SUPER SHAMPOO PRODUCTS AND THE INDIAN MASS MARKET A CASE STUDY

Submitted by: ABHISHEK MOHANTY REG No- 11PGDM-BHU002 PGDM 2011-13 IMI-BHUBANESWAR

Under the guidance of: DR. D.D.SWAIN

DECLARATION
I hereby declare that the report titled Super Shampoo Products and the Indian Mass Market A Case Study submitted to IMI-Bhubaneswar, is a record of an original work done by me under the guidance of Dr. D.D.Swain, faculty member, IMIBhubaneswar. Abhishek Mohanty Reg No.- 11PGDM-BHU002

ACKNOWLEDGEMENT

I take this opportunity to acknowledge a deep sense of gratitude to many people who helped significantly to improve this project and without their help and advice this project would not have been possible. I am highly indebted to Dr.D.D.Swain for his guidance and supervision as well as for providing necessary information regarding the project & also for his support in completing the project. My thanks and appreciations also go to my batch-mates in developing the project and people who have willingly helped me out with their abilities.

TABLE OF CONTENTS

1. DECLARATION3 2. ACKNOWLEDGEMENT..4
3. BACKGROUND OF THE CASE..5 4. INDUSTRY ANALYSIS....6

5. SHAMPOO INDUSTRY IN INDIA..9 6. SWOT ANALYSIS11 7. ISSUES AND DECISION POINTS..14

8. FINDINGS AND RECOMMENDATIONS..17 9. CONCLUSIONS18

10. FUTURE OUTLOOK....19

11. ANNEXURE

12. BIBLIOGRAPHY AND WEBLIOGRAPHY

1.

INTRODUCTION

The case hovers around how Mr. Suresh Venkataraman, a successful marketer of industrial products, hit upon an idea of getting into the business of consumer products in general and the shampoo industry in particular. The fact that fascinated him the most was the use of single packaging. Also he wondered how with the invention of sachets, shampoo as a category was transformed from an unaffordable product to an affordable one. Therefore, in spite of being from Coimbatore, a city known for its textile industries, he decided to get into the shampoo industry. Venkataraman also had a firm belief that the rural market offered a huge potential for consumer products. Naming of the brand5 Venkataraman often wondered why several brands of shampoos did not have a brand name that was simple to understand. He decided to name the product Super Shampoo. He selected the name Super as it was easy to pronounce and had an English overtone that was considered a part of the aspirations of rural consumers. Moreover, the word super was amplified by the media to celebrate film stars by projecting them as superstars. The word super triggered a superior image amongst whatever it was competing against in a specific context.

1.1. History of Shampoo

Deen Muhammad, the head massage expert, is mentioned in the Oxford Dictionary of National Biography (ODNB) for helping Europe coin the word shampoo. He hailed from Bihar. Deens father was an employee of the East India Company and collected tax from the people of Bihar and Bengal around mid 1700. It is believed that Deen was born in Buxar where the famous Battle of Buxar between the East India Company and early India revolutionaries took place. Deens father had fought for the Company in that battle. Beginning his career as a servant of the Company, Deen used to massage the heads of war-fatigued soldiers with soap and a special oil. He was called the shampoo champion by these soldiers because they could not pronounce champi,

the Hindi word for head massage. In England, Ireland and Scotland, Deen gained fame as a shampoo surgeon. The ODNB describes Deen by this name. Deen learnt the art of massaging from local barbers, and hakims from the different towns of Bihar.

2.

