2011

IIM Rohtak Bharadwaj Battaram Jaideep Jaiman Sujata Swati

[HAIR CARE]

1 ASPM INTERIM PROJECT REPORT

Increasing consumer awareness and affordability are the two key growth drivers of the Indian cosmetic industry. Hair care market in India is anticipated to reach around INR 208 Billion by 2014, growing at a CAGR of around 20% during 20112014, says RNCOS in its latest research report.i Baby hair care market will grow at a CAGR of around 5% during 20112014.ii Below is a depiction of the hair care industry as a part of the FMCG industry in terms of size.

1.1 CHANGING
LAST

ENVIRONMENT FOR

HAIR CARE (SHAMPOOS & OILS)

OVER THE

10 YEARS

From coconut oil to conditioners and henna to hair colorants, Indian hair care market is undergoing a sea change in the way consumer nurture their hairs. A strong undercurrent is being observed in the Indian hair care market with consumers showing readiness in experimenting with new products and manufacturers showering consumers with new products and services. Traditional usage of hair oil for nurturing and hair styling makes it the biggest segment in the Indian hair care market. Due to this, Conditioner category (including

hair oil) dominates the Indian hair care market with 48% share while Shampoo & Hair colorants form 38% and 11% share respectively. Styling and Perms & Relaxers category are still at a nascent stage and contributes only miniscule 3% of the hair care marketiii. A marketing insight report by Datamonitor, 'Product Insights: Hair care in India', has estimated the Indian hair care segment to grow at a CAGR of around 10 per cent over the next 5 years, making it one of the fastest growing hair care markets in the world. India was ranked eighth in terms of the new products launched globally in 2009, and is increasingly becoming one of the most sought-after destinations for retail investments in hair care. The growth is attributed to favourable demographics and key socio-economic factors such as rising beauty consciousness and increasing disposable incomes. Shampoos and conditioners, which collectively accounted for around two-thirds of all new launches in 2009, are the mainstay of the market but categories such as styling agents and hair colorants are now beginning to gain traction. The demand for Shampoos as a category of Hair Care products has risen from 7000 tonnes in 1995-96 to 50,000 tonnes in 2009-10 as shown in the table belowiv.

1995-96 Demand (in 000 tonnes) No. of HHs using (per 1000 HHs) Rural Demand (% of All India)
*HH=Household

2001-02 21 391.7

2005-06 33 480.7

2009-10 50 583.2

7 182.1

27.2

31.9

33.0

From the above table, the penetration of shampoos in the rural and urban markets is very clear. According to the same source, the urban usage pattern of Shampoos in the middle income group was 827.8 per 1000 households in 2001-02 as compared to 1000.0 in 2009-10. Similar figures for rural usage were 354.5 and 458.4 respectively. This gives us a good idea of the changing perception of shampoos as a dispensable product over the last 10 years. Following is the CAGR in volume for Hair Oil Industry over the last 5 yearsv.

CAGR in value for Hair Oil Market over the last 5 years:

1.2 CHANGES IN THE TARGET MARKET PROFILE & CONSUMER BEHAVIOR

The hair care market in India is going through a major change and has evolved over the past decade. What used to be a commodity product, with people hardly putting in any effort to select the best thing for their hair, has now changed into a high involvement product. India has come a long way from the good old Keshnikhar days. The consumer today is lot more aware due to the sheer variety of products on the shelves. There is a whole new range of products now available starting from the good old Hair Oil category, where Marico is still the market leader with its Parachute Brand, to whole new products like Hair Serums, Styling Gels, and Leave-on conditioners. This abundance of choices makes the consumer much more demanding now than in the last decade. The target market for Hair Care Products basically can be divided into 4 major categories:

Upper middle class, Now, also the middle class and housewives, Upper class rural consumers, Teenager fast becoming a major contributing segment.

With consumers ready to experiment with new products and services and marketers churning out new products at an impressive rate, there is a sense of excitement in the industry. The potential is such that major Indian manufacturers are now relaunching hair care brands that did not survive in earlier market scenarios. With globalization and greater purchasing power, consumers are willing to pick up higher-priced brands. There is especially an increase of awareness amongst Indian women about hair care. Although hair colors as a market has matured, slowly there is a demand for hairstyling and hair care products from consumers. There are still more female buyers than male buyers. The companies also are launching separate mens hair care ranges, but that still has to mature. The aspiration value has increased beyond consumers in the tier one/urban markets across the cities. Consumers in the tier two and tier three markets, including those in rural areas, also are demanding more and new products. Changing Consumer Aspirations: Hair care, once an occasion based activity, has now become an integral part of Indian consumers daily beauty regime. With growing disposable incomes and increasing western influence, Indian consumers are not shying away from experimenting with newer or pricier products. This has created new opportunities for the companies in this sector. As a result, products such as hair styling creams & gels, post wash serums etc. which once were nonexistent in the Indian market are increasingly finding a place in the Indian consumers shopping basket. A Shift Towards Natural/Organic Products: According to the new product insight report Hair care in India from Datamonitor, there is a growing preference towards product made from natural/organic ingredients amongst Indian consumers. Owing to such a strong demand, numerous personal care companies in India are introducing products that appeal to consumers who are keen to move away from conventional hair care products made from harmful chemicals. Increasing Segmentation in Hair Care Products: According to the latest report Hair care in India, due to increasing competition, manufacturers of hair care products in India have realized the pressing need to differentiate their offerings from other competing brands. This has resulted in greater segmentation in the hair care market. Increasing awareness among consumers has made manufacturers realize that a 'one size fits all' approach is no longer enough to attract customers. The

demand for customized offerings has resulted in the emergence of niche segments in the Indian hair care market, such as products which control dandruff, hair loss and thinning, products which offer protein enrichment or hair softening properties.

