HORLICKS BRAND

EXTENSION: KEY
ISSUES

Consumer
Behaviour

HORLICKS CASE KEY ISSUES 1

Consumer Behaviour

INTRODUCTION
GlaxoSmithKline is a leading healthcare company resulting from the merger of two leading international
organizations: Glaxo Wellcome and Smithkline Beecham. In India GSK operates as GSK Consumer
Healthcare Ltd. (GSKCH) headquartered in Gurgaon and GSK Pharmaceuticals Ltd headquartered in
Mumbai. GSKCH's journey in India began with Horlicks. During the initial years, Horlicks was
manufactured by Horlicks Ltd. Slough, England and was imported, bottled and sold in India. In the year
955, the change in the Indian import policy discontinued the import of Horlicks and Horlicks Ltd. was left
with only option to look for possibilities of setting up a plant in India.
Horlicks Ltd. in 1958, with the support of Maharaja of Nabha, Pratap Singh managed to come up with
Hindustan Milkfood Manufacturers Pvt. Ltd. Later in the year 1969, Beecham plc. acquired Horlicks
Limited and became the majority shareholder in Hindustan Milkfood Manufacturers Ltd. A decade later,
in 1979, Beecham India (Pvt) Ltd. merged with Hindustan Milkfood Manufacturers Ltd. to form HMM
Ltd. In 1989, Beecham plc., UK merged with and SmithKline, USA to form SmithKline Beecham plc, and
had its registered office in UK. HMM Ltd. thus became part of SmithKline Beecham Consumer Brands
and its name was changed to SmithKline Beecham Consumer Brands Limited. Finally in 1994, the name
of the company was changed to SmithKline Beecham Consumer Healthcare Limited, reassuring the
Company's promise of providing healthcare to consumers. In 2000, a new identity GlaxoSmithKline
Consumer Healthcare Ltd. (GSKCH) came into existence with the merger of two global giants SmithKline
Beecham and Glaxo Wellcome who shared values towards scientific research and improving people's
lives. (gsk.com)

THINKING OUT OF THE BOX

GlaxoSmithKline is trying to introduce newer product categories under the brand umbrella of Horlicks.
The reason and vision behind this move is not to be perceived as only a health drink provider. Hence
Horlicks is trying very hard to enter in the allied health food and beverage categories. In spite of having
more than 70% market share in malted health drinks segments, Horlicks is trying to diverse the product
portfolio because, to be alive in the market, they have to be innovative and keep updating their
offerings as per consumer needs.(Khicha, 2011) Now this can be happened in two ways: product line
extension and brand extension.
They are constantly and successfully doing product line extension by innovating different kinds of
Horlicks drinks to tap all the potential segments. Now to expand the product offerings or brand
extension, Horlicks is trying to introduce more diversified product under the brand umbrella. Now from
the brand personality point of view, Horlicks has been perceived as health conscious brand. Hence, they
are trying to defend the same perception for all the new product entry under the brand name. Hence,
difficulty is arising while they are introducing a very diverge product like Foodles. Some of their new
products are not very successful also. Hence the big question arises: Should Horlicks extend to new
categories or not.

HORLICKS CASE KEY ISSUES 2

Consumer Behaviour

PLANING
Horlicks was planning to launch 8-10 new products and expecting 30% growth from that. To ensure
growth of the brand of Horlicks, Shubhajit Sen, GSKCH executive vice president (marketing) talked about
three levels of strategies: (DR.LEENA KAUSHAL, Oct, 2011)

Invest more in research and development in the main product i.e. original Horlicks to keep the
standard improving.
Second, product line extension into new health drink sectors to tap all the uncovered consumer
segments that may not be using the category. For example, Junior Horlicks, Womens Horlicks,
Mothers Horlicks, Asha, Horlicks Lite etc.
Third, brand extension to new product categories like Noodles (Foodles), cereal bars (Horlicks
NutriBar), ChillDoodh, Horlicks biscuits etc.

Horlicks expands its product line of health drinks to cater all the segments of potential customer.