MARKET ANALYSIS

2.1. FMCG Market in India

Fast Moving Consumer Goods (FMCG) goods are popularly named as consumer packaged goods. Items in this category include all consumables (other than groceries/pulses) people buy at regular intervals. The most common in the list are toilet soaps, detergents, shampoos, toothpaste, shaving products, shoe polish, packaged foodstuff, and household accessories and extends to certain electronic goods. These items are meant for daily of frequent consumption and have a high return. The Indian FMCG sector is the fourth largest sector in the economy with a total market size in excess of US$ 17 billion. It has a strong MNC presence and is characterised by a well established distribution network, intense competition between the organised and unorganised segments and low operational cost. Availability of key raw materials, cheaper labour costs and presence across the entire value chain gives India a competitive advantage. The FMCG market is set to reach US$ 33 billion in 2015. Penetration level as well as per capita consumption in most product categories like jams, toothpaste, skin care, hair wash etc in India is low indicating the untapped market potential. Burgeoning Indian population, particularly the middle class and the rural segments, presents an opportunity to makers of branded products to convert consumers to branded products. Growth is also likely to come from consumer 'upgrading' in the matured product categories. The increasing disposable income and improved standard of living in most tier II and tire III cities are spearheading the FMCG growth across the nation. The changing profile and mind set of the consumers has shifted the thought to Value for Money from Money for Value. Over the years companies like HUL, ITC and Dabur have improved performance with innovation and strong distribution channels. Their key categories have strengthened their presence and out performed peers in the FMCG sector. On the contrary, Colgate Palmolive and Britannia Industries are strong in single product category i.e. tooth pastes and Biscuits. In addition companies have been successful in reviving their presence in the semi-urban and rural markets.

2.2. Shampoo Market in India

Shampoo fall under the hair care category of the FMCG sector. The value of the shampoo market in India is US$ 600 million with a penetration rate at 13 percent. But

it is expected to increase because of the potential recognized in the rural market by the major players in this segment. The market is also expected to increase due to lower duties and aggressive marketing by players. Shampoo is also available in a sachet, which is affordable and makes upto 40% of the total shampoo sale. Since long HUL has been the market leader in the shampoo industry. With rivals like Procter & Gamble and Dabur giving tough competition, FMCG major Hindustan Unilevers market share in shampoo segment is declining and analysts pointed out that there is a concern over the firm losing out to competition in its other core segments. According to the Neilsens January-February data, HULs market share (volumes) in shampoo segment declined by 1.3 percentage points to 47.3 per cent while P&G gained by 2.4 percentage points with a market share of 17.7 per cent. Dabur on the other hand gained 0.8 percentage points capturing 6.7 per cent market share in the estimated Rs 3,000 crore Indian shampoo market. The companys brands Clinic Plus, Dove and Pantene competes against the likes of P&Gs Head & Shoulder and Daburs Vatika, ITCs Fiama Di Wills The Indian shampoo market is characterised by a twin-benefit platform: cosmetic and anti-dandruff. It is basically an upper middle class product, as more than 50% of the consumers use ordinary toilet soap for washing hair. While the awareness level is high, the penetration level is very low even in the metros which is only 30%. Urban markets account for 80% of the total shampoo market, The penetration level is rapidly increasing due to decline in excise duty, which was 120% in 1993 to 30% currently. The hair conditioner market is estimated at around Rs 200 crores and is growing at about 40 to 50 percent a year. In India, the share of hair conditioners is merely one-fifteenth of the shampoo market. In most mature markets , the share of hair conditioners is about one-third.

2.2.1. Classification of Shampoo

Different categories of shampoo products available in the Indian market can be broadly classified into the following:

Dandruff Gluten and wheat care All Natural Baby Animal Solid Jelly/Gel Paste/Cream

The biggest consumer hair problem in India was hair fall. However the fastest growing segment at 12 to 15 percent growth year on year was the anti-dandruff segment, which was around 15 to 20 percent of the market. The key benefit segment were cosmetic (which refers to shine, strength and lustre), anti-dandruff and herbal.

2.2.2. Shampoo Market in Rural South India

The top three shampoo brands in rural South India (total region encompassing Tamil Nadu, Kerala, Karnataka and Andhra Pradesh) were Clinic Plus, Head & Shoulders and Chik.

