The WordPress.com stats helper monkeys prepared a 2014 annual report for this blog.
Here’s an excerpt:
A San Francisco cable car holds 60 people. This blog was viewed about 2,000 times in 2014. If it were a cable car, it would take about 33 trips to carry that many people.
Hello Friends,
I welcome you all to my Youtube Channel – ‘Marketing by Vijay’. Let me give you an overview of this channel.
What is this channel all about? Just like this blog, this channel is meant to simplify the subject area of Marketing. This channel will be very helpful to the Marketing students and management professionals. This channel will put a lot of emphasis on the theoretical inputs in Marketing, while this will also tend to give you a real world picture to understand it better.
This channel will also supplement my blog; where I can discuss the theoretical concepts in Marketing and can also clarify your doubts. To start with, I am going to discuss the frequently asked questions in Marketing like What is Marketing? What is the difference between Marketing and Selling? What do you mean by Marketing Mix? And so on. Right now there are four videos uploaded and few more will be added every fortnight. The first video gives an overview of the channel; while the second video talks about ‘What is Marketing? The third video details the definition given by American Marketing Association; while fourth one talks about the difference between marketing and sales. The links for the last two videos are as following, while other links are already given above.
I dedicate this channel to our Father of the Nation – Mahatma Gandhi. I also believe that the Greatest Marketer of All time is none other than Mahatma Gandhi.
On this very auspicious day, I would also like to thank all the academicians, who have directly or indirect contributed to my learning and experience. Although the list is pretty long; I will try to name some of them. On the international front, I admire the works of Philip Kotler, Peter Drucker, C. K. Prahalad, Nirmalya Kumar and Jagdish Sheth. While in India, I learnt a lot from Prof. S. Neelamegham, Prof. J. D. Singh, Prof. Rajan Saxena and Prof. M. J. Xavier. Thank you Sir for helping me understand marketing better.
Marketing Guru : International
Marketing Guru : India
Once again, I welcome you all to board the journey of the Youtube Channel – Marketing by Vijay. Please subscribe the channel to stay updated. Kindly send your feedback in the comment section or write to me on marketingbyvijay@gmail.com.
Thank You…
YouTube: https://www.youtube.com/channel/UCfV-cq1ikCK8Xj_s2jPeQ3g
Facebook: https://www.facebook.com/marketingbyvijay
Linkedin: http://in.linkedin.com/pub/vijay-prakash-anand/32/724/b36
Welcome to Rs.1000 Crore FMCG Club
Yes, you are right. In this blog post, I am going to talk about the FMCG brands, which are generating revenue of more than Rs. 1000 Crore in India.
Let me ask you few multiple choice questions, before I start this post.
Q1. Name the highest selling consumer goods brand in India?
a) Surf b) Parle G c) Wheel d) Lux
Q2. Name the highest selling brand of Hindustan Unilever limited (HUL)?
a) Wheel b) Lifebuoy c) Surf d) Lux
Q3. Can you name the top 3 consumer products company in India?
a) HUL, Nestle India and GCMMF (Amul)
b) Nestle, HUL and P&G
c) HUL, GCMMF (Amul) and Nestle India
d) HUL, P&G and ITC
Q4. Identify the market size of the largest consumer goods company in India?
a) Rs. 30000 Cr. plus b) Rs. 18000 Cr. plus c) Rs. 39000 Cr. plus d) Rs. 9000 Cr. plus
Q5. Name the FMCG company with the maximum number of brands in Rs. 1000 Cr. club?
a) P&G b) Nestle c) ITC d) HUL
I hope, you got most of the answers right. The answers are given at the end of the post.
Before we move further, let us understand, what do you mean by FMCG. As you know, FMCG means Fast Moving Consumer Goods. Now the question arises, where does the goods move fast. Here, the answer is on the retail shelves. When the goods move fast on the retail shelves, it is known as FMCG.
Now, let us get into technicalities.
Fast Moving Consumer Goods are of low unit value with high volume potential and require frequent repurchase.
These frequent purchases make FMCG move faster on the retail shelves. FMCG generally include a wide variety of frequently purchased products such as toothpaste, shampoo, soap, cosmetics, hair oil and detergents, as well as other non-durables such as plastic goods, CFL bulbs, paper & stationery and glassware. FMCG may also include chocolates, pharmaceuticals, packaged food products and soft drinks.
In 2013, the market size of FMCG industry was Rs. 2.2 lakh-crore in India. The top 10 companies in the FMCG sector are Hindustan Unilever Limited (HUL), Amul, Nestle India, ITC, Procter & Gamble, Dabur, Asian Paints, Cadbury India, Britannia Industries and Marico Industries. While other leading companies in this segment are Reckitt Benckiser, GlaxoSmithKline, Pepsi, Coke, Himalaya, Bajaj, Godrej etc.
According to a news report published in ‘The Economic Times’ dt. 29th Oct., 2014; Procter & Gamble, one of the top two FMCG firms in the world, has topped Nestle and ITC to become India’s third-largest consumer products maker after HUL and GCMMF (Amul) (Kindly check out the table 1 below).
