The current India MD of GSK consumer healthcare is looking to diversify the brand by

leveraging the goodwill of the consumers from its star product “Horlicks”.

Key issues:

Brand Extension:

GSK consumer healthcare is known as a health-beverage maker in the industry but it is

trying to diversify into newer product lines and enter into FMCG market. Though there are

many risks involved but the management has decided to leverage Horlicks tag to introduce a

new product “Foodles’ in the market which will have its unique proposition of healthy

noodles without compromising the taste. The primary risk in introducing a product like

noodles with the name of Horlicks is that it will lose its perceived image of a healthy

beverage brand.

Product Line Extension:

Horlicks accounts for 85% of the total revenue of the company with product line of Junior

Horlicks, Women Horlicks, Horlicks lite and various flavours of all these variants. Now GSK is

looking to diversify its products like the acidity relief solution Eno to develop other products

from it. Similarly, GSK wishes to diversify the painkiller Crocin by developing it to make it

available in other forms also.

Extending product line has many disadvantages such as:

  Cannibalization of the original products like Eno, Crocin which are already a success

in the market.

 Cluttering/confusion in consumer’s mind due to multiple forms of the same product.

 Diluted marketing effort due to multiple products.

 Unresponsive retail channels due to multiple variants of the same product.

Failure of recent new launches:

Though GSK is highly ambitious about its new product line, the two new recent product

launches proved to be a failure for GSK. While the first product Horlick Asha which was

targeted at the bottom of the pyramid customers caused dissonance in consumers, the

second product its chilled milk was a failure due to the non-acceptance of chilled milk

products in India.

Weak distribution system:

Compared to other major players in market, GSK has much lesser distributors across India.

While market leader HUL covers around 6.5 million outlets, GSK covers only 250,000 outlets

in India. Also, GSK’s performance in Northern and Western India is still weak. If GSK wants to

enter the FMCG industry it must strengthen its distribution system.

Challenges in sustaining the initial momentum in market share:

While it is easy to enter the market and gain the initial momentum, it is very difficult to

sustain a healthy growth rate because of the presence of other big players like HUL, ITC and
Nestle in the market. GSK should invest in R&D and upgrade their products as per the

customer expectations. One of the main reasons for the failure of earlier products was that

GSK did not importance to learn the changing consumer behaviour.