Market Dominance Strategies

Dr Amit Rangnekar Dec 2007

Market Dominance • “Dominating a market or category isn’t easy; not only must you become the default option for the consumer, the consumer must view her second option very grudgingly. That’s when you dominate mind share - and market share” • Jagdeep Kapoor, CMD, Samsika Marketing Consultants

International Brand dominance
• Brand leaders in the 1930s in the US • Colgate, Kodak, J&J, Pfizer, Coke • Brand Leaders in the new millennium in the US • Colgate, Kodak, J&J, Pfizer, Coke • Aakers- Buildings dilapidate and die, but brands live on forever

The Dominant Leaders
Brand / Company Eureka Forbes Amul Butter (GCMMF) Dettol (RCI) Nokia Fair & Lovely (HUL) Cadbury Titan Eureka Forbes Maruti Suzuki Vim (HUL) Hindustan Unilever Category Vacuum Cleaner Butter Antiseptic Lotion Mobile Handset (GSM) Fairness Cream Chocolate Watches Water Purifier Passenger Cars Dishwash Aids Toilet Soap MS% 90 86 85 78 73 70 65 62 59 56 55

Sources- AC Nielsen, TNS CEllTrack 2006, SIAM, Industry estimates & Company sources

Sustain Market Dominance due to..
• Legacy- Lifebuoy, Lux • First mover advantage- Fair & Lovely • New category creation- Maggi Noodles • Catering to customer aspirations- Nokia • Offering new benefits- Moov • Superior segmentation & product design- Titan • Economies of scale / cost leadership- Amul • Pricing strategies- J&J sanitary care • Quality of customer service- Maruti • Quality of field force training- Eureka Forbes

First mover advantage- Fair & Lovely
• 1960s- Fair & Lovely, India’s first fairness cream • 2006- Rs 850-crore brand, 75% share of Rs 1,200 crore Indian fairness market • 1999- Innovation- sachets to tap new markets, to ensure greater penetration & availability across price strata, now account for 50% of sales • “Sachets exploded the market, delivering consistent double digit growth,” Ashok Venkatramani, VP, HUL • Fair & Lovely Ayurveda- targeted consumers who prefer natural products, now contributes 10% of sales • “Ayurveda was a big subset in the fairness cream universe” says Venkatramani

Eureka Forbes- New Category Creators
• 1986- Aquaguard launched • 2006- 60% share of the 710-crore water purifier market • Then, purification meant boiling or filtering water to make it potable • “Reasons behind the company’s success are- our 6000 strong sales force, our 1000 service centres & our constant investment in training its sales force. Our 19 recruitment & training centres across the country train salespeople 300 days a year. These training rooms are our factories. But, our rivals depend on advertising & dealer selling, and dealers work only on margins. Also 85% of our base has a service centre within a 5-km radius.” Forbes’ Palekar

Eureka Forbes AquaGuard- New Category • Market domination also entails responsibility of growing the market • “After ultra-violet purifiers, RO-based purifiers & resin-based purifiers, we have now launched a purifier with technology developed by IIT Chennai which removes pesticides from water. As leaders, we try to cover the entire market for purifying needs.” Palekar, Forbes • The idea of dominating markets appeals to marketers, but competition helps grow the market • The burden of growing the water purifier category has been unending, and market dominators exploit this to their advantage by taking a disproportionate share of incremental market or category growth

Maggi- Customer Benefit
• 1983- Nestle launched Maggi noodles • Noodles, then available only from the unorganised sector or in Chinese restaurants • 1980s & 90s- Built on taste & convenience platform • 1995-Competition-Top Ramen- taste variants, smart segmentation aggressive promo & Shahrukh Khan • Maggi offered a new taste – not successful • 1999- relaunched with original taste, sustained efforts saw the brand reclaiming lost ground • Innovation- pack, flavours, price- retain share • “Maggi adapted to local tastes, continuously sensitised itself to the evolving Indian consumer & withstood competition” Martial Rolland, CMD, Nestle India