2.2.2.1. Clinic Plus-Background

Clinic Plus was a cosmetic shampoo brand of Unilever. It was in the popular/economy tier in terms of pricing and targeted at the low income consumer (semi-urban and rural). The brand was sold in bottles ranging from 25 ml to 300 ml, sachets of 7.5 ml and value packs or multi-sachet bundles. The brands place in the companys shampoo portfolio seemed to be a Family Value and Health Foundation brand.

2.2.2.2. Head & Shoulders-Background

Head & Shoulders was an anti-dandruff shampoo brand of P&G. It was in the premium tier in terms of pricing and targeted at consumers who sought a chemically mild yet effective anti-dandruff solution. The brand was sold in bottles ranging from

100 ml to 400 ml, sachets of 7.5 ml and value packs or multi-sachet bundles. The brands place in the companys shampoo portfolio seemed to be the lead antidandruff shampoo, which was endorsed by experts.

2.2.2.3. Chick-Background
Chik was a cosmetic shampoo brand of Cavin Kare. It was in the popular/economy tier in terms of pricing and targeted at the low-income consumer (semi-urban and rural). The brand was sold in bottles ranging from 25 ml to 100 ml and sachets of 7.5 ml. The brands place in the companys shampoo portfolio seemed to be the flagship brand that promised soft, nourished, beautiful hair for the confiden zindian woman.

2.3. Buying Behaviour of Indian Consumer

The Indian consumers are noted for the high degree of value orientation. Such orientation to value has labeled Indians as one of the most discerning consumers in the world. Even, luxury brands have to design a unique pricing strategy in order to get a foothold in the Indian market. Indian consumers have a high degree of family orientation. This orientation in fact, extends to the extended family and friends as well. Brands with identities that support family values tend to be popular and accepted easily in the Indian market. Indian consumers are also associated with values of nurturing, care and affection. These values are far more dominant that values of ambition and achievement. Product which communicate feelings and emotions gel with the Indian consumers. Apart from psychology and economics, the role of history and tradition in shaping the Indian consumer behavior is quite unique. powder existing with shampoos and toothpaste. Perhaps, only in India, one sees traditional products along side modern products. For example, hair oils and tooth

2.3.1. Rural vs Urban Consumer

Buying behaviour is different among urban and rural customers in the same income bracket as the rural mind is troubled by uncertainties which may be irrelevant in the urban context. The rural consumer is socially, psycho graphically, economically different from their urban counterparts. Therefore, companies need to understand the social dynamics and attitude variations within each village though nationally it follows a consistent pattern. One of the main influencer in the rural market is the retailer. He is the person who pushes a brand to the consumer, as the consumer is unaware of different brands existing and has no choice or preference. The rural consumer only asks for the generic product from the retailer and the retailer pushes a particular brand according to the availability and the returns he gets out of that brand. Hence, educating, training and networking with these retailers should be emphasized.

3.

SWOT ANALYSIS OF SUPER SHAMPOO

Strength:

Marketing Experience of Mr. Suresh Venkataraman. Proper selection of the sample for survey.

Good understanding of rural culture and market. Naming of the product as Super to which rural people could connect.

Weakness:

Finance Lack of proper distribution channel No brand name as it was new in the market

Opportunity:

Significant growth in rural market. Huge untapped rural market. 75 % of the BoP (Bottom of the Pyramid) consumers live in the rural market.

Threat:

Less affordability of low income strata customers. Advertising blitzkrieg of megabrands. Lack of advertising media in the rural market. Availability of homemade Ayurvedic substitutes.

4.

ISSUES/CHALLENGES FACED BY SUPER SHAMPOO IN THE RURAL MARKET

Since Super shampoo is a new brand, therefore it could face quite a few challenges before it positions itself comfortably in the rural market. Some of the major issues and decision points that could crop up are as follows:

Addressing the established brands of shampoos: There were basically three major brands of shampoos in rural South India. They were Clinic Plus, Head & Shoulders and Chik. These brands were quite established in their own rights and it would be quite difficult for new entrant to displace these brands from the market.

