87083659-A-Project-Report-on-Indian-Bath-Soap-Industry.pdf

8/19/2019 87083659-A-Project-Report-on-Indian-Bath-Soap-Industry.pdf

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A Project Report

On

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TABLE OF

CONTENTS

TOPIC PAGE NUMBER

• EXECUTIVE SUMMARY 3• INRODUCTION 4• INDUSTRY PROFILE 6

• SWOT ANALYSIS 18• FMCG INTRODUCTION 19

• BCG MATRIX 21

• COMPANY’S PROFILE 24

• SWOT OF NIRMA 27

• RESEARC METODOLOGY 46

• FIVE FORCES ANALYSIS 47

• SWAOT OF LL 49

• SWOT OF GODRE! "3

• FINDINGS # SUGGESTIONS 62

• CONCLUSIONS 66

• BIBLIOGRAPY 67

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EXECUTIVESUMMARY

FMCG industry is the most emerging industry nowadays in Indian

as well as global market. In India it is the 4th

largest market, whichshows that how important the industry is and how much itcontributes towards our economy.

FMCG includes the personal care products also like soaps,shampoos, etc. so our project mainly focuses on the market andstudy of !"# $%!&$ I' I'(I!. It consists )arious multi nationaland domestic companies. Major players are *nile)er+#-, 'irma,Godrej, ohnson / ohnson, colgate0palmoli)e, etc.

%ur main focus is on #industan le)er ltd, 'irma, and Godrej. # isha)ing largest market share within our country which gi)es toughcompetition to other local and domestic companies also. ath soapmarket is gradually de)eloping )ery fast and day by day many new)arieties, fla)ours, and fragrances, are added in it by )ariouscompanies to e1ist in the market.

%ur project consists study of 2 major players of bath soap marketand their $3%" analysis, CG Matri1, forces model of theindustry and the companies. 5arious suggestions andrecommendations are also been gi)en to the FMCG sector bathsoap segment. # is the most dominating company across theworld in FMCG sector due to its )ertical and hori6ontal integration."hen also 'irma and Godrej are trying to gi)e tough fight to it.

Main mantra for success of the companies is the di)ersification oftheir business and their products. "hus the study pro)ides detailedstudy of FMCG sector with focus on bath soap industry.

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INTRODUCTION$%&'() '* B+&,-%'+.

$oap has been with us in one form or another for thousandsof years. "he story goes that in 7ome in around 8,999 .C. at aplace called $apo #ill, the women were washing their clothes in asmall tributary of the ri)er "iber, below a religious site where animal

sacrifice took place. "hey noticed that the clothes became cleanupon contact with the soapy clay which was dripping down the hilland into the water. It was noticed later that this cleansing agent wasformed by the animal fat soaking through the wood ashes and intothe clay soil.

$trangely, in the first century !.(., the 7omans are creditedwith the making of a soap0like substance using urine. "heammonium carbonate in the urine was reacted with oils and fat in

wool to form this :soap:.

(uring the ;ighth Century the $panish and Italians beganmaking what was more like modern soap from eech "ree ash andGoat fat, whilst the French are credited with replacing the animal fatwith %li)e oil.

In ;ngland during the 8


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Further de)elopments in soap making were pioneered inritain during the late 8>th century with the in)ention of:"ransparent: soap by !ndrew &ears, the son of a Cornish farmer.

"his refined soap was known then as it is now as &ears

"ransparent $oap.

%)er the years and to the present day, opa?ue soaps ha)eremained the fa)ourite, mainly because transparent soaps tend tobe more e1pensi)e and also don:t last as long.

Factors likely to encourage soap marketing and consumptionin de)eloping countries in the future include@

• More discriminating educated and aware consumers.

• Growth of the media, especially "5• Impro)ements in transportation and communication networks.

• Inno)ati)e 7/( for raw materials and finished products.• Growth of supermarkets and retail outlets.

• #igh speed packaging machines and attracti)e packagingmaterials.

• $tate of the art technology to enhance producti)ity andreduce cost.

• Increasingly talented ad)ertising and market research

agencies.• iberalisation of markets and growth in free trade.

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INDUSTRYPROFILE

"he Fast Mo)ing Consumer Goods +FMCG- sector is thefourth largest sector in the economy with a total market si6e in

e1cess of 7s A9,999 crore. "his industry essentially comprisesConsumer 'on (urable +C'(- products and caters to the e)erydayneed of the population.

P('/0& C,+(+&($%&$%

&roducts belonging to the FMCG segment generally ha)e thefollowing characteristics@

• "hey are used at least once a month• "hey are used directly by the end0consumer• "hey are non0durable• "hey are sold in packaged form• "hey are branded

I/0%&() S5&%

"he main segments of the FMCG sector are@

•

P(%'+ C+(@ oral careB hair careB skin careB personal wash+soaps-B cosmetics and toiletriesB deodorantsB perfumesBpaper products +tissues, diapers, sanitary-B shoe care.

Major companies acti)e in this segment include #industan e)erBGodrej $oaps, Colgate0&almoli)e, Marico, (abur and &rocter /Gamble.

• '0%,'/ C+( fabric wash +laundry soaps and syntheticdetergents-B household cleaners +dishutensil cleaners, floor

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cleaners, toilet cleaners, air fresheners, insecticides andmos?uito repellants, metal polish and furniture polish-.

Major companies acti)e in this segment include #industan

e)er, 'irma and 7eckitt / Colman.

• B(+// +/ P++/ F''/ +/ B(+%@ healthbe)eragesB soft drinksB staplescerealsB bakery products+biscuits, bread, cakes-B snack foodB chocolatesB ice creamBteaB coffeeB processed fruits, )egetables and meatB dairyproductsB bottled waterB branded flourB branded riceB brandedsugarB juices etc.

Major companies acti)e in this segment include #industan

e)er, 'estle, Cadbury and (abur.

• $pirits and "obacc Major companies acti)e in this segmentinclude I"C, Godfrey &hilips, * and $haw 3allace.

!n e1act product0wise sales break up for each of the items isdifficult.

