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Sindhu J.

Bhattacharya

New Delhi , Oct. 8

LOOKS like the toothpaste market is getting ready for a pricing churn. After sales
slumped 12.5 per cent last fiscal, players in this category have been mulling
ways to stem the slide and it appears that Anchor Health and Beauty Care Pvt
Ltd (AHBC) has taken the lead in terms of price correction.

AHBC has come up with a promotional offer of over 60 per cent discount on the
MRP for a combipack of Anchor White toothpaste together with an Achor
Premium toothbrush. While the MRP for 200-gram Anchor White toothpaste and
toothbrush is Rs 54 and Rs 15 respectively, the combipack is now being offered
at only Rs 25.

When contacted, the Managing Director of AHBC, Mr Sanjay Shah, told Business
Line, "the offer has been launched to ensure mass trials of Anchor White
toothpaste. While this offer is particularly for the Delhi market, we are also
offering a price discount in several other markets."

Asked whether the company has announced a price discount due to falling
market share over the last couple of months, Mr Shah acknowledged the loss but
declined to quantify it.

He claimed that while market research agency ORG puts Anchor White
toothpaste share at about 7.8 per cent of the Rs 2,500-crore toothpaste market,
"our internal estimates peg it between 14-15 per cent".

According to company officials, the offer has been launched in Uttar Pradesh,
Rajasthan, Mumbai and the South albeit at prices higher than Delhi. They also
said that the promotion could be extended, depending upon the sales response it
generates over the next few months.

But while AHBC has taken the lead in initiating a price correction, the market is
expected to witness a flurry of activity in terms of new product launches as well.
Amid talk of Procter & Gamble toying with the idea of launching its international
brand Crest here, watchmaker Ajanta has already forayed into low-priced
toothpastes.

Industry sources said AHBC's price cut initiative could well be the result of
multinationals - Hindustan Lever Ltd (HLL) and Colgate-Palmolive - having
managed to stem the onslaught of small manufacturers over the last one year
through price cuts and new product launches. They said that while HLL
commands about 33 per cent of this Rs 2,500-crore market with Pepsodent and
Close Up, Colgate is the leader with close to half of the total market.

While the HLL spokesperson could not be reached, a P&G spokesperson declined
to comment on whether the company would bring Crest to India.
What makes a great brand
February 02, 2006 09:21 IST

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A new-age fable says that you can leave behind your brands' five-year plans in the business class seat of
your aircraft, your competitor, sitting two rows behind can pick it up and take it to his office, and you can still
beat your competitor if you implement and execute your plans.

Most plans do not get executed. And it is not difficult to guess what your competitor's plans are over the next
five years. But the million-dollar question is, will they be able to execute the plan? To this is the corollary,
how will they adapt their execution to the changes in the market environment?

The premium soap Liril was originally test marketed in early 70s as a blue colour soap cake. Finally, it got
launched as a green soap, based on customer feedback. Interestingly, in 2002, Liril was relaunched as an
'icy blue' soap.

Sundrop cooking oil was launched in a 1 litre PET bottle and economy packs came only three years after
launch. The company was worried that a pouch pack would dilute the premium appeal of the brand.

Dettol Soap was launched in 1981 as a light yellow soap, positioned as a 'love and care soap'. After the poor
response, the company took a few years to regroup and relaunch the brand in a green wrapper, as a
germicidal soap on the '100% bath' platform.

