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A Project Report On Indian Bath Soap Industry PDF
A Project Report On Indian Bath Soap Industry PDF
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1
TABLE OF
CONTENTS
TOPIC PAGE NUMBER
EXECUTIVE SUMMARY 3
INRODUCTION 4
INDUSTRY PROFILE 6
SWOT ANALYSIS 18
FMCG INTRODUCTION 19
BCG MATRIX 21
COMPANYS PROFILE 24
SWOT OF NIRMA 27
RESEARCH METHODOLOGY 46
FIVE FORCES ANALYSIS 47
SWAOT OF HLL 49
SWOT OF GODREJ 53
FINDINGS & SUGGESTIONS 62
CONCLUSIONS 66
BIBLIOGRAPHY 67
2
EXECUTIVE
SUMMARY
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.
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.
3
INTRODUCTION
History of Bath-soap
Soap as we know it today did not come about until the 18th
century, when Nicholas Le Blanc, a Frenchman, discovered a
reliable and inexpensive way of making sodium hydroxide (caustic
soda), or lye as it is known to the soap maker, which forms the base
with which soaps are made to this day.
4
Further developments in soap making were pioneered in
Britain during the late 18th century with the invention of
'Transparent' soap by Andrew Pears, the son of a Cornish farmer.
This refined soap was known then as it is now as Pears
Transparent Soap.
Over the years and to the present day, opaque soaps have
remained the favourite, mainly because transparent soaps tend to
be more expensive and also don't last as long.
5
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 60,000 crore. This industry essentially comprises
Consumer Non Durable (CND) products and caters to the everyday
need of the population.
Product Characteristics
Industry Segments
Personal Care: oral care; hair care; skin care; personal wash
(soaps); cosmetics and toiletries; deodorants; perfumes;
paper products (tissues, diapers, sanitary); shoe care.
6
cleaners, toilet cleaners, air fresheners, insecticides and
mosquito repellants, metal polish and furniture polish).
7
Toilet Soap Industry in India:
8
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 low-
priced 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.
Low-priced brands
9
income households to downtrade, that is, switch from high- to low-
priced brands.
Better quality
10
activity may soon tell on the growth rate of the players. And when it
comes to sustaining a high decibel promotional campaign, HLL's
size certainly gives it the wherewithal to do it.
Third, 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. Therefore, even if a good monsoon
translates into a higher agricultural output, there is the question of
whether this will actually expand or shrink farm incomes.
11
than 20% of group turnover (in 1999).
12
The Lux commercial was kicked off almost in tandem with the
launch of FairGlow, which is touted as India's first fairness soap.
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 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. While details of the proposed Lux soap
are not available, the product is expected to be launched in the next
fortnight.
The ad depicts how, by using the soap, one can block the sun
rays from tanning the skin surface. However, the ad does not reveal
the name of the product. But it clearly signals that a new product
offering from the Lux stable, albeit on the fairness plank, is in the
pipeline. It has been a couple of weeks since the teaser ad was
launched on select channels.
13
Est
Production (market 2002- % EST %
Unit 2003-
size) 2003 growth growth
2004
FMCG (overall) Rs billion
600 2% 609 1.5%
Soap & Toiletries
Rs billion 90 -5% 90.9 1%
(overall)
Soap & Toiletries
Mn tonn 60 4% 60.09 1.50%
(overall)
There were 45 leading national brands. None of the national
brands had more than 5% market share and many more regional
and unorganised sector/local brands. 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, which gives the lead players and their
respective market share.
14
Percentage of Market Share
HLL
Godrej
Nirma
Colgate
Palmolive
Others
15
4. P&g (Procter and gamble)
Among these players HLL is the biggest player with around 67%
of market share. For HLL most of the soap has become a brand
they have their own identity.LUX is the most recalled soap in the
mind of the consumers.
16
Cadbury India Ltd. 199912 511.08 36.7
Procter & Gamble 200006 492.85 75.03
Hygiene & Health Care
Ltd.
Reckitt & Colman Of 199812 435.33 31.47
India Ltd.
I S P L Industries Ltd. 199903 21.57 0.04
Exports
India is one of the worlds largest producer for a number of
FMCG products but its FMCG exports are languishing at around Rs
1,000 crore only. There is significant potential for increasing exports
but there are certain factors inhibiting this. Small-scale sector
reservations limit ability to invest in technology and quality
upgradation to achieve economies of scale. Moreover, lower volume
of higher value added products reduce scope for export to
developing countries.
