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NAVIGATOR 2006-07National Case Study Contest

NAVIGATORThe case deals with Daburs strategy and business plan towards achievement of its Vision 2010. Introduction On 29th March 2006, Mr. Sunil Duggal, CEO Dabur India Limited unveiled Daburs four year strategy and business plan which envisions doubling the turnover and net profit by the year 2010. Christened Vision 20101, this announcement came on the back of successful completion of the previous four-year business plan. The timing marks the end of our previous four year business plan that was crafted for the year 2002-06 and comes to an end with this fiscal...We expect to double our sales and profits by the end of fiscal 2009-10 with this plan said Mr. PD Narang, Group Director2. Background The company traces its origins to 1884, when Dr SK Burman set up Dabur as a proprietary firm for the manufacture of Ayurvedic drugs. Dr Burman set up the firm with a goal of meeting the healthcare needs of poor Indians. Initially the company marketed an allopathic drug, Plagin, to combat the then prevalent epidemic of plague. With growing demand, Dr Burman established a manufacturing plant in Kolkata in 1896, and Dabur became the first company to mass-produce Ayurvedic formulations under modern scientific methods. In 1940, Dabur entered the domain of personal care with the launch of Dabur Amla Hair Oil. In 1949, the company introduced Dabur Chyawanprash, the first branded restorative in a packaged form. The company expanded its product portfolio by adding oral care products in 1970. The year 1972 witnessed a shifting of operations from Kolkata to Delhi. Over the next decades, the company saw its portfolio expanding through introduction of new products and categories. At the turn of the millennium, Dabur staged a turnover of Rs.1000 crore.

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Exhibit 1: Timeline of Key Events 1884 1896 1940 1949 1994 1995 1996 2000 2003 2004 2005 Birth of Dabur First Production Unit Launch of Dabur Amla Hair Oil Launch of Dabur Chyawanprash Raises First Public Issue Launch of Vatika Range Launch of Real Juice Crosses Rs 1000 crore Turnover Demerger of Pharmaceuticals Business Promotion of 5 Power Brands Acquisition of Balsara Group of companies

Exhibit 2: Snapshot of Topline Growth Since 1980

Dabur Pharma was part of Dabur India till 2003;Pharma demerged into a separate company in 2003-04 Figures in Rs Crore

In the year 2002-03 Dabur laid down its long-term plan of transforming to a focused and transformed FMCG player. Accordingly, a four-year strategy, Vision I 3, was crafted, which targeted sales of Rs 2000 crore by the year 2006. Execution of Vision I: 2002-06 In order to operationalise and execute Vision-I, Dabur took a number of incremental and transformational initiatives. One of the first moves by the company in its journey towards becoming a focused FMCG player was to demerge its pharmaceuticals business as a separate entity- Dabur Pharmaceuticals Ltd. Within the FMCG space, Daburs blueprint involved developing and implementing marketing initiatives based on a clear strategic plan with restructured brand architecture, continuously introducing a stream of new products and creating a niche for the company in the FMCG segment based on the herbal and natural products segment. Brand Architecture Dabur realized that whilst rejuvenation of old brands, innovations and new product launches were key for achieving its growth targets, the immediate priority was

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streamlining the brand architecture. The flagship brand Dabur, actually operated at three distinct levels- the companys corporate brand identity, the mother brand for a whole range of products and also percolated to individual product names. With the word having several different meanings, the brand message was not getting clearly communicated to the consumers. Realizing that one brand cannot straddle so many categories, we decided to adopt a key brand strategy4, said Mr. Duggal. This strategy, directed towards creating differentiation amongst products, lead to the adoption of 5 master brands. It was decided that whilst Dabur, the flagship brand, would stand for healthcare products, Vatika and Anmol would be the master brands for the personal care portfolio. Most of the diversification into new product categories, such as skin care, was planned under these brands. Vatika was positioned as a herbal beauty brand with a premium image and Anmol was a mass market, value for money brand. Hajmola was positioned as a tasty digestives brand, and Real was to be the umbrella brand for juices and food, aimed at upmarket urban consumers. The company thus rationalized its earlier portfolio of over 20 brands. Once the overall brand architecture was established, a well-calibrated mix of products was placed under each brand. However, Daburs brand equity had to become more cohesive and in sync with the new brand architecture. In early 2002, Dabur had undertaken a study in association with consulting firm Accenture, to understand its brand equity. The key finding: Daburs brand perception was of a herbal specialist. The herbal segment was one of the fastest growing in FMCG sector and could be leveraged across both, urban and rural markets. However, in the past Daburs products had come to be associated with the 35 plus age group. With almost half the countrys population in the below 30 years age bracket, the company ran the risk of missing the next generation consumers. These factors created the impetus for re-visiting the corporate identity. According to Mr.Duggal, While the current logo has been with Dabur for years, we now felt the need to contemporise itExhibit 3: Change in Corporate Identity

and make it more relevant5.