Competing against the advertising blitzkrieg of the established brands: The above mentioned brands of shampoos are the products of large business houses like HLL, P&G and Cavin Kare respectively. Therefore, they have a huge financial backup to spent on advertising which is invariably the most popular method of marketing a FMCG product. On the contrary, a new entrant like Super Shampoo does not have the required financial prowess to spent on advertising.

Understanding the diversity of cultures: There is a huge difference between the urban and rural mindset. There exists a huge gap between consumer behaviour in rural areas and urban areas. Since, Mr. Venkataram is from an urban area and his mind thinks in an urban style, there can be difficulty in relating to the rural consumer.

Understanding the consumer psyche in the changing environment: Demand for a product is varied for people living in different areas with different climatic conditions, occupations, literacy level, outlook towards life and their exposure to modern goods and services. The income difference between the few wealthy people and poor create differences in the demand, customs and beliefs, making segmentation difficult.

Low per capita income: Rural consumers have low per capita income, low purchasing power and a low literacy rate, contributing to a low standard of living. However, this is changing as consumers are becoming slowly literate.

Sales Management:

Rural marketing involves a greater amount of personal selling effort compared to urban marketing. The rural salesman must be able to guide the rural consumers in the choice of products, who sometimes do not properly motivate customers. Channel management poses a problem as distribution networks in rural villages are lengthy, involving more intermediaries and consequently higher consumer process. Also, dealers with experience are not available.

Proper media channel: Unlike urban India, rural India was what one might call a significantly dark media market in terms of the most penetrated urban media; for example, TV was the media with the highest reach, yet it penetrated only 38% of rural India. Radio was ahead of print in terms of reach, likely owing to literacy barriers. It reached 18% while print reached 15%. Cinema had a mere 5% reach. Therefore, it was very important to choose the right media for advertising in rural area.

Liberalisation and globalization: India is passing through a transition phase, and urban markets are flooded with foreign products. These will soon enter the rural markets questioning the survival of Indian brands. Indias consumer base is poor, and customers prefer value-for-money products. Foreign brands, with inherent cost structures are delivering affordable products. To survive, there is a need for better distribution systems and retailer service.

5. STRATEGIES ADOPTED BY MR. VENKATARAMAN

Mr. Venkataraman decided to commission a survey to obtain some insights related to the consumer behaviour towards shampoo category as well as towards the brands. For the purpose of sampling, the target population was defined in terms of elements, sampling units, extent and time. The element was as below:

Females aged 18 to 50, belonging to rural or semi-urban household basis income classification (annual household income of less than Rs 75,000 or between Rs 75,000 and Rs 150,000).

Category (shampoo) non-users or low frequency users, yet aware of the top three shampoo brands in the market.

Significant TV media consumption and enjoys watching advertisements.

The sampling unit was households, since the income parameter was used at the household level. The second level included individuals fitting the demographics. With regard to sampling frame, the basis of selection of representative elements of the target population were taken as gender, age group, household income, category consumption and media consumption. The extent was rural Karnataka; specifically, two towns (Bidadi and Hoskote) which are part of the Bangalore Rural District and a cluster of adjoining villages (Jigani) were selected for the study. The questionnaires formulated in English as well as the brand communication material were translated into the local language of the consumer while it was administered. The selection of the towns was performed based on the judgement of rural household penetration and category awareness. Within these geographies, probability sampling was the chosen technique, in which simple random sampling was performed to select the elements. The individuals were tested through the filter questionnaire to ensure that they met the demographic and category criteria that was required for the study. Seventy five respondents were chosen based on the above criteria.

6. FINDINGS AND RECOMMENDATIONS

To succeed in rural market the company will need to adapt the 4Ps of marketing to the 4As in their strategy Awareness, Acceptability, Availability and Affordability. Due to the limited reach of mass media the marketer would have to focus more on traditional media like melas, haats or mandis, which were places where the entire

population of a village congregated on a periodic basis to purchase a multitude of essential goods while also seeking a says entertainment for the family.