"he si6e of the fabric wash market is estimated to be 7s 499

croreB of household cleaners to be 7s 8899 croreB of personal washproducts to be 7s 4999 croreB of hair care products to be 7s DA99croreB of oral care products to be 7s DA99 croreB of healthbe)erages to be 7s 8899 croreB of bread and biscuits to be 7s >999crore B of chocolates to be 7s 29 crore and of ice cream to be 7sE99 crore.

In )olume terms, the production of toilet soap is estimated toha)e grown by four per cent in 8EEE0D999 from ,29.999 tonnesfrom ,89,999 tonnes in 8EE>0EE. "he production of synthetic

detergents has grown by eight per cent in 8EEE0D999 to D.A milliontonnes. "he cosmetics and toiletries segment has registered a 8per cent growth in 8EEE0D999 as against an annual growth of 29 percent recorded during the period 8EED0E2 to 8EE.

In the packaged food and be)erage segment, ice cream hasregistered a negligible growth and the soft drink industry hasregistered a si1 per cent growth in 8EEE0D999.

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Toilet Soap Industry in India:

"oday, the FMCG sector is the fourth0largest sector in theIndian economy, with an estimated total market si6e of around 7s49 bn. Further, the growth potential for all the FMCG companies ishuge, as the per capita consumption of almost all products in thecountry is amongst the lowest in the world. Further, if thesecompanies can change consumer:s mindset and offer newgeneration products, they would be able to generate higher growth.For e1ample, Indian consumers used to wear non0branded clothesfor years, but today, clothes of different brands are a)ailable and the

same consumers are willing to pay almost times more for branded?uality clothes. It is the ?uality and inno)ation of products, which isreally dri)ing many sectors. "hus, FMCG companies should usetheir imagination and respect the tastes of Indian consumers byoffering ?uality products.

"oilet soap industry is one of the oldest Fast Mo)ingConsumer Goods +FMCG- industry in India. It is among the highestpenetrated category within FMCG sector reaching an estimatedE urban and >


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"his is despite the fact that this usually sleepy category hasseen a spate of new players debut new offerings in recent times.%)er the past couple of years, 'irma has launched a slew of low0priced soaps under the banner of 'ima and 'irma eauty. Godrej

Consumer, a long0standing player, has relaunched old brands suchas Cinthol, apart from new ones such as FairGlow, !llcare, and'ikhar.

#enkel $&IC has made a maiden foray into the market withthe Fa range of soaps. Colgate &almoli)e has pepped up its soaprange with e1tensions such as &almoli)e 'aturals and &almoli)e;1tra Care. "he market leader #, has relaunched ree6e, apart

from launching $kin Care and $unscreen )ariants of its premiumsoap 00 u1 International.

If the shrinking market si6e suggests that Indian consumersha)e actually been cutting back on their use of toilet soaps, this isnot really the case. In )olume terms, the market for toilet soaps hascontinued to show a growth of A per cent in the first eight months ofD998.

"he major players ha)e certainly managed to sell more toiletsoaps by )olume. ut price competition in the segment and a slewof promotional campaigns ha)e reduced the effecti)e realisationsper unit sold. "his has probably neutralised the gains from )olumee1pansion. "heories about the reasons for the shrinking the marketsi6e )ary.

ow0priced brands

Industry players commonly attribute the de0growth: in the soapmarket to downtrading. "oilet soaps are among the highestpenetrated products within the FMCG market, reaching anestimated E per cent of the urban and >< per cent of the ruralhouseholds. "he fairly high contribution from the rural market makesthis category sensiti)e to the fortunes of the agricultural economy.

"he prolonged drought in the 'orth and 3est of the country

+until D999- and the sharp fall in farm disposable incomes +broughton by falling farm product prices- has probably persuaded low0

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income households to downtrade, that is, switch from high0 to low0priced brands.

"his is indeed supported by the fact that within toilet soaps, it

is the discount segment +soaps that cost between 7s and 7s >per


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acti)ity may soon tell on the growth rate of the players. !nd when itcomes to sustaining a high decibel promotional campaign, #:ssi6e certainly gi)es it the wherewithal to do it.

7ural re)i)al 00 ! wild card

It appears that a genuine boost to the market si6e for toiletsoaps will still ha)e to come from a re)i)al in rural demand.;)idence from the past does appear to suggest that a sharp rise inrural incomes would ha)e a cascading effect on FMCG demand."he pick0up in )olume growth in the soap market in 8EEE, after ayear of sluggish growth in 8EE>, demonstrated that a reco)ery inagricultural output does ha)e an indirect impact on sales )olumes ofFMCG products.

"his year, reports of a good monsoon in the northern andwestern parts of the country ha)e sparked off speculation about are)i)al in FMCG growth rates. "he fact these two regions accountfor per cent of the demand for FMCG products strengthens thisargument. #owe)er, it appears to be a bit early in the day to call it are)i)al. For one, while the northern and western regions ha)erecei)ed satisfactory rains, southern India has been the )ictim of a)ery erratic monsoon. $econd, gi)en that the good monsoon in the

current year succeeds two or three consecuti)e years of drought insome regions, there could be a substantial time lag before higherrural incomes translate into better FMCG demand

"hird, the key crisis in agriculture o)er the past year has beenthat farm product prices ha)e dropped sharply in response to a buildup of surplus foodgrain stocks. "herefore, e)en if a good monsoontranslates into a higher agricultural output, there is the ?uestion ofwhether this will actually e1pand or shrink farm incomes.

"hese factors suggest that it may be premature to takein)estment e1posures in companies focussed on toilet soaps in thehope of a re)i)al. It may be better to wait for concrete signs of apick0up in rural demand, which is certainly some way off.

'ature of the global Industry

"he global soap market is dominated by a small number ofmultinational companies. $oap is only one sector of their product

ranges. In multinational companies such as *nile)er and &rocter /Gamble, soap and detergent ranges typically account for less

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than D9 of group turno)er +in 8EEE-.

"he largest toilet soaps and detergents only company, by)olume sales, is the *nile)er Group, which has strong presence in

all regional markets in the world. "he top ten leading manufacturersand distributors of soap worldwide account for more than oftotal sales by )alue in 8EEE, totalling in e1cess of *$H>9billion.

P'%$&$' C'5.+) : V+0 '* W'(/8 *nile)er 89.9<D &rocter / Gamble


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"he u1 commercial was kicked off almost in tandem with thelaunch of FairGlow, which is touted as India:s first fairness soap.FairGlow has marked a breakthrough in the stagnant toilet soapsmarket and has kindled hopes of fuelling growth with the creation of

a new category.