1.3 OBJECTIVES & BUDGETING FOR IMC PROGRAM

1.3.1 OBJECTIVES
The IMC objectives can vary from creating and increasing brand awareness to changing perceptions about the philosophy of the company that would ultimately affect behaviour. Possible communications objectives may include education and information, branding and image building, affecting attitudes, and loyalty. The objectives are generally different at difference stages of product life cycle of a product. For example, when HUL launched Dove in 2007, the umbrella communication objective was to provide information to effectively change the target consumer's knowledge, perceptions and attitudes towards the brand, which would eventually change behaviour. HUL initiated huge sampling in malls by setting up counters where consumers could get their hair washed and photographed. These pictures were then showcased in the dove gallery. As a result, the testimonials were not just on TV but also online through consumer generated content and in print. Sunsilk, another brand from HUL projects itself as a hair expert. The objective for the IMC of the brand is to upgrade the value of the brand name. As the brand is one of the leading shampoo brands in India, it does not need much recognition. Other than increasing the market share, it tries to recommend a positive message about lifestyle to young generation. Sunsilk used the memorable slogan Life cant wait for its advertising campaign. It uses advertising for brand recall, so it uses a reminder strategy. P&G tries to raise consumer awareness and exposure for its brands Pantene and Head & Shoulders by spending billions of dollars in advertising. Haircare brands like Clear from HUL also go for persuasive advertising with the objective of comparing the brand with a competing brand and trying to acquire the customers of the competing brand. Haircare brands have also tried to acquire customers from new markets for eg. Rural markets or small towns. With the objective of creating awareness for Parachute coconut oil, Marico Industries Ltd. Launched a van campaign in towns with population of less than 20000 in Tamilnadu, in order to convert loose oil buyers into Parachute pouch customers. It is also possible to increase the usage of existing customers in the product class. In essence the goal would be to increase the amount consumed per usage occasion.

For example Clinic Plus recommendeds through its advertisement, that its shampoo must be used three times in a week .

1.3.2 BUDGETING
In personal care, companies spend a lot for improving awareness and visibility.Market estimates put total LOreal advertising budget at Rs 200 crore. This year it is expected to spend around Rs 350 crore . The company spent almost 25 per cent of its last years turnover on above- and below-the-line promotion. In personal care, companies set aside 15 to 18 per cent of their turnover for such expenses. LOreal spends a much higher proportion to improve its visibility.

1.4 CREATIVE STRATEGY

In the battle for global beauty markets, $12.4 billion L'Oreal has developed a winning formula: a growing portfolio of international brands that has transformed the French company into the United Nations of beauty. Blink an eye, and L'Oreal has just sold 85 products around the world, from Redken hair care and Ralph Lauren perfumes to Helena Rubinstein cosmetics and Vichy skin care. Research results, compiled from markets around the world, indicated that: Women believed the ideal standard for hair is "healthy". Women considered their own hair damaged. Women believed that shine signaled health. Pro-vitamin formulation provided real support for claims. It was on the basis of the results of this research that P&G developed the advertising for its small premium brand of shampoo Pantene when in 1990 they made the decision to launch the brand around the world. Advertising was developed around the health positioning and was launched globally. The advertising was customized at the local level with the tag line, "Hair So Healthy It Shines." University of Tennessee professor Ron Taylor developed a model that divides strategies into the transmission view, which is similar to the more rational head strategies, and the ritual view, which is similar to the more feeling- based heart strategies. He then divides each into three segments: ration (rational), acute need, and routine on the transmission side; and ego, social, and sensory on the ritual side.

Most advertising messages use a combination of two basic literary techniques to reach the head or the heart of the consumer: lectures and dramas. A lecture is a serious instruction given verbally. The speaker presents evidence (broadly speaking) and uses a technique such as an argument to persuade the audience. The advantages of lectures are many: They are relatively inexpensive to produce and are compact and efficient. A lecture can deliver a dozen selling points in seconds, get right to the point, and make the point explicitly. In advertising we use the phrase talking head to refer to an announcer who delivers a lecture about a product. This can also be a celebrity spokesperson or an authority figure, such as a doctor or scientist. Drama, however, relies on the viewer to make inferences about the brand. Sometimes the drama is in the story that the reader has to construct around the cues in the ad. Through dramas, advertisers tell stories about their products; the characters speak to each other, not to the audience. Like fairy tales, movies, novels, parables, and myths, advertising dramas are essentially stories about how the world works. They can be funny as well as serious. Viewers learn from these commercial dramas by inferring lessons from them and by applying those lessons to their everyday lives.

The Facets Model can be helpful in thinking through objectives and their related strategies: Messages That Get Attention Messages That Create Interest Messages That Resonate Messages That Create Believability Messages That Are Remembered Messages That Touch Emotions Messages That Inform Messages That Teach Messages That Persuade Messages That Create Brand Associations Messages that drive action

Dove traditionally has shown women their natural beauty. Years since their successful launch, they still have the same message and strategy, and it just refuses to stop selling.

i ii

Indian Hair Care Market Shows Enormous Growth Prospects Indian Baby Haircare Market Set to Explode http://www.indiafoodbrief.com/analysis/A%20Hair%20raising%20story.pdf http://www.ncaer.org/downloads/PPT/thegreatindianmarket.pdf The AC Neilson Retail Audit Report

iii iv v