted at both men and women. FairGlow is being promoted as a beauty and complexion soap which contains a bio-extract called natural Oxy-G which is said to make skin fairer naturally. The ad depicts how. While details of the proposed Lux soap are not available. point out industry analyst. However. Research findings show that a section of men too are users of fairness creams. it is crucial to defend any market share erosion at a time when the industry is strutting at growth levels of 2-3 per cent per annum. which is touted as India's first fairness soap.The Lux commercial was kicked off almost in tandem with the launch of FairGlow. It has been a couple of weeks since the teaser ad was launched on select channels.
None of the national brands had more than 5% market share and many more regional and unorganised sector/local brands. which gives the lead players and their respective market share.Production size) (market Unit FMCG (overall) Rs billion 1.% 20032003 growth 2004 600 2% 609 EST % growth Table-1: The Lead Players and their Market Share Percentage of Market Company Share HLL 67 Godrej 10 Nirma 8 Colgate Palmolive 1 Others 14 Source: Vanscom Database 14 .50% (overall) There were 45 leading national brands.09 1. Est 2002.9 1% (overall) Soap & Toiletries Mn tonn 60 4% 60. 9Hindustan Lever was the market leader with about 30 (number) of toilet soap brands with a total market share of 67% in 1998-99 in organised sector as seen from Table-1 below.5% Soap & Toiletries Rs billion 90 -5% 90.
Pears. showed that 103 toilets soap brands were available in this city alone. Liril. to induce trials and liquidate excessive inventories. Nirma. to encourage switching.Percentage of Market Share HLL Godrej Nirma Colgate Palmoliv e Others The leading brands in the market are Dove. which was conducted in Ahmedabad. companies were trying to increase market share in stagnant to declining (volume terms) market in order to retain consumers. Inflationary trend had made both the consumer as well as trade deal prone. HLL (Hindustan lever limited –a subsidiary of Unilever) 2. 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. Lux. Nirma 15 . A survey reported in Vanscom. Today big players in Indian bath-soap market are… 1. Due to such a dense market like India big companies adopt different strategies and coming up with various sales promotion schemes continuously. Palmolive and Hamam. Godrej 3. Lifebuoy. The industry had witnessed many innovative sales promotion activities in the recent past. Rexona. Dettol. One of the reasons being that the market being sluggish. Numerous factors were responsible for such a phenomenon.
200003 1717. 200003 714. 199912 1546. Unlike several other sectors where multinationals have entered after 1991. 200003 1169.53 (India) Ltd. The top five listed FMCG companies on the basis of their sales turnover in the last financial year (either year ended December 31.74 Marico Industries Ltd. For HLL most of the soap has become a brand they have their own identity. each soap is described in brief as an introduction about which soap belongs to which company.84 Colgate-Palmolive 200003 1123.47 51.1 77.88 Nestle India Ltd. four are multinationals while two others have significant MNC shareholdings. Crores 1073. MNCs have been active in India for a long time.02 51.1 98.05 Profit After Tax Rs.44 234.LUX is the most recalled soap in the mind of the consumers. 200003 1046.89 35.63 Ltd. 200003 649. Godrej Soaps Ltd.73 792. Dabur India Ltd.73 16 .38 Consumer Healthcare Ltd. 2000) are: Company Name ym(finance_year) sales Rs.4.79 42.94 Nirma Ltd. For these main four players . 200003 7971.67 97.61 61.31 I T C Ltd. P&g (Procter and gamble) Among these players HLL is the biggest player with around 67% of market share.43 Britannia Industries Ltd. 199912 10978. 1999 or March 31.28 Smithkline Beecham 199912 743. Godfrey Phillips India 200003 1082. Crores Hindustan Lever Ltd. There is a strong MNC presence in the Indian FMCG market and out of the top 10 FMCG companies.
I S P L Industries Ltd. Nestle and Britannia are active in the food sector and Colgate has a strong presence in the oral care segment. 199912 Procter & Gamble 200006 Hygiene & Health Care Ltd. Hindustan Lever has a strong presence in the food. Moreover. ITC is the market leader in cigarettes. lower volume of higher value added products reduce scope for export to developing countries.7 75.04 Among the major companies.Cadbury India Ltd. 17 . There is significant potential for increasing exports but there are certain factors inhibiting this.57 31. Small-scale sector reservations limit ability to invest in technology and quality upgradation to achieve economies of scale.000 crore only. Nirma has a strong presence in the detergent market.33 21. 199903 511.08 492.47 0. Reckitt & Colman Of 199812 India Ltd. personal care and household care (detergents) sectors.03 435.85 36. Exports India is one of the world’s largest producer for a number of FMCG products but its FMCG exports are languishing at around Rs 1.
Opportunities: • Large domestic market. • Export potential • Increasing income levels will result in faster revenue growth. • Strong brands in the FMCG sector. • Low cost operations Weaknesses: • Low export levels. Threats: • Imports • Tax and regulatory structure • Slowdown in rural demand 18 .INDUSTRY SWOT ANALYSIS Strengths: • Well-established distribution network extending to rural areas. • Several "me-too’’ products. • Small scale sector reservations limit ability to invest in technology and achieve economies of scale.
metal polish and furniture polish). perfumes. This industry essentially comprises Consumer Non Durable (CND) products and caters to the everyday need of the population. 19 . household cleaners (dish/utensil cleaners. Colgate-Palmolive. insecticides and mosquito repellants. paper products (tissues.FMCG Introduction The Fast Moving Consumer Goods (FMCG) sector is the fourth largest sector in the economy with a total market size in excess of Rs 60. • Household Care: fabric wash (laundry soaps and synthetic detergents). Marico. toilet cleaners. cosmetics and toiletries. diapers. personal wash (soaps). sanitary). shoe care. skin care. • Major companies active in this segment include Hindustan Lever. Product Characteristics Products belonging to the FMCG segment generally have the following characteristics: • • • • • They They They They They are used at least once a month are used directly by the end-consumer are non-durable are sold in packaged form are branded Industry Segments The main segments of the FMCG sector are: • Personal Care: oral care. Godrej Soaps. air fresheners. hair care. floor cleaners.000 crore. Dabur and Procter & Gamble. deodorants.