Brand execution is about constantly keeping an eye on the various parameters that make up the brand
offering:
 Is the product quality just right? Can it be improved? Global FMCG major P&G launches a new product
only if it scores 51% on blind product test over its nearest rival.
 Is the pricing competitive? Should it be lower? Higher?
Indian consumers look for value even in prestige products. The brand has to rationalise the price premium
through emotional or experiential means .
 Is the place right for the brand? Should new distribution avenues be explored?
Eureka Forbes created a unique direct selling model to market vacuum cleaners in India [ Images ]. Cease
Fire appliances tried emulating this model in the late 90s but after a few years could not sustain the
momentum.
 Is the 'promotion' mix right?
Not all performance problems can be fixed with a new advertising-promotion campaign. But as Santoor
discovered, a new campaign (focusing on skin care benefit) turned the fortunes of the brand in late 80s,
early 90s .
 Is the packaging right? Are there other options?
Frooti from Parle, exploited the tetrapak packaging medium to create a new space in the soft drink market.
Cadbury's Appela, launched five years earlier may have had a better chance if it had used a different
packaging form, instead of returnable glass bottles.
 Is the profit plan in place? Should it be modified?
India is a large market with a large consumption appetite. But MNCs have discovered that it is not a
cakewalk. While most companies plan for a two to five year gestation period for a brand, how valid are these
assumptions in a changing-growing market? ...
 What 'people' or 'service' support does the brand need?
While the seven factors listed under brand execution are not exhaustive, these form a key framework for the
brand offer.

They are also not mutually exclusive parameters. As an old adage goes, the Indian consumer will want
everything 'Sasta, Sundar, and Tikau' (economical, beautiful and long lasting). Marketers have to balance
this S-S-T needs of the consumer with the organisation's obligation to the stakeholders and shareholders.

Brand execution elements will change in importance as one moves from an FMCG to a durable to a service.
While the product/service offer, price, distribution, location/place, and promotion will continue to be
important, the service or people component will become paramount for a service brand like a hotel or a
department store. Durable brands too are becoming more and more service driven.

Product offer

Brands depending on the product/service category will have to offer features that are de rigueur (point of
parity) of the category, while they have differences in the offering (point of difference). Sometimes the PODs
are in the price, or place. But most successful brands offer a POD in the product offer as well:
 Ayurvedic soap Chandrika, is made through a special 'cold-press' method
 Liril was the first soap to offer a marble texture
 Lifebuoy hand-wash was the first liquid soap
 Hyundai Santro [ Images ] was the first small car to offer a Multi Point Fuel Injection (MPFI) petrol engine
 Kinetic [ Get Quote ] Honda was the first modern age scooter with a button start
 Onida was the first colour TV with a sleek looking vertical format.
The examples are numerous, and often it is the easiest solution to go with a me-too product. Or at times,
launch a brand with a product difference that is too small to be noticed, JNND (Just not noticeable
difference). The danger in these approaches is that the brand starts with no real difference in product offer
terms. The onus of creating a difference now vests on the other legs, a more difficult task.

Price offer

The brand price offer can also be played using different packaging forms:
 Chik and Velvette shampoos used the pouch pack to build brand attraction at a low price point of 50
paise.
 Anchor white toothpaste has large packs at attractive prices to gain brand loyalty. The pricing strategy for
a brand can also be driven by the gaps in the market:
 Nirma Beauty Soap was priced at Rs. 7 per 100 gmsa price point below Lux but above 150 gms Lifebuoy
on a gram per gram basis. ....
Price is the single most important dimension in the value driven Indian market. Brands have met with
sudden deaths with ill timed price increases:
 In the 80s Chiclets Chewing Gum moved its price from lOp (for 2) to 25p. As against an anticipated drop
of 50% in sales volume, the brand sales dropped by 90%.
 In a replay of sorts, Halls in the 90s moved its price from 50p to 75p to meet with a similar fate.
The rapid growth of motorcycles in the late 90s were contributed to by the narrowing price difference
between scooters and entry level motor cycles.

Quartz watches' sales benefitted with launch of Titan and its price value offer, backed by the Tata
guarantee. In spite of the initial fear that the Indian consumer will be loath to buying batteries every year, the
company's pioneering effort to ensure affordable batteries paid off in a revolution on Indian wrists.

Place offer

How will the brand reach the consumer's hands? How many hands will it pass through? Where will it be
retailed?

How is the brand presented at the dealer outlet?

Does the place add to the brand value?

Tata Motors [ Get Quote ] when they made their play for the growing Indian small car market consciously set
up an entirely new dealer network, distinct from the Tata truck dealers. The company re-organised that while
utility vehicles like Tata Sumo could be sold through commercial vehicle dealers, a passenger car buying
family man will be very hesitant to enter a truck showroom.

