Assignment

StrategicMarketing

MarketingStrategyforLirilSoapinIndia
By

1. AbhishekTandon(2009A08)
2. JerrinJacob(2009A18)
3. KumarMithilesh(2009A44)

Objective

To frame marketing strategy to increase the market share of Liril brand (HUL) from 1% to 3% in India by
the end of 2012.
[LIRIL: Liril is a popular brand of soaps owned by FMCG major Hindustan Unilever Limited (HUL). It
basically caters to a premium market where customers prefer a high quality bathing soap providing freshness.]

IndustryAnalysis
1. Industrydominanteconomictraits

A]MarketSize:Market for toilet soaps in India is currently estimated at about 9,000 Cr.
Toilet soap industry is one of the oldest Fast Moving Consumer Goods (FMCG) industries in
India. It is among the highest penetrated category within FMCG sector reaching an estimated 98% urban
and 70% of the rural households. In volume terms, the toilet soap market in India is estimated at
approximately 13 million MT (metric ton).

B]Risinginputcosts:Most FMCG companies use palm oil for their soap, which needs to be imported
from countries like Malaysia. Vegetable oil prices have increased significantly in the past one year due to
surge in consumption demand for bio fuels and shift in acreage in favor of corn and wheat. This is likely
to impact margins of various FMCG players, especially HUL and Godrej.
Increase in Excise Duty has put further pressure on the margins of big players. The hike in customs duty
on diesel and petrol, coupled with a 5% increase in the import duty on crude, will negatively impact the
transportation and packaging costs, thus affecting the entire FMCG sector.

C]GrowthDrivers:The soap market is expected to grow moderately at 4.5-5% in the near term. Some
of the major growth drivers are:

Growing consumer demand: Rising income levels and growing aspirations, coupled with lower
penetration levels, have fueled a strong demand for Lifestyle and Value-added products. Sales are
volume driven and not value driven.

Rural India driving incremental growth: FMCGs are seeing a volume growth of just 6-7% in
metros, their growth in rural markets is over 20%. Rural income levels are on the rise, driven largely
by a continuous growth in agriculture for four consecutive years and the Government's continued
focus on rural development initiatives, fuelling a fresh demand for FMCG firms.

New Product launches: In a bid to garner a higher market share and sustain long-term growth, most
FMCG companies have launched new products, largely in the form of variants/extensions of their
existing brands, to boost growth.

SegmentalShift:Over the years, the popular' segment has witnessed rapid growth and has been
the category driver. Consumers shift from the premium segment as and when they see better value in
the popular category; at the same time, consumers upgrade from the economy segment due to
increased aspirations and affordability.

2. Competitiveforces(Portersfiveforcesanalysis)

A]ThreatofIntenseSegmentRivalry
Penetration level of soaps is around 92% and therefore, price-wars and promotional schemes are almost
frequent in this industry. The market is littered over with several, leading national and global brands and
a large number of small brands, which have limited markets. There are many established players like
GPCL, Nirma, ITC, P&G, Wipro Ltd. etc. going aggressive about their target markets.
B]ThreatofNewEntrants
Entry in this industry is fairly easy due to which a large number of players with good distribution
networks have entered. ITC has already made headway with its premium brand Fiama di wills.
Companies like Marico, Kopran, and Anchor are likely to launch soaps in the premium category. There
are a large number of smaller/regional players who are also eating away the market share of biggies.
C] Threat of Substitutes
A major threat comes from the use of products like body wash and face wash. Due to high costs
associated with such soaps, Body wash and Face wash may make use of soaps less frequent. Also, the
consumption of Liril may not pick up because customers may be down-trading to popular category
soaps.
D] Threat of bargaining power of Buyers
To a large extent, Premium Soap is a price sensitive market. Of late, there has been an increasing trend
towards down-trading. This has forced the manufacturers to lower the prices or offer temporary
discounts to woo the consumers who are either down-trading from the popular segment or graduating
upwards from carbolic soaps. The buyers, even in the rural area, are subjected to the media invasion and
are well- informed about the basket of products available in the market and thus take a rational decision.
E] Threat of bargaining power of Suppliers
The major input for the soap manufacture is vegetable oil (constitutes around 80% of the raw materials).
They are not available in India and thus have to be imported from countries like Malaysia, Indonesia and
China. There are only few players who export palm oil from these countries and these exporters have
more bargaining position.
3. ChangedriversandtheirImpact
A] Value consciousness: The penetration level of soaps is ~92 per cent. With increase in disposable
incomes, growth in rural demand is expected to increase because consumers are moving up towards
premium products. However, in the recent past there has not been much change in the volume of
premium soaps in proportion to economy soaps, because increase in prices has led some consumers to
look for cheaper substitutes.
B] Increasing aspirations: Continued income growth coupled with increased willingness to spend will
see consumers up-trading, creating demand for higher priced and increased functionality (real or
perceived) products. The size of this segment will be large.
C] Evolving categories: Many consumers will move up the ladder and will shift from basic need to
want based products. In addition evolving behaviour and emphasis on beauty, health & wellness will
see increased requirements for customized and more relevant product offerings.
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4. Competitiveposition
HUL is the leader with market share of ~60%; Nirma follows next with Godrej at third position.
Category

