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MOSQUITO REPELLENT INDUSTRY- OVERVIEW

Its sole reason for existence in the market is the omnipresent mosquito, which makes life excruciatingly difficult for the average Indian during summer and monsoon months. In many ways the primary factor fuelling the explosive growth of this market – characterized by low brand loyalty and low product involvement –has been the availability of cost-effective, mosquito repellents. The night-long noisy drone of mosquitoes that disturbs our sleep is music to the ears of the Rs1, 100-crore mosquito repellent industry. The various segments in this industry are coils, mats, vaporizers, aerosols and creams. The two new segments are personal sprays and gels.

The category-wise market shares: Coils command nearly 50 per cent of the market share, vaporizer refills at 20 per cent, with mats at 10 per cent followed by aerosols at 9 per cent and the rest shared by creams, heating devices and other products.

Segment Wise Market Share

The market for insecticides and repellents has grown by 20 per cent in 2003-04 and is estimated to grow at about 20%. The rural market for mosquito repellents is reckoned at around Rs 173 million against a mere Rs 79 million in urban centers. The market leader of the industry is Godrej Sara Lee Ltd. with brands like Good Knight, Jet and Hit enjoying a market share of 40%

THE EVOLUTION: Coils were the first mosquito repellants to be introduced in the Indian market. The first brand of coils was Tortoise, launched by Bombay Chemicals Ltd. (BCL) in the 1970s. In the 1980s Good Knight was launched and mats used with electronic mosquito destroyers became extremely effective. In the mid 1990s Karamchand Appliances created a new segment of vaporizers with the launch of All Out. .This segment was almost completely dominated by KAPL.

GSLL (Godrej Sara Lee Limited) could no longer ignore this growing segment and launched its own vaporizer under the Good Knight brand in 1996-97. In the latter half of the 1990s, the market became much more competitive, with the entry of GSLL, Reckitt Benckiser and HLL. GSLL launched an array of brands (all coils) like Jet Fighter (1997), GoodKnight Jumbo (1999) and GoodKnight Instant one after the other The company's other brands included Banish (mats), Hit (aerosols), Hit Lines (chalks), Mosfree (lotion) and Hexit (spray).while Reckitt also launched its range of mats and coils. These new entrants resorted to heavy advertising and aggressive sales promotion tactics. Recently two new categories of personal sprays and gels have emerged.

MAJOR PLAYERS KARAMCHAND APPLIANCES PRIVATE LTD. – ALL OUT GODREJ SARA LEE LTD- GOOD NIGHT, JET, BANISH, HIT RECKITT BENCKISER- MORTEIN JYOTHY LABORATORIES- MAXO TAINWALA PERSONAL CARE PRODUCTS- CASPER BOMBAY CHEMICALS- TORTOISE

COMPANY’S SHARE SEGMENT WISE Mosquito coil market: Market leader: Mortein (35%) from Reckitt Benckiser India Ltd Market Challenger: Good Knight with a share of 30% Market Follower: Maxo from Jyothy Laboratories' is rapidly increasing its share. Vaporizer refill market: Market leader: All Out brand from Karamchand Appliances Pvt Ltd. (65%)

Market Challenger: Good Knight and Jet from Godrej Sara Lee Ltd. together account for 24% of the vaporizer segment. Market Follower: Mortein Vaporizer by Reckitt Benckiser has a market share of about 5-7%.  Mats and aerosol categories: Market leader: Godrej Sara Lee leads the market with its brands Good Knight Silver mat (68%) in mats and Hit (aerosol). Market Follower: Mortein’s share in mats is estimated at roughly 15%.

KARAMCHAND APPLIANCES PRIVATE LTD. ALLOUT

The name All Out is almost a generic name for Liquid Vaporizers (vaporizers), a segment of Rs.22O crores in the mosquito repellant industry in India. All out is the market leader in this segment with a 70 percent market share in 2001. KAPL was almost solely responsible for creating this segment. Within a decade of its launch, All Out had converted a large number of customers into vaporizer users. Allout’s sales reached Rs 253 million in 1996-97. GSLL could no longer ignore this growing segment and launched its own vaporizer under the GoodKnight brand in 1996-97. Although the initial success of All Out was largely due to technological innovation and first-mover advantages, it was widely believed that what had kept the brand going was strong marketing. KAPL decided to handle the advertising for All Out on its own, surprising many industry watchers and drawing criticism from some ad agencies. However, the company surprised everybody with the launch of a campaign featuring an animated, jumping frog (actually an All Out vaporizer) eating mosquitoes, which proved to be immensely successful. In 1998, KAPL came out with a Rs 99 pack consisting of the Pluggy and a refill. The deal, called the 'deadly offer' was backed by heavy advertising. . After KAPL's 'deadly exchange scheme,' GoodKnight's share decreased by 9.3% in volume terms between September 1999 and February 2000. KAPL's distribution network consisted of around 120 distributors across the country. Of the 900,000 outlets across the country, that sold repellants, KAPL was available in only 18%. As this was significantly lower than the 55% figure for R&C and 54% for GSSL, KAPL is working towards increasing its presence. GODREJ SARA LEE LTD GOOD KNIGHT Godrej Sara Lee Ltd. is a 450 crore turnover company with brands like Good Knight, Jet and Hit. It is the market leader in the mats segment with a share of 68% in May 2000. Good Knight has become the most preferred mosquito repellent solution in the country. The Good Knight brand was launched by Transelektra Domestic Products Ltd (TDPL) in 1984. The product was innovative and perfectly priced. Good Knight worked on a long term strategy that would capitalize on its long-established equity.