Raymond's secret strength is their 250+ authorised dealers. Each is a handpicked dealer offering a
'Raymond' buying experience including tailoring and readymade apparel. Park Avenue and Parx (and Color
Plus which was acquired in 2002) are the readymade brands from Raymonds enjoying the tremendous
advantage of instant distribution presence across the country. ...

So retail outlets may not just be selling points but can be a big vehicle for carrying forward the brand
message.

Promotion offer
How will the brands be promoted? How will the brands message reach the prospects?... A new brand will
need to attract trial. That calls for free sampling or trial offers. Once the brand gains momentum, free trials
can be reduced.

When Johnson &Johnson was trying to sell sanitary napkins in India in the mid-70s, they found the only way
to discuss such a sensitive topic was on a woman to woman basis. So they put together a large team of
sales promoters who went door-to-door.

This gave the brand Stayfree a toehold and the product category, the initial user base. The programme has
now been dropped, as the core user base has been created. The company may still want to run 'educational'
programmes at girls' schools and colleges.
BS S

Ajanta works up some foam


Vinod Mathew

From keeping time to oral care, it's been a good run for Ajanta Clock
Manufacturing which has diversified into the FMCG segment. It is using price to
make a big dent in the market, and has set itself ambitious targets.
FROM wall clocks and watches to toothpaste and shampoo, it has been a frothy
ride for the Morbi-based Ajanta Clock Manufacturing Company during the last
nine months. But then, it had already witnessed an electrical switch
manufacturing company, the Anchor group, make a fairly successful foray into
the oral care segment.

With aggressive pricing as its USP, the company decided it was time to do a
sting operation reminiscent of the one carried out by Nirma many years ago in
the detergents segment. Originally priced at Rs 18 per 200 gm tube of white
toothpaste, one-third the price of a Colgate or a Pepsodent, Ajanta rewrote the
rules of the game for oral care products.

The result: there was unprecedented rollback in prices earlier this year by some
of the market leaders from Rs 54 to Rs 45 and even to Rs 41 per 200 gm white
toothpaste tube while Ajanta revised it up to Rs 21 per tube. Anchor settled for a
price tag of Rs 39 per 200 gm tube that also came with a toothbrush. Ajanta
followed up with three varieties of gel toothpaste at Rs 27 per 200 gm and the
price war got pretty much under way.
According to Jagdeep Kapoor, Managing Director of Samsika Marketing
Consultancy, this is a trend that is here to stay in India. The best example to
date in this category is Anchor toothpaste. In India, there are some 12
affordability segments and it is for the companies to identify their specific slots
and pitch in, he explains.

"This is not surprising as the trend of people looking for value for money
products will continue. Ajanta's pitch is clearly the low price, mass-market
segment. Indian companies such as this are going to keep growing in the coming
days," adds Kapoor.
Ajanta Health, the brand floated by the Ajanta group earlier this year for
entering the healthcare segment, had all the reason to smile as it clocked sales
of Rs 83.89 crore in the first eight months (April - November 2003) of
operations. Having set its eyes on Rs 130 crores in sales to close 2003-04, the
company believes that it is in an ideal position to push for a Rs 300-crore
turnover in its second year.

The immediate target for Ajanta Health is to scale up its market share in
toothpaste from what it is convinced will not be less than seven per cent by the
end of this fiscal to 20 per cent by March 2006. If that were to happen, the
company would have to really keep the current level of momentum going and
notch up a turnover of Rs 600 crore in 2005-06. Not an unrealistic target, feels
Manish Purohit, CEO, Ajanta India Ltd.

"We started with an installed capacity of 30 tonnes per day in toothpaste, but
were forced go in for another production facility with 80 tpd capacity. At present,
Ajanta Health is manufacturing 60 tpd, of which 40-45 tpd is toothpaste while
shaving cream accounts for the remaining 15-20 tpd. The company has already
placed the order for plant and machinery to double capacity by March 2004 and
equipment is expected to be delivered in mid-January. The Ajanta Health success
is no flash in the pan," says Purohit.