"he industry was rife with speculation that market leader #would follow in the footsteps of Godrej $oaps to launch a soapproduct on the same *$&. 3hile details of the proposed u1 soapare not a)ailable, the product is e1pected to be launched in the ne1tfortnight.

"he ad depicts how, by using the soap, one can block the sunrays from tanning the skin surface. #owe)er, the ad does not re)eal

the name of the product. ut it clearly signals that a new productoffering from the u1 stable, albeit on the fairness plank, is in thepipeline. It has been a couple of weeks since the teaser ad waslaunched on select channels.

"he mo)e is seen by industry obser)ers as a knee0jerkreaction to combat the launch of FairGlow. "he only catch here isthat while Godrej $oaps directly claims deli)ering fairness throughFairGlow, the proposed u1 product talks about protecting fairness

by offering sunscreen benefits. FairGlow is being promoted as abeauty and comple1ion soap which contains a bio0e1tract callednatural %1y0G which is said to make skin fairer naturally.

For e)ers, point out industry analyst, it is crucial to defendany market share erosion at a time when the industry is strutting atgrowth le)els of D02 per cent per annum. Gi)en that the 7s D,E99crore industry has reached saturation le)els in penetration in bothurban and rural markets, it is becoming increasingly challenging formarketers to de)elop )alue0added soap products in the market.

Industry analysts point out that manufacturers will ha)e todesign products which offer uni?ue benefits so as to stoke )olumesgrowth. It is not surprising then that FairGlow is targeted at bothmen and women. 7esearch findings show that a section of men tooare users of fairness creams.

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"here were 4 leading national brands. 'one of the nationalbrands had more than market share and many more regionaland unorganised sectorlocal brands. E#industan e)er was the

market leader with about 29 +number- of toilet soap brands with atotal market share of A0EE in organised sector as seenfrom "able08 below, which gi)es the lead players and theirrespecti)e market share.

T+;-1 T, L+/ P+)(% +/ &,$( M+(& S,+(

Company&ercentage of Market$hare

# A<Godrej 89'irma >Colgate &almoli)e 8%thers 84$ource@ 5anscom (atabase

P('/0&$'

U$&2??2-2??3

:('@&,

E%&2??3-2??4

EST :('@&,

FMCG


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&ercentage of Market $hare

#,,

Godrej

'irma

Colgate

&almoli)e

%thers

"he leading brands in the market are (o)e, &ears, u1,(ettol, iril, 7e1ona, ifebuoy, 'irma, &almoli)e and #amam. !sur)ey reported in 5anscom, which was conducted in !hmedabad,showed that 892 toilets soap brands were a)ailable in this cityalone.

"he industry had witnessed many inno)ati)e sales promotion

acti)ities in the recent past. 'umerous factors were responsible forsuch a phenomenon. %ne of the reasons being that the marketbeing sluggish, companies were trying to increase market share instagnant to declining +)olume terms- market in order to retainconsumers, to encourage switching, to induce trials and li?uidatee1cessi)e in)entories. !nother reason possible was that with thepresence of so many brands the competition had increasedse)erally leading to fight for market share and shelf space.Inflationary trend had made both the consumer as well as trade deal

prone.

(ue to such a dense market like India big companies adoptdifferent strategies and coming up with )arious sales promotionschemes continuously.

"oday big players in Indian bath0soap market areL

8. # +#industan le)er limited Ka subsidiary of *nile)er-D. Godrej2. 'irma

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4. &/g +&rocter and gamble-

!mong these players # is the biggest player with around A


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Cadbury India td. 8EEE8D 88.9> 2A.<

&rocter / Gamble#ygiene / #ealth Caretd.

D9999A 4ED.> 8D 42.22 28.4<

I $ & Industries td. 8EEE92 D8.< 9.94

!mong the major companies, #industan e)er has a strongpresence in the food, personal care and household care+detergents- sectorsB I"C is the market leader in cigarettesB 'irmahas a strong presence in the detergent marketB 'estle and ritannia

are acti)e in the food sector and Colgate has a strong presence inthe oral care segment.

E.'(&%

India is one of the worldNs largest producer for a number ofFMCG products but its FMCG e1ports are languishing at around 7s8,999 crore only. "here is significant potential for increasing e1portsbut there are certain factors inhibiting this. $mall0scale sectorreser)ations limit ability to in)est in technology and ?uality

upgradation to achie)e economies of scale. Moreo)er, lower )olumeof higher )alue added products reduce scope for e1port tode)eloping countries.

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INDUSTRY SWOTANALYSIS

S&(&,%

• 3ell0established distribution network e1tending to rural areas.• $trong brands in the FMCG sector.• ow cost operations

W+%%%

• ow e1port le)els.• $mall scale sector reser)ations limit ability to in)est intechnology and achie)e economies of scale.•

$e)eral Ome0tooNN products.

O..'(&0$&$%

• arge domestic market.• ;1port potential• Increasing income le)els will result in faster re)enue growth.

T,(+&%

• Imports• "a1 and regulatory structure• $lowdown in rural demand

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FMCGI&('/0&$'"he Fast Mo)ing Consumer Goods +FMCG- sector is the

fourth largest sector in the economy with a total market si6e ine1cess of 7s A9,999 crore. "his industry essentially comprisesConsumer 'on (urable +C'(- products and caters to the e)eryday

need of the population.

P('/0& C,+(+&($%&$%

&roducts belonging to the FMCG segment generally ha)e thefollowing characteristics@

• "hey are used at least once a month

• "hey are used directly by the end0consumer•

"hey are non0durable• "hey are sold in packaged form• "hey are branded

I/0%&() S5&%

"he main segments of the FMCG sector are@

• &ersonal Care@ oral careB hair careB skin careB personalwash +soaps-B cosmetics and toiletriesB deodorantsBperfumesB paper products +tissues, diapers, sanitary-B shoecare.

• Major companies acti)e in this segment include #industane)erB Godrej $oaps, Colgate0&almoli)e, Marico, (aburand &rocter / Gamble.

