SHOULD HORLICKS EXTEND TO

NEW CATEGORIES?
Horlicks – An Overview

Horlicks is the flagship brand of GlaxoSmithKline Consumer Healthcare (GSKCH). It is a

malted hot drink developed by founders ​James​ and ​William Horlick​. Initially, it was sold as
"Horlick's Infant and Invalids Food," and soon added "aged and travelers" to their label. In the
early days of the 20th century, it was sold as a powdered ​meal replacement​ drink mix.

Horlicks has shown a decent growth rate its introduction in late 1950s and is the leading health
food drink market. In India, it has a 42.8% share, followed by its competitors Mondelez Cadbury
Bournvita at 12.6% and Boost with 10.6%.

It is considered as a healthy drink for consumption across all age groups and is known for its
nutrition content like iron and vitamins. Aggressive advertisements and constant product line
extensions have helped them establish a strong foundation in Indian malt drink market. On 3
December 2018, ​Unilever​ announced that they were buying Horlicks for a whopping 3.8 billion
USD.

Industry Overview

India is considered to be the world’s largest malt-based drinks market and accounts for close to
20% of the world’s retail volume sales. In India, malted beverages are popularly known as health
drinks. Although marketers have positioned such beverages as nutritious drinks, these are widely
consumed as taste enhancers to encourage growing children to drink milk.

According to the “India Malted Health Drinks Market Overview, 2018-2023”, malted drinks
market in India is expected to grow with a CAGR of more than 10% over next six years. A
growing rate of health conscious consumers in India has increased the demand of the malt health
drinks. Due to improving standard of living, evolving lifestyle and high level of consumerism,
the India consumer is growing more and more inclined towards healthier food and beverages.

Many companies operate in the Indian malt health drinks market - companies such as GSK,
Mondelez, Abbot, etc. Some well-known malted health drink products available in the country
are Horlicks, Bournvita, Complan, Boost, Milo, Amul Pro, etc. Recently, ​Nestle has re-entered
the market with its brand, Milo and Danone. South India has the largest market share in the
malted drinks industry.

Market Segmentation

Horlicks identified its various target market segments as under.

Product Categories

In response to the various target segments, Horlicks developed products customized for each of
these segments. The various product offerings of Horlicks are as under.
Marketing Mix OF Horlicks

Product:

To effectively cater to the nutritional needs of the consumers, the company has taken special
steps to develop the drink scientifically. The company has decided to cater to each section of
society by including women and children of every age group. Originally, the brand dealt only in
the drinks market but later started including various other related health products under its
portfolio. Horlicks has products for different age groups and genders with a multitude of flavors
in each category.

Place:

Horlicks is a well-known healthy food brand that owes its success to a strong network of
distribution and a focused communication process. The brand has taken care that the product is
always available at the correct time, right place and in various and different quantities to the
consumer. Horlicks’ has a distribution network that includes factory, wholesalers, channels for
distribution and retailers. It has factories and manufacturing plants for its production and
packaging units located at convenient locations. It has a sales office in all the four metro cities
from where the sales are coordinated along with collection and distribution activities of their
particular area. The products are available at almost every grocery store, retail outlets and big
showrooms that have specific food related departments. Nowadays, the products can also be
purchased quite easily from the internet at the consumer’s convenience.

Price:

Although the company’s objective had been to maximize their profit, they have kept the prices
reasonable. They have a competitive pricing strategy where the consumers do not have to make
undue sacrifices in their budget against other comparative drinks. As a brand name, Horlicks
represents quality to the consumers. Hence, the company has decided to follow value added
pricing policy. The consumers are guaranteed to receive their money’s worth and as the
nutritional capacity of the drink is much higher than those of other drinks, the consumers do not
hesitate to make it their final choice.
Promotion:

All ad campaigns by Horlicks have highlighted its deep commitment to maintain and present
qualitative products. The different variants of the brand have maximum visibility and shelf
appeal because of direct and indirect promotional activities. The brand has been involved in
running seminars to stress on the importance of nutritional drinks. Several fests are organized in
schools and at malls and showrooms, where free drink is offered to everyone. Many ad
campaigns are aired on various channels of television and radio featuring kids and strong
messages. The print media has also been roped in for maximum visibility. Some celebrities
associated with Horlicks are Vidya Balan and child actor Darsheel Safari.

Where Horlicks Went Wrong?

The biggest challenge faced by GSKCH was distribution network. HUL covered

6.5million outlets, Nestle reaches to 3million and ITC FMCG reaches to 2.5million.
Compared to these brands, GSK had 800000. Once you want to have a line extension,
you need to have a huge distribution network. Since HUL has now acquired Horlicks, a
line extension could be looked at.
Poor reach to rural population was another issue due to weak distribution network in the

rural areas. Since a large part of the Indian population still lived in villages, they were
missing out on a huge chunk of market.

