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TABLE OF
CONTENTS
TOPIC PAGE NUMBER
EXECUTIVE SUMMARY 3
INRODUCTION 4
INDUSTRY PROFILE 6
SWOT ANALYSIS 18
FMCG INTRODUCTION 19
BCG MATRIX 21
COMPANY’S 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
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EXECUTIVE
SUMMARY
FMCG industry is the most emerging industry nowadays in Indian
as well as global market. In India it is the 4 th 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.
Industry analysts point out that manufacturers will have to design products
which offer unique benefits so as to stoke volumes growth. It is not surprising then that
FairGlow is targeted at both men and women. Research findings show that a section of
men too are users of fairness creams.
Est
Production (market 2002- % EST %
Unit 2003-
size) 2003 growth growth
2004
13
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.
Godrej
Nirma
Colgate
Palmolive
Others
14
The leading brands in the market are Dove, Pears, Lux,
Dettol, Liril, Rexona, Lifebuoy, Nirma, Palmolive and Hamam. A
survey reported in Vanscom, which was conducted in Ahmedabad,
showed that 103 toilets soap brands were available in this city
alone.
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.
15
companies on the basis of their sales turnover in the last financial
year (either year ended December 31, 1999 or March 31, 2000) are:
16
Hygiene & Health Care
Ltd.
Exports
India is one of the world’s 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.
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 ,
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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
NIRMA
Background
The Nirma story began in 1969 and since then it has expanded its detergent
(cakes and powders), soaps, soap intermediates Alfa Olefin Sulphonate (AOS) to
level of Rs. 82 billion. Today, Nirma has a Rs.17 billion share in this market and ha
been acknowledged as a marketing miracle. Nirma known for its focus on cost
effectiveness by integrating latest technology manufacturing facilities with innovativ
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.
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Share Holding Pattern
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
Nirma’s principal business activities pertain to manufacture and sale of detergents
and toilet soap. Nirma dominates the popular detergent segment with brands like
Nirma Popular powder, Nirma Detergent powder, Nirma bar, etc. Super Nirma
detergent powder is positioned in the mid-priced segment. Toilet soaps recorded a
strong 40% plus volume and value growth driven by the success of the launch of
"NIMA" brand in FY00. Nirma also sells glycerine, LAB and other industrial
chemicals.
The Soaps & Detergents Industry is characterized by a number of small scale
manufacturers at one end of the spectrum and large companies (including MNC's)
the other end. The market for Soaps & Detergents has increased manifold with
changing lifestyles, growing purchasing power, increased awareness about person
hygiene, responsiveness of the consumer to brands offering superior value and th
spread of audio-visual media. Fabric Wash Industry in India is characterized by (lik
any other non-durable product category in India) low per capita consumption and
substantial potential in rural markets ( in terms of category penetration and per cap
consumption). Per capita consumption of fabric wash products in India is just 3.1 K
which is very low compared to developed and some developing countries. Also, th
consumption figure has to be viewed against the fact that India's Active Matter
standards are one of the lowest in the world. The Fabric Wash Industry is divided
into Laundry Soaps, Synthetic Detergent Cakes & Powder. The Toilet Soaps
Industry is segmented into economy, popular and premium segments. The market
witnessing fierce competition from MNCs and requires substantial efforts for marke
penetration and brand development, reflected by the fact that only 5% of total
production comes from the small scale sector.
25
The company is hoping to cash in on the advantages of the in-house production o
soda ash and LAB, which together constitute 63 percent of the total costs of soaps
and detergents. It is expecting to boost its sales revenue by selling salt which is th
by-product of soda ash. The company will be marketing the salt called "Nirma Salt
on a platform of "value for money", which is common to all its other products. At th
moment Nirma Salt is being test marketed in Gujarat.
It is planning to add another 60,000 to 70,000 tpa, to its existing toilet soap capaci
of 1,10,000 tpa in Bhavnagar this fiscal. Plans are also under way to increase the
detergent capacity from 8,00,000 tpa to 1.10 mn tpa. Nirma also plans to introduce
new products and brand extensions in the personal care segment.
Performance of segments
The sales breakup of the company for FY00 and FY99 is as follows:
%
Period ended 03/99 03/00
change
Sales value (Rs mn)
Detergents 8,100.4 8,110.7 +0.12%
Toilet soap 3,275.3 4,674.9 +42.73%
Others 2,259.6 2,383.6 +5.49%
Sales volume (unit)
Detergents (Ton) 590,031.0 615,749.0 +4.36%
Toilet soap (Ton) 75,102.0 106,626.0 +41.97%
Unit realisation (Rs/unit)
Detergents (Ton) 13,729 13,172 -4.05%
Toilet soap (Ton) 43,612 43,844 +0.53%
Products
The main products for Nirma are detergent Cakes, Bathing Soaps, other products
like salt and industrial products like linear alkyl benzene, sulphuric acid, glycerin,
26
fatty acid, LAB and soda ash.
SWOT Analysis
Strengths:
Strong Brand equity. Nirma is a Rs.17 billion umbrella brand offering consumers
broad portfolio of products at multiple price points in the Detergents, Soaps &
Personal Care market.
