Hul Shampoo

Topics: Marketing, Price, Pricing Pages: 5 (1815 words) Published: January 4, 2013
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Direct Selling
"Our competition now spills beyond direct selling companies," Doug DeVos, Amway president and youngest son of its co-founder Rich DeVos, told ET in an exclusive interaction. As a company too, Amway has outgrown multinationals like L'Oreal, Nivea and Kellogg in India by reporting Rs 2,130 crore in sales for calendar 2011. The US company, which started operations in India 14 years ago, attributes its success to 550,000 active distributors, aggressive pricing and advertising, and it plans to double its advertising spends this year to Rs 58 crore from Rs 30 crore in 2011 as it targets double-digit growth to follow 19% rise in sales last year. "The strategy is to gain market share and tell consumers our value story," DeVos says. Industry experts and analysts, however, say scalability is a challenge. "For direct selling firms, achieving scale in the long term for top line and distribution is much more challenging compared to traditional firms like, say, a HUL or a Marico," says Pinakiranjan Mishra, partner and national leader (retail and consumer product practice) at consulting firm Ernst &.

The segment, at around Rs 4,000 crore as of January 2012 (as per Nielsen data) is growing by over 18 per cent annually. And competition for a share of this pie is intense. Shampoos also enjoy one of the highest penetration levels (around 80-85 per cent) across product categories in India, making it necessary for brands to keep innovating to stay ahead. Srinandan Sundaram, general manager, hair care, Hindustan Unilever (HUL) explains why companies are falling over one another to offer a plethora of variants and brands to consumers. “There are major demographic and psychographic differences amongst the consumers in India,” he says. “Keeping that in mind, we have a portfolio which helps us straddle the price pyramid while fulfilling all the needs of the consumer. Thus there is a range of brands differentiated on the basis of consumer needs and aimed at specific target groups.”

Here’s how HUL — that holds the largest share in the market (43 per cent or Rs 1,720 crore) — does it. The company holds four shampoo brands — Dove, Clear, Sunsilk and Clinic Plus. Each of these comes at a different price point and is built on a specific platform. The platform forms the base offering of the product with multiple variants to offer specific solutions. For instance, Dove is positioned as a damage control expert. It offers variants like Dove Colour Rescue (to protect coloured hair), Dove Hair Fall Rescue (an anti hair fall variant), Dove Dandruff (anti-dandruff) and so on. Similarly, Clear is an anti-dandruff solution with variants like Clear Hair Fall Defense (anti-hair fall), Clear Radiant Black (for dark black hair) and others. Other players like Procter & Gamble (29 per cent or Rs 1,160 crore), CavinKare (9 per cent or Rs 360 crore), Dabur (7 per cent or Rs 280 crore), L’Oreal (4 per cent or Rs 160 crore) and ITC (1.1 per cent or Rs 44 crore) also hold two to three brands across price points, with myriad variants under each. But are companies worried about cannibalising sales of similar variants under various brands in their stable? Satyaki Ghosh, director, consumer products division, L’Oreal India, which recently launched a Fall Repair variant under L’Oreal Paris range and also has a Garnier Fall Fight variant, doesn’t think so. “If the pie is big enough, in this case hair fall, one doesn’t have to worry. Besides...
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