Junior Horlicks: To target children for the age group of 2-3 years.
Womens Horlicks: To fulfil the nutritional need for the mothers or to be mothers.
Horlicks Lite: For the aged people and diabetic people as it contains all the needed ingredients
but with low sugar and low cholesterol. It is positioned as With zero added sugar and zero
cholesterol.
Asha: To cater the need for the lower end segments.
Horlicks Gold: This is the latest and premium version of its portfolio to attract premium classes
with better test and aroma.

Apart from the ingredient contain differentiation, Horlicks also launched its Honey, chocolate and vanilla
flavor to provide pleasurable nourishment.
Now brand extension to new product categories is newer concept for Horlicks. They have already
launched Nutribar, Horlicks biscuits and Foodles. It positioned each of its product line extension based
on health consciousness concept. Horlicks biscuits are positioned as calcium content which is good for
bone. Nutribar is positioned as multi-nutrient bar which contains 11 vital nutrients. They position
Foodles also on the same lime of concept of health having a good nutrition value. They came up with the
health maker packet which contains nine essential vitamins with the goodness of rice, wheat, ragi and
corn.

CHALLENGES
Analysts are suspecting that in the name of product line extension and brand extension, Horlicks is
trying to over leverage the mother-brand.

Some market analyst apprehended that expanding into new category especially into noodle
segment may create a negative perception about the brand, because normally noodles are

HORLICKS CASE KEY ISSUES 3

Consumer Behaviour

perceived as junk food. This perception is in dissonance with the brand personality of Horlicks;
hence this diversification is completely unrelated.
Horlicks does not have enough efficient supply chain and distribution model for their flagship
product. Hence they could not leverage the distribution system for other products. This is a
major cause for the struggling of Nutribur and Chil-doodh. So at first they have to develop the
distribution system for other products also.
Deviation from the core competency may result in brand dilution. Like when Ponds introduced
toothpaste, it was a major failure. So before any new product development, they have to think
about strategic fitness.
Towards the bottom of the pyramid, perception of the brand Horlicks is urban or premium.
Hence, Horlicks failed to penetrate the bottom of the pyramid to that extend. Here lies the
scope or opportunity to develop a very cheap and simple product. They tried with Asha but it
was not a great success.

Adoption of new product:

Relative Advantage
Complexity
Compatibility
Trainability
Observability

FUTURE OPPORTUNITIES
Horlicks has currently launched oats products for the breakfast food section. For this type of products,
market is quite emerging and attractive. Horlicks is trying to position this product also on the other
health aspect like blood pressure and weight management for the age group of 25-45. Analyst also
claims that unlike product category extension for Foodles and biscuits, which were not the kind of
products for breakfast item, the entry into oats segment are more of a strategic fit with Horlicks core
brand. This product is more in synergy with the brand personality as oats is also a breakfast item to be
consumed at breakfast table.
Also as a recommendation, I am suggesting a product similar to Cerelac or ready to eat materials for
baby. May be the product based on milk and will be applicable for the baby for less than 1-2 age groups.
In that case they can also leverage the existing supply chain system.
Another product that I can think of is protein supplement for mass gaining. The potential customer
segment will be body concern middle age people or teenagers.

HORLICKS CASE KEY ISSUES 4

Consumer Behaviour

CONCLUSION
For the sustainability purpose, every company has to be innovative in terms of product line extension
and brand extension. For this purpose they have to be updated with the latent needs of the consumers
while keeping in mind the brand perception. The brand personality should not be diluted due to some
arbitrary product development. Product also has to be strategic fit under the offerings of the particular
brand. As of now Horlicks is not ignoring its core business rather they are trying to renovate in that
section too. The malt-food drink section is under constant innovation to cater all the segments or
potential customer. So as an obvious next step, Horlicks implemented the concept of brand line
extension. May be all the innovations are not that much success. One of the major causes for failure is
lack of distribution system. So with proper distribution system and right product choice, Horlicks should
extend to new categories.