Produces a range of industrial chemical products which primarily serve as raw
material or intermediates for Soaps & Detergents business.
Market leadership in detergents market and fabric wash industry and second
largest player in Toilet soaps industry.
Wide distribution network.
Weaknesses:
High interest burden.
Less presence in premium segment.
Lack global tie ups and thus lacking in export markets.
Opportunities:
Exports.
Acquisitions for strengthening its distribution tie ups.
Entry into other categories like shampoos, toothpastes and fabric whiteners.
Threats:
MNCs coming to India particularly in Toilet and Soap industry.
Emergence of small but strong regional players.
The manufacturing and marketing operations were divided in several closely held
group companies. In FY97, Nirma group restructured its operations and merged 4
companies, namely Nilinta Chemicals Ltd, Nirma Detergents Limited, Nirma Soaps
and Detergents Limited and Shiva Soaps and Detergents Limited, with its flagship
27
Nirma Limited. Kisan Industries, the sole separate detergent manufacturing unit ha
been merged with Nirma in March '00. Nirma now owns all the detergent
manufacturing facilities of the group, besides toilet soap/ other industrial chemicals
manufacturing facilities and a modern packaging unit owned by Kisan.
Plant locations :
Post merger of the group companies, Nirma has become a multi-locational compa
Nirma has plants located at Mehsana, Trikampura and Chhatral in Gujarat ,
Pithampur in MP and Jainpur in UP. Its new LAB plant is located at Alindra in Baro
and the soda ash complex is located at Bhavnagar in Gujarat.
Nirma, famous for its Nirma washing powder, a brand with a robust value for mone
image, seems to be trying to don a more upmarket garb. The Rs 2,500-crore
Ahmedabad-based soaps and detergents major is making tentative efforts to enter
the premium end of the market
Nirma is a phenomenon and synonymous with Value for Money. The brand
transcends the specific dynamic of any particular product category, which is best
captured in its above mission statement - a statement of sustained innovation, an
unceasing effort to deliver better value to consumers, through better product qualit
Different soaps of Nirma: The following are the different bath soaps of Nirma as
listed below-
Nirma Bath Soap
Nirma Beauty Soap
Nirma Lime Fresh Soap
Nima Rose
Nima Sandal
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Toilet soaps recorded a strong 40% plus volume and value growth
driven by the success of the nIma launch. Besides the Rose
variant, Nirma launched several fragrance variants such as Nima
Lime and Nima Sandal during the year. Other toilet soap brands
Nirma Bath , Nirma Beauty, Nirma Lime and Nirma Premium
positioned at various price points also continued to grow. Toilet
soap volumes grew from 75,450 tons in FY99 to 106,626 tons in
FY00. Toilet soap manufacture capacity at Mandali was increased
from 90000 to 110000 tons pa in FY00
29
admirable perfume and a higher TFM content, this brand,
within a short span of five years, had achieved the status of
the third largest selling toilet soap brand and still continues its
outstanding performance.
Strategy
30
launched by the end of the year. The company is also considering
other categories such as shampoo, toothpaste and fabric whiteners.
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1. HINDUSTAN LEVER LIMITED
Mission
Products :
Lux
Rexona
Pears
Dove
Breeze
Hamam
Liril
Lifebuoy
Lux
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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.
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.
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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.
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
34
towards fulfilling the company's mission of being inventive in creating
value.
Hamam
Liril
For 28 years, freshness has been clearly identified with one name – Liril
Lifebuoy
35
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
protect against germs which cause skin blemishes, while Lifebuoy Plus
offers protection against germs which cause body odour.
Strengths:
With identified strengths including a
36
strong brand portfolio;
consumer understanding;
R&D ability;
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
37
emerging modern trade to be effectively used for introduction of
more upscale personal care products;
Threats:
Perceived threats
grey imports
3. GODREJ
VISION:
MISSION:
VALUES:
38
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
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 90’s 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.
Godrej’s 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.
39
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 GCPL’s turnover.
Exports of Godrej Brands (2% of overall sales) grew by 28% yoy in
FY01.
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 90’s 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.
Godrej’s 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 company’s
market share in toilet soaps improved marginally to 5.6% during
FY01. The company’s oldest and well know brand Cinthol is
proposed to be repositioned and relaunched during FY02.
40
Contract manufacturing of toilet soaps registered a 20% volume growth but grew by
only 7% in value terms to Rs618mn. Margins earned on 3P manufacture are
significantly lower as compared to its own brands. Margins on own brands are
estimated to be 60% more than that on 3P manufacturing. The company manufactured
45530 tons of toilet soap in FY01. (32754 in FY00) Capacity utilization of toilet soaps
has improved from 46% in Fy00 to 64% in FY01.
Cinthol
Godrej FairGlow
41
addition, it also removes blemishes to give you a clear, glowing
complexion.
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
42
Godrej refreshes itself
Godrej Consumer Products has beaten the stagnation in the FMCG
segment through a host of initiatives that saw it introducing new
price points, enter new territory and strengthen its brands.