cakes). The production of synthetic detergents has grown by eight per cent in 1999-2000 to 2. • Major companies active in this segment include Hindustan Lever. of household cleaners to be Rs 1100 crore.000 tonnes in 1998-99. branded flour.000 tonnes from 5. 20 . In volume terms.• Major companies active in this segment include Hindustan Lever. ice cream. the production of toilet soap is estimated to have grown by four per cent in 1999-2000 from 5. dairy products. bread. An exact product-wise sales break up for each of the items is difficult. of hair care products to be Rs 2600 crore. Godfrey Philips. staples/cereals. vegetables and meat.30. • Branded and Packaged Food and Beverages: health beverages. soft drinks. coffee. chocolates. bottled water. branded sugar. • Spirits and Tobacc Major companies active in this segment include ITC. of bread and biscuits to be Rs 8000 crore . of chocolates to be Rs 350 crore and of ice cream to be Rs 900 crore. of personal wash products to be Rs 4000 crore.10. branded rice. juices etc. In the packaged food and beverage segment. Cadbury and Dabur. The cosmetics and toiletries segment has registered a 15 per cent growth in 1999-2000 as against an annual growth of 30 per cent recorded during the period 1992-93 to 1997-98. Nirma and Reckitt & Colman. of oral care products to be Rs 2600 crore. tea. snack food. UB and Shaw Wallace. Nestle. processed fruits. The size of the fabric wash market is estimated to be Rs 4500 crore.6 million tonnes. of health beverages to be Rs 1100 crore. ice cream has registered a negligible growth and the soft drink industry has registered a six per cent growth in 1999-2000. bakery products (biscuits.
worse they are often allowed to reinvest substantial cash amounts in their businesses. even worse. In this way they are unable to ever become cash cows. In such a scenario: A. Cash cows business units will beat their profit target easily. Either these SBUS should receive enough investment funds to achieve a real market dominance and become a cash cow(or star). C. • Market growth is not the only indicator for attractiveness of a market. Even. such as a generic growth target. As a result (all)question marks and stars business units get mediocre size investment funds. investments are made now and then in hopeless attempts to ‘turn the business around’. their management has an easy job and is often praised anyhow. • Sometimes dogs can even more cash as cash cows. Dogs business units fight an impossible battle and. Limitations of BCG matrix: Some limitations of Boston consulting group matrix include: • High market share is not only success factor. 21 . or otherwise companies are advised to disinvest and try to get whatever possible cash out of the question marks that were not selected. B.BCG MATRIX The BCG matrix method can help understand a frequently made strategy mistake: having a one-size -fits-all-approach to strategy. which are mature. and not growing anymore. These inadequate invested sums of money are a waste of money.
Lifebuoy. breeze. Hamam. ? HLL Rexona . Godrej-shikakai .Dettol. Colgate pamolive Godrej-Ganga. Dove.Liril NIRMA-beauty soap Johnson & Johnson baby soap Godrej-Cinthol. Maisur Sandal soap. nirma bath nirma lime soap camay. Fairglow HLL-Lux. HLL: Santur Nirma – soap Godrejlifebuoy +. breeze Johnson & Johnson -Savlon. Pears . Godrej No.. Godrej no.BCG MATRIX.1 breeze 22 .
slow growing industry. A dog may not require substantial cash. but because the market is growing rapidly they require investment to maintain their lead. Star A business unit that has a large market share in a fast growing Industry. These business units require resources to grow market share. Stars may generate cash. If successful. Unless a dog has some other strategic purpose.Cash cow A business unit has a large market share in a mature. star will become a cash cow when its industry matures. Question mark (problem child) A business unit that has a small market share in a high growth market. but it ties up capital that could better be deployed elsewhere. 23 . it should be liquidated if there is little prospect for it to gain market share. Dog A business unit that has a small market share in a mature industry. but weather they will succeed and become stars is unknown. Cash cows require little investment and generate cash that can be used to invest in other business units.
COMPANY PROFILE 24 .
soaps. namely Nilinta Chemicals Ltd. with its flagship Nirma Limited. 82 billion. etc. The manufacturing and marketing operations were divided in several closely held group companies.9 crore and the total shares outstanding amount to 3. In FY97. Super Nirma 25 detergent powder is positioned in the mid-priced segment. NCCL is the licensee for using the trade marks and the brand Nirma. Nirma dominates the popular detergent segment with brands like Nirma Popular powder. Nirma Soaps and Detergents Limited and Shiva Soaps and Detergents Limited. which are owned by Nirma Chemicals Pvt Ltd. In value terms. NCCL’s lease for the brand will be in perpetuity. 418. soap intermediates Alfa Olefin Sulphonate (AOS) to a level of Rs. Nirma Detergent powder. Nirma known for its focus on cost effectiveness by integrating latest technology manufacturing facilities with innovative marketing strategies to create world class brands.17 billion share in this market and has been acknowledged as a marketing miracle. the sole separate detergent manufacturing unit has been merged with Nirma in March '00. olding Pattern Share Holding Pattern The share capital of the company is Rs.NIRMA Background Toilet soaps recorded a strong 40% plus volume and value growth The Nirma story began in 1969 and since then it has expanded its detergents (cakes and powders). except in the event of Karsanbhai & Associates equity stake in NCCL falling below 51%.1415. Kisan Industries. Nirma holds 16% market share in the branded detergents segment. The market capitalization of the company is Rs. Nirma bar. as on May 28. Nirma group restructured its operations and merged 4 companies. The free float is 18% and the promoters hold 72% stake in the company. Nirma Consumer Care Limited (NCCL). The face value per share is Rs. Marketing of products is carried out through a 100% subsidiary. Today. besides toilet soap/other industrial chemicals manufacturing facilities and a modern packaging unit owned by Kisan. Nirma also sells glycerine. Business Overview Nirma’s principal business activities pertain to manufacture and sale of detergents and toilet soap. LAB and other industrial .10. Nirma now owns all the detergent manufacturing facilities of the group. P&G to become the market leader (in terms of volumes) in this price-sensitive industry. Nirma has a Rs. 2001. Nirma Detergents Limited. has by passed MNCs like HLL.39 crore.33. Toilet soaps recorded a strong 40% plus volume and value growth driven by the success of the launch of "NIMA" brand in FY00. The stock is currently trading at Rs.85 crore.
sensing a strong need to expand the market through Penetrative Pricing. Nirma Lime Fresh Soap 26 .Nirma Bath Soap Toilet soap market in India was dominated by a very few MNCs which could monopolistically price their product. this brand.” Nirma introduced ‘Nirma Beauty Soap’ in the year 1992. had achieved the status of the third largest selling toilet soap brand and still continues its outstanding performance. which is a carbolic (Red) soap. In 1992. Nirma Bath has generated larger volumes each year. within a short span of five years. Packed in a red colour wrapper and available in 75 gram and 150 gram pack sizes. Nirma entered this market with the launch of ‘Nirma Bath Soap’. this soap has a TFM content of 70%. Available in three different variants and pack sizes. Although the carbolic soap segment is on decline. this soap has a Total Fatty Matter (TFM) of 60 %. Better Living. Better Value. Due to its admirable perfume and a higher TFM content. Nirma Beauty Soap With its market promise to offer “Better Products.