Table 1 : Top 5 Consumer Products Maker in India
| Company | FY14 Revenue (In Cr. Rs.) | CAGR % | Major Brands |
| Hindustan Unilever Ltd. | 30053 | 13.1 | Rin, Surf Excel, Wheel, Lux, Lifebuoy, Fair & Lovely, Dove, Pond’s and Clinic Plus |
| GCMMF (Amul) | 18143 | 22.7 | Amul |
| P&G India | 9274 | 23.7 | Ariel, Tide, Whisper, Vicks and Gillette |
| Nestle India | 9197 | 15.5 | Maggi, Nescafe, KitKat, Munch and Everyday |
| ITC – FMCG | 8099 | 22.1 | Aashirvaad, Sunfeast, Bingo!, Vivel, Fiama Di Wills, Minto, Candyman, Vivel and Superia |
As you can check out from the above table, the top 5 consumer products maker in India are HUL, GCMMF (Amul), P&G India, Nestle India and ITC. The fastest growing company in the list is Proctor & Gamble; while the growth of HUL is the lowest. But you should also keep in mind that HUL is more than three times bigger than P&G India or Nestle India or ITC – FMCG. It is also interesting to find that HUL and Amul, the top two players in this category, are not competing against each other in any segment.
Now, let us talk about Rs. 1000 Crore club and answer the Question 1, 2 and 5. The highest selling consumer brand in India is Parle-G. In 2012 only, it crossed Rs. 5000 Crore mark to become the largest consumer brand in India. It also has the distinction of being the largest selling biscuit brand in the world. Started a long way back in 1939, Parle G has come a long way in redefining the biscuit market in India. Parle-G is a good marketing case to understand, as to how do you stay relevant in the market and also sustain and grow your brand with the changing times. In the last 75 years, its value proposition, affordability, quality has remain unchanged. And that’s what Parle-G is promoting through an ad campaign – ‘Pehli Wali Baat’. Please Check out the television commercial (TVC) above.
| Brand | Sales at MRP (In Rs., 2012 Data) |
| Parle-G | 5010 Cr. |
| Wheel | 3700 Cr. |
| Ghari | 3500 Cr. |
| Lifebuoy/Lux | 2800 – 3000 Cr. |
| Surf | 2900 Cr. |
The other highest selling brands in the top 5 list are Wheel, Ghari, Lifebuoy/Lux and Surf. All these brands are owned by HUL, except Ghari which is owned by Rohit Surfactants Pvt. Ltd. (RSPL).While the second and third brand i.e. Wheel and Ghari are fighting out against each other in the low cost detergent powder category. Personal soap category is also making their presence felt at No. 4 slot with Lifebuoy and Lux. While Surf completes the list through its presence in the detergent powder category.
It is also very interesting to note that HUL has got the highest number of brands crossing the magic figure of Rs. 1000 crore in sales (FY13), under its belt. The list is pretty long with ten entries i.e. Rin, Surf Excel, Wheel, Brooke Bond, Lux, Lifebuoy, Fair & Lovely, Clinic Plus, Pond’s and Dove. Wheel, currently the highest selling brand in HUL, took almost three decades to reach Rs. 1000 Cr. mark, while Dove only took two decades after its launch in 1993 in India. Even, Dove has the distinction of being the fastest growing brand in the last few years. It has grown ten times between 2007 and 2013 from a mere Rs. 100 Cr. to become Rs. 1000 Cr. brand. Dove has played its brand extension card well by transforming itself from just a bathing bar to conditioners, deodorants, hair oil, lotions, body and face wash.
Besides HUL, PepsiCo and Coke have also many brands under their sleeves clocking turnovers of more than Rs. 1000 crore. The list includes PepsiCo’s Pepsi Cola , 7Up , Mirinda, Slice Lay’s and Kurkure. It also includes Coke’s Maaza , Thums Up, Sprite, Fanta and Limca Mountain Dew, Coke and Kinley. All these brands are doing quite well in India. In this list, there is also the presence of Colgate, Maggi, ITC’s Aashirvaad atta and Sunfeast biscuits and so on. The list is pretty long and many brands are on the verge of joining the list.
As long as a company fulfils the needs of consumers and keeps the faith of the consumers in the brand on a sustained basis, the brand can only look upward and Parle-G has been doing the same for the last 75 years and many more years to come.
Disclaimer : The listing of brands are not exhaustive, but only indicative. The revenue quoted for specific brands are applicable to the respective financial year.
Answers:
Q1. b) Parle G
Q2. a) Wheel
Q3. c) HUL, GCMMF (Amul) and Nestle India
Q4. a) Rs. 30000 Cr. plus
Q5. d) HUL
Mahatma Gandhi
Hello Friends,
Recently I did a poll on my facebook page on the ‘Greatest Marketer of All Time’. Most of the respondents favoured the names of Mahatma Gandhi, Narendra Modi and Steve Jobs. While I believe that the Greatest Marketer of All time is none other than Mahatma Gandhi.
Greatest Marketer of All Time Poll
Now let us talk about as to why I call him the greatest marketer of all time. But before going further, let us check out the definition given by American Marketing Association.
‘Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.’
If you look at the definition closely, you will find that marketing should ultimately benefit the society. In marketing, we not only talk about the businesses for profit, but we also talk about not for profit businesses like Government organizations or Non Governmental organizations and so on.
Similarly According to Philip Kotler, an idea can also be marketed. So what was the idea, Mahatma Gandhi was propagating. Mahatma Gandhi was propagating the idea of Freedom. He was propagating the idea of Non Violence. And it was all there for the benefit of the society.