• #ousehold Care fabric wash +laundry soaps and syntheticdetergents-B household cleaners +dishutensil cleaners,floor cleaners, toilet cleaners, air fresheners, insecticidesand mos?uito repellants, metal polish and furniture polish-.

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• Major companies acti)e in this segment include #industane)er, 'irma and 7eckitt / Colman.

• randed and &ackaged Food and e)erages@ healthbe)eragesB soft drinksB staplescerealsB bakery products

+biscuits, bread, cakes-B snack foodB chocolatesB ice creamBteaB coffeeB processed fruits, )egetables and meatB dairyproductsB bottled waterB branded flourB branded riceBbranded sugarB juices etc.

• Major companies acti)e in this segment include #industane)er, 'estle, Cadbury and (abur.

• $pirits and "obacc Major companies acti)e in this segmentinclude I"C, Godfrey &hilips, * and $haw 3allace.

!n e1act product0wise sales break up for each of the items isdifficult.

"he si6e of the fabric wash market is estimated to be 7s 499croreB of household cleaners to be 7s 8899 croreB of personal washproducts to be 7s 4999 croreB of hair care products to be 7s DA99croreB of oral care products to be 7s DA99 croreB of healthbe)erages to be 7s 8899 croreB of bread and biscuits to be 7s >999crore B of chocolates to be 7s 29 crore and of ice cream to be 7sE99 crore.

In )olume terms, the production of toilet soap is estimated toha)e grown by four per cent in 8EEE0D999 from ,29.999 tonnesfrom ,89,999 tonnes in 8EE>0EE. "he production of syntheticdetergents has grown by eight per cent in 8EEE0D999 to D.A milliontonnes. "he cosmetics and toiletries segment has registered a 8per cent growth in 8EEE0D999 as against an annual growth of 29 percent recorded during the period 8EED0E2 to 8EE.

In the packaged food and be)erage segment, ice cream hasregistered a negligible growth and the soft drink industry hasregistered a si1 per cent growth in 8EEE0D999.

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BCG MATRIX"he CG matri1 method can help understand a fre?uently madestrategy mistake@ ha)ing a one0si6e 0fits0all0approach to strategy,such as a generic growth target.

In such a scenario@

!. Cash cows business units will beat their profit target easilyB their

management has an easy job and is often praised anyhow. ;)en,worse they are often allowed to rein)est substantial cash amountsin their businesses, which are mature, and not growing anymore.

. (ogs business units fight an impossible battle and, e)en worse,in)estments are made now and then in hopeless attempts to Pturnthe business aroundN.

C. !s a result +all-?uestion marks and stars business units get

mediocre si6e in)estment funds. In this way they are unable to e)erbecome cash cows. "hese inade?uate in)ested sums of money area waste of money. ;ither these $*$ should recei)e enoughin)estment funds to achie)e a real market dominance and becomea cash cow+or star-, or otherwise companies are ad)ised todisin)est and try to get whate)er possible cash out of the ?uestionmarks that were not selected.

imitations of CG matri1@

$ome limitations of oston consulting group matri1 include@

• #igh market share is not only success factor.

• Market growth is not the only indicator for attracti)eness of amarket.

• $ometimes dogs can e)en more cash as cash cows.

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BCG MATRIX

LLR'+ P+(%L$*;0') ;(=!',%' # !',%'-S+'D&&' ;(=

M+$%0( S+/+ %'+.G'/(-%,$++$

QLL $*;0') S+&0( N$(5+ $(5+ ;+&,%'+.

- $(5+ $5 %'+. - +5+)

G'/(- F+$('@

LL-L0 +5+5

D'L$($NIRMA-;+0&) %'+.!',%' # !',%';+;) %'+.G'/(-C$&,' G'/('

C'+& .+5'$G'/(-G++ G'/(N'1;(=

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Cash cow 0 ! business unit has a large market share in a mature, slowgrowing industry. Cash cows re?uire little in)estment and

generate cash that can be used to in)est in otherbusiness units.

$tar 0 ! business unit that has a large market share in a fastgrowing Industry. $tars may generate cash, but becausethe market is growing rapidly they re?uire in)estment tomaintain their lead. If successful, star will become a cash

cow when its industry matures.

Ruestion mark +problem child- 0 ! business unit that has a small market share in a high

growth market. "hese business units re?uire resourcesto grow market share, but weather they will succeed andbecome stars is unknown.

(og 0 ! business unit that has a small market share in a matureindustry. ! dog may not re?uire substantial cash, but itties up capital that could better be deployed elsewhere.*nless a dog has some other strategic purpose, it shouldbe li?uidated if there is little prospect for it to gain marketshare.

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COMPANYPROFILE

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"oilet soaps recorded a strong 49 plus )olume and )alue growth

NIRMA

B+('0/

"he 'irma story began in 8EAE and since then it has e1panded its detergents+cakes and powders-, soaps, soap intermediates !lfa %lefin $ulphonate +!%$- to ale)el of 7s. >D billion. "oday, 'irma has a 7s.8< billion share in this market and has

been acknowledged as a marketing miracle. 'irma known for its focus on costeffecti)eness by integrating latest technology manufacturing facilities with inno)ati)emarketing strategies to create world class brands, has by passed M'Cs like #,&/G to become the market leader +in terms of )olumes- in this price0sensiti)eindustry. In )alue terms, 'irma holds 8A market share in the branded detergentssegment.

"he manufacturing and marketing operations were di)ided in se)eral closelyheld group companies. In FSE


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N$(5+ B+&, S'+.

"oilet soap market in India was dominated by a )ery fewM'Cs which could monopolistically price their product. In8EED, sensing a strong need to e1pand the market through&enetrati)e &ricing, 'irma entered this market with the launchof P'irma ath $oapN, which is a carbolic +7ed- soap. !lthough

the carbolic soap segment is on decline, 'irma ath hasgenerated larger )olumes each year. &acked in a red colourwrapper and a)ailable in


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"his product had created a sensational marketinghistory in the Indian "oilet soaps market, when it waslaunched in 8EE, as ranked by theusiness $tandard Marketing (erby, 8EE>. +as featured in"he $trategist Ruarterly, uly0$eptember 8EE>-.

