You are on page 1of 6

Case study solutions for "Procter & Gamble India - Gap in the Product Portfolio":

1. What were the key challenges in achieving the targets set by Project 2-3-4?
The main challenges faced by P&G for achieving the targets set by Project 2-3-4 are:
Increasing the rural consumption: P&G needs to tap the rural markets in order to increase growth
since they have a relatively good market share in urban markets but future growth will be driven by
rural markets. The huge population base in rural India provides a massive opportunity for the
companies to sell their products and services on a sizeable scale. Apart from a large population, the
increased presence of media and higher literacy level has created a lot of awareness amongst them.
Consumer price sensitivity: The product portfolio skews heavily to the high end of the markets in
which it competes. This emphasis on premium products can help keep margins wide, but it places
Procter & Gamble at a disadvantage during times of economic weakness when customers may be
forced to trade down to less expensive options. While those customers may, indeed, come back
when times are flush again, the impact on sales during economic weakness could materially hamper
the company's growth over shorter periods.
Innovation: It must continually invest in its brands or risk them becoming stale or obsolete. Thus,
research and development and marketing are vital to its long term success.

2. How did HUL build a strong rural distribution network?
HUL has a distribution network which is one of their key strengths that helps them reach their products
across the length and breadth of our vast country. To meet the ever-changing needs of the consumer, HUL
has set up a distribution network that ensures availability of all its products, in all outlets, at all times. This
includes, maintaining favorable trade relations, providing innovative incentives to retailers and organizing
demand generation activities among a host of other things. Therefore, over the decades, HUL has
progressively strengthened its distribution reach in rural India. In 1997, it launched Project Streamline for
reaching rural markets that were inaccessible but with high potential. They appointed Rural Distributors
(RDs), who had star sellers associated with them. Each of these star sellers located in the rural market then
performs the role of driving distribution in neighboring smaller villages using local means of transport. This
enabled HUL to reach a total population of 220 million in 100,000 villages. Later, HUL launched Project
Shakti in the year 2000 to reach inaccessible rural markets with low potential representing a population of
500 million in 500,000 villages. HUL partnered with members of Self Help Groups (SHGs) consisting of rural
women, mostly poor and illiterate and offered them opportunities to earn a sustainable income while
distributing HUL products to nearby villages.

3.Why is the detergents market such an intensely competitive segment? (you can refer exhibit 2A, 2B & 4)
The detergents market in India comprising of laundry soaps, synthetic detergents powders and bar is
continuously growing. With such growth, more and more players are entering the market thereby
intensifying the competition. Nirma and HUL have positioned their brands in all segments. Nirma dominates
the popular segment with the Nirma brand, which competes with HUL's 'Wheel' 'Rin' and 'Surf' brands and
P&G's 'Tide.' Premium brands in the detergent market are the likes of Ariel from P&G and Surf Excel from
HUL. However, the differentiation has been reducing since the premium brands are now available in sachets.
HUL is the market leader with Wheel and Surf brands. P&G and Henkel Spic a have a presence mainly in
the premium segment. In addition to this, the price cuts and aggressive marketing strategies of all players in
this market focus on increasing market share which is making it difficult for all companies to increase their
margins due to high price sensitivity of the consumer and existing varied options. Clearly, P&G has to
execute well on a virtually constant basis or it will quickly find itself at a disadvantage.

4. Is the regional Bottom-of Pyramid (BOP) story still intact? (you can refer exhibit 5)
Yes, since majority of Indian consumers belong to the rural market which is at the bottom of the pyramid.
Though many of these consumers are striving to improve their lifestyle significantly and their incomes could
increase in the coming years they are still many who are yet to make the transition. Hence the regional BOP
story is still intact.

5.What can we infer from the evolution of brands? (you can refer exhibit 3 & 5)
Brands are now not only targeting premium segments but are now focusing on increasing their market share
by targeting economy segments. Brands like Nirma and Ghari are on par with global players like HUL and
P&G despite having a shoestring advertising budget. They are able to drive their sales by building their brand
equity as low cost brands providing value for the customers. Hence in Indian market, they are able to sustain
despite the tough competition.

6. How have the companies responded to competition in terms of brand launches & re-launches? (Create
a time line with year of launch of various brands launches and re-launches of HUL & P&G)
1959 Launch of Surf (HUL)
1969 Launch of Nirma
1988 Launch of Wheel (HUL)
1991 Launch of Ariel (P&G)
1992 Launch of Surf Ultra (HUL)
1994 Launch of Rin (HUL)
1999 Launch of Ariel Power Compact and New Ariel Front O Mat (P&G)
Late 1990s Relaunch of Surf Ultra as Surf Excel (P&G)
2000 Launch of Tide as a premium brand (P&G)
2004 Re launch of Tide as mid price segment (P&G)
Early 2000s Launch of Wheel Active (HUL)
2003 Launch of Surf Excel Quick wash (HUL)
2008 Re Launch of Rin (HUL)
2008: Launch of Rin Matic (HUL)
2009: Launch of Tide Naturals (P&G)
The above timeline clearly demonstrates that all companies continuously relaunched and tweaked their
brands to generate consumer acceptance and increase volumes in sales.