MarketShare,%(2010)
Others
15%
GCPL
6%

HUL
62%

Nirma
17%

Size(InLakh
Tonnes)

MajorBrands

Premium

0.8

Santoor, Lux
International, Margo,
Pears, Dove, Liril

Popular

2.2

Lux, Breeze, Hamam,

Dettol, Cinthol, Rexona

Economy*

2.3

Nirma, Godrej No.1,

Lifebuoy, Medimix

*Includingdiscountcategory

Competitive position as per Arthur D. Little framework Dominant.

5. Likelycompetitivemoves
A] Forward Integration: Companies like Godrej and VVF who previously used to supply soaps to other
bigger companies have gone for forward integration and started selling their own brands.
B] Niche Offerings: A prime example of this is the current trend towards producing higher quality and
special soaps, e.g. Soap for different skin types.
C] Acquisitions of small brands by big players: Cash-rich players may acquire small brands to enrich
their portfolio.

6. KeySuccessFactors(KSF)
A] Distribution channel:- Buying behaviour of rural consumer indicates that the rural retailers influences
35% of purchase occasions. Therefore sheer product availability can affect decision of brand choice,
volumes and market share. Some of the FMCG giants like HLL took out project streamline to
significantly enhance the control on the rural supply chain through a network of rural sub-stockists, who
are based in the villages only.
B] Awareness:- Mass media is able to reach only to 57% of the rural population Creating awareness then,
means utilizing targeted, unconventional media including ambient media .For generating awareness,
events like fairs and festivals, Haats etc. are used as occasions for brand communication.
C] Product Innovation:-Similar on the lines of Godrej, who launched FairGlow as Indias first fairness
soap, HUL needs to spend more on features such as fragrance, packaging etc.
D] Smart Advertising: The premium category of soaps is still in the growth phase in rural markets. There
lies scope for promoting more usage and consumption through mass-advertising or below-the-line
activities.

7. IndustryAttractiveness
Margins are likely to expand for most FMCG companies (due to a mix of lower costs of ads, palm oil and
packaging materials). However, profitability will be low (5-6%) as the industry is volume-driven.
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CompetitorStrategy
GCPL continued to invest heavily to support new product launches. They launched a new variant under
Godrej No.1 - Lime and Aloe. They have now decided to hike prices of some brands that means they
would like to maintain profitability while playing volume game.
ITC has continued to invest heavily in new products. They have been fast in launching new soap brands
like Fiama di Wills in premium, Vivel in the popular, and Superia in economy category.

Innovation&Acquisitions:
FMCG majors are increasingly focusing on expanding their global footprint by acquiring companies in
niche segments to fill gaps in their product portfolio. The companies are also increasingly spending more
on Research and Development (R&D).
ITC is investing heavily on R&D to launch new innovative products. It has recently launched gel bathing
bars under Fiama Di Wills brand, a breakthrough made through its unique patented freezing technology.
Godrej Consumer's (GCPL) acquisition of Tura, an African personal care brand from Tura Group, is a
significant development.

FunctionalStrategyforLiril

SWOTAnalysisforLiril

Weakness
1.Highbrandawareness,StrongBrandEquity
1.Manybrandsinthecategory(Godrej,Nirma,
2.AdistinctmarketpositionthroughFreshnessas ITC)
2.PremiumPriceoftheSoap
diffentiatorforthesoap
3.LowMarketShare&LowMarketPenetration.
3.VastdistributionnetworkofHUL
4.HULsownbrandsmaycannibalizeLiril
4.GoodResearch&Developmentcapabilityof
(Breeze,Lux,Lifebouy)
HUL
Strengths

LIRIL
Opportunity
1.BiguntappedmarketespeciallyRuralAreas
2.FreshnesshasnotbeenexploredmuchasUSP
3.UsageofSoapasalternatetofacewash
4.HighGrowthPotential
5.ExportOpportunitiestotapaspirations

Threats
1.EstablishedbrandslikeGodrej&Nirma
2.Competitors'growingportfolio
3.Launchofnewproductsinpremiumcategory
4.SeasonalsalesforbtandlikeLiril
5.PreferenceforPopularcategory(VFM)soaps

STPAnalysis
Segmentation - We are adopting benefit-based segmentation approach here. The market is segmented as:
Benefit sought -
Example -

Beauty

Natural

Lux

Santoor, Margo,
Medimix,

Cream
(Moisturizing)
Dove,
Doy Care

Medicinal

Glycerin

Dettol,
Savlon

Pears,
Emami

Basic
Cleansing
Lifebuoy,
Nirma

Based on demographics, Rural Markets can be segmented as:

SECClassification:
% of
Annual Income (`)