this soap is available in green colour. The company is also considering other categories such as shampoo. (as featured in The Strategist Quarterly. market share growth will drive profitability. July-September 1998). Packed in a poly coated 75 gm carton.8-1bn last year. The company plans to tap export markets and is alos looking at acquisition opportunities or distribution tie up arrangements in other FMCG categories. this soap contains 80% TFM. being ranked as the Seventh Most Successful Brand Launch for the year 1998. Branded salt will be launched by the end of the year. The LAB plant has yielded about 12% cost savings and the company expects a similar cost saving of about 12-15% once the soda ash plant stabilizes. Overall the backward integration has yielded a cost saving of Rs0. which is printed on the world’s best Cerruti 8-colour printing machine. as ranked by the Business Standard Marketing Derby. when it was launched in 1997. Earnings sensitivity factors: Stabilization of backward integration projects Volume growth in detergents as well as toilet soaps and utilization of expanded capacity • Toilet soap market share : Success of new launches. 1998. toothpaste and fabric whiteners. Self sufficiency in key raw materials will give protection against commodity cycles besides yielding substantial savings in raw material cost. Strategy Nirma's large capex backward integration projects had been undertaken with a strategy to become the lowest cost detergent manufacturer in the world. • • 27 . The company estimates a total cost saving of 25% in material and handling costs due to the backward integration projects. Seventeen million packs of Nirma Lime Fresh soap were sold in the very first month of its soft launch.This product had created a sensational marketing history in the Indian Toilet soaps market. Post completion of backward integration the company now plans to focus on building large volumes and gain from economies of scale. The product launch of Nirma Lime Fresh had been extremely successful. With a lime aroma that tingles in one’s sensory buds for a long time.
And the company has achieved tremendous success.• Commodity price movement of LAB and Soda ash will have significant impact on company’s competitive position. driven by the success of the Nima launch.to fight competition and the unorganized sector. Nirma has for the first time diverted from its strategy of umbrella branding and has launched Nima as a 'fighter brand' . the company has managed to almost achieve double digit volume growth. The Consumer products division continued to grow at a healthy pace of 26% yoy. HINDUSTAN LEVER LIMITED Mission 28 . In a scenario where the average industry has been growing at a poor 2-3%. as Nirma will be the only company to have its own raw material production facility. 1.
Lux recognized the need for a compelling message about beauty that would resonate with women of today. gross block: 59. Since its launch in India in the year 1929. net forex earnings: 6 and trading value: 8. and personal care with brands that help people feel good. 2003 saw one of the biggest milestones in the history of Lux. net profit: 12. Products : Lux Rexona Pears Dove Breeze Hamam Liril Lifebuoy Lux Lux stands for the promise of beauty and glamour as one of India's most trusted personal care brands. Almond Oil and Milk Cream. look good and get more out of life. 29 . Lux has offered a range of soaps in different sensuous colors and world class fragrances. It leads in home and personal care products. The Far Eastern Economic Review rates HLL as the best Indian company and recognises it as one which all others want to emulate.4% of the total market capitalisation of the Top 500. HLL's rank on other parameters are . Hindustan Lever (HLL). Lux continues to be a favorite with generations of users for the experience of a sensuous and luxurious bath. We meet everyday needs for nutrition. sales: 8. Its market capitalisation went up 18% to Rs 324351 mln (taking it to the first position from last year's third) when the total market capitalisation of the Top 500 companies was down 22%. Fruit Extracts and Honey in Milk Cream and Sandal Saffron in Milk Cream.Unilever's mission is to add Vitality to life. It now accounts for almost 8. India's largest fast-moving consumer goods company is also the country's largest company in terms of market capitalisation. Lux is available in four different variants – Exotic flower petals and Jojoba Oil. From being just a beauty soap of film stars.capital employed: 87. and foods and beverages with over 110 brands. hygiene.
which was launched by Unilever in 1957. In 1989 coconut was introduced in Rexona for the first time to strengthen the overall skincare appeal of the brand. That is the cause if its unique transparency. the glycerine is retained within the soap. Launched in 1947. leaving it clear and flawless. Dove Dove soap. a green variant for oil control and a blue variant for germ protection. Since then the product has been constantly improved to keep up with the expectations of the consumers.Rexona Rexona is one of India's pioneer brands in family soaps.the traditional amber variant. it is individually polished and packed in cartons. Today Pears is available in three variants . has been available in India since 1995. the soap is mellowed under controlled conditions over weeks. glowing skin. in addition to coconut oil and moisturising milk cream. Its creamy lather purifies the skin. Pears is manufactured like any other soap. it was positioned as a natural skin care soap to give silky. it is about how you feel. At the end of this maturing process. It is gentle enough. Pears soap has no equal. It has also been enhanced with a perfume that lingers well after a bath. even for baby's skin. Pears Introduced in India in 1902. After manufacturing. 30 . It provides a refreshingly real alternative for women who recognise that beauty is not simply about how you look. Rexona has now been relaunched with cucumber extracts. but unlike in conventional soaps.
Since the 1980s.5 and 7. Dove has been extended to many other countries. Hamam 31 . Introduced in variants like Scent Magic. Breeze strives towards fulfilling the company's mission of being inventive in creating value. body lotions. This makes it suitable for all skin types for all seasons. Breeze explores this through the proposition of 'scent in a soapScent ka kamaal. Breeze has offered them 'beauty at an affordable price'. Dove is formulated to be pH neutral (pH between 6. Breeze Breeze Scent Magic is the soap which fulfills the aspirations of women of rural India. deodorants. Ordinary soaps tend to be alkaline. for example. While Dove soap bar is widely available across the country.The skin's natural pH is slightly acidic 5. making them look and feel beautiful. Dove Body Wash is available in select outlets.5-6. ab sabun mein' and explicitly propagates the brand promise of the "Hameshaa kuchh extra". which ensure that one smells good for a long time through the day. with pH higher than 9. providing a comprehensive range of solutions to bring out true inner beauty. Scent Magic Lime. It delivers all this and still matches consumer's needs in terms of price and quantity offered. facial cleansers and shampoos and conditioners. Breeze has been enriched with 19 special scent oils.5) and to be mild on skin. staying true to its word. Unilever has launched a moisturising body-wash. Research and consumer visits have shown that the desire for great fragrance featured highest in the daily beauty regime of discount-soap users. Globally. and Scent Magic Sandal.