17
INDUSTRY SWOT
ANALYSIS
Strengths:
Weaknesses:
Opportunities:
Threats:
Imports
Tax and regulatory structure
Slowdown in rural demand
18
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 60,000 crore. This industry essentially comprises
Consumer Non Durable (CND) products and caters to the everyday
need of the population.
Product Characteristics
Industry Segments
19
Major companies active in this segment include Hindustan
Lever, Nirma and Reckitt & Colman.
Branded and Packaged Food and Beverages: health
beverages; soft drinks; staples/cereals; bakery products
(biscuits, bread, cakes); snack food; chocolates; ice cream;
tea; coffee; processed fruits, vegetables and meat; dairy
products; bottled water; branded flour; branded rice;
branded sugar; juices etc.
Major companies active in this segment include Hindustan
Lever, Nestle, Cadbury and Dabur.
Spirits and Tobacc Major companies active in this segment
include ITC, Godfrey Philips, UB and Shaw Wallace.
20
BCG MATRIX
The BCG matrix method can help understand a frequently made
strategy mistake: having a one-size -fits-all-approach to strategy,
such as a generic growth target.
In such a scenario:
A. Cash cows business units will beat their profit target easily; their
management has an easy job and is often praised anyhow. Even,
worse they are often allowed to reinvest substantial cash amounts
in their businesses, which are mature, and not growing anymore.
21
BCG MATRIX..
HLL: lifebuoy +,
?
HLL Santur
Rexona , Pears Nirma nirma bath
,Lifebuoy, breeze soap
Johnson & Johnson - nirma lime soap
-Savlon,Dettol, breeze, - camay,
Maisur Sandal soap, Godrej- Fairglow
Godrej-shikakai ,
22
Cash cow -
A business unit has a large market share in a mature, slow
growing industry. Cash cows require little investment and
generate cash that can be used to invest in other
business units.
Star -
A business unit that has a large market share in a fast
growing Industry. Stars may generate cash, but because
the market is growing rapidly they require investment to
maintain their lead. If successful, star will become a cash
cow when its industry matures.
Dog -
A business unit that has a small market share in a mature
industry. A dog may not require substantial cash, but it
ties up capital that could better be deployed elsewhere.
Unless a dog has some other strategic purpose, it should
be liquidated if there is little prospect for it to gain market
share.
23
COMPANY
PROFILE
24
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), soaps, soap intermediates Alfa Olefin Sulphonate (AOS) to a
level of Rs. 82 billion. Today, Nirma has a Rs.17 billion share in this market and has
been acknowledged as a marketing miracle. Nirma known for its focus on cost
effectiveness by integrating latest technology manufacturing facilities with innovative
marketing strategies to create world class brands, has by passed MNCs like HLL,
P&G to become the market leader (in terms of volumes) in this price-sensitive
industry. In value terms, Nirma holds 16% market share in the branded detergents
segment.
The share capital of the company is Rs.33.9 crore and the total shares
outstanding amount to 3.39 crore. The face value per share is Rs.10. The stock is
currently trading at Rs. 418, as on May 28, 2001. The market capitalization of the
company is Rs.1415.85 crore. The free float is 18% and the promoters hold 72%
stake in the company.
Business Overview
26
This product had created a sensational marketing
history in the Indian Toilet soaps market, when it was
launched in 1997. Seventeen million packs of Nirma Lime
Fresh soap were sold in the very first month of its soft launch.
Packed in a poly coated 75 gm carton, which is printed on the
worlds best Cerruti 8-colour printing machine, this soap is
available in green colour. With a lime aroma that tingles in
ones sensory buds for a long time, this soap contains 80%
TFM. The product launch of Nirma Lime Fresh had been
extremely successful, being ranked as the Seventh Most
Successful Brand Launch for the year 1998, as ranked by the
Business Standard Marketing Derby, 1998. (as featured in
The Strategist Quarterly, July-September 1998).
Strategy
27
Commodity price movement of LAB and Soda ash will
have significant impact on companys competitive
position, as Nirma will be the only company to have its
own raw material production facility.
Mission
28
Unilever's mission is to add Vitality to life. We meet everyday needs for
nutrition, hygiene, and personal care with brands that help people feel
good, look good and get more out of life.