The idea still lives in our hearts all across the world and it is not restricted to India only. The idea has an impact on billions of people all across the world, not only in India. Will any CEO of any company can have this kind of impact on the hearts as well as the minds of people. The answer will definitely be No.
A long way back in 1890, Mahatma Gandhi said in a speech in South Africa –
“A customer is the most important visitor on our premises.
He is not dependent on us. We are dependent on him.
He is not an interruption in our work. He is the purpose of it.
He is not an outsider in our business. He is part of it.
We are not doing him a favour by serving him. He is doing us a favour by giving us an opportunity to do so.”
This quote is so important that I have also included the same as the first quote in my book, ‘Marketing Management, An Indian Perspective’ (Published by Biztantra, New Delhi and distributed by Wiley International, ISBN No. – 9789350042489). In many companies in India, this quote is used as a pledge. If you visit any of the Khadi and Village Industries Stores, you will find a poster of the same. Such is the importance of these famous words by Mahatma Gandhi.
‘Marketing Management, An Indian Perspective’ by Vijay Prakash Anand
Amazon India Link : http://www.amazon.in/Marketing-Management-An-Indian-Perspective/dp/9350042487/ref=sr_1_1?ie=UTF8&qid=1413116854&sr=8-1&keywords=marketing+management+vijay+prakash+anand
Think again, Mahatma Gandhi talked about the importance of a customer in the business more than 120 years ago and now we talk about the same more and more in terms of marketing, in terms of CRM i.e. Customer Relationship Management?
Mahatma Gandhi understood the same, more than 100 years back and delivered what all of India wanted – Freedom. His ideologies, philosophies and deeds are guiding the path today, not only in India, but across the world and it will do so in future also. What an impact on the whole mankind…
This is the reason I call Mahatma Gandhi, the Greatest Marketer of All Time. Kindly send me your comments to let me know your views.
Thanks…
Welcome to the Great Indian Mobile Phone War.
Welcome to the Indian Market, where the homegrown Indian players like Micromax, Karbonn and Lava have waged a war for supremacy against the global behemoths like Samsung, Nokia, Motorola and Apple on the one hand and Chinese ones like Xiaomi, Gionee etc. on the other hand.
According to a recent report from Hong Kong based Counterpoint Research, Micromax became the leading mobile phone supplier brand in India in Q2 2014 for the first time ever by capturing 16.6% market share against Samsung’s share of 14.4%. In the same report, it was also pointed out that Micromax has also become the leading feature phone supplier overtaking Nokia for the first time. But in the smartphone category, Samsung still maintains a wide lead with market share of 25.3% against Micromax’s share of 19.1%.
Let us get into the data to understand the market scenario better. On the whole, mobile phone category can be classified under feature phone and the smart phone category.
| Rank | Mobile Handset Shipments Share (%) | Q2 2014 |
| 1 | Micromax | 16.6% |
| 2 | Samsung | 14.4% |
| 3 | Nokia | 10.9% |
| 4 | Karbonn | 9.5% |
| 5 | Lava | 5.6% |
| Others | 43.0% | |
| Total | 100% |
| Rank | Smartphone Shipments Share (%) | Q2 2014 |
| 1 | Samsung | 25.3% |
| 2 | Micromax | 19.1% |
| 3 | Karbonn | 5.9% |
| 4 | Motorola | 4.3% |
| 5 | Nokia | 4.0% |
| Others | 41.4% | |
| Total | 100% |
| Rank | Feature Phone Shipments Share (%) | Q2 2014 |
| 1 | Micromax | 15.2% |
| 2 | Nokia | 14.7% |
| 3 | Karbonn | 11.4% |
| 4 | Samsung | 8.5% |
| 5 | Lava | 7.3% |
| Others | 42.9% | |
| Total | 100% |
Source: Counterpoint Research
Micromax
From the above table, we can conclude the following:
1) It is clear that Micromax is leading the sales in the mobile phone category on the whole and feature phone category in particular; while Samsung is still maintaining the lead in the smartphone category.
2) Now, Nokia is dethroned from the leadership position in the feature phone category and is taken over by Micromax.
3) All the tables also feature two more Indian mobile phone players i.e. Karbonn and Lava, besides Micromax.
Moto G
4) Another interesting fact is the entry of Motorola at fourth place with 4.3% market share in smartphone category. In all the tables, top five players have majority market share i.e. around 41 to 43% of the total mobile handset market in India.
On the contrary, a report by IDC suggests that Samsung leads Indian market in the 2nd quarter, but is closely followed by Micromax. Let us not get into the debate of who is no. 1 right now in the Indian market. We should look at the larger picture. The market is getting into hyper competitive mode and it will be difficult for any company to hold their forte. Few years back, Nokia was ruling the charts in India, now it is almost on the brink and hopes are also fading. Similarly Samsung has been quite strong in Indian market, but Micromax is currently giving a tough fight. Even in Chinese market also, Samsung has lost its dominance to Xiaomi, which is also nicknamed as ‘Apple of China’. It’s very interesting to know that both in Indian and Chinese markets, Samsung is dethroned from the top position by the local players like Micromax and Xiaomi. It is also interesting to note that both these companies are only 5-6 years old in the market.