Liril has donned many avatars. Presently. has carried the Lifebuoy message of health across the length and breadth of the country. freshness has been clearly identified with one name – Liril Liril expressions have always set trends whether it is a bathing beauty in a waterfall or "Oof Yu Maa!" The energy and excitement levels associated with the brand have to be experienced to be believed with changing times. Hamam is considered to be the most reliable option. The new attractive oval shaped Hamam comes in an attractive and modern packaging. Liril Icy Cool and Liril Orange splash are making waves. Hamam takes on a very modern and trendy look. Lifebuoy offers specific health benefits through Lifebuoy Gold and Plus.When it comes to soaps. According to a research conducted By Indica Research in May 2003. has been synonymous with health and value. The 2002 and 2004 relaunches have been turning points in its history. At the upper end of the market. Tulsi and Aloe Vera .. 78% of Doctors in Tamil Nadu recommend Hamam. Lifebuoy Gold (also called Care) helps 32 . Lifebuoy Making a billion Indians feel safe and secure by meeting their health and hygiene needs is the mission of Lifebuoy. for over a 100 years. Hamam's enhanced fragrance now provides a longer lasting freshness. Liril For 28 years. Hamam. The new mix includes a new formulation and a repositioning to make it more relevant to both new and existing consumers. with its perfume and popular Lifebuoy jingle. Liril Soft Aloe Vera & Lime. Besides being a perfectly balanced soap. Hamam has traditionally been a soap that takes care of your skin in a natural way. The brick red soap.. Launched in 1895. The world's largest selling soap offers a compelling health benefit to the entire family. The ingredients that are used in Hamam Neem. the brand is very true to its tagline that says. Launched in 1934. Lifebuoy. What's next? Wait and Watch! The show has just begun.by themselves have great therapeutic values. "Everything in life is about balance".
R&D ability. distribution reach(networking) and high quality manpower Strong media personalities As the production is on large scale it has the benefit of economies of scale. 33 . consumer understanding. while Lifebuoy Plus offers protection against germs which cause body odour.protect against germs which cause skin blemishes. Hindustan Lever’s SWOT analysis Strengths: With identified strengths including a strong brand portfolio.
the company and its brands achieves highest trust of the consumers. growing consumption in out of home categories. positioning HLL as a sourcing hub for Unilever companies elsewhere and leveraging the latest IT technologies. emerging modern trade to be effectively used for introduction of more upscale personal care products. Opportunities: HLL sees its opportunities as market and brand growth through increased penetration especially in rural areas. brand growth through increased consumption depth and frequency of usage across all categories. Price positioning in some categories that allows for low price competition and high social costs in the plantation business. upgrading consumers through innovation to new levels of quality and performance. 34 . travel. Threats: Perceived threats span low-priced competition now being present in all categories. Weaknesses: The company's weaknesses spotted thereby include Increased consumer spends on education.Being very old and reputed company. consumer durable. etc resulting in lower share of wallet for FMCG. entertainment. Complex supply chain configuration and unwieldy number of stock keeping units (SKUs) with dispersed manufacturing locations.
and the communities in which we live and work to prosper. Environment. formally Godrej Soaps. the company generated revenues of $417. profit.14 35 . The company is part of the Godrej Group conglomerate. allowing our people. The company saw a net income of $13. As a result. Company Overview Godrej Industries Limited. India For the fiscal year ended March 2004. Trust. Godrej also operates in the food and medical diagnostics markets.7% on the previous year.34 million (Rs18. 3. VALUES: Integrity. To serve respect. an increase of 9. As well as the chemicals industry. We will provide branded products and services of superior quality and value that improve the lives of the world's consumers.grey imports spurious/counterfeit products in rural areas and small towns. Godrej Industries is headquartered in Mumbai. is India's large manufacturer of oleochemicals. changes in fiscal benefits. and value creation. our shareholders.23 billion). GODREJ VISION: Godrej in every home and work place. consumers will reward us with leadership sales. MISSION: Enriching quality of life everyday everywhere.
8 million) during fiscal 2004.million (Rs573.476 2. Detergents (6%) and Cosmetics and Toiletries (8%) are the other contributors to GCPL’s turnover. All interests of the erstwhile Godrej Soaps in other businesses such as industrial chemicals. Godrej entered into a strategic alliance with P&G for inter alia toilet soap business. under which Godrej used to manufacture soaps. the company lost significant part of its market share and subsequently the arrangement was discontinued. Exports of Godrej Brands (2% of overall sales) grew by 28% yoy in FY01. GCPL has emerged as a focussed FMCG company. Toilet soaps account for more than 50% of the Consumer business sales. fairness creams. % of Sales 53 FY2001 FY2000 Growth 2.9 Soaps Toilet soaps – Godrej brands (53% of turnover) 36 . In the early 90’s Godrej had created strong brand equities for its leading brands Cinthol. medical diagnostics and financial investments continued to remain in the existing entity. Contract manufacturing of toilet soap for other industry players (13%). liquid detergent. Godrej reestablished a distribution network by utilizing the network of group company Godrej Hicare for marketing of its brands and in FY00 took over the entire distribution network from them.5% on fiscal 2003. The company also undertakes contract manufacturing of toilet soap for third parties. Evita etc. cosmetics such as hair care. way back in 1930. an increase of 72. Hair Color (20%). However post marketing alliance with P&G.119 16. In 1994. etc and men’s toiletries. Ganga. Godrej’s entire distribution network was then taken over by P&G. Godrej Consumer Prodiucts Ltd (GCPL) was formed wef April1. post demerger and the company has been renamed Godrej Industries Ltd (GIL) Godrej has the distinction of being the first company in the world to develop technology to make soap with vegetable oils. which were marketed by a joint venture company. Marvel. Its main product lines now consist of toilet soaps. 2001 with the demerger of the consumer business of the erstwhile Godrej Soaps Ltd.