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. Lux continues to be a favorite with
generations of users for the experience of a sensuous and luxurious bath.
Since its launch in India in the year 1929, Lux has offered a range of soaps
in different sensuous colors and world class fragrances. 2003 saw one of
the biggest milestones in the history of Lux. From being just a beauty soap
of film stars, Lux recognized the need for a compelling message about
beauty that would resonate with women of today.
Lux is available in four different variants Exotic flower petals and Jojoba
Oil, Almond Oil and Milk Cream, Fruit Extracts and Honey in Milk Cream
and Sandal Saffron in Milk Cream.
29
Rexona
Rexona is one of India's pioneer brands in family soaps. Launched in 1947,
it was positioned as a natural skin care soap to give silky, glowing skin.
Since then the product has been constantly improved to keep up with the
expectations of the consumers.
In 1989 coconut was introduced in Rexona for the first time to strengthen
the overall skincare appeal of the brand. Rexona has now been relaunched
with cucumber extracts, in addition to coconut oil and moisturising milk
cream. Its creamy lather purifies the skin, leaving it clear and flawless. It
has also been enhanced with a perfume that lingers well after a bath.
Pears
Introduced in India in 1902, Pears soap has no equal. It is gentle enough,
even for baby's skin.
Pears is manufactured like any other soap, but unlike in conventional
soaps, the glycerine is retained within the soap. That is the cause if its
unique transparency. After manufacturing, the soap is mellowed under
controlled conditions over weeks. At the end of this maturing process, it is
individually polished and packed in cartons.
Today Pears is available in three variants - the traditional amber variant, a
green variant for oil control and a blue variant for germ protection.
Dove
Dove soap, which was launched by Unilever in 1957, has been available in
India since 1995. It provides a refreshingly real alternative for women who
recognise that beauty is not simply about how you look, it is about how
you feel.
30
The skin's natural pH is slightly acidic 5.5-6. Ordinary soaps tend to be
alkaline, with pH higher than 9. Dove is formulated to be pH neutral (pH
between 6.5 and 7.5) and to be mild on skin. This makes it suitable for all
skin types for all seasons. While Dove soap bar is widely available across
the country, Dove Body Wash is available in select outlets.
Globally, Dove has been extended to many other countries. Since the
1980s, for example, Unilever has launched a moisturising body-wash,
deodorants, body lotions, facial cleansers and shampoos and conditioners,
providing a comprehensive range of solutions to bring out true inner
beauty.
Breeze
Breeze Scent Magic is the soap which fulfills the aspirations of women of
rural India. Breeze has offered them 'beauty at an affordable price', making
them look and feel beautiful.
Research and consumer visits have shown that the desire for great
fragrance featured highest in the daily beauty regime of discount-soap
users. Breeze explores this through the proposition of 'scent in a soap-
Scent ka kamaal, ab sabun mein' and explicitly propagates the brand
promise of the "Hameshaa kuchh extra". It delivers all this and still
matches consumer's needs in terms of price and quantity offered, staying
true to its word.
Breeze has been enriched with 19 special scent oils, which ensure that one
smells good for a long time through the day. Introduced in variants like
Scent Magic, Scent Magic Lime, and Scent Magic Sandal, Breeze strives
towards fulfilling the company's mission of being inventive in creating
value.
Hamam
31
When it comes to soaps, Hamam is considered to be the most reliable
option. Launched in 1934, Hamam has traditionally been a soap that takes
care of your skin in a natural way.
According to a research conducted By Indica Research in May 2003, 78%
of Doctors in Tamil Nadu recommend Hamam.
Besides being a perfectly balanced soap, Hamam takes on a very modern
and trendy look. Hamam's enhanced fragrance now provides a longer
lasting freshness. The new attractive oval shaped Hamam comes in an
attractive and modern packaging. The ingredients that are used in Hamam -
Neem, Tulsi and Aloe Vera - by themselves have great therapeutic values.
Hamam, the brand is very true to its tagline that says, "Everything in life
is about balance".
Liril
For 28 years, freshness has been clearly identified with one name Liril
Lifebuoy
Making a billion Indians feel safe and secure by meeting their health and
hygiene needs is the mission of Lifebuoy.
The world's largest selling soap offers a compelling health benefit to the
entire family. Launched in 1895, Lifebuoy, for over a 100 years, has been
synonymous with health and value. The brick red soap, with its perfume
and popular Lifebuoy jingle, has carried the Lifebuoy message of health
across the length and breadth of the country.