Xiaomi
But, both are following a different strategy. In India, Micromax sources the components from China and assembles the same in India; while Xiaomi has the advantage of in house manufacturing. It means Xiaomi can manufacture a handset at a lower cost than Micromax and thus, the most important edge of Micromax – its killer pricing, may not sustain in the near future or pricing may come at par with its competition. Advantages like strong dealer network and after sales service is also under attack, where Xiaomi and Motorola has gone to the online route by supplying directly through Flipkart and it has done wonders for Motorola. That’s why you find Motorola being ranked on No. 4 with 4.3% market share.
Xiaomi also followed the online route and has sold 95,000 smart phones in six flash sales, organised by Flipkart. In the last sale on 26th August, Xiaomi sold 20,000 smart phones, while more than 1 Lac customers registered them selves to buy the same on Flipkart. In all these flash sales, the smart phone on offer Xiaomi Mi3 has been sold within ten seconds. This is the best, Xiaomi could have asked for in Indian market. This is also a warning signal for all Indian players like Micromax, Karbonn, Lava etc. that time has come to pull up their socks to be ready for the war.
As far as after sales service is concerned, companies which are selling online, are not far behind. Motorola already has a wide service network, while Xiaomi is looking for 24 hour turnaround time for its customers.
So, on the whole the macro picture looks very complex and so is the the future of these companies. Now let us talk about the developments, which are taking place in this market right now.
1. Mozilla has recently come out with a $35 Firefox OS smartphone and launched the same in collaboration with Spice named Fire One priced at Rs. 2299/-.
Android One
2. Google is also not far behind. It is launching smart phones under Android One project in India in the price range of $100 . These smart phones are going to be sold in India by Micromax, Karbonn and Spice. The only respite is that both these smartphones are going to be sold, in collaboration with Indian counterparts.
Xiaomi Mi 4
3. Xiaomi has launched Mi 4 at a price point of 1,999 yuan, that is around $322; which is almost half that of the iPhone 5s. Mi 4 is not only bigger than Apple’s iPhone, but also rivals iPhone in terms of performance. It is expected to be launched by December in India. Currently Xiaomi is selling Mi 3 here.
4. Apple may be launching iPhone 6 on 9th Sept. This may further fortify its position in India. It has already gained ground in India by offering buyback, exchange and EMI schemes on its iPhone 5s and 5c.
Above are the current developments in this industry, which may impact future of various companies. The silver lining in this scenario is that Indian smart phone market is growing exponentially. In 2013, the market size was around 44 million mobile handsets, while in 2014, it is expected to touch 80 million handsets. It means that there is a lot of scope for all to grow. But all these companies needs to be vigilant all the time to sustain and grow in the market.
Just to add some drama to the story, do you know how big is Xiaomi? According to TrendForce, a Taiwanese market research company, Xiaomi was ranked seventh in the global smartphone market, with a share of 4%, in the January-March quarter this year. Xiaomi sold 26.1 million mobile handsets in the first half of 2014 i.e. around 4 million handsets more than what was sold in India in 2013 on half yearly basis.
So, the mobile handset market scenario looks tough ahead in India. Can we do something to improve the current situation? Yes, we can. In this hyper competitive scenario, all these companies need to follow what I call – the BIG approach.
The BIG Approach
The BIG approach is nothing but Branding, Innovation and Global Marketing.
All the Indian companies need to invest in their branding efforts. On this front, Micromax has taken a lead by earlier roping in Akshay Kumar as the brand ambassador for its feature phones, while they roped in Hugh Jackman for their Canvas series of mobile phones. But somehow, the advertising campaign does not look cohesive and a lot of efforts is still required on this front. Other companies like Karbonn and Lava are too far from the branding effort. Their efforts are mostly concentrated on announcing new phones with attractive pricing tag. Now is the time to wake up or, the consumer may count these mobile handsets third on the priority list, after Global players and Chinese ones.
Karbonn
Another aspect is innovation, which is crucial for the existence of these companies. On this front, these companies are quite in disadvantageous position, as they source all the components of a mobile handsets from China and are fully dependent upon them. That’s why Mi 4 can come from China to counter Apple iPhone 5; but it may take long to come something from India to counter the likes of Apple and Samsung.
Every company needs to sustain and grow in the market, to achieve its business objective i.e. profit. Now Global marketing is no more a strategic decision, but a contemporary one. You need to play globally, to remain competitive in the market or you will be wiped out from the market. Tata Motors is a very good example, whose success today is mostly dependent upon its subsidiary Jaguar and Land Rover (JLR). It might be a good strategy for Micromax, Karbonn and Lava to expand globally. In this process, mergers and acquisitions may also help them to achieve nirvana, by integrating their business backward. In turn, it will help these companies to source the components of the mobile handsets.
Thus the BIG approach will help these companies to plan for today and tomorrow. These companies need to cultivate the habit of ‘being proactive’, as said by Stephen Covey in his book ‘The Seven Habits of Highly Effective People’. This will help these companies to understand and anticipate the requirements of the customers better. If they can understand the customers better, they can serve them better.
It will be interesting to watch this space, as to who emerge as the winner in this Great Indian Mobile Phone War. Hope, an Indian company does. Amen….
I would like to start this blog post by thanking Mr. Laxmikant Dube, Mr. Prashant Chaturvedi, Mr. Sudhir Singh Rajput, Mr. Shaan Abbas and Ms. Monika Banerjee for their valuable and inspiring comments received for this blog.
In this blog post, I am going to continue from where I left the last blog post i.e. ‘Nirma Vs. Wheel’. If you are reading it afresh, kindly go through the earlier post on ‘Nirma Vs. Wheel’ to understand it better. Let us start by answering the questions posed in the earlier post one by one. Following was the first question:
1. Do you agree with the statement: ‘Low-income markets present an exceptional opportunity for the world’s wealthiest companies’?