S&(+&)

'irma:s large cape1 backward integration projects had beenundertaken with a strategy to become the lowest cost detergentmanufacturer in the world. $elf sufficiency in key raw materials willgi)e protection against commodity cycles besides yieldingsubstantial sa)ings in raw material cost. "he company estimates atotal cost sa)ing of D in material and handling costs due to thebackward integration projects. "he ! plant has yielded about8D cost sa)ings and the company e1pects a similar cost sa)ing ofabout 8D08 once the soda ash plant stabili6es. %)erall thebackward integration has yielded a cost sa)ing of 7s9.>08bn lastyear. &ost completion of backward integration the company nowplans to focus on building large )olumes and gain from economiesof scale. "he company plans to tap e1port markets and is aloslooking at ac?uisition opportunities or distribution tie uparrangements in other FMCG categories. randed salt will belaunched by the end of the year. "he company is also considering

other categories such as shampoo, toothpaste and fabric whiteners.

E+($% %%$&$$&) *+&'(%

• Stabilization of backward integration projects• Volume growth in detergents as well as toilet soaps and

utili6ation of e1panded capacity• Toilet soap market share : $uccess of new launches,

market share growth will dri)e profitability.

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• Commodity price movement of ! and $oda ash willha)e significant impact on companyNs competiti)eposition, as 'irma will be the only company to ha)e itsown raw material production facility.

"he Consumer products di)ision continued to grow at ahealthy pace of DA yoy, dri)en by the success of the Nima launch.'irma has for the first time di)erted from its strategy of umbrellabranding and has launched 'ima as a :fighter brand : 0 to fightcompetition and the unorgani6ed sector. !nd the company hasachie)ed tremendous success. In a scenario where the a)erageindustry has been growing at a poor D02, the company hasmanaged to almost achie)e double digit )olume growth.

1. HINDUSTAN LEVER LIITED

ission

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Unilever's mission is to add Vitality to life. We meet everyday needs for

ntrition! "y#iene! and $ersonal %are &it" rands t"at "el$ $eo$le feel

#ood! loo( #ood and #et more ot of life.

)indstan *ever +)**,! ndia's lar#est fast-movin# %onsmer #oods%om$any is also t"e %ontry's lar#est %om$any in terms of mar(et

%a$italisation. t leads in "ome and $ersonal %are $rod%ts! and foods and

evera#es &it" over 110 rands. "e /ar astern %onomi% evie& rates

)** as t"e est ndian %om$any and re%o#nises it as one &"i%" all ot"ers

&ant to emlate. ts mar(et %a$italisation &ent $ 18 to s 324351 mln

+ta(in# it to t"e first $osition from last year's t"ird, &"en t"e total mar(et

%a$italisation of t"e o$ 500 %om$anies &as do&n 22. t no& a%%onts

for almost 8.4 of t"e total mar(et %a$italisation of t"e o$ 500. )**'s

ran( on ot"er $arameters are - %a$ital em$loyed 87! #ross lo%( 59! sales

8! net $rofit 12! net fore earnin#s 6 and tradin# vale 8.

Products :

*

eona

ears

ove

reee

)amam*iril

*ifeoy

Lu!

* stands for t"e $romise of eaty and #lamor as one of ndia's most

trsted $ersonal %are rands. * %ontines to e a favorite &it"

#enerations of sers for t"e e$erien%e of a sensos and lrios at".

in%e its lan%" in ndia in t"e year 1929! * "as offered a ran#e of soa$s

in different sensos %olors and &orld %lass fra#ran%es. 2003 sa& one of

t"e i##est milestones in t"e "istory of *. /rom ein# :st a eaty soa$

of film stars! * re%o#nied t"e need for a %om$ellin# messa#e aot

eaty t"at &old resonate &it" &omen of today.

* is availale in for different variants ; oti% flo&er $etals and lmond =il and ?il( @ream! /rit tra%ts and )oney in ?il( @ream

and andal affron in ?il( @ream.

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Re!ona

eona is one of ndia's $ioneer rands in family soa$s. *an%"ed in 1947!

it &as $ositioned as a natral s(in %are soa$ to #ive sil(y! #lo&in# s(in.

in%e t"en t"e $rod%t "as een %onstantly im$roved to (ee$ $ &it" t"e

e$e%tations of t"e %onsmers.

n 1989 %o%ont &as introd%ed in eona for t"e first time to stren#t"en

t"e overall s(in%are a$$eal of t"e rand. eona "as no& een relan%"ed

&it" %%mer etra%ts! in addition to %o%ont oil and moistrisin# mil(%ream. ts %reamy lat"er $rifies t"e s(in! leavin# it %lear and fla&less. t

"as also een en"an%ed &it" a $erfme t"at lin#ers &ell after a at".

Pears

ntrod%ed in ndia in 1902! ears soa$ "as no eAal. t is #entle eno#"!even for ay's s(in.

ears is manfa%tred li(e any ot"er soa$! t nli(e in %onventional

soa$s! t"e #ly%erine is retained &it"in t"e soa$. "at is t"e %ase if its

niAe trans$aren%y. >fter manfa%trin#! t"e soa$ is mello&ed nder

%ontrolled %onditions over &ee(s. >t t"e end of t"is matrin# $ro%ess! it is

individally $olis"ed and $a%(ed in %artons.

oday ears is availale in t"ree variants - t"e traditional amer variant! a

#reen variant for oil %ontrol and a le variant for #erm $rote%tion.

Do"e

ove soa$! &"i%" &as lan%"ed y Unilever in 1957! "as een availale in

ndia sin%e 1995. t $rovides a refres"in#ly real alternative for &omen &"o

re%o#nise t"at eaty is not sim$ly aot "o& yo loo(! it is aot "o&yo feel.

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32/64

W"en it %omes to soa$s! )amam is %onsidered to e t"e most reliale

o$tion. *an%"ed in 1934! )amam "as traditionally een a soa$ t"at ta(es

%are of yor s(in in a natral &ay.

>%%ordin# to a resear%" %ond%ted y ndi%a esear%" in ?ay 2003! 78of o%tors in amil Dad re%ommend )amam.

esides ein# a $erfe%tly alan%ed soa$! )amam ta(es on a very modern

and trendy loo(. )amam's en"an%ed fra#ran%e no& $rovides a lon#er

lastin# fres"ness. "e ne& attra%tive oval s"a$ed )amam %omes in an

attra%tive and modern $a%(a#in#. "e in#redients t"at are sed in )amam -

Deem! lsi and >loe Vera - y t"emselves "ave #reat t"era$eti% vales.