The 2002 and 2004 relaunches have been turning points in its history. The
new mix includes a new formulation and a repositioning to make it more
relevant to both new and existing consumers.
At the upper end of the market, Lifebuoy offers specific health benefits
through Lifebuoy Gold and Plus. Lifebuoy Gold (also called Care) helps
32
protect against germs which cause skin blemishes, while Lifebuoy Plus
offers protection against germs which cause body odour.
Strengths:
With identified strengths including a
consumer understanding;
R&D ability;
33
Being very old and reputed company, the company and its brands
achieves highest trust of the consumers.
Weaknesses:
The company's weaknesses spotted thereby include
Opportunities:
HLL sees its opportunities as
Threats:
Perceived threats
34
grey imports
3. GODREJ
VISION:
MISSION:
VALUES:
Company Overview
Godrej Industries Limited, formally Godrej Soaps, is India's large
manufacturer of oleochemicals. As well as the chemicals industry,
Godrej also operates in the food and medical diagnostics markets.
The company is part of the Godrej Group conglomerate. Godrej
Industries is headquartered in Mumbai, India
For the fiscal year ended March 2004, the company generated
revenues of $417.34 million (Rs18.23 billion), an increase of 9.7%
on the previous year. The company saw a net income of $13.14
35
million (Rs573.8 million) during fiscal 2004, an increase of 72.5% on
fiscal 2003.
Godrej has the distinction of being the first company in the world to
develop technology to make soap with vegetable oils, way back in
1930. In the early 90s Godrej had created strong brand equities for
its leading brands Cinthol, Ganga, Marvel, Evita etc. In 1994, Godrej
entered into a strategic alliance with P&G for inter alia toilet soap
business, under which Godrej used to manufacture soaps, which
were marketed by a joint venture company. However post marketing
alliance with P&G, the company lost significant part of its market
share and subsequently the arrangement was discontinued.
Godrejs entire distribution network was then taken over by P&G.
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.
Toilet soaps account for more than 50% of the Consumer business
sales. Hair Color (20%), Contract manufacturing of toilet soap for
other industry players (13%), Detergents (6%) and Cosmetics and
Toiletries (8%) are the other contributors to GCPLs turnover.
Exports of Godrej Brands (2% of overall sales) grew by 28% yoy in
FY01.
36
Godrej has the distinction of being the first company in the world to
develop technology to make soap with vegetable oils, way back in
1930. In the early 90s Godrej had created strong brand equities for
its leading brands Cinthol, Ganga, Marvel, Evita etc. In 1994, Godrej
entered into a strategic alliance with P&G for inter alia toilet soap
business, under which Godrej used to manufacture soaps, which
were marketed by a joint venture company. However post marketing
alliance with P&G, the company lost significant part of its market
share and subsequently the arrangement was discontinued.
Godrejs entire distribution network was then taken over by P&G.
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.
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. It pioneered the concept of a fairness
soap through launch of Fairglow soap. New variants like Sandal and
Natural in the Godrej No.1 brand also aided high growth. Toilet soap
volumes of Godrej brands grew by 30% yoy in FY01. In value terms
sales grew by 17% yoy to Rs2.5bn. The company also launched
new brands like Godrej Nikhar during the year. The companys
market share in toilet soaps improved marginally to 5.6% during
FY01. The companys oldest and well know brand Cinthol is
proposed to be repositioned and relaunched during FY02.
37
Cinthol
Godrej FairGlow
Godrej FairGlow Soap was India's first and is the largest selling
fairness soap. It helps you become fairer in a convenient way,
simply through a daily bath. It is a quality Grade 1 fairness product
having 76% TFM (Total Fatty Matter). It has a pleasant fragrance
and is white in colour.
Godrej no1
38
the quality offered.it comes in three colours and flavour, it is giving
good fight to the leading brands too.
39
FORTIFYING its soap brands, introducing new price points,
entering new categories such as babycare and hand sanitisers ... it
has been a busy year at Godrej Consumer Products Ltd (GCPL).
While FMCG categories such as toiletries, hair care and soaps have
been under pressure, the company has outperformed the still
sluggish FMCG industry primarily because it has been operating on
a relatively smaller base compared to the biggies, and also because
of the urban-centric nature of its brands.
40
within the first year of the relaunch. The brand was relaunched last
month.