43
In fact, Godrej is almost consciously targeting the fairness cream
users through its newly relaunched fairness soap. `The cool way to
fairness and freedom from oily skin' is the message the company
wants to convey to all its prospective users. Launching the All New
FairGlow soap, Hoshedar K. Press, Executive Director & President,
Godrej Consumer Products, said, "There is an increasing demand
among Indian women for convenient and inexpensive solutions to
skincare and a need to look good naturally. The soap keeps this
need in mind."FairGlow soap, a pioneer in its category which
managed to find a niche in the fairness market in spite of the
looming presence of HLL's mega brand Fair & Lovely, has
intentions of doubling its turnover from Rs 60 crore to Rs 120 crore
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.
44
Observes Shah, "Toilet soaps are likely to maintain robust growth of
15-20 per cent on the back of FairGlow's relaunch and the
continuing growth of Godrej No.1." The new unit for toilet soaps in
Himachal Pradesh would also lead to an improvement in
profitability, as it is located in a tax-free zone. The unit would
provide income-tax relief and exemption from excise duty, which is
likely to improve the company's soap margins.
"We have decided to target these States with low per capita
incomes through our small unit packs. This will be a great
45
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.
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.
46
Five forces
analysis of bath
soap industry
SUPPLY
DEMAND
BARRIERS TO ENTRY
47
BARGAINING POWER OF CUSTOMERS
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.
48
Hindustan Lever’s SWOT analysis
Strengths:
With identified strengths including a
strong brand portfolio;
consumer understanding;
R&D ability;
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Strong media personalities
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
Increased consumer spends on education, consumer durable,
entertainment, travel, etc resulting in lower share of wallet for
FMCG;
Opportunities:
HLL sees its opportunities as
market and brand growth through increased penetration
especially in rural areas;
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emerging modern trade to be effectively used for introduction
of more upscale personal care products;
Threats:
Perceived threats
span low-priced competition now being present in all
categories;
grey imports
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
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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%
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Laundry soaps/bars Rs billion -8% 0%
Laundry soaps/bars MN Tonn -5% 1%
Personal wash
Rs billion 7% 1.5%
market
Toilet Soap Rs billion -5% 1.5%
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.
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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.
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.
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Growth and expansion strategies in
global scenario
Market segmentation
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the growth of task specific products. The market for bath products in
particular, has shifted toward body cleansing, as well as
moisturising, as brands become more specialised. Traditional soaps
are fighting back with a move toward nostalgia, and seem to be
attracting consumers back to the products they know best.
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.
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How local companies are responding to
multinational strategies
Many national soap manufacturers are matching the big player’s
expansion strategies by expanding into niche markets where brand
loyalties are yet to form. They are becoming successful by quickly
identifying and meeting consumer needs,
and by offering more competitively priced products than the
multinationals. Another strategy involves offering products at low
retail prices and with small value shares in several sectors without
occupying leading positions in any of them.
Threats
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Loopholes in government customs machinery have led to the
influx of grey imports, i.e. unofficially imported products in the local
market. In addition, official relaxation of trade barriers in all regional
markets has increased the entry of imported soap into most regional
markets that were fairly stagnant in terms of new product d
evelopment and launches.
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.
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Unilever
Countries of origin and bases: UK/ Netherlands
Unilever, the Anglo-Dutch consumer goods company is among the
world’s 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 Unilever’s skincare position in China
and South East
Asia.
Operating structure
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The business coordinates its activities through divisions, These are
(i) foods (which accounts for 50% of Group turnover in 2000) (ii)
detergents, (iii) personal products including soap (accounting for
14% of Group turnover in 2000) (iv) specialty chemicals (v) other
products
Corporate strategy
Leading brands
Future strategy
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into new skincare related categories. These brands have strong
consumer loyalty which will allow the brands to cross sector barriers
with relative ease.
Nirma Ltd
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FINDINGS
&
SUGGESTIONS
Tax reforms
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The government has gradually removed the restrictions on imports
of consumer goods in the country and also significantly reduced
custom duties. The domestic tax structure of these products,
however, has not been rationalised to provide level playing field for
competition. This is adversely affecting the growth of the FMCG
industry and could have far reaching adverse impact. The following
taxation issues need urgent attention of the government:
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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This differential basis creates unfair competition as tax incidence on
domestic manufacture could be considerably higher in case of those
products which incur significant marketing and distribution cost.
There is a need to bring parity in tax incidence between domestic
manufacture and imports by including all such elements of post
manufacturing costs while deciding the abatement percentage of
MRP based duty.
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the purpose of SED by excluding labeling, relabeling or conversion
into small packs.
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.
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encourage production of goods of higher value addition by
companies in the sector.
5. Food laws such as the PFA Act should be amended and be made
contemporary.
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
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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.
BIBLIOGRAPHY
Websites :
www.infoline.com
www.nirma.co.in
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www.hll.com
www.godrej.com
www.thehindubusinessline.com
www.google.com
Newspapers:
Business Standard
Economic Times
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