)amam! t"e rand is very tre to its ta#line t"at says! &E"eryt'in( in li)e

is a*out *alance&.

Liril

/or 28 years! fres"ness "as een %learly identified &it" one name ; *iril

*iril e$ressions "ave al&ays set trends &"et"er it is a at"in# eaty in a

&aterfall or C=of E ?aaFC "e ener#y and e%itement levels asso%iated

&it" t"e rand "ave to e e$erien%ed to e elieved &it" %"an#in# times.*iril "as donned many avatarsG resently! *iril oft >loe Vera H *ime!

*iril %y @ool and *iril =ran#e s$las" are ma(in# &aves.

W"at's netI Wait and Wat%"F "e s"o& "as :st e#n...

Li)e*uoy

?a(in# a illion ndians feel safe and se%re y meetin# t"eir "ealt" and

"y#iene needs is t"e mission of *ifeoy.

"e &orld's lar#est sellin# soa$ offers a %om$ellin# "ealt" enefit to t"e

entire family. *an%"ed in 1895! *ifeoy! for over a 100 years! "as een

synonymos &it" "ealt" and vale. "e ri%( red soa$! &it" its $erfme

and $o$lar *ifeoy :in#le! "as %arried t"e *ifeoy messa#e of "ealt"

a%ross t"e len#t" and readt" of t"e %ontry.

"e 2002 and 2004 relan%"es "ave een trnin# $oints in its "istory. "e

ne& mi in%ldes a ne& formlation and a re$ositionin# to ma(e it more

relevant to ot" ne& and eistin# %onsmers.

>t t"e $$er end of t"e mar(et! *ifeoy offers s$e%ifi% "ealt" enefitst"ro#" *ifeoy Bold and ls. *ifeoy Bold +also %alled @are, "el$s

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$rote%t a#ainst #erms &"i%" %ase s(in lemis"es! &"ile *ifeoy ls

offers $rote%tion a#ainst #erms &"i%" %ase ody odor.

$/0%&+ L(’% SWOT ++)%$%

Strengths:

3ith identified strengths including a

strong brand portfolioB

consumer understandingB

7/( abilityB

distribution reach+networking- and high ?uality manpower

$trong media personalities

!s the production is on large scale it has the benefit of economiesof scale.

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eing )ery old and reputed company, the company and its brandsachie)es highest trust of the consumers.

Weaknesses:

"he company:s weaknesses spotted thereby include

Increased consumer spends on education, consumer durable,entertainment, tra)el, etc resulting in lower share of wallet forFMCGB

Comple1 supply chain configuration and unwieldy number of stockkeeping units +$=*s- with dispersed manufacturing locationsB

&rice positioning in some categories that allows for low pricecompetition and high social costs in the plantation business.

Opportunities:

# sees its opportunities as

market and brand growth through increased penetration especiallyin rural areasB

brand growth through increased consumption depth and fre?uencyof usage across all categoriesB

upgrading consumers through inno)ation to new le)els of ?ualityand performanceB

emerging modern trade to be effecti)ely used for introduction ofmore upscale personal care productsB

growing consumption in out of home categoriesB

positioning # as a sourcing hub for *nile)er companieselsewhere and le)eraging the latest I" technologies.

T,(+&%

&ercei)ed threats

span low0priced competition now being present in all categoriesB

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grey imports

spuriouscounterfeit products in rural areas and small townsB

changes in fiscal benefits.

3 GODRE!

VISION Godrej in e)ery home and work place.

MISSION

;nriching ?uality of life e)eryday e)erywhere.3e will pro)ide branded products and ser)ices of superior ?ualityand )alue that impro)e the li)es of the world:s consumers. !s a

result, consumers will reward us with leadership sales, profit, and)alue creation, allowing our people, our shareholders, and thecommunities in which we li)e and work to prosper.

VALUES

Integrity, "rust, "o ser)e respect, ;n)ironment.

C'5.+) O($@Godrej Industries imited, formally Godrej $oaps, is India:s large

manufacturer of oleochemicals. !s well as the chemicals industry,

Godrej also operates in the food and medical diagnostics markets.

"he company is part of the Godrej Group conglomerate. Godrej

Industries is head?uartered in Mumbai, India

For the fiscal year ended March D994, the company generated

re)enues of H48.D2 billion-, an increase of E.


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million +7s million- during fiscal D994, an increase of - are the other contributors to GC&Ns turno)er.;1ports of Godrej rands +D of o)erall sales- grew by D> yoy inFS98.

: '*S+%

FY2??1 FY2??? G('@&,

$oaps 2 D,4


37/64

Godrej has the distinction of being the first company in the world tode)elop technology to make soap with )egetable oils, way back in8E29. In the early E9Ns Godrej had created strong brand e?uities forits leading brands Cinthol, anga, !arvel, "vita etc. In 8EE4, Godrej

entered into a strategic alliance with &/G for inter alia toilet soapbusiness, under which Godrej used to manufacture soaps, whichwere marketed by a joint )enture company. #owe)er post marketingalliance with &/G, the company lost significant part of its marketshare and subse?uently the arrangement was discontinued.GodrejNs entire distribution network was then taken o)er by &/G.Godrej reestablished a distribution network by utili6ing the networkof group company Godrej #icare for marketing of its brands and inFS99 took o)er the entire distribution network from them.

"he company has been )ery aggressi)e during the year in the toiletsoap business and has launched a number of new products in themarket in the last two years. It pioneered the concept of a fairnesssoap through launch of Fairglow soap. 'ew )ariants like $andal and'atural in the odre# No$% brand also aided high growth. "oilet soap)olumes of Godrej brands grew by 29 yoy in FS98. In )alue termssales grew by 8


38/64

C$&,'

Cinthol is the flagship brand of Godrej Consumer &roducts imited."he brand was launched in 8ED as the first (eodorant $oap in thecountry.In 8EA9 Cinthol (eodorant "alc was launched. It continued to sell asa freshness talc thereafter. "he brand, o)er the first three decades

of its e1istence, took the platform of protection from body odor.