In fact, the company suffered a loss in sales for its toiletries division
primarily due to the failure of its FairGlow cream. Admits Press,
"FairGlow cream did badly, leading us to withdraw the product. Our
toiletries margins have been affected by its failure." Besides, Godrej
Shave Gel for men has also failed to register any significant
volumes.
41
Meanwhile, its Cinthol soap franchise has taken a backseat,
primarily due to lack of proper positioning. "Cinthol as a brand has
been over-extended and we are in the process of redefining the
positioning," says Press. This is being done through a new
campaign and positioning statement which is likely to be unveiled
soon through its advertising agency, Orchard.
"We have decided to target these States with low per capita
incomes through our small unit packs. This will be a great
opportunity to grow since consumption levels of soap are still low in
these parts. These small pack sizes will not be made available
nationally and are meant specifically for these three States," says
Press.
42
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. In this sector there is very
tough competition between players.they are using large number of
advertising,sales promotions, positioning, and pricing strategies.
Research design
Data sources
Secondary data:
Web sites,
Magazines,
Newspapers
Limitations of study
Lack of sufficient material.
Lack of time.
43
Five forces
analysis of bath
soap industry
SUPPLY
DEMAND
BARRIERS TO ENTRY
44
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.
Unbranded players are size of Rs.1-3 billion and they are growing
at the rate of 10%.
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.
45
Hindustan Levers SWOT analysis
Strengths:
With identified strengths including a
strong brand portfolio;
consumer understanding;
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.
Being very old and reputed company, the company and its
brands achieves highest trust of the consumers.
46
Weaknesses:
The company's weaknesses spotted thereby include
Increased consumer spends on education, consumer durable,
entertainment, travel, etc resulting in lower share of wallet for
FMCG;
Complex supply chain configuration and unwieldy number of
stock keeping units (SKUs) with dispersed manufacturing
locations;
Price positioning in some categories that allows for low price
competition and high social costs in the plantation business.
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;
upgrading consumers through innovation to new levels of
quality and performance;
emerging modern trade to be effectively used for introduction
of more upscale personal care products;
growing consumption in out of home categories;
positioning HLL as a sourcing hub for Unilever companies
elsewhere and leveraging the latest IT technologies.
Threats:
Perceived threats
span low-priced competition now being present in all
categories;
grey imports
spurious/counterfeit products in rural areas and small towns;
changes in fiscal benefits.
47
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, premium and middle-end soaps are
growing at a rate of 10 per cent. The leading players in this market
are HLL (Lux, Lifebuoy, Breeze, Rexona), Nirma (Nima), Godrej
Soaps (Cinthol, FairGlow, Shikakai, Nikhar), and Reckitt & Colman
(Dettol).
Est
Production (market 2002- % EST %
Unit 2003-
size) 2003 growth growth
2004
FMCG (overall) Rs billion 600 2% 609 1.5%
Soap & Toiletries
Rs billion 90 -5% 90.9 1%
(overall)
Soap & Toiletries
Mn tonn 60 4% 60.09 1.50%
(overall)
Fabric wash market MN tonn 50 4% 50.25 0.50%
Laundry soaps/bars Rs billion 53.3 -6.5% 50.64 -5%
Personal wash
Rs billion 45 5% 45.45 1%
market
Toilet soap Rs billion 42 -3.2% 40.11 -4.5%
48
Projected Growth in Production of FMCG Sector
First two
First two
quarters
quarters
SECTOR UNIT (Apr-Sept
(Apr-Sept 2004-
2003-04)
05) Projected
Actual
FMCG (overall) Rs billion 1.50% 2%
Soap & Toiletries
Rs billion -4% 1.50%
(overall)
Soap & Toiletries
MN tonn 2% 4%
(overall)
Fabric wash market
Laundry soaps/bars Rs billion -8% 0%
Laundry soaps/bars MN Tonn -5% 1%
Personal wash market Rs billion 7% 1.5%
Toilet Soap Rs billion -5% 1.5%
49
SWOT ANALYSIS OF
GODREJ
Strengths
Very old and trusted domestic company in India.
Good distribution network across the country.
Cinthol is one of the popular and strongest brand of the
company.
Diversification of the products and deepens each product
vertically.
Economical products with wide product line.
Weaknesses
Medium focus on advertising as compared to other
competitors.
Focused attention on cinthol brand.
Less focus on product variety.