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At the same time it was also important to maintain continuity with the banyan tree that was so closely identified with Dabur. The new identity modernizes the 100 year old equity of Dabur, both as a company and as a brand 6, said Mr. Devendra Garg, EVP Marketing. The new logo- the tree with a younger look in form and colours was also in sync with the new brand essence Celebrate Life. Each element of the identity was crafted to convey a relevant message. The burst of leaves signified growth, vitality and rejuvenation. The dual colours reflected the combination of stability and freshness. The form of the trunk mirrored three people raising their hands in exultation. Whilst the broad trunk represented stability, the multiple branches represented growth. The soft orange color of the trunk was selected for its message of warmth and energy. Thus, through its form and colours, the new logo combined stability and freshness and expressed a positive, proactive and progressive brand. Consumer Care Division Along of with the was contemporary the newHair Care

Exhibit 4: Product Portfolio-CCD, 2006 Category Products*Amla Hair Oil, Amla Lite Hair Oil, Anmol Sarson Amla, Vatika Hair Oil, Vatika Anti Dandruff Shampoo, Vatika Henna Conditioning Shampoo, Anmol Natural Shine Shampoo, Anmol Silky Black Shampoo Dabur Lal Dant Manjan, Dabur Red Toothpaste, Dabur Red Gel, Babool Toothpaste, Meswak Toothpaste, Promise Toothpaste, Binaca Toothbrush

identity came other changes. One area change two and organization the family structure. Prior to 2003, Dabur operated through products the divisions-

Oral Care

healthcare in

products marketing,

divisions. However in 2003, considering commonalities distribution, retailing and sales, the company decided to merge them as one. This division- now referred to as Consumer Care Division (CCD)7

Dabur Chyawanprash, Dabur Health Chyawanshakti, Dabur Honey, Dabur Supplements Glucose Dabur Hajmola tablets, Hajmola Candy, Hajmola Candy Fun 2, Digestives Hajmola Yumstick, Hajmola Mast and Masala, Anardana, Dabur Hingoli, Confectionary Pudin Hara Pearls, Pudin Hara Liquid, Pudin Hara G Skin Care and Baby Care Home Care Dabur Lal Tail, Dabur Baby Olive Oil, Dabur Janma Ghunti, Gulabari, Vatika Fairness Face Pack, Vatika Honey and Saffron Soap Odonil, Odomos, Sanifresh, Odopic

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consists of a diverse product portfolio and contributes the largest share to Dabur Indias top line.

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Having established the new brand architecture and logo, the Consumer Care Division turned its focus on further growing the business. In the personal care product range, the focus was to grow faster than the market, whilst in healthcare products, being the market leader, Dabur decided to drive the market growth. One of the key strategies of the company was to enter new categories and to innovate new product offerings. Over the four years, the company entered a number of new categories such as toothpastes, soaps and skincare. The strategic focus on new product development yielded benefits, as new products contributed about 42 per cent of CCDs growth during the period 200206.

Exhibit 5: Category Contribution to CCD Portfolio, 2003-06

Throughout the period 2002-06, the CCD brands got sustained support from aggressive advertising campaigns. The CCD brands adopted a successful strategy of communication through focused positioning and celebrity endorsers such as Amitabh Bachchan, Rani Mukherjee, Virender Sehwag and Vivek Oberoi. To support its

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marketing strategies, CCD needed to streamline and strengthen its sales and distribution. In 2002, the company already had one of the largest distribution networks in the country. However, it decided to further increase its penetration, reach and efficiency. This was achieved by covering towns where the company did not previously have a presence and by increasing direct coverage in present coverage towns. An analysis of the region-wise sales data revealed a significantly low contribution of the southern region (7