In 8E>A , in an attempt to moderni6e the image O'ew Cinthol O soapwas launched with new look packaging , shape and ad)ertisingusing celebrities like 5inod =hanna and Imran =han . "hiscommunication campaign de)eloped strong OconfidentO , Oacti)eOassociations with Cinthol which became a part of the essence of thebrand

G'/( F+$(G'@

"he Godrej FairGlow fairness soap contains a powerful fairnessingredient : 'atural %1y0G :, which makes you fairer by reducing thedark melanin without changing the skin:s natural balance. Inaddition, it also remo)es blemishes to gi)e you a clear, glowingcomple1ion.

Godrej FairGlow $oap was India:s first and is the largest sellingfairness soap. It helps you become fairer in a con)enient way,

simply through a daily bath. It is a ?uality Grade 8 fairness productha)ing


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the ?uality offered.it comes in three colours and fla)our, it is gi)inggood fight to the leading brands too.

G'/( S,$++$ %'+.

"his is also one of the popular soap of the godrej product line. "hissoap is used to wash hairs. Many people belie)es shikakai as abest thing to wash the hair . black ,long and silki hairs are result ofutili6ation of the soap. "his soap is gi)ing fight to all the shampoofor washing the hairs. It is pro)ed )ery popular among women.

!ll of these soaps can be further classify in to three basic segments

P($ S5&% '* B+&, S'+.%

$egment &rice 3eight&remium T 7s.8 0

8


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F%7"IFSI'G its soap brands, introducing new price points,

entering new categories such as babycare and hand sanitisers ... ithas been a busy year at Godrej Consumer &roducts td +GC&-.3hile FMCG categories such as toiletries, hair care and soaps ha)ebeen under pressure, the company has outperformed the stillsluggish FMCG industry primarily because it has been operating ona relati)ely smaller base compared to the biggies, and also becauseof the urban0centric nature of its brands.

Focusing on its stronger and faster growing brands, the 7s 90

crore Godrej Consumer &roducts began the year by e1tendingGodrej 'o.8 ayur)edic soap to more markets and at an attracti)eprice. !t the same time it also decided to capitalise on the successof its FairGlow soap, instead of trying to push the languishingcream, to take on #industan e)er td +#- in the fairnesssegment.

In fact, Godrej is almost consciously targeting the fairness creamusers through its newly relaunched fairness soap. "he cool way tofairness and freedom from oily skin: is the message the companywants to con)ey to all its prospecti)e users. aunching the !ll 'ewFairGlow soap, #oshedar =. &ress, ;1ecuti)e (irector / &resident,Godrej Consumer &roducts, said, O"here is an increasing demandamong Indian women for con)enient and ine1pensi)e solutions toskincare and a need to look good naturally. "he soap keeps thisneed in mind.OFairGlow soap, a pioneer in its category whichmanaged to find a niche in the fairness market in spite of thelooming presence of #:s mega brand Fair / o)ely, hasintentions of doubling its turno)er from 7s A9 crore to 7s 8D9 crore

40


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within the first year of the relaunch. "he brand was relaunched lastmonth.

!ccording to industry obser)ers, # is not in a position to push its

Fair / o)ely soap for fear of losing its share in the fairness creammarket.

"his situation gi)es Godrej an opportunity to strengthen its positionin the fairness soaps category while phasing out its cream, which inany case did not manage to register any significant )olumes.

In fact, the company suffered a loss in sales for its toiletries di)isionprimarily due to the failure of its FairGlow cream. !dmits &ress,OFairGlow cream did badly, leading us to withdraw the product. %ur

toiletries margins ha)e been affected by its failure.O esides, Godrej$ha)e Gel for men has also failed to register any significant)olumes.

"he relaunch of FairGlow soap is e1pected to add weight toGodrej:s soap portfolio. $ays !nand $hah, FMCG !nalyst at ICICI$ecurities, OFairGlow has been registering declining sales o)er thepast two years. "he !ll 'ew Godrej FairGlow is aimed at femaleteenage college students instead of the pre)ious positioning of that

for women in their early D9s. "his mo)e could help GC& build ayounger clientele and broaden its target base.O

esides, the largest soap brand in Godrej:s kitty, Godrej 'o. 8,managed to maintain robust growth and today accounts for nearlyA9 per cent of GC&:s toilet soap )olumes. Its low pricing and )alue0for0money proposition has worked for the company and it has beensteadily increasing its )ariants with an ayur)edic offering.

%bser)es $hah, O"oilet soaps are likely to maintain robust growth of80D9 per cent on the back of FairGlow:s relaunch and thecontinuing growth of Godrej 'o.8.O "he new unit for toilet soaps in#imachal &radesh would also lead to an impro)ement inprofitability, as it is located in a ta10free 6one. "he unit wouldpro)ide income0ta1 relief and e1emption from e1cise duty, which islikely to impro)e the company:s soap margins.

41


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Meanwhile, its Cinthol soap franchise has taken a backseat,primarily due to lack of proper positioning. OCinthol as a brand hasbeen o)er0e1tended and we are in the process of redefining the

positioning,O says &ress. "his is being done through a newcampaign and positioning statement which is likely to be un)eiledsoon through its ad)ertising agency, %rchard.

ast year, Godrej decided to stretch the Cinthol brand to a handsanitiser. O"here is heightened hygiene consciousness emergingamong consumers and we realised it would be ideal to introduce thehand sanitiser, a re)olutionary concept for germ0free hands,O says&ress. Godrej already supplies hand sanitisers under the Cintholbrand to 3est !sia. "he $!7$ epidemic did help in gaining salesfor the product.

eefing up its rural initiati)es to accelerate sales growth, Godrejalso decided to increase its rural penetration by introducing smallunit packs of its soap brands in the imaru $tates of ihar, Madhya&radesh and *ttar &radesh. y introducing its three power soapbrands 0 Cinthol, FairGlow and Godrej 'o.8 0 in 9gm $=*s +stockkeeping units-, the prices of these respecti)e brands ha)e beenpegged between 7s 4 and 7s .

O3e ha)e decided to target these $tates with low per capitaincomes through our small unit packs. "his will be a greatopportunity to grow since consumption le)els of soap are still low inthese parts. "hese small pack si6es will not be made a)ailablenationally and are meant specifically for these three $tates,O says&ress.

