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Fevikwik and the Lucknow market

Background
Pidilite Industries Limited is the largest adhesive manufacturer in India. It also has world wide presence in adhesives, art material and industrial chemicals. Pidilite's most famous brand is the Fevicol range of adhesives. Its other famous brands are Dr. Fixit, Cyclo, Ranipal, Hobby Ideas, M-seal and Acron. Pidilite's corporate office is located in Andheri (East), Mumbai. It also makes Fevikwik -India's first ever One Drop Instant Adhesive. Fevikwik is Indias leading instant adhesive brand, also known as the one drop instant adhesive. Its ability to bond a variety of surfaces in a matter seconds makes it a handy home and industrial adhesive.
One of the most popular applications among consumers for the instant one-drop adhesive' is gluing back sandals and handbags that are coming apart, according to the company's findings. The importance of endconsumer adoption is reflected in Fevikwik's retail expansion available countrywide Pidilite company officials attribute the success of Fevikwik to the following Strong consumer brand, which is highly salient in consumer minds due to break through advertising. In fact the instant adhesive category is defined by Fevikwik in India. Wide availability. It is available across over 3 Mln outlets across the country including Urban and Rural areas. and probably among the top five to six FMCG brands in terms of reach. Alongside Fevistik glue stick, it presents a compelling proposition for retailers and stationery stores to stock. It is available across various types of retail outlets including kirana, hardware, modern trade and pan shops . It is available even in towns with 2,000 to 3,000 population. Attractive pricing . Fevikwik is available in a variety of pack sizes (with the Rs 5 MRP SKU contributing to more than 80% of sales)

Type of end users: Fevikwik's growth has come from adoption by household consumers (which contributes to more than 70% consumption) in addition to craftsmen (auto mechanics, electricians, plumbers, mobile repairmen, spectacle repairmen and the like) Type of retailers: The type of outlets through which the Fevikwik sell are - Hardware outlets, Hardware & Sanitary outlets, Electrical outlets, FMCG & Kirana outlets, Stationary outlets, Auto outlets, Industrial retail outlets. Different consumer segment purchase from different type of outlets

The challenge in Lucknow While Fevikwik has a market share of over 85% in the country , one of the areas where there is strong presence of competition is Lucknow where a local brand Cheapy has been in the market for a long time (much before Fevikwik) . While over the years Cheapys share has eroded , it still has market share of 29% in Lucknow. Certain craftsmen segment like Auto mechanics are loyal to the brand

Sales in Lucknow:
Average monthly sales (in cr)
Others, 0.15, 6%

Fevikwik
Cheapy, 0.76, 29% Fevikwik, 1.74, 65%

Cheapy Others

100%

0.47

0.16 Wholesale

50%

1.27

0.6

0%
Fevikwik Cheapy

Brand Cheapy Fevikwik

Pros Higher margin for distributors and retailers (Relatively lower DP (Dealer Price) of Rs 3.3 for retailers and DP of Rs 2.90 to Rs 3.15 depending on purchase quantity for wholesalers) Loyalty from craftsmen segment of auto mechanics Higher bonding strength Better packaging material High brand recall in household segment (The

Cons Quality not at par with Fevikwik Replacement of damaged pieces from retailers is not done at regular intervals

Rate issues in retail market due to disturbance from wholesale Less margin for wholesalers due to higher landing price (DP of Rs 4.13

category itself is identified by the name Fevikwik) Immediate replenishment of damaged stock at retailer and wholesaler level

for retailers)

Strategies that Cheapy employs to grab market share from Fevikwik: Cheapy:
1 Steel glass of MRP Rs 20 free with every box of 100 pieces (Rs 310). The stock of 50 units is sold in a metal box (which if the retailer doesnt need Cheapy salesmen reimburse Rs 10 for empty box in their next visit) Gift schemes like LCD, mobile for Quarterly target achievement for wholesalers and semiwholesalers (15% scheme) Monthly target achievement schemes of Blackberry mobiles for semi-wholesalers which comes down to scheme of 3%-4%.

Fevikwik:
Currently operate gift scheme for Fevikwik in retail markets, wherein we give gifts in the form of Miton pet bottle, Milton casserole, small light torch etc which comes down to a scheme of 6%7% Pidilite runs visibility campaigns for Fevikwik wherein the salesmen use various POPs to increase visibility and reinforcement for the brand. Fevikwik does not give schemes in the wholesale market so as to control price issues in retail market.

Deliverables:
Approach: Consider that you have joined Lucknow branch as an Area Sales Manager. You have been briefed that we have been losing market share to Cheapy due to decreasing demand from wholesale. What would be your strategy to grab the market share back from Cheapy ? Targeting the market: Understand the difference between wholesale and retail . Can we increase the contribution from retail? What would you target first? Wholesale or retail? Specify the reasons. You can focus on the Place & Promotion part of 4Ps of Marketing to come up with solutions Innovation: Our existing gift schemes in Lucknow are of the value of 6%-7% of DP (Landing price for dealer). Can you come up with innovative ideas to increase demand of Fevikwik in wholesale markets without altering the existing margins (We expect you to do some research on the psyche of wholesalers and what really motivates them)