Nokia- Managing customer aspirations
• Nokia came from behind to stun Ericsson & Motorola, garner nearly 80% of the GSM handset market • Anticipated what customers were looking for • “We invested ahead of time in branding, distribution & people. We foresaw market trends. When the market opened in 2003-04, we were ready with a complete product portfolio across the price spectrum. We found sweet spots across categories in terms of pricing and requirement” Shivakumar, VP & MD, Nokia India • Single-minded focus on 1 category helped brands gain dominance • “Most of our competition had other products in the market as well, so for them handsets was ‘another business’ they had, but for us it was a must-win category” Shivakumar

Nokia- Managing customer aspirations
• Nokia’s accent on distribution was critical • “A decade back, the mobile market in India was mostly grey. The need of the hour for retailers was trust, managing price erosion & a solid backing from leading handset manufacturers.” • “ Our HCL tie up focused on managing profitability of the retailers & was fundamental in developing the entire distribution chain of mobile phones in India” • “Today, 100,000 outlets stock mobile phones in India, & about 60,000 of them stock only Nokia. At every retailer, on an average, 2 of 3 phones sold are Nokia” • Nokia has blocked sensitive price points from Rs 1500 to Rs 20000 at every Rs 500 price interval, offering a wide choice in terms of price and features

Amul- Reach & Economy
• Amul Butter’s 86% market share is a function of taking butter consumption, mass • Great distribution, major investments in mass media • “Our backward integration cannot be captured by our competitors. We have strong relationships with 25 lakh farmers, focused communication & a sound supply chain which helps us maintain consistent quality,” RS Sodhi, CGM • The Amul Girl, world’s longest running ad campaign • Stunning reminder ads, wittily capturing current trends • High brand salience, brand is generic to category

Cadbury’s
• “Leadership is more about thought leadership than just being the leader in terms of market share. You’re a loser if you’re reactionary. Keep raising the bar & not wait for competition to kick in” A Kripalu, MD Cadbury • Full chocolate range, complete category coverage • Distinctive taste, captured sensitive price points • Éclair Rs 1, Chocky Rs 2 5 Star Rs 5 & Rs 10 Dairy Milk Rs 10, Rs 15, Rs 25 & Rs 100 Fruit & Nut Rs 20, Dry Fruit Range Rs 2550 Heroes Rs 50 & 100 Celebrations Rs 50 & 100 Rich Chocolate Rs 100, 250, 450

J&J- TINA & Pricing
• 1980s- J&J dominated the feminine hygiene & baby care businesses with 80-90% MS • Challengers- P&G and Wipro entered • 2007- J&J market domination in baby care- TINA • Feminine hygiene category leadership- J&J’s complacency allowed P&G’s Whisper to steal 50% of the sanitary napkin market from Stayfree • Clever pricing strategy let Stayfree regain sharecapitalised on Whisper’s inability to lower costs due to new machinery, overheads & marketing costs • “There is a more value conscious segment that exists, and we addressed Stayfree to this segment”

HUL’s Vim- Innovation
• Timely innovation helps marketers beat back challengers • Vim, dominates the dishwash bar segment, but threatened by Henkel’s Pril in the growing liquid dishwash segment • 2007, Vim liquids introduced both in a plastic bottle & a plastic bag innovation, Vim edged past Pril by July 2007 • “It’s important to innovate ahead of time and not get complacent about being the leader. If what you add builds on what you have, it is bound to work” Sudhanshu Vats, category head - home care, HUL

HUL Soaps- Legacy
• “Our domination of the toilet soap market is partly a question of legacy. Both Lux & Lifebuoy have been built over a long time and have strongly entrenched imagery positions that aren’t easily dislodged” • The 2 brands have market shares of 17%-18% each, while the next competitor, Godrej, has only a 5% share • Smaller SKUs have worked well for HUL, In 2006Mini SKUs (Rs 5) were 13% of the category in value terms, growing at 35% over 2005 • “We dominate in smaller SKUs, and are reaping the benefits of growth and penetration” • “Market growth is also a function of the level of noise that rival brands make. So greater competition means all share the cost of growing the market” Venkatramani