7. What is the role of Rin Matic or Surf Excel Matic in the product line?
The role of Rin Matic or Surf Excel Matic in the product line was specifically aimed at addressing the needs of
the fast growing washing machine consumers for in machine stain removal. HUL launched Rin Matic for the
mid price segment whereas Surf Excel Matic was launched for their premium price segment.

8. What is the relevance of Nirma Popular, Nirma and Super Nirma?
Nirma, a washing powder launched in 1969 was priced at one third of HULs Surf. Its low price attracted
consumers as it tapped rural markets and helped Nirma command a market share of 58%. Super Nirma was
a product of the premium detergent segment and provided an attractive value for money proposition.
Nirma Popular catered to the needs of its specific target audience, offering a good quality product at a very
affordable price and was targeted at the mid price segment.

9. What does the pricing of detergent variants signify?
The exhibit 6 signifies the various brands in the portfolio of different companies. It shows the actual cost and
the selling cost which implies the margins earned by these companies. It also signifies the different
detergent variants and which segment they target. Many companies such as HUL have various product
offerings in both the low, mid and premium price segments.

10. What can we infer from the positioning statement of detergent brands?
The main inference we get from the positioning statement of detergent brands is the segment they are
targeting. We also realize that more companies are now positioning themselves as economical brands
providing value for the consumer at low cost but maintaining high quality as opposed to primarily targeting
urban markets and premium segments.

11. Apply the four levels of products (Basic, Expected, Augmented and Potential) on the positioning of the
Basic: detergent, good fragrance, packaging, reasonable price
Expected: Hygiene and cleanliness, removal of dirt, stain removal, whiteness, etc
Augmented: maintain the texture of the fabric, dont reduce coloring, condition the fabric, improve fabric
Potential: Use for delicate and expensive clothing, no requirement to dry clean, etc

12. What do the advertising spends of the brands indicate? refer exhibit 9
P&G and HUL lead in terms of advertising spend for their mid price segment offerings Tide and Rin
respectively. On the other hand they have reduced the advertising spend to nil for certain brands like Rin
Advanced White and Ariel Spring clean. Companies like Nirma and Ghari though have increased their ad
spend but it still considerably lesser when compared to other companies.

13.What are the key challenges of communicating variants to customers in a mature and diversified
product segment such as detergents?
Diverse population with large rural consumers hence it becomes difficult to reach these consumers
as they are located in scarcely populated villages located at vast distances and have limited
communication systems.
Too many existing players which could confuse the consumer and he may not have high recall of
certain other brands.
Existence of sub-brands might confuse the consumer especially if the brand names sound similar.
E.g. Nirma Super is a premium price offering whereas Nirma is mid price offering but due to similar
named brands the consumer may not identify his choice and its possible one brand of the same
company would hamper another brand.
Improvement in distribution would ensure that the product reach different channels who can
communicate about their existence to consumers.

14 .Compare and analyze the detergents product line for HUL and P&G?
Both companies have products in the mid and premium price segment. HUL has Rin and P&G has
Tide for their mid price segment whereas HUL has Surf Excel and P&G has Ariel in the premium
Both companies have detergents aimed as washing machine using consumers. HUL has Rin Matic,
Surf Excel Matic whereas P&G has Ariel Oxy Blue Ultramatic
HUL is targeting the rural consumer specifically as its the only one with a product offering in the low
price segment having the Wheel brand whereas P&G only has Tide for the mid price segment and
rural consumers might not be able to afford it. Hence HUL has played the pricing game well to tap
into the rural markets.
HUL as compared to P&G has a complete product line for all segments, i.e. low, mid and premium

15. When should a firm have a product line extension?
When there is a gap in their product portfolio and certain segments of the market can be tapped by
using the current attributes of a existing brand.
Logistics and storage costs
Entry barriers for new labels
Sales forecasting is easier since an analogy with existing product line could be had
Line extension is low cost and a low risk way of meeting needs of multiple consumer segments
Reduces cost of marketing research and direct marketing

16. What kind of product line extension is seen as a response to competitive price?
A product that is low cost, offers value to consumer, has something new to offer and yet maintains the
essence of the existing brand with reducing its brand equity.

17. What is the effect of market orientation on product line extension?
Market orientation is a business culture or behaviour that leads to business success. Its influence on product
line extension is one way to enhance business performance. Companies make great efforts in their attempt
to be more successful in meeting the needs of their consumers than their competitors, consequently to
achieve a better position in the market and better business performance. The needs of consumers and the
activities of competitors often stimulate companies to introduce to the market either quite modified or new
products, or to supplement their product line by new products. Market orientation in a company
contributes to an improved understanding of the market. Companies, by continuously determining needs,
come to better know customers and their needs, thus identifying new forms of products which are missing
in current product lines.

18. Re-examine the product mix of P&G?
P&G needs to increase its product portfolio in the home care category
They need to tap into the high potential rural markets
As compared to HUL, they have a limited product mix and hence need to add new items. Also they
need to add new product categories to tap the FMCG sector as HUL has a varied product mix in
different categories such as Food & Beverages, Personal care, Home care, Cosmetics, etc.