Horlicks had low penetration in the market in Northern and Western India.

Horlicks Asha was launched for people below poverty line. This adversely affected the

brand image as it created cognitive dissonance in customers who took the product as poor
quality compared to original Horlicks.
For Horlicks, the Product Line extension has shown more success than Brand Extension.

This can be shown as per the theory called Associative Network of Memory. When we
hear the word Horlicks, we always relate it to a malted hot drink. This was the reason
why their other brands like instant noodles and NutriBar failed as we could not relate
Horlicks to them.
 HFDs were used to get kids to drink milk. However, the recent years have seen a growing

preference to have cereals with milk, so parents don’t bother about HFDs.

Sachets are less than 10% of the total sales. Category penetration is less than 40%. The

roll-out of Women’s Horlicks, Mothers’ Horlicks and Horlicks Lite has been too late and
their contribution is still small.

Suggestions Under The Scope of Consumer Behavior Concepts

ELM Model

● Central Route: Since Horlicks now has various different offerings, a central route can be
adopted to highlight how each of these different categories are customized to give the
maximum benefit to the target customer. For example, Women’s Horlicks should focus
on explaining how women have higher needs for nutrition and calcium and show how the
product takes care of these.
● Peripheral Route: For products targeted at kids, using the peripheral route will be useful
since they can relate better to their favorite Disney characters. Showing ads with these
will automatically make them want to consume this product rather than explaining the
nutrient value. For categories that are targeted at athletic men and women, celebrity
endorsers like Virat Kohli could help in strengthening association and a better brand
recall in addition to knowing the nutrient value.

Product Life Cycle Extension

Horlicks can focus on increasing the market share by extending the Product Life Cycle (PLC) of
the products. This can be done by

● Finding New Users: ​Horlicks has already covered majority of the segments of the target
market. However, they could still come up with a product for individuals in their old age.
This could be done by showing the product having nutrient values which are required to
stay fit in old age. Another product offering could be a sugar free offering especially for
men and women with diabetes.
 ● Find New Uses: Horlicks could run ad campaigns showing how it can be used to
innovate and create interesting food products and drinks like Horlicks flavored chocolate
muffins, cakes, smoothies, puddings, etc.
● Increase The Usage: ​Ad campaigns could be run to encourage kids to consume horlick
twice a day.

Diffusion

Relative Advantage: High at the beginning during the introduction phase of malted

hot drink. Moderate level of diffusion now.

Compatibility: High for the malted drinks category, low for other categories like

noodles and biscuits

Complexity:​ Low as it only needs to be mixed in milk and stirred.

Observability: The consumption cannot be observed unless tried personally. Hence

the diffusion is low.

Trialability: Product is offered in various quantities. Hence, it has a high diffusion

rate.

Appeals

● Fear Appeal: They effectively use the fear appeal at a low intensity level by focusing on
the tag line “Taller, Stronger, Sharper”. Similarly, they could use a moderate fear appeal
to address men and women in their late 30s and 40s showing them how consumption of
sweetened drinks like tea and coffee can cause diabetes and they should therefore resolve
to the sugar-free Horlicks customized for them.
● Emotional Appeal: ​This can be used to rope in individuals in their old age as well as
young adults by creating a feeling of nostalgia. Ads should focus on how having a glass
of Horlicks makes you feel closer to your childhood carefree days.
● Fun Appeal: ​As mentioned earlier, Horlicks can come up with ads showing different and
innovative uses of Horlicks. These ads should focus on showing how fun the process will
be.
Conclusion

In this project, we have basically observed that Horlicks has a closer and much stringer
recognition as a malted drink than as other solid consumable products brand. As such, they
should focus on building on this strong recognition. While they already have a large variety of
product offerings that are customized at various target consumers, some categories like adults,
diabetic individuals and old people are segments still untapped. So Horlicks should focus on
creating a variety for these segments first and then think about other solid foods.
References:

https://india-consumer.gsk.com/en-in/products/horlicks/

https://www.marketing91.com/marketing-mix-of-horlicks/

https://lite.horlicks.in/product-range.html

https://www.marketing91.com/marketing-strategy-of-horlicks/

https://www.businesswire.com/news/home/20181004005296/en/India-Malted-Health-Drinks-Ma
rket-Overview-2018-2023

https://www.researchandmarkets.com/reports/4636687/india-malted-health-drinks-market-overvi
ew-2018

https://economictimes.indiatimes.com/industry/cons-products/food/buyer-beware-horlicks-comes
-with-a-set-of-challenges/articleshow/64759281.cms

https://www.slideshare.net/ShubhamJain643/gsk-horlicks-presentation