Maruti
• In 2002, Maruti’s market share dropped to 45% • Competition in the small car segment emerged from Hyundai Santro, Tata Indica and the Daewoo Matiz • In 2007, Maruti has a market share of 59% overall, and 65% in the small car segment • “We have doubled our network in the last 4 years, & are No. 1 in customer service & satisfaction - our service people sell more cars than our sales people,” Jagdish Khattar, MD, Maruti Suzuki • 60% of Maruti buyers come through recommendations • Range & price point sensitivity- A Maruti variant from the 800, Omni, Alto, Zen, Wagon-R, Swift, Esteem, Baleno & SX-4 from Rs 2-8 Lakhs at every Rs 25000 price point

Hero Honda- You just can beat a Bajaj
• Hero Honda dislodged the mighty Bajaj who once had a waiting period of 9 years for its scooters • Hero cycles tied up with Honda, to move up the value chain from cycles to motorcycles, while Bajaj could not envision the changing trend from scooters to motorcyles • Hero Honda offered a fuel efficient, low cost of maintenance product, and put in place a coutry wide distribution network • 2007-Hero Honda straddles the bike market while Bajaj remains a distant number 2, a gap of 33%

Parachute
• “Parachute hair oil is a good example of innovation. The brand is the leader because it has continually strived to raise the aspirational value of the category by making coconut oil contemporary and relevant to a younger set of consumers” Kapoor, Samsika • Captured sensitive price points and offered innovative packings- right pricing and sizing, comprehensive reach

Market Challengers
• “Market dominators are formidable due to their hold over the category but often, the competition fails utterly in making inroads, & gives up the battle midway” • “To make a dent in the market, a challenger has to be present and sustain investments for at least 5-10 years. Often, the category is too small to justify investments, or the climb is too hard, so challengers give up. This scenario often calls for a war of attrition that only marketers with deep pockets - or deep vision - can sustain” Nadkarni • Typically, a combination of factors drive market domination - heritage, distribution, focus, foresight, planning & innovation • It’s a model that looks simple but is very difficult to duplicate • Challenger brands have to identify and deliver on consumer need gaps

Can market dominators be overthrown
• Maruti unseated Ambassador and Padmini Premier by offering consumers a smaller, better designed, more maneuverable and economical car • Titan stormed the HMT citadel by capitalising on the aspirational value of a better-designed quartz watch, and focused on innovation and segmentation to remain ahead of the curve. • “The biggest challenge is to be able to reinvent yourself. Take Madonna for instance, she has been able to remain vibrant and energetic, cool and contemporary and hence relevant throughout,” says Harish Bhat, COO, Titan.

What clicked- Moov
• Moov came from nowhere to overcome Iodex by tapping the consumer’s latent need for better usage (less smelly, less staining, new plastic tubes, more for less) • Girish Patel CEO Paras Pharma • “Iodex lost market share as complacency crept into their marketing. Iodex kept introducing new products worldwide, but continued in India as the smelly black pain balm for years” • “There is never a perfect solution, there can only be a better one. We strive to perfect the art of finding better solutions” • "We chose markets where there is a strong no. 1 but no strong no. 2“

What Failed- Savlon
• Savlon tried to sell the painlessness, the pleasant smell of its antiseptic lotion, and the plastic bottle, as key differentiators over Dettol, but failed • “Pain and smell weren’t problem points. Your brand having a differentiation means nothing to the consumer. The key is to meet an unfulfilled need” Kapoor

Market domination
• Bane- marketers let their guard down- Iodex, Surf • Complacency- Fiat, Kelloggs, US cars in India • Even if marketers aren’t first-movers, brands ascend by pushing aggressively into growing markets- Moov • Most market dominators stay at the top as they constantly innovate- to put widen the gap between them and the competition- Gillette • “If brands do not innovate enough, there is a risk of becoming obsolete” Shripad Nadkarni, MarketGate • “Vicks lozenges, since 2002, has launched flavours like tulsi and honey, and more than doubled our business in throat lozenges with these strong and meaningful consumer interventions,” he claims P&G’s Vohra.

Learnings • Ultimately, leadership is about constantly seeking possibilities for improvement, irrespective of competition- Gillette • “Market dominators are those who focus on the ball and not the bowler. Look at the market and the consumer, not the competition.” Kapoor

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