Now you all know that ‘Low-income markets present an exceptional opportunity for the world’s wealthiest companies’ and thus the answer to the first question is yes. With more than 4 billion people in this category, low income markets makes it very lucrative for the multi national corporations (MNCs). As you know that every company needs to sustain itself and grow in the market to fulfill their ultimate objective of making more and more profits. But, high income markets are limited and these markets have already been catered by different MNCs since long. So, there is lesser possibility to expand these markets. In that way, low income markets are totally untapped market andprovides a huge opportunity for the marketers; as it did also in the case of Wheel for Hindustan Unilever Limited (HUL).
Let us come to the second question:
2. Discuss the reasons for the success of Wheel in the Indian market.
This was the trickiest question and the answer was not there in the post. You were supposed to answer this question by applying your common sense and the knowledge of the marketing domain. Before getting into answering it now, let us go back in 1969; where the story originates. In 1969, Dr. Karsanbhai Patel launched Nirma detergent powder to cater to the unmet needs of the customers for a low cost detergent powder. At that point of time, HUL’s Surf was priced at Rs. 15/- a kg and that was too costly for the bottom of the pyramid customers. Dr. Patel launched Nirma at Rs. 3.50/- a kg and the same became a huge success.
Let us get into marketing theory a bit, to understand this scenario better. As you know, Marketing is all about identifying and fulfilling the needs of the customers. These customer needs can be classified into two categories –
1) Unmet needs and
2) Met Needs
Good companies try to meet the needs of the customers, which are already met; while Great Companies try to fulfill both unmet needs as well as met needs.
Nirma
Nirma is a very good example of fulfilling the unmet needs of the customers. Once you fulfill the unmet needs, you also get the first mover advantage; as there is no competition and you can have a free run in the market. It happened with Nirma also and it had almost a free run till late 1980s.
But at last, in 1988, HUL woke up and launched Wheel to counter Nirma. At almost same point of time, Ghari detergent powder also entered the market and the market became highly competitive.
In the next phase, around 2010, HUL started thinking of giving Wheel brand a mega push by undertaking two distinct strategies to counter both the players – Nirma and Ghari in one go.
Ghari
As you know, a brand can only sustain and grow itself in the market, when it can differentiate itself with the similar / me-too products. The answer to differentiation lies into the marketing mix of any product i.e. 4Ps and 7Ps, if it is a service. You need to tweak one of the Ps or more than one P to differentiate yourself and win over the market. In the case of Wheel, the product was similar to Nirma and Ghari and differentiation with respect to price and place was not possible. Nirma and Ghari were already there in the market for many years and were also very frugal in their expenses; which made them quite competitive in the market. Thus, the possibility of breaking the price barrier and selling Wheel at a lesser price than Nirma and Ghari was ruled out. Now the only thing left was the promotion. The most obvious choice in this P was to get a Brand Ambassador / Celebrity Endorser and that’s what HUL did. HUL roped in Salman Khan and Prachi Desai to endorse Wheel. Although the choice of Prachi Desai was simple, due to her massive fan following among housewives due to Saas Bahu serials. But choosing the male brand ambassador was pretty difficult.
Although it may seem easy to you; but think again. Is that so easy? For a company like HUL; the possibilities in selecting the brand ambassador was wide open; right from Amitabh Bachchan to Sachin Tendulkar to M S Dhoni to all the khans in the industry – Salman Khan, Shahrukh Khan, Aamir Khan, plus Akshay Kumar, Hrithik Roshan and so on. Next comes the question – how do you select a brand ambassador? Brand ambassador is decided on the basis of the target market, you cater to. Now, who is the target market for a product like Wheel detergent powder, which sells for Rs. 40/- a kg. Yes, You are right, the target customer for Wheel is the bottom of the pyramid customer, who earns $1500 a year. In monthly terms, he earns $125 a month i.e. Rs. 7500/- per month. Now, a person who earns on an average Rs. 7500/- and even less is hooked to what? Cricket, Cinema or something else. Most probably it will be cinema and for the Hindi belt in India; it will be specifically Bollywood cinema.
Now comes the next question, Which Bollywood film star can he associate himself with? He can only associate with the film star; whom he can identify himself with. If it would have been 1980s, the choice was fairly simple – Amitabh Bachchan. Then Govinda and now yes, you are right, it is Salman Khan. Salman Khan was the only film star, who was popular with the masses, since his film Wanted in 2009. At that point of time, Shahrukh Khan was always acting as an NRI in USA in most of his films, while Aamir khan was seen as a Class actor, not an actor of the masses. With the massive success of Wanted in 2009 that too in single screen theatres in tier II and tier III cities, semi urban and rural locations, made the choice for Salman Khan very obvious for HUL. The success story still continues with hits after hits like Dabbang, Ek tha Tiger, Bodyguard, Ready, Dabbang 2, Jai Ho and now Kick; which is ruling at the box office.
Wheel
Besides promotion, HUL also created another differentiation, that too in the product. Now let me ask you one question, how do you understand that the clothes which you are going to wear is fresh? Yes, you smell it. And HUL smelt that too and incorporated artificial fragrance into Wheel, with photographs of Lemon, Jasmine, Sandal etc. to make consumers believe that it contains real ones.