In the mid 1990s, Good Knight faced growing competition from new coil and vaporizer products. To counter this thrust, Good Knight re-launched its mat first as Super mat and finally as Good Knight Silver mat in 2003, with contemporary packing, superior technology and using a high decibel campaign. Today Good Knight Silver mat is a market leader with 62% market share. By 1999, Good Knight also joined the battle for the coils by launching its red coil variant. Since Good Knight was seen to be a hi-tech brand and coils were regarded as an entry-level product, the company made sure that it did not suffer a downgrade in consumer perception. It branded its version as a value-added product, which lasted ten hours (compared to eight hours in the case of most others). The color red was meant to convey power. . The red coil category created by Good Knight is growing and has cornered 50% of the coil market. Good Knight entered the vaporizer segment in 1995 by launching Good Knight liquidator and Liquid Mosquito Destroyer (LMD) machine, together as a combo-pack. In a short span of three years, Good Knight liquidator managed a share of 24% of the vaporizer market and 32% of LMD market based on the strength of the Good Knight equity. The Good Knight Vaporizer lasted 30-45 days and just had to be plugged in. Good Knight Turbo refill, a technologically superior product, was launched in 2004. It was the right time for Good Knight to take the plunge and gun for market leadership. The most important USP for Good Knight is its brand equity, built over a decade by its products and brand communication.

RECKITT BENCKISER MORTEIN Rs 585-crore Reckitt Benckiser in India is high profile particularly because it has a range of popular products. Reckitt launched mosquito repellent coils and mats under the brand name Mortein in 1994. Mortein is also available in liquid and aerosol spray forms. Mortein is the number two pestcontrol brand in the country Mortein sales grew by 9.2% in F12/01, as against market growth of 9%. Mortein Coil sales grew by 14.5% despite stiff competition in the category. For Mortein the strategy is to increase penetration of coils, enhance brand salience of other variants and tap niche segments through a stream of innovations. Another target for 2001 is to

gather a legitimate share among vaporizers -- from 1.5 per cent to a double digit figure. Mortein's share in mats is estimated at roughly 15 per cent. WHY WE CHOSE TO LAUNCH A VAPORIZER?

1) Market Growing: The market for vaporizers has grown from 5% in 1999 to 20% in 2004. It is expected to grow even further since vaporizers are becoming economical and people are realizing the disadvantages of using coils and mats.

2) Safer And Convenient: Vaporizers are safer than coils since they just have to be switched on. They are far more convenient as well. Many people complain of breathing problems with coils which is eliminated through vaporizers.

3) Economical: Vaporizer is considered to be a premium product but if you compare the prices of the coils and vaporizers today than there is not much difference. Consumers have to bear the initial cost of a machine which is a one time cost and the per day cost of the refill is even lower than the coils.

PORTERS 5 FORCE MODEL

1) Threat of competitors The threat of competitors is high because there are a lot of players in the market and two new segments that is personal sprays and gels have come in which will increase the existing competition. Also existing players are entering new segments which increase the competition like Casper entering the vaporizer segment and Good Knight the personal spray and gel segment.

2) Threat of New Entrants New entrants to an industry can raise the level of competition, which depends mainly on the barriers to entry. In case of mosquito repellent industry the entry barriers are low since the costs to set up the plant is not very high. The exit barriers are low and thereby firms can enter and exit easily.

3) Threat of Substitute Products The presence of substitutes can dilute the attractiveness of a particular industry. The threat of substitute products is low. The substitutes for mosquito repellent would be agarbattis and dhoop that are used in villages. There are not many substitutes available.

4) Threat of Buyers Bargaining Power The buyer’s bargaining power is low since they cannot influence the prices to such a great deal. They have to purchase the product at whatever prices available.

