INDIAN HOME PRODUCTS LTD. – CASE STUDY

Submitted by:

SANJEEV KUMAR

Roll No – U811029

EPWP 11-12

Xavier Institute of Management, Bhubaneswar

INTRODUCTION:

Indian Home Products (P) Limited was a leading manufacturer of consumer products in India. The company was engaged in the production of soaps, detergents, cosmetics and medicinal products. IHPL had a large distribution network covering all the major towns with a sales force that service over 30,000 retail outlets all over the country.

Marketing Manager was planning to add new products to the company’s product line. Management felt that liquid shampoo was one product in view of its fast growth and increasing acceptance in the market. However Marketing manager not able to decide what kind of liquid shampoo to be launched.

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. 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”. In addition companies have been successful in reviving their

presence in the semi-urban and rural markets.

Shampoo Market in India

Shampoo fall under the hair care category of the FMCG sector. The value of the

shampoo market in India is 138kls with a growth rate at 6.6 percent estimated in year

1976.It is expected to increase growth of Shampoo 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 up to 40% of the total shampoo

sale.

The Indian shampoo market is characterized 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 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.

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 s

egment 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

was cosmetic (which refers to shine, strength and luster), anti-dandruff and herbal.

Buying Behavior 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. Perhaps, only in India, one sees traditional

products along side modern products

Rural vs Urban Consumer

Buying behavior 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.

SWOT ANALYSIS OF IHPL

Strength:

IHPL is having good marketing experience.

Company can invest good sum of money to get the proper sample selected for survey.

Good understanding of rural culture and market.

Well established distribution channel.

Weakness:

No brand name as it was new in Shampoo market

Opportunity:

Significant growth opportunity 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.

SUGGESTED STRATEGIES :

To address the established brand of shampoo 4A’s strategy is suggested in rural

market:

Awareness: IHPL has to create awareness about hair care. Due to the limited reach of

mass media the marketer would have to focus more on traditional media like melas,

haats or mandis

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.

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 brand awareness and loyalty in rural areas is quite high. Therefore, first a brand

value must be created among the rural customers.

Distribution Channels:

The distribution strategy especially framed for rural India are-

Co-operatives society

Public distribution system

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.

CONCLUSION

The Indian hair care market is undergoing a sea change in the respects of the buying

behavior 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. Keeping focus of rural population not using shampoo product

as they believe that it contains harmful chemical product and most of them using the

home made herbal product.

My recommendation is that IHPL should launch herbal shampoo as per the data

analysis consumer movement is from other NSD product to herbal product.

CONTIGENCY PLAN:

Since there is wave in favor of anti dandruff shampoo and shampoo with mineral and

protein, which nurture the health of hair. In case we see challenge in herbal product, we

can switch to Anti dandruff and protein shampoo.

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+5EnGjyGXO9hLECvTuNvwUH5MWzEuAiG8dfH+/Z7F

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

Consumer Products- Sector Research and Analysis : http://www.equitymaster.com/research-it/sector-info/consprds/consprds-products . html

Rivals eat into HUL’s shampoo market share : http://www.thehindubusinessline.com/industry-and-economy/ marketing/ article 1684908.ece