Now let us come to the third question:
3. Unilever has adopted the bottom of the pyramid as a corporate strategic priority. Is it right for the Unilever to do so?
Yes, it is perfectly right for Unilever to replicate the same strategy across other similar markets. That’s why they launched Ala in Brazil. Now catering to the needs of the bottom of the pyramid customers has become a trend for all the companies. These companies try to innovate and introduce products to suit their needs. HUL’S Pure It and Tata Swach is a good example in the water purifier segment. Many companies have introduced small sachets / packages in the FMCG category to target more and more customers from the price point ranging from a meager 50 paise to Rs. 10. You name any brand and it’s there with the likes of Colgate, Parachute, Sunsilk, Parle G, Pepsodent, Fair & Lovely.
I hope, you enjoyed reading the post. Kindly send me your suggestions, comments to improve this blog further. If you want to read on any specific topic, please let me know by writing in the comments section or mailing me on marketingtbyvijay@gmail.com
Nirma Vs.Wheel
Thanks a lot for the overwhelming response to the first blog post on ‘Deodorants market getting hotter in India’. Now let us do something cool. So, in this blog post, I will provide you a platform to think about the marketing games played by different companies. For the same, I will be using the backdrop of Dr. C. K. Prahalad’s famous ‘Bottom of the Pyramid’ concept, combining with low cost detergent powder market in India. Much before Dr. C. K. Prahalad could come out with the concept of ‘Bottom of the Pyramid’; way back in 1969 Dr. Karsanbhai Patel started selling Nirma, a low cost detergent powder in Gujrat and went on to sell it nationally by 1985. This blog post is about Nirma and the rise of Wheel in this market.
Although, since Nov. 2012, Ghari is the market leader followed by Wheel and Nirma, I would like you to concentrate on Nirma and Wheel to drive home few basic concepts of marketing i.e. need identification, need fulfillment and creating sustainable differentiation, with respect to competition.
For the same, kindly go through this blog post and try to answer three questions, which is there at the end of the blog post. I am particularly looking forward to your answer for second question. Either mail me the answers or wait for 72 hours; I will come up with another post to discuss the answers and to tell you various concepts in Marketing, with real life scenario of Nirma and Wheel. It will also consist of supporting videos and print ads.
All the best. Let us enter the marketing game…
Fortune at the Bottom of the Pyramid
Low-income markets present an exceptional opportunity for the world’s wealthiest companies – to seek their fortunes and bring prosperity to the aspiring poor.
The concept of the “Fortune at the Bottom of the Pyramid” was coined by C. K. Prahalad, Professor of Corporate Strategy and International Business at the University of Michigan, USA. The economic pyramid shown below illustrates the concept really well. According to this pyramid, more than 4 billion consumers constitute the BOP (Bottom of the Pyramid). This is indeed a massive, untapped opportunity.
The traditional assumption is that the poor have no purchasing power and therefore do not present a viable market. Is this true? Not really, if you know how to convert the poor into consumers! The real source of market promise is not the wealthy few in the developing world, or even the emerging middle – income consumers: It is the billions of aspiring poor who are joining the market economy for the first time. In short, the poorest populations raise a prodigious new managerial challenge for the world’s wealthiest companies: selling to the poor and helping them improve their lives by producing and distributing products and services in culturally sensitive, environmentally sustainable, and economically profitable ways.
Four Consumer Tiers
Four Consumer Tiers
At the very top of the world economic pyramid are 75 to 100 million affluent Tier 1 consumers from around the world. This is a cosmopolitan group composed of middle and upper-income people in developed countries and the few rich elites from the developing world. In the middle of the pyramid, in Tiers 2 and 3, are poor customers in developed nations and the rising middle classes in developing countries, the targets of MNCs’ past emerging-market strategies.
Now consider the 4 billion people in Tier 4, at the bottom of the pyramid. Their annual per capita income — based on purchasing power parity in U.S. dollars — is less than $1,500, the minimum considered necessary to sustain a decent life. For well over a billion people — roughly one-sixth of humanity — per capita income is less than $1 per day. In fact, given its vast size, Tier 4 represents a multitrillion-dollar market. According to World Bank projections, the population at the bottom of the pyramid could swell to more than 6 billion people over the next 40 years, because the bulk of the world’s population growth occurs there. The quality and quantity of products and services available in Tier 4 is generally low. Therefore, much like an iceberg with only its tip inplain view, this massive segment of the global population – along with its massive market opportunities – has remained largely invisible to the corporate sector.
Wheel vs. Nirma
Hindustan Unilever Ltd. (HUL), a subsidiary of Great Britain’s Unilever PLC and widely considered the best managed company in India, has been a pioneer among MNCs exploring markets at the bottom of the pyramid. For more than 50 years, HUL has served India’s small elite who could afford to buy MNC products. In 1969, Dr. Karsanbhai Patel started selling Nirma in Gujrat and went on to sell it nationally by 1985. Patel was offering detergent products for poor consumers, mostly in rural areas. In fact, Nirma created a new business system that included a new product formulation, low-cost manufacturing process, wide distribution network, special packaging for daily purchasing, and value pricing.