The company also launched new brands like Godrej Nikhar during the year. The company has been very aggressive during the year in the toilet soap business and has launched a number of new products in the market in the last two years.6 Toilet Soap Cinthol. under which Godrej used to manufacture soaps.5bn. The company manufactured 45530 tons of toilet soap in FY01. Godrej reestablished a distribution network by utilizing the network of group company Godrej Hicare for marketing of its brands and in FY00 took over the entire distribution network from them. which were marketed by a joint venture company.Godrej has the distinction of being the first company in the world to develop technology to make soap with vegetable oils. the company lost significant part of its market share and subsequently the arrangement was discontinued. The company’s market share in toilet soaps improved marginally to 5. Margins on own brands are estimated to be 60% more than that on 3P manufacturing. Ganga. Segment Brands Market Share FY00 5. Ganga.Contract manufacturing (13% of turnover) Contract manufacturing of toilet soaps registered a 20% volume growth but grew by only 7% in value terms to Rs618mn. Margins earned on 3P manufacture are significantly lower as compared to its own brands. In value terms sales grew by 17% yoy to Rs2. Nikhar. New variants like Sandal and Natural in the Godrej No.1 brand also aided high growth. In 1994.6% during FY01. However post marketing alliance with P&G. It pioneered the concept of a fairness soap through launch of Fairglow soap. Fair Glow. Goderj No 1 37 . Evita etc. Toilet soaps . Godrej’s entire distribution network was then taken over by P&G. The company’s oldest and well know brand Cinthol is proposed to be repositioned and relaunched during FY02.2 Market Share FY01 5. (32754 in FY00) Capacity utilization of toilet soaps has improved from 46% in Fy00 to 64% in FY01. Marvel. Godrej entered into a strategic alliance with P&G for inter alia toilet soap business. way back in 1930. Toilet soap volumes of Godrej brands grew by 30% yoy in FY01. In the early 90’s Godrej had created strong brand equities for its leading brands Cinthol.
glowing complexion. It has a pleasant fragrance and is white in colour. shape and advertising using celebrities like Vinod Khanna and Imran Khan . Godrej no1 Godrej no. "active" associations with Cinthol which became a part of the essence of the brand Godrej FairGlow The Godrej FairGlow fairness soap contains a powerful fairness ingredient ' Natural Oxy-G '. in an attempt to modernize the image "New Cinthol " soap was launched with new look packaging . it also removes blemishes to give you a clear. took the platform of protection from body odor.1 is another popular soap from godrej product line . The brand. In 1960 Cinthol Deodorant Talc was launched. It continued to sell as a freshness talc thereafter. simply through a daily bath. In addition. Godrej FairGlow Soap was India's first and is the largest selling fairness soap. It helps you become fairer in a convenient way. over the first three decades of its existence. The brand was launched in 1952 as the first Deodorant Soap in the country. It is a quality Grade 1 fairness product having 76% TFM (Total Fatty Matter).Cinthol Cinthol is the flagship brand of Godrej Consumer Products Limited. it is proved popular in the rural market due to the affordable price and 38 . This communication campaign developed strong "confident" . which makes you fairer by reducing the dark melanin without changing the skin's natural balance. In 1986 .
Godrej refreshes itself Godrej Consumer Products has beaten the stagnation in the FMCG segment through a host of initiatives that saw it introducing new price points. it is giving good fight to the leading brands too. enter new territory and strengthen its brands.it comes in three colours and flavour. This soap is giving fight to all the shampoo for washing the hairs. Many people believes shikakai as a best thing to wash the hair . It is proved very popular among women. 75 gm. All of these soaps can be further classify in to three basic segments Price Segments of Bath Soaps Segment Premium Popular Economy Price > Rs. Godrej Shikakai soap This is also one of the popular soap of the godrej product line. 39 . 75 gm.long and silki hairs are result of utilization of the soap. black . This soap is used to wash hairs.15 Rs.8 Weight 75 gm.815 < Rs.the quality offered.
Launching the All New FairGlow soap. hair care and soaps have been under pressure.1 ayurvedic soap to more markets and at an attractive price. introducing new price points. and also because of the urban-centric nature of its brands. At the same time it also decided to capitalise on the success of its FairGlow soap. Executive Director & President."FairGlow soap. In fact. `The cool way to fairness and freedom from oily skin' is the message the company wants to convey to all its prospective users. the Rs 550crore Godrej Consumer Products began the year by extending Godrej No. Godrej is almost consciously targeting the fairness cream users through its newly relaunched fairness soap. a pioneer in its category which managed to find a niche in the fairness market in spite of the looming presence of HLL's mega brand Fair & Lovely.FORTIFYING its soap brands. Godrej Consumer Products. "There is an increasing demand among Indian women for convenient and inexpensive solutions to skincare and a need to look good naturally. Focusing on its stronger and faster growing brands.. the company has outperformed the still sluggish FMCG industry primarily because it has been operating on a relatively smaller base compared to the biggies. Hoshedar K. entering new categories such as babycare and hand sanitisers .. said. The soap keeps this need in mind. While FMCG categories such as toiletries. it has been a busy year at Godrej Consumer Products Ltd (GCPL). Press. instead of trying to push the languishing cream. to take on Hindustan Lever Ltd (HLL) in the fairness segment. has intentions of doubling its turnover from Rs 60 crore to Rs 120 crore 40 .
" The new unit for toilet soaps in Himachal Pradesh would also lead to an improvement in profitability.1. 1. managed to maintain robust growth and today accounts for nearly 60 per cent of GCPL's toilet soap volumes. Godrej Shave Gel for men has also failed to register any significant volumes. leading us to withdraw the product." Besides. Its low pricing and valuefor-money proposition has worked for the company and it has been steadily increasing its variants with an ayurvedic offering. The relaunch of FairGlow soap is expected to add weight to Godrej's soap portfolio. This move could help GCPL build a younger clientele and broaden its target base. Admits Press. The All New Godrej FairGlow is aimed at female teenage college students instead of the previous positioning of that for women in their early 20s. The brand was relaunched last month. which in any case did not manage to register any significant volumes. Says Anand Shah. According to industry observers. The unit would provide income-tax relief and exemption from excise duty. HLL is not in a position to push its Fair & Lovely soap for fear of losing its share in the fairness cream market. Godrej No. the company suffered a loss in sales for its toiletries division primarily due to the failure of its FairGlow cream. In fact. "FairGlow has been registering declining sales over the past two years." Besides. FMCG Analyst at ICICI Securities. This situation gives Godrej an opportunity to strengthen its position in the fairness soaps category while phasing out its cream. Observes Shah.within the first year of the relaunch. the largest soap brand in Godrej's kitty. 41 . Our toiletries margins have been affected by its failure. as it is located in a tax-free zone. "FairGlow cream did badly. "Toilet soaps are likely to maintain robust growth of 15-20 per cent on the back of FairGlow's relaunch and the continuing growth of Godrej No. which is likely to improve the company's soap margins.
" says Press." says Press. Orchard. its Cinthol soap franchise has taken a backseat. the prices of these respective brands have been pegged between Rs 4 and Rs 5. "We have decided to target these States with low per capita incomes through our small unit packs. Godrej also decided to increase its rural penetration by introducing small unit packs of its soap brands in the Bimaru States of Bihar." says Press.1 .Cinthol. This is being done through a new campaign and positioning statement which is likely to be unveiled soon through its advertising agency. Last year. Madhya Pradesh and Uttar Pradesh. These small pack sizes will not be made available nationally and are meant specifically for these three States. 42 . FairGlow and Godrej No. primarily due to lack of proper positioning. This will be a great opportunity to grow since consumption levels of soap are still low in these parts. Godrej already supplies hand sanitisers under the Cinthol brand to West Asia. Beefing up its rural initiatives to accelerate sales growth. a revolutionary concept for germ-free hands. "Cinthol as a brand has been over-extended and we are in the process of redefining the positioning. "There is heightened hygiene consciousness emerging among consumers and we realised it would be ideal to introduce the hand sanitiser. By introducing its three power soap brands . The SARS epidemic did help in gaining sales for the product.in 50gm SKUs (stock keeping units). Godrej decided to stretch the Cinthol brand to a hand sanitiser.Meanwhile.