The gameplan for the Morbi-based company, with little claim till date to the glitz
and glam of the FMCG segment, is to consolidate in at least three product
categories over the next couple of years before rolling out new products. With
this end in view, it has already decided against making a push in the toilet soap
segment, and keep only a marginal presence there.
Instead, the company has identified shampoo and shaving cream as the two
other products where it wants to carve out a sizeable market share. Ajanta
Health shampoo, with a 10,000 bottle per day (5 tpd) capacity, sold under the
brand name Orsilk, is gearing up for capacity augmentation in the next couple of
months. At Rs 36 per 250 ml, Ajanta feels it has a winner here and has ordered
two more moulding machines that will take up the capacity to 30 tpd (60,000
bottles per day) over the next one year or so.
But Nikhil Vora, FMCG analyst, SSKI Securities, sounds a word of caution, even
as he agrees that Ajanta has done well to move into the FMCG category from its
existing product line. "The question is whether Ajanta would be able to sustain
its annual incremental growth rate. For this, the company would have to look at
other products, which would mean running the risk of getting defocused. Also,
other product categories may not offer a similar vacuum for the company to
move into, with its aggressive pricing strategy," says Vora.

However, the Ajanta Health team, led by Dr Ashok O. Patel, son of O. R. Patel,
the founding director of the Ajanta and Orpat product line, is convinced that his
company's growth would continue as planned. The market for sensibly priced
oral care and skin care products not covered so far gives ample scope for making
a tryst with such a growth target, says Dr Patel.

"Rural market penetration does not happen merely by making the product
available in the interiors of India, it has also got to be competitively priced. At
the same time, we are not merely putting into the market a low-priced product
for mass consumption. Ajanta toothpaste is just as good as any of the big
names, if not better, as is borne by the extra cost of some Rs 2 lakh we incur
daily for our glycerine content. Our answer to the sceptics is that we are only the
second manufacturer in the country to get the approval of the Indian Dental
Association," elaborates Dr Patel.

The consolidation in skin care for Ajanta would be complete only when it shifts
its shaving cream production base to the old 30 tpd plant where the toothpaste
was originally planned to be manufactured. No surprises here that pricing
continues to be the USP here as well as it has positioned Ajanta Total shaving
cream, all complete with aloe vera, mint and coagulating agent, at Rs 25 per 100
gm while the Ajanta regular pack comes at Rs 21 per 125 gm.
Surely, the Ajanta Health bandwagon has begun to roll and it is taking almost all
parts of the country in its stride. According to Mr Dharmendra K. Rachh, Country
Sales and Marketing Manager, Ajanta India, the first eight months has seen
some of the most unlikely regions topping the sales chart. The East accounts for
Rs 24.66 crore, the South for Rs 21.50 crore and the North for Rs 19.25 crore
while the West accounts for Rs 18.48 crore in sales.

"We had the advantage of going in with many of the distributors of our existing
product line. However, selling clocks and calculators is different from marketing
toothpaste and shampoo. We could convince the stockists and retailers that they
stood to gain a similar margin by selling our products compared to that of
competition. The advantage by going with us was that they could buy more
products by investing a certain amount, which meant a higher return on
investment. That is driving our sales," says Rachh.

The response to Ajanta Health toothpaste and lately, shampoo, has puzzled
marketing pundits somewhat considering Bangalore became the single largest
revenue earner for Ajanta with Rs 4.10 crore till date. Cuttack followed with Rs
3.15 core and hometown Rajkot fetched up third with Rs 2.76 crore. The image
of Ajanta toothpaste being a product consumed in the rural outback no longer
holds good.

The reinvention of the `Made in India' toothpaste that began with Anchor seems
to have shifted a couple of gears with the arrival of Ajanta. And it may be a
matter of time before one gets to see other personal care products such as
creams and lotions from the unlikely town of Morbi occupy shelf space in rural
and urban India alike. Till then, Ajanta may continue to work up more foam and
lather.

Minat Terkait