HUL, in typical MNC fashion, initially dismissed Nirma’s strategy. However, as Nirma grew rapidly, HUL could see its local competitor was winning in a market it had disregarded. Ultimately, HUL saw its vulnerability and its opportunity: In 1995, the company responded with its own offering for this market, drastically altering its traditional business model. HUL decentralized the production, marketing, and distribution of the product to leverage the abundant labor pool in rural India, quickly creating sales channels through the thousands of small outlets where people at the bottom of the pyramid shop. HUL also changed the cost structure of its detergent business so it could introduce Wheel at a low price point. Unilever’s own analysis of Nirma and HUL’s competition in the detergent business reveals even more about the profit potential of the marketplace at the bottom of the pyramid.
Contrary to popular assumptions, the poor can be a very profitable market — especially if MNCs change their business models. Specifically, Tier 4 is not a market that allows for the traditional pursuit of high margins; instead, profits are driven by volume and capital efficiency. Margins are likely to be low (by current norms), but unit sales can be extremely high. Managers who focus on gross margins will miss the opportunity at the bottom of the pyramid; managers who innovate and focus on economic profit will be rewarded. Nirma has become one of the leading branded detergent makers in the world. Meanwhile, HUL, stimulated by its emergent rival and its changed business model, registered a 20 percent growth in revenues per year and a 25 percent growth in profits per year between 1995 and 2000. Over the same period, HUL’s market capitalization grew to $12 billion — a growth rate of 40 percent per year. HUL’s parent company, Unilever, also has benefited from its subsidiary’s experience in India. Unilever transported HUL’s business principles (not the product or the brand) to create a new detergent market among the poor in Brazil, where the Ala brand has been a big success. More important, Unilever has adopted the bottom of the pyramid as a corporate strategic priority.
Answer the following:
Let me ask you two multiple choice questions, before I start this blog post.
Q1. Name the market leader in deodorant category in India?
a) Park Avenue b) Axe c) Fogg d) Old Spice
Q2. Identify the market size of deodorant in India?
a) Rs. 1122 crore b) Rs. 295 crore c) Rs. 2100 crore d) Rs. 3900 crore
I hope, you got it right. The answer for both the questions is the ‘c’ option; i.e. Fogg is the market leader in deodorant category and the market size is worth Rs. 2100 crore.
Let us get into the deodorant market deeper. In the last few years, Deodorant has come up very fast in the Fast Moving Consumer Goods (FMCG) category. From a minuscule market size of Rs. 283 Crore in 2007, it has grown to more than Rs. 2100 crore in 2014. (Kindly check out the table 1 below). Besides the market size, it is also the fastest growing product in the FMCG category. Against the growth rate of 9 percent in FMCG, it is growing at 16 percent in India. This kind of growth also makes India, as the fastest growing deodorant markets in the world. These facts and figures make every FMCG company drool over this category. That’s why; you find the presence of all the big as well as regional companies vying for the consumer’s attention. Let us check out the brands in this category. I have listed down 22 brands; while in reality there may be a larger number, due to presence of many regional players (Kindly check out the table 2 below).
Table 1 : Deodorant Market Size in India
| Sl. No. | Year | Deodorant Market Size(In Rs. Crore) |
| 1 | 2007 | 283 |
| 2 | 2008 | 393 |
| 3 | 2009 | 567 |
| 4 | 2010 | 793 |
| 5 | 2011 | 1129 |
| 6 | 2012 | 1521 |
| 7 | 2014 | 2100 (Approx.) |
Source : Euromonior International
Table 2 : Deodorant Brands in India
| Sr. No. | Brand | Company | Brand Ambassador | Market Share |
| 1 | Fogg | Vini Cosmetics | – | 17% |
| 2 | Park Avenue | Helene Curtis India (Part of Raymond) | – | 8% |
| 3 | Axe | Hindustan Unilever Limited (HUL) | Ranbir Kapoor | Over 6% |
| 4 | Wild Stone | McNroe | Dia Mirza | Around 6% |
| 5 | Old Spice | Proctor & Gamble (P&G) | Arjun Rampal | |
| 6 | He | Emami | Hrithik Roshan | |
| 7 | Layer’r Shot | Adjavis Venture | Imran Khan | |
| 8 | Envy | Vanessa Care | Irrfan Khan | |
| 9 | Provogue | Provogue | Fardeen Khan | |
| 10 | Addiction | Mankind Pharma | Sunny Leone | |
| 11 | Garnier | Garnier | John Abraham | |
| 12 | Dove | HUL | ||
| 13 | Rexona | HUL | ||
| 14 | Set Wet | Marico | ||
| 15 | Cinthol | Godrej | ||
| 16 | Nivea | Nivea India | ||
| 17 | Engage | ITC | ||
| 18 | Spinz | Cavincare | ||
| 19 | Fa | Jyothy | ||
| 20 | Yardley | Wipro | ||
| 21 | KS Deo(Kama Sutra) | J. K. Ansell (Part of Raymond) | ||
| 22 | Rover | VEMB Retail |
Deodorant market is also unique in India, with market being dominated by companies of Indian origin, rather than MNCs. According to the recent Economic Times report – based on the March 2014 quarter Nielsen data, Fogg leads the market with 17% market share and is followed by Park Avenue with 8%. While Axe has slipped to third place with only 6% market share and its market share is now almost identical to Wild Stone. Although Axe has been in the market for long, it just took four years for Fogg to become the leader in the market.