Data sources Secondary data: Web sites. Magazines. and pricing strategies.sales promotions. Newspapers Limitations of study Lack of sufficient material. In this sector there is very tough competition between players. Lack of time.Research methodology Need for study Fmcg sector is very vast and 4th largest sector in Indian economy in which different marketer use different strategies for the survival and make profit from their products or brands. 43 . positioning.they are using large number of advertising. Research design We have used secondary data as a source of this research.
BARGAINING POWER OF CUSTOMERS Due to increase in branded products. which reduces the suppliers clout. BARGAINING POWER OF SUPPLIERS Many established players have a slight edge in bargaining power giving the competition among suppliers.Five forces analysis of bath soap industry SUPPLY Abundant supply in metros Competition is beefing up their distribution network to penetrate the rural areas. BARRIERS TO ENTRY Huge investment in promoting brands.(eg getting one soap free with one unit of soap) 44 . there is less chance that the consumer can influence.5% until February 2007. but intense competition within fmcg companies result in value for money deals for consumers. and the present consumer demand is set to boom by almost 60% over this period. Most fmcg companies are awaiting to tap this latent. Some of the companies have backward integration. setting of distribution network and intense competition. DEMAND At an average GDP growth of 5.
1-3 billion and they are growing at the rate of 10%. Unbranded players are size of Rs. Local players have no large distribution network so they are giving fight to the branded products by giving huge margins to retailers which is an important part of supply chain.COMPETITION In bath soap industry there are low profit margins about 5 – 10% but they are selling in huge volumes. To beat the competition companies mainly use various strategies like discounts and freebies. 45 .
Being very old and reputed company.Hindustan Lever’s SWOT analysis Strengths: • • • • • • • • With identified strengths including a strong brand portfolio. consumer understanding. 46 . the company and its brands achieves highest trust of the consumers. distribution reach(networking) and high quality manpower Strong media personalities As the production is on large scale it has the benefit of economies of scale. R&D ability.
• positioning HLL as a sourcing hub for Unilever companies elsewhere and leveraging the latest IT technologies. Opportunities: • HLL sees its opportunities as • market and brand growth through increased penetration especially in rural areas. • growing consumption in out of home categories. etc resulting in lower share of wallet for FMCG. Threats: • Perceived threats • span low-priced competition now being present in all categories. consumer durable. 47 . • emerging modern trade to be effectively used for introduction of more upscale personal care products. • grey imports • spurious/counterfeit products in rural areas and small towns. • upgrading consumers through innovation to new levels of quality and performance. • Complex supply chain configuration and unwieldy number of stock keeping units (SKUs) with dispersed manufacturing locations. entertainment. • brand growth through increased consumption depth and frequency of usage across all categories. • Price positioning in some categories that allows for low price competition and high social costs in the plantation business.Weaknesses: • The company's weaknesses spotted thereby include • Increased consumer spends on education. travel. • changes in fiscal benefits.
5% 5% -3.64 45.45 40.50% -5% 1% -4.09 50. Growth in production of FMCG Production (market size) FMCG (overall) Soap & Toiletries (overall) Soap & Toiletries (overall) Fabric wash market Laundry soaps/bars Personal wash market Toilet soap Unit Rs billion Rs billion Mn tonn MN tonn Rs billion Rs billion Rs billion Est 2002. and Reckitt & Colman (Dettol). Godrej Soaps (Cinthol. Shikakai. Nirma (Nima). The leading players in this market are HLL (Lux. Nikhar).3 45 42 -5% 4% 4% -6. premium and middle-end soaps are growing at a rate of 10 per cent.5% 1% 1.9 60.2% 90. FairGlow. Rexona).% 20032003 growth 2004 600 2% 609 90 60 50 53.50% 0.5% 48 .11 EST % growth 1. Breeze. Lifebuoy.Personal wash market: While the growth rate for the overall personal wash market is only 1 per cent compared to average growth rate of 5 per cent.25 50.
5% 1.5% SECTOR UNIT FMCG (overall) Soap & Toiletries (overall) Soap & Toiletries (overall) Fabric wash market Laundry soaps/bars Rs billion Rs billion MN tonn Rs billion Laundry soaps/bars MN Tonn Personal wash market Rs billion Toilet Soap Rs billion 49 .Projected Growth in Production of FMCG Sector First two quarters (Apr-Sept 2003-04) Actual 1.50% 4% 0% 1% 1.50% -4% 2% -8% -5% 7% -5% First two quarters (Apr-Sept 200405) Projected 2% 1.
to be focused by aggressive marketing.SWOT ANALYSIS OF GODREJ Strengths • Very old and trusted domestic company in India. Opportunities • Penetration in rural market area. • Focused attention on cinthol brand. • Focusing more on its innovations and product variety it can become a global player. • Good distribution network across the country. • Low market share. • Cinthol is one of the popular and strongest brand of the company. • Less focus on product variety. • Economical products with wide product line. • Lack of concentration on bath soap segment after diversification. Weaknesses • Medium focus on advertising as compared to other competitors. • More brand loyalty of customers towards some of the brands. 50 . • Diversification of the products and deepens each product vertically. • Lack of promotion of its products by influential celebrities.
51 . • Due to successful backward integration it has a benefit of low cost production.Threats • Trust factor and emotions attached to it due to the domestic company towards localites. • Best infrastructure. • Major focus on effective advertising.