Lack of promotion of its products by influential celebrities.
Lack of concentration on bath soap segment after
diversification.
Opportunities
Penetration in rural market area.
More brand loyalty of customers towards some of the brands.
Focusing more on its innovations and product variety it can
become a global player.
Low market share, to be focused by aggressive marketing.
50
Threats
Trust factor and emotions attached to it due to the domestic
company towards localites.
Due to successful backward integration it has a benefit of low
cost production.
Major focus on effective advertising.
Best infrastructure.
51
Growth and expansion strategies in
global scenario
Market segmentation
With the exception of East and Central Europe, m ost soap and
other toiletry markets are becoming increasingly foreign. In Latin
America, Brazil stands out as an exception to this trend, having a
high presence of domestic companies.
52
In Asia,domestic manufacturers such as Nirma and Godrej are
gradually increasing their
domestic market share, particularly at the lower end of their
markets.
53
Threats
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. This coincides with th e emergence of a more sophisticated
consumer base, much greater segmentation in markets, and
increased demand for value added products.
Basic products like bar soaps remain dominant in Asia, as the bulk
of consumers in most markets earn low incomes and only buy low
cost items. However, this situation showed signs of change over the
last three years with bar soap increasing in value shire from 68.2%
to 72.1%. 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. Liquid soaps became increasingly popular until
the 1997 economic crisis caused consumers to economize. The
popularity of liquid soaps and shower gels is due to their hygienic
packaging which makes them popular to use because, unlike bar
soaps, it cannot be shared by members of the family for body
cleansing.
54
The regional market presents tremendous opportunities to the soap
manufacturer in terms of the share size of the formed population.
With Indias population officially exceeding one billion at the end of
the last century and Chinas over 1.5 billion, the majority of them
living under the poverty line, appropriate marketing strategies are
needed to turn this region into an area of advantage for the industry.
Unilever is the most dominant player in the region with Japanese
companies,
Unilever
Countries of origin and bases: UK/ Netherlands
Unilever, the Anglo-Dutch consumer goods company is among the
worlds largest soap manufacturers. It is unusual in its structure,
which involves two parent companies; Unilever NV and Unilever
PLC. This structure relates back to the 1930s merger of the Lever
Soap Company with the Dutch edible (oil) fats company NV
Margarine Unie. Unilever started its involvement in the soap market
with the manufacturers of Pearls toilet soap, a major force in the
soap industry. Since the mid 1980s Unilever Has further developed
strong position in the soap sector through acquisition of various
established brand names. Unilever has been building its soap
(skincare) activities in the developing regions through acquisition. In
Eastern Europe, it acquired PTZ, the Czech state-owned producer
of toilet soaps and skincare products in 1992. In 1995 the Singapore
based Haze Line Company was acquired from Glaxo for US$150
million. This has strengthened Unilevers skincare position in China
and South East
Asia.
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Operating structure
Corporate strategy
Leading brands
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local washing preferences. Its Lux, Rexon, Dove, Ponds and
Lifebuoy brands are present
in virtually every market around the world. Other leading brands
include Hellmanns', Liptons, Knorr and Ponds.
Future strategy
Nirma Ltd
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Nirma has cut the cost of distribution by doing away with
intermediaries. The product travels from the factory to the d
istributor's doorstep. Though the distributors have slender margins,
they make money from sheer volume sold. The company makes
extensive use of wallpaintings for advertising.
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FINDINGS
&
SUGGESTIONS
Tax reforms
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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. Moreover, MRP-based
excise duty is levied on a large number of FMCG products.
Countervailing duty on the same product when imported is charged
on CIF value. 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.
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5) Cascading effect of Special Excise Duty
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Other suggestions
1. A joint industry government initiative for building a "Made in
India brand for FMCG products is required. With many
multinationals moving into the Indian FMCG market, a concerted
marketing strategy which creates strong brands will be needed for
Indian FMCGs to gain recognition in the market.
5. Food laws such as the PFA Act should be amended and be made
contemporary.
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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.
The main leaders of the bath soap segment like HLL, NIRMA. 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. The main reason for the
success of some companies is their strategy and distribution
networks.
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.
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BIBLIOGRAPHY
Websites :
www.infoline.com
www.nirma.co.in
www.hll.com
www.godrej.com
www.thehindubusinessline.com
www.google.com
Newspapers:
Business Standard
Economic Times
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