5) Threat of Supplier’s Bargaining Power The cost of items bought from suppliers can have a significant impact on the company’s profitability. The threat of supplier’s bargaining is moderate. We can get our raw materials since they are herbal and can be easily available. But certain oils are not available everywhere which increases the supplier’s bargaining power.

FUTURE According to industry reports, the Indian mosquito repellant market was expected to grow rapidly. Analysts said that with improvement in literacy and health consciousness in rural areas, the use of mosquito repellants was expected to increase substantially in these areas. As the per capita usage of repellants was very low in the country, there was considerable scope for the market to expand.

LAUNCH OF A MOSQUITO REPELLENT- FIGHTER

ABOUT FIGHTER Our product is a mosquito repellent vaporizer machine and its refill. The machine has an added feature of being operated with AA battery. This battery if used everyday will work for about 45 days. So it can be used even without electricity and can be used outdoors as well; for example tents, cars, etc. The refill will be available in 25ml pack which will last 30 nights, 35ml which will last about 45 nights and 45ml lasting 60 nights subject it is used for 8 hours every night. The liquid is light green in color. The vaporizer liquid is herbal. It is very economical. Some of the benefitsof our product are: 1) Effective evacuation of mosquitoes 2) No irritation of eyes 3) No hoarseness of throat, 4) No headaches and 5) No allergies. Due to complex structure of herbal extracts in our vaporizer liquid, mosquito do not develop immunity/resistance towards it like synthetic toxicants.

USP: The USP of our product is that it is the most effective herbal vaporizer which has an added feature of being operated with a battery.

INGREDIENTS: The ingredients of our product are: •Eucalyptus extract containing 50% p-methane-3 and 8-diol(PMD) •Lemongrass oil •Citronella oil •Tulasi oil •Clove extract •Palmarosa oil

MANUFACTURING PLANT: Our manufacturing plant will be set up in Daman because we will be exempted for sales tax for a period of 15 yrs as well as it is in the centre which will save our transportation costs.

MARKETING MIX

1) PRODUCT:

SEGMENTATION Geographic: Initially using the geographic variable Fighter has segmented the market into the western belt that is the states of Gujarat, Maharashtra, Karnataka, Kerala and the union territories of Goa and Daman, Diu. Psychographic: It has also segmented on the lifestyle variable, for people who have an adventurous lifestyle who can carry our vaporizer at their outings. Socio-economic Classification: SEC A, SEC B and SEC C. We have also included SEC C because vaporizer is considered to be a premium product but we want FIGHTER to be used by SEC C as well since it is economical compared to the other vaporizers in the market. Behavioral: Fighter has segmented on the benefit variable by providing the benefit of being protected from mosquitoes. Fighter has also segmented on the basis of occasion where it can used on occasions like camps, outings provided used in a closed area.

TARGETING Our target market is SEC A, SEC B and SEC C. Income: Rs. 60,000+ p.a. We would aim to target our customer which will be a woman because Fighter is a household product and usually the woman buys it.

POSITIONING STATEMENT Fighter is primarily positioned as “A battery operated herbal vaporizer which is the most effective to repel mosquitoes, absolutely safe, convenient and economical which protects you always.”

PRODUCT DIFFERENTIATION Our product is one of its kinds. Most of the other vaporizers are chemical based, whereas we are the first movers to have a complete herbal vaporizer. We have an added feature of a battery as well. Most of the other vaporizers become ineffective if there are power cuts but FIGHTER overcomes this problem.

POSITIOINING STRATEGY Our positioning strategy is benefit positioning since we want to be known as the most effective herbal vaporizer.

2) PRICE The price of our combi-pack is Rs.67/-.The price of the 25ml refill is Rs.32/35ml refill is Rs.42/- and 45ml refill is Rs.52/-. Our pricing strategy is Penetration Pricing because we want to sell high volumes which will result in high long-run profits. The price of our product is low as compared to our competitors mainly because we are using herbal products and thereby our manufacturing costs are low. We want to penetrate

into the market and want to be known as the a product which is value for money.

3) PLACE We have a three-tier distribution system which includes MANUFACTURER- DISTRIBUTOR- STOCKIST-WHOLESALER-RETAILER The margins are as follows: Distributor Stockist Wholesaler Retailer 2% 3% 5% 12%

We will appoint distributors as per the density of population in the states and the estimated demand. Maharashtra and Goa together being the most populated will have 4 distributors. One for Mumbai, one for northern Maharastra, one for central and one for southern Maharashtra and Goa. Gujarat will have three distributors one each for north, central and south. Karnataka will have two distributors and even Kerala will

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