This situation is most common in Asia and Latin America. 52 . as brands become more specialised. as well as moisturising. Mergers and acquisitions Production of soaps for distribution on the international market takes place as near to national markets as possible. With the exception of East and Central Europe. m ost soap and other toiletry markets are becoming increasingly foreign. While domestic manufacturers traditionally tend to concentrate in their countries of origin. The distance of many of the emerging markets from major industrial nations. Brazil stands out as an exception to this trend. In addition. and seem to be attracting consumers back to the products they know best. they are increasingly seeking to increase revenues by venturing into neighbouring countries. has shifted toward body cleansing. The main strategy used by companies wishing to enter other markets is a series of mergers and acquisitions. Corporate market expansion strategy by the multinational organizations has involved increased market segmentation to create a wide range of products especially in the toilet and laundry soap categories.Growth and expansion strategies in global scenario Market segmentation Most multinationals are active in almost all the regions profiled in this report. The main developments during the 1990s has thus been the growth of task specific products. The market for bath products in particular. Traditional soaps are fighting back with a move toward nostalgia. and the sheer bulk of the bar soap and liquid soaps combine to make import uneconomical in most instances. having a high presence of domestic companies. they acquire manufacturing facilities and set up distribution agreements with local companies. In Latin America. Their global reach has been facilitated in part by the increas ingly open economic policies that were being implemented by developing countries such as India and China during the 1990s.
the findings of this research indicate that many sectors of the global market for soap are not yet saturated. This seems to have been a major factor in Unilever’s acquisition of Helen Curtis. mothers. for example. It is believed that additional sales growth can be generated by targeting specific consumer groups.domestic manufacturers such as Nirma and Godrej are gradually increasing their domestic market share. and new product development will therefore tend to take the form of brand and line extensions. 53 . many local manufacturers are identifying and exploiting pockets of innovation in niche markets especially. While new product development will be important in the strategy of niche players. children and teenagers. They are becoming successful by quickly identifying and meeting consumer needs. where global players do not have dominant positions. This is because investment funds are not readily available in the same way. health conscious consumers. How local companies are responding to multinational strategies Many national soap manufacturers are matching the big player’s expansion strategies by expanding into niche markets where brand loyalties are yet to form. Another strategy involves offering products at low retail prices and with small value shares in several sectors without occupying leading positions in any of them. The alternative to acquisition or creation of a manufacturing operation in the target country. The acquisition of regional players represents a clear means of establishing or strengthening a position in a region. and by offering more competitively priced products than the multinationals. Acquisition is also being used as a means of balancing the geography of a portfolio where a large player is weak in a particular country. In any case. it is unlikely that it will be as innovative as that achieved by the global players. consumers in provincial and rural regions. particularly at the lower end of their markets.In Asia. is to set up a licensing agreement with a local manufacturer. Nonetheless.
This was due to consumers at the lower end of the market trading up to more expensive types of soaps as their average incomes increased. 54 . Loopholes in government customs machinery have led to the influx of grey imports. official relaxation of trade barriers in all regional markets has increased the entry of imported soap into most regional markets that were fairly stagnant in terms of new product d evelopment and launches. However. as the bulk of consumers in most markets earn low incomes and only buy low cost items. In addition. This coincides with th e emergence of a more sophisticated consumer base. Competition has intensified significantly over the last five years and has resulted in heavy corporate investment in a wider range of technologically advanced products and new product development in general. as well as advertising and promotional expenditure to differentiate their products in the mass or lower market segment from local ones. much greater segmentation in markets.2% to 72.1%. i. Liquid soaps became increasingly popular until the 1997 economic crisis caused consumers to economize. unofficially imported products in the local market. High production excise taxes which in some cases are higher than the import duty on raw materials.e. this situation showed signs of change over the last three years with bar soap increasing in value shire from 68. all the major players and other manufacturers in the industry list the following issues as threats to the uninhibited growth of theindustry: High government custom duties on essential imported raw materials. and increased demand for value added products. Basic products like bar soaps remain dominant in Asia. it cannot be shared by members of the family for body cleansing. High local energy costs including electricity and fuel.Threats Without exception. Increasing cost of policing their products against local artisanal soap producers. This takes the form of increasing research and development. unlike bar soaps. The popularity of liquid soaps and shower gels is due to their hygienic packaging which makes them popular to use because.
it acquired PTZ. In 1995 the Singapore based Haze Line Company was acquired from Glaxo for US$150 million. This has strengthened Unilever’s skincare position in China and South East Asia. Unilever is the most dominant player in the region with Japanese companies. Unilever NV and Unilever PLC. Since the mid 1980s Unilever Has further developed strong position in the soap sector through acquisition of various established brand names. the Anglo-Dutch consumer goods company is among the world’s largest soap manufacturers. which involves two parent companies. a major force in the soap industry. In Eastern Europe. It is unusual in its structure. Unilever started its involvement in the soap market with the manufacturers of Pearls toilet soap. appropriate marketing strategies are needed to turn this region into an area of advantage for the industry. Unilever has been building its soap (skincare) activities in the developing regions through acquisition.The regional market presents tremendous opportunities to the soap manufacturer in terms of the share size of the formed population. the Czech state-owned producer of toilet soaps and skincare products in 1992. the majority of them living under the poverty line. 55 . This structure relates back to the 1930s merger of the Lever Soap Company with the Dutch edible (oil) fats company NV Margarine Unie. With India’s population officially exceeding one billion at the end of the last century and China’s over 1.5 billion. Unilever Countries of origin and bases: UK/ Netherlands Unilever.
Apart from direct presence. Unilever also seeks to expand through organic market development where appropriate. The company has pursued a selective acquisition and disposal strategy with net expenditures on disposals and acquisitions amounting to over US$ 1billion in 1999. Europe accounted for over half of the company’s turnover and operating profit in 2000. The company is also involved in Joint Ventures (JV) where this method is proved to be the most effective means of entering a new market For example. When sales from European markets and North America are combined. the most established brand is Omo in the fabric detergent sector. its strategy emphasizes the importance of local requirements. Unilever’s brands are on sale in a further 90 countries through import arrangements and agreements with local companies.Operating structure Unilever has operations in more than 90 countries which provide it with a presence in every continent. they account for 2/3 of global turnover The business coordinates its activities through divisions. A world wide network of innovation centres is in place which allows rapid transfer of ideas and the identification of tailoring required for local or regional markets. While the company enjoys the benefit of owning a number of global brands. The company is keen to position itself as the “Multi-local Multinational” Leading brands Unilever has significant involvement in the global soap market through a portfolio of strong consumer brands marketed primarily through selective mass outlets. In the detergent market. (iii) personal products including soap (accounting for 14% of Group turnover in 2000) (iv) specialty chemicals (v) other products Corporate strategy The broad ranging interests of Unilever are underpinned by a strong corporate strategy which focuses on the core activities and brands. The key to the company’s strategy is the importance of product innovation. Omo is sold in over 50 countries with a wide number of formulations to reflect 56 . These are (i) foods (which accounts for 50% of Group turnover in 2000) (ii) detergents. in Vietnam the company operates through two JV agreements.