Consumer Class

Household

0.9

Consuming Class

Above 2,50,000
L
45,001-2,50,000

Climbers

22,001-45,000

49

Aspirants

16,001-22,000

14

Destitute

Below 16,000

11.1

Very Rich

25

EDUCATION OF

PUCCA SEMI PUCCA

CHIEF WAGE EARNER

HOUSE HOUSE

SSC/ HSC

R2

R3

College

R1

R2

Graduation / Post Grad. General

R1

R2

Graduation / Post Grad. Professional

R1

R2

Targeting - Target for Liril would be Households from Consuming and Very Rich Classes as defined in
the above grid and SEC R1 and R2 in the above SEC classification. However, the Target group would
primarily be rural women in the age group of 15-30 yrs.
Positioning (byAttributes&ProductBenefits) Other than Cinthol, there are not any brands which
project freshness as their unique benefit (Cinthol is generally perceived as a male brand).This gives a
good opportunity to position Liril as a freshness soap for young women.
The freshness quotient will be the key differentiator in the crowded soap market. Differentiation can also
be created in terms of Product Design (Color, Fragrance, Packaging, etc.).

4PStrategies(PLCbased)

PLCStage
Product

Price

Place

Promotion

Growth

Maturity

Shape of bar should be

innovated. Colours such as
light green, yellow, Pista
etc. to be tried.
75gm and 50gm SKU
Price should be affordable.
should be priced just below
(Very recently, price of Lirl
Cinthol. 100gm SKU may
was increased to `22/75gm)
be priced a bit higher.
Liril can be tied with:
Existing distribution channel a) other soaps in HULs
will suffice. Intensive
portfolio e.g. with Lux,
distribution.
b) other toiletries products
such as deodorants.
Price discounts can be
Can be bundled with: a)
Cosmetics products, e.g.
given (e.g. `2 less).
Fair & Lovely, and b)
Combo packs can be
feminine hygiene products,
introduced (e.g. Soap +
e.g. Stayfree.
Deodorant at less prices).

The Lime variant should be

relaunched with improved
fragrance. Icy Mint should be
more rich in cream content.

Decline
Only basic variants
(Lime & Mint) to be
continued. Line should
be pruned.
Price can be slashed
occasionally to make
quick, seasonal sales.

Selective distribution,
e.g. through select kirana
shops, super markets etc.

Offers (Buy 3, Get 1

FREE) can be given.

ProductMixStrategy

More SKUs (50gm, 100gm) should be added to increase the depth of the Liril line. Currently, they are sold
in 75gm SKUs only. To induce trials, special pack sizes (30gm in `10) should be introduced.
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ProductLineStrategy
They should discontinue the variants like Orange Splash since they dont fit the freshness appeal of brand.
Icy Mint should be relaunched with different shapes.

BrandingStrategy

1. BrandPositioning
They should position the brand as a provider of Freshness and cool bathing experience. Brand should
revolve around the core benefits of a unique bath. The brand would stand for aspiration of women aged
15- 40. It would reflect as the self-expression for these women who would like to make a point. Also, the
brand stands for individual freedom and happiness.
Liril has extremely high brand recall in Urban markets due to which it has sufficient levels of recall in
the rural markets as well (trickle down). However, the imagery that was used in the urban markets
cannot be replicated in rural markets. The new imagery should highlight how fresh fragrance of lime can
act as a confidence booster.

2. BrandImage(BrandPersonality)
Cheerful, Energetic, Lively, Fun-loving, Self-expressive, Modern, Progressive.

The brand image should be signifying the confident female youth of rural areas and small towns.

3. BrandCommunication
They should revive the waterfalls, the lime baths and the sizzling Nymphs who sang laah-la-la-laah.
Liril should be shown as pioneer brand providing the original and classic way to feel fresh while bathing.
Also, the Lime factor should be projected (Other than soothing bath, Lemon will also provide necessary
nutrients to skin). HUL should stress on the fact that Liril keeps the skin healthy and lively. The original
tagline of Come alive with freshness can be revived to stress on the core of this brand.
4. BrandExtension
Liril brand can be extended to Deodorant category. HUL can launch the deodorant in spray form, for the
same target segment. The deodorant will be communicated as an add-on for freshness at occasions other
than bathing.

5. Monitoring&Review
The efficiency of communication programs can be reviewed through the Reach, Frequency & Impact
analysis of Ads. Market Research should be done by a reputed firm to ascertain the favourable change in
consumer preference towards Liril brand. Also, projective techniques and free-association tests can be
used to understand the brand associations throughout the PLC by during market research.

PossibleNewProductDevelopment(NPD)
They should launch some new fragrances in attractive shapes such as oval etc. Based on market research
findings, other product attributes can be decided. The brand extension of Liril can be developed as
Deodorants (same on the lines of Rexona). However, the attributes will be focused on freshness and
vitality. The development should start 3-4 months after the above recommended variants of soap are
launched.
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