Marico Case Study

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Analysis of Marico Limited’s Hair Care Business|



Table of Contents
Brief overview of marico limited3
Trends in hair oil Industry4
Value added hair oils5
Distribution system5
competition analysis5
Impact of porter’s 5 forces7
Marico Limited’s position in the market8

Brief overview of Marico Limited
Marico Limited manufactures and market fast moving consumer goods in hair care, skin care and health food segments. The product portfolio consists of edible oils, hair oils, fabric care products, hair creams and processed foods. Brands associated with Marico’s stable are Parachute, Parachute Jasmine, Hair & care, Oil of Malabar, Saffola, Sweekar, Shanti Amla and Shanti Thanda. The Marico Group business organisation is structured into three Strategic Business Units (SBUs) Consumer Products Business (India)

     Personal & Nature Care
     Wellness & New Products
International Business Group
     International FMCG Business
Kaya (Branched out to form a separate company Kaya Ltd. a wholly owned subsidiary of Marico)      Kaya Skin clinics

Trends in Indian Hair Oil Industry:
The hair oil market is huge, valued at Rs 6 bn. Due to the varied consumption habits of consumers across the country, where coconut oil and edible oil are interchangeably used, the size of the market is likely to be higher than estimated. More importantly, the market is growing at an impressive 6-7 per cent in volume terms despite the high penetration level. The penetration of hair oil is fairly high at around 87 per cent and evenly distributed among the urban and rural areas. Usage of hair oil is a typical Indian traditional habit. It is perceived to offer benefits of nourishment, hair strengthening, faster and better growth, and reduce the problem of falling hair. There are two types hair oil available in the market; coconut oil and non-greasy perfumed oil. Coconut oil comprises 2/3rd of the total market and the balance comprises the non-greasy perfumed oil. Unlike shampoos or hair colours, which are products relatively new to the Indian psyche, the usage of hair oil is a deeply ingrained habit with Indian consumers. Therefore, this is one product where the major players do not have to confront with either monetary or psychological barriers to usage. But this does not necessarily mean that being a branded player in the Rs 1,300-crore hair oils market is an easy affair. Branded players account for just over a third of the total hair oil market. Players in the plain coconut oil segment operate in a category where there are few entry barriers in place. Loose oils are priced on the basis of input costs and availability, both of which are notoriously volatile. Since branded players have to grow at the expense of the ubiquitous unorganized segment and a host of regional and local brands, it is difficult to shield margins and selling prices from the vagaries of loose oil prices. Players in value-added hair oils are better off on this count. But competition in this segment is intense with Hindustan Lever, Marico Industries and Dabur India launching a slew of new products.

Value-added hair oils
Given the limited differentiation possibilities in the coconut oil segment, major players in the branded hair oils market have been training their sights on value-added hair oils. This has spawned a range of product innovations -- hair oils with herbal ingredients, non-sticky oils, light hair oils, and lately, dandruff solution hair oil. An entry into the value-added hair oils segment appears to offer quite a few benefits to the branded players. One, with easier differentiation from the regional and local brands, establishing a brand identity is easier. Two, this makes value-added hair oils less vulnerable to price competition from cheaper alternatives. Third, value addition helps players command a price premium over the...
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