It was able to cut costs with a model focused on the poor. Success due to undercutting multinational rivals eg. These brands have strong consumer loyalty which will allow the brands to cross sector barriers with relative ease. which dominates the Indian rural market. the company was able to cut production costs dramatically. and produce a more environmentally sound product. Production facilities at 6 places in India. Ponds and Lifebuoy brands are present in virtually every market around the world. 57 . Dove. Rexon. Using a lower fat-towater ratio and indigenous oils in the formulation of the soap. Its Lux. Future strategy Unilever is likely to continue to strengthen its presence in and further develop its soaps and bath /shower product lines. Surf. It produces a range of industrial chemical products which primarily serve as raw material or intermediates for soap and detergent business.local washing preferences. Other leading brands include Hellmann’s'. Nirma Ltd Nirma is a private family firm. Liptons. The company will continue to use the Dove and Lux brands to expand into new skincare related categories. Knorr and Ponds. Largest national detergent maker and second largest selling soap manufacturer.
they make money from sheer volume sold. 58 . Though the distributors have slender margins. The company makes extensive use of wallpaintings for advertising. The product travels from the factory to the d istributor's doorstep.Nirma has cut the cost of distribution by doing away with intermediaries.
which is currently in the range of 10 to 25 per cent. The domestic tax structure of these products. 2) Irrational domestic tax structure encouraging imports Significant reduction in custom duty rates of consumer goods has made imported product cheaper as compared to indigenously manufactured products. processed food. should not exceed 12 per cent.FINDINGS & SUGGESTIONS Tax reforms The government has gradually removed the restrictions on imports of consumer goods in the country and also significantly reduced custom duties. For instance. 59 . Similarly. It is recommended that the total excise incidence of FMCG products should not exceed 16 per cent in the case of non food items and eight per cent in the case of processed foods. The following taxation issues need urgent attention of the government: 1) Extremely high incidence of tax on certain product categories Some FMCG products such as shampoos. due to irrational domestic tax structure. soft drinks and toiletries containing alcohol attract high rates of excise duty and sales tax. This is adversely affecting the growth of the FMCG industry and could have far reaching adverse impact. The total tax incidence in some cases is more than 60 per cent of the cost or more than 30 per cent of MRP. has not been rationalised to provide level playing field for competition. the marginal rates of sales tax. Such high tax incidence hampers growth of these product categories besides encouraging manufacture of spurious products and smuggling. goods manufactured in India suffer from cascading effects of taxes on inputs as additional cost compared to imports. however.
In addition to customs duty. with its vertical integration with the agricultural sector has significant potential for employment generation and economic growth. This differential basis creates unfair competition as tax incidence on domestic manufacture could be considerably higher in case of those products which incur significant marketing and distribution cost. Countervailing duty on the same product when imported is charged on CIF value. 3) Inverted Duty structure for selected inputs Duty on certain raw materials is higher or the same as compared to finished products in which these materials are used. 4) Need for rationalisation of taxes on processed foods Processed food industry. Such raw materials include oils and chemicals like Soda ash. MRP-based excise duty is levied on a large number of FMCG products. There is a need to bring parity in tax incidence between domestic manufacture and imports by including all such elements of post manufacturing costs while deciding the abatement percentage of MRP based duty. The existing tax structure and its high overall incidence. The MRP based assessable value for excise duty does not allow abatement for post manufacturing costs such as advertising and selling expenses whereas CIF value considered for the purpose of import duty does not include costs of these elements incurred subsequently by importers. Moreover. raw materials are also subject to SAD/sales tax and octroi and therefore total tax incidence and cost of indigenous manufacture goes up. The import duty on raw materials needs to be rationalised so that it does not exceed 60 to 70 per cent of the duty on finished goods. 60 . The increase in excise duty in last year’s budget from eight per cent to 16 per cent has adversely affected the growth of processed foods industry. It is recommended that marginal rate of excise duty on processed foods should not be more than eight per cent and the sales tax should be levied at four per cent. caustic soda and LAB.The cascading effect of sales tax and local levies on inputs used in domestic manufacture should be eliminated by providing either MODVAT credit or by introducing notional VAT covering both central and state taxes on an urgent basis. has been hampering the growth of the processed industry. however.
It is recommended that SED should be made "cenvatable’’. Most FMCG products covered by tariff chapter 33 such as shampoos. alternatively the term "manufacture’’ needs modification . atleast for the purpose of SED by excluding labeling. relabeling or conversion into small packs. The levy of SED on such products therefore leads to double taxation when goods are labeled or converted into small packs after manufacture. relabeling or conversion of large packs into small packs. This tariff chapter also contains very wide definition of the term "manufacture’’ which includes labeling.5) Cascading effect of Special Excise Duty The special excise duty introduced last year is not "cenvatable’’ except in the case of selected products. 61 . ice creams and cosmetics are subject to SED.
FMCG goods have to be cleared by regulatory authorities before they are allowed to enter domestic shores. The government must facilitate more R&D in packaging materials as this will help in cutting wastes and costs in the sector. A joint industry –government initiative for building a "Made in India’’ brand for FMCG products is required. While import of most items has been allowed. 5. 62 . a concerted marketing strategy which creates strong brands will be needed for Indian FMCGs to gain recognition in the market. The small-scale reservation policy should be reviewed as it hampers the growth of this sector. not only are Indian producers of many FMCG products restricted from attaining economies of scale. Food laws such as the PFA Act should be amended and be made contemporary. 3. including several FMCG products can be freely imported. 4. In other countries.Other suggestions 1. the government is not geared to prevent import of spurious products. they also have to compete against import that do not face constraints on small scale reservations. This is not happening in India and the government needs to undertake a comprehensive crackdown on these products. The possibility of a longer shelf life will encourage production of goods of higher value addition by companies in the sector. Many reserved products. Better packaging materials are necessary as a large number of FMCG products are perishable . Under the current policy. With many multinationals moving into the Indian FMCG market. 2.
vertical and horizontal integration.CONCLUSION From the above detailed study of the FMCG industry with the focus on bath soap segment we can make out that FMCG is the most emerging sector and industry not only in India but all over the world. Thus the company needs to focus on its distribution channels. sales promotion etc to succeed in the market. 63 . The main reason for the success of some companies is their strategy and distribution networks. The main leaders of the bath soap segment like HLL. From the study we can make out that nirma and godrej still needs a lot market penetration in the urban market also with focus on the premium class. AND GODREJ are focused in the study which shows that HLL is the leader in FMCG industry and has a large amount of market share about 67% and even the growth rate. HLL is dominating due to its diversification. marketing strategies. breadth and depth product line and innovative and customer oriented product introduction. networking. NIRMA.
co.thehindubusinessline.godrej.google.hll.com www.com www.com Newspapers: Business Standard Economic Times 64 .com www.in www.BIBLIOGRAPHY Websites : www.infoline.com www.nirma.
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