Fogg
Fogg
Axe Blast
Now let us check out what makes Fogg the leader in the market. For the same, we need to understand the marketing strategy of Fogg. Fogg is owned and marketed by a company called Vini Cosmetics, which was founded by Darshan Patel. Darshan Patel was the former promoter of Paras Pharma, which was later sold to Reckitt Benckiser. Earlier with Paras Pharma, Patel had successfilly marketed Moov, Krack Cream, Livon, Itchgard and Dermicool. He applied a strategy to break the clutter in this highly fragmented category, by giving more value to the customer.
If we think in terms of marketing from the theoretical perspective per se; a company can differentiate its product from the competition, on the basis of the marketing mix i.e. 4Ps – Product, price, place and promotion. In this case, being a FMCG product; Fogg played the first P i.e. Product card quite well. They found out that the deodorant can be differentiated by having less gas and more perfume. In turn, it will also provide more value to the customers. Now the customers were guaranteed to have 800 sprays from a bottle of Fogg Royal priced at Rs. 170/-. Thus the functionality of having more number of sprays in a bottle worked wonders for Fogg and it became the leader in the market. The functionality was also adopted well in the promoting the product with the tagline ‘No Gas, Only Deo’. This kind of positioning was also different from the competition – including Axe, which emphasized only on the seduction aspect to sell their deodorants.
Wild Stone
He
Now let us analyse the positioning of various companies in the segment. Before 2013, Axe Ad was featuring a promotional campaign showing ‘Angels falling on the earth’. But it was not received well in India. To arrest the sales graph, HUL roped in Ranbir Kapoor as the brand ambassador. But this strategy has also not shown results. In comparison to Axe, Park Avenue deodorant has hold its ground well and have managed to keep their market share intact by product differentiation through innovation in pack sizes and by launching new fragrances. Other competitors are busy playing the card of seduction like Wild Stone, KS, Provogue etc., while others are relying on copying Fogg’s strategy. Now few companies are trying to combine the seduction card with the functionality part like Addiction. New players like ‘He’ deo by Emami is banking on Hrithik Roshan, while ‘Envy’ deo by Vanessa is relying heavily on Irrfan Khan to do the trick. Besides these brands, few other brands like Set Wet, Spinz, Fa, Nivea, Yardley, Cinthol etc. are lost in the market game, without having a mark on the marketing horizon. Thus, it will be very interesting to see as to how these companies fight out in the cluttered deodorant market in the coming years and emerge a winner.
Addiction
Marketing Mantra 1 – Marketers do not create needs…
Now let me ask you a very simple question. Do we need deodorant or the need for the deodorant is created by the marketers. Most probably, you will say that the need for deodorant is created by the marketers. But this is not correct.
Marketers do not create needs; needs pre-exist marketers.
Marketers just influence demand by communicating the benefits of the products to the customers, making the product available and by pricing it attractively. Customers are influenced by the society and this in turn creates demand for the product. In case of deodorant, a customer can very well live without it; but the societal influences keep him asking for the product. Thus, marketers do not create needs.
Marketing Mantra 2 – FMCG (Fast Moving Consumer Goods)
Fast Moving Consumer Goods widely known as FMCG, generally include a wide variety of frequently purchased products such as toothpaste, shampoo, soap, cosmetics, hair oil and detergents, as well as other non-durables such as plastic goods, CFL bulbs, paper & stationery and glassware. FMCG may also include chocolates, pharmaceuticals, packaged food products and soft drinks.
These goods are of low unit value with high volume potential and require frequent repurchase. That’s why these goods are called fast moving consumer goods, as these goods move fast at the retail shelf.
In 2013, the market size was Rs. 2.2 lakh-crore in India. The top 10 companies in the FMCG sector are Hindustan Unilever Limited (HUL), ITC, Nestle India, Amul, Dabur, Asian Paints, Cadbury India, Britannia Industries, Procter & Gamble and Marico Industries. Other leading companies in this segment are Reckitt Benckiser, GlaxoSmithKline, Pepsi, Coke, Himalaya, Bajaj, Godrej etc.
Let me know your views, comments, suggestions for the blog to improve it.
Dear Friends,
I am very happy happy to share my first blog post with you all. At this moment today, which also happens to be my son – Aryan’s birthday; I would like to dedicate my first blog post to my mentor, guide and guru Prof. M. J. Xavier Sir. He is currently Executive Director at VIT University, Vellore and Chennai. Earlier in his position as Director – IIM Ranchi, he had taken the institution to a greater height. Through his initiative only, among all the new IIMs, IIM Ranchi is holding the top position.
Prof. M. J. Xavier
As a guru, I really admire him; because he is the person; who has encouraged me to contribute significantly in the subject area of marketing through my book ‘ Marketing Management, An Indian Perspectives’, Lectures at the leading B-Schools in the country including IIMs and now this blog.
Thank you Sir for your encouragement, guidance and support….
Dear Friends,
Welcome to ‘Marketing by Vijay’ blog. ‘Marketing by Vijay’ is the official blog of Prof. Vijay Prakash Anand.
Prof. Vijay Prakash Anand
The objective of this blog is to simplify the subject area of Marketing, so as to be understood by even a lay man. This blog will discuss the developments, issues and challenges in the area of marketing in India as well as abroad. All the topics discussed in this blog will not only talk about the current scenario, but will also connect you to theoretical inputs in marketing. Ultimately, this blog shall help you understand marketing, as the subject area better. You can expect at least one blog post every month.
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Happy Reading…
Marketing by Prof. Vijay Prakash Anand 