Access and availability are equally important There should be deep distribution and easy availability. Availability is the biggest challenge. Affordability is the key driver in rural India because of which the sachets needs to be carefully priced. With low disposable income product needs to be affordable to the customer.

6.1. STRATEGIZING
As seen above there are several challenges for the product can face in the rural market hence they can use try devising some strategy to overcome the challenges. Some of the strategies that the company can adopt are: Product Strategy: The packaging of the product should be in colourful and decent sachets in order to attract the rural consumers. The rural consumers are more concerned with the utility of the products. The brand awareness and loyalty in rural areas is quite high. Therefore, first a brand value must be created among the rural customers. Distribution Channels: Most manufacturers and marketers do follow a distribution arrangement for a village with the population of atleast 5000 people. While it is essential to formulate specific strategies for distribution in rural areas, the characteristics of product, its shelf life and other factors have to be kept in mind. the distribution strategy especially framed for rural India are-

Co-operatives society Public distribution system Multipurpose distribution canters

Distribution up to feeder markets/mandi towns/hats etc.

Pricing Strategy: The per capita income of consumers in rural areas is quite low as compared to urban areas. Therefore, the price of the product in rural market should be lower than that of urban market. Also refill packs can be introduced as they reduce the price. Promotion Strategy: In rural markets, TV, radio, print media and cinema are not that popular. Therefore, new and innovative modes of promotion strategies should be adopted. One strategy could be promoting the product at village haats, melas and mandis. Also, leaflets, in local languages, describing the product could be distributed among the villagers.

7.

CONCLUSION

It is quite evident from the case that a proper market survey is required for a new FMCG product in general and a new shampoo product in particular to enter into the

rural market. There were days when huge organizations flocked to rural markets to establish their brands. Today, rural markets are critical for every marketer be it for a branded soap or an automobile. As urban markets are getting saturated for consumer goods (FMCG & Durables), marketing executives are fanning out and discovering the strengths of large rural markets. The Indian hair care market is undergoing a sea change in the respects of the buying behaviour and consumer preferences. The consumers are willing to experiment with new products and manufacturers can therefore take advantage of this situation and gradually venture into the market. There is a strong wave in favour of anti dandruff shampoos and shampoos with minerals and proteins which nurture the health of the hair. There is a stiff competition and the rural market can be exploited for revenue. The income pattern of the population in rural areas is a bit wayward and the manufacturer can tap this situation and make profit by use of Sachets. According to the analysed data, the major dilemma for companies today is the gap between the rural and the urban consumer. The reason why only few companies have managed to venture out is because of the lack of understanding into the psyche of the rural consumer. Thus looking at the challenges and the opportunities which rural markets offer to the marketers, it can be said that the future is very promising for those who can understand the dynamics of rural markets and exploit them to their best advantage. A radical change in attitudes of marketers towards the vibrant and burgeoning rural markets is called for, so they can successfully impress on the 230 million rural consumers spread over approximately six hundred thousand villages in rural India.

BIBLIOGRAPHY AND WEBLIOGRAPHY

Pandey, Mukesh (2009): Contemporary Indian cases in Marketing Raut, Sidhartha and Kashyap, Pradeep (2009): The Rural marketing Book Fast moving Consumer Goods : http://www.ciionline.org/Sectors.aspx?
enc=prvePUj2bdMtgTmvPwvisYH+5EnGjyGXO9hLECvTuNvwUH5MWzEuAi G8dfH+/Z7F

Indian FMCG Industry outlook 2013 : http://www.salisonline.org/marketresearch /indian-fmcg-industry-outlook-2013/

Consumer Products- Sector Research and Analysis :

http://www.equitymaster.com/research-it/sector-info/consprds/consprdsproducts . html

Rivals eat into HULs shampoo market share :

http://www.thehindubusinessline.com/industry-and-economy/ marketing/ article 1684908.ece