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7esearch

methodologyN/ *'( %&0/)

Fmcg sector is )ery )ast and 4th largest sector in Indian economy inwhich different marketer use different strategies for the sur)i)al andmake profit from their products or brands. In this sector there is )ery

tough competition between players.they are using large number ofad)ertising,sales promotions, positioning, and pricing strategies.

R%+(, /%$

3e ha)e used secondary data as a source of this research.

D+&+ %'0(%$econdary data@

3eb sites,Maga6ines,'ewspapers

L$5$&+&$'% '* %&0/)ack of sufficient material.ack of time.

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F$ *'(%

++)%$% '* ;+&,%'+. $/0%&()

SUPPLY

!bundant supply in metrosCompetition is beefing up their distribution network to penetrate therural areas.

DEMAND

!t an a)erage G(& growth of . until February D99


45/64

COMPETITION

In bath soap industry there are low profit margins about K 89 butthey are selling in huge )olumes.

"o beat the competition companies mainly use )arious strategieslike discounts and freebies.*nbranded players are si6e of 7s.802 billion and they are growingat the rate of 89.ocal players ha)e no large distribution network so they are gi)ingfight to the branded products by gi)ing huge margins to retailerswhich is an important part of supply chain.

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$/0%&+ L(’% SWOT ++)%$%

S&(&,%

• 3ith identified strengths including a• strong brand portfolioB

• consumer understandingB• 7/( abilityB• distribution reach+networking- and high ?uality manpower

• $trong media personalities

• !s the production is on large scale it has the benefit ofeconomies of scale.

• eing )ery old and reputed company, the company and itsbrands achie)es highest trust of the consumers.

46


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W+%%%

• "he company:s weaknesses spotted thereby include• Increased consumer spends on education, consumer durable,

entertainment, tra)el, etc resulting in lower share of wallet forFMCGB

• Comple1 supply chain configuration and unwieldy number ofstock keeping units +$=*s- with dispersed manufacturinglocationsB

• &rice positioning in some categories that allows for low pricecompetition and high social costs in the plantation business.

O..'(&0$&$%

• # sees its opportunities as

• market and brand growth through increased penetrationespecially in rural areasB

• brand growth through increased consumption depth andfre?uency of usage across all categoriesB

• upgrading consumers through inno)ation to new le)els of?uality and performanceB

• emerging modern trade to be effecti)ely used for introductionof more upscale personal care productsB

• growing consumption in out of home categoriesB

• positioning # as a sourcing hub for *nile)er companieselsewhere and le)eraging the latest I" technologies.

T,(+&%

• &ercei)ed threats

• span low0priced competition now being present in allcategoriesB

• grey imports• spuriouscounterfeit products in rural areas and small townsB• changes in fiscal benefits.

47


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&ersonal wash market@ 3hile the growth rate for the o)erall

personal wash market is only 8 per cent compared to a)eragegrowth rate of per cent, premium and middle0end soaps aregrowing at a rate of 89 per cent. "he leading players in this marketare # +u1, ifebuoy, ree6e, 7e1ona-, 'irma +'ima-, Godrej$oaps +Cinthol, FairGlow, $hikakai, 'ikhar-, and 7eckitt / Colman+(ettol-.

G('@&, $ .('/0&$' '* FMCG

P('/0&$'

U$&2??2-2??3

:('@&,

E%&2??3-2??4

EST :('@&,

FMCG


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P('&/ G('@&, $ P('/0&$' '* FMCG S&'(

SECTOR UNIT

F$(%& &@'H0+(&(%

A&0+

F$(%& &@'H0+(&(%


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SWOT ANALYSIS OF

GODRE!S&(&,%

• 5ery old and trusted domestic company in India.

• Good distribution network across the country.• Cinthol is one of the popular and strongest brand of the

company.

• (i)ersification of the products and deepens each product)ertically.

• ;conomical products with wide product line.

W+%%%

• Medium focus on ad)ertising as compared to othercompetitors.

• Focused attention on cinthol brand.

•

ess focus on product )ariety.• ack of promotion of its products by influential celebrities.

• ack of concentration on bath soap segment afterdi)ersification.

O..'(&0$&$%

• &enetration in rural market area.

• More brand loyalty of customers towards some of the brands.• Focusing more on its inno)ations and product )ariety it can

become a global player.

• ow market share, to be focused by aggressi)e marketing.

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T,(+&%

• "rust factor and emotions attached to it due to the domesticcompany towards localites.

• (ue to successful backward integration it has a benefit of lowcost production.

• Major focus on effecti)e ad)ertising.

• est infrastructure.

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G('@&, +/ .+%$' %&(+&$% $';+ %+($'

M+(& %5&+&$'

Most multinationals are acti)e in almost all the regions profiled inthis report. "heir global reach has been facilitated in part by theincreas ingly open economic policies that were being implementedby de)eloping countries such as India and China during the 8EE9s.Corporate market e1pansion strategy by the multinationalorgani6ations has in)ol)ed increased market segmentation to create

a wide range of products especially in the toilet and laundry soapcategories. "he main de)elopments during the 8EE9s has thus beenthe growth of task specific products. "he market for bath products inparticular, has shifted toward body cleansing, as well asmoisturising, as brands become more specialised. "raditional soapsare fighting back with a mo)e toward nostalgia, and seem to beattracting consumers back to the products they know best.

M((% +/ +H0$%$&$'%

&roduction of soaps for distribution on the international market takesplace as near to national markets as possible. "he distance of manyof the emerging markets from major industrial nations, and thesheer bulk of the bar soap and li?uid soaps combine to make importuneconomical in most instances. 3hile domestic manufacturerstraditionally tend to concentrate in their countries of origin, they areincreasingly seeking to increase re)enues by )enturing intoneighbouring countries. "his situation is most common in !sia andatin !merica.

"he main strategy used by companies wishing to enter othermarkets is a series of mergers and ac?uisitions. In addition, theyac?uire manufacturing facilities and set up distribution agreementswith local companies.

3ith the e1ception of ;ast and Central ;urope, m ost soap andother toiletry markets are becoming increasingly foreign. In atin

!merica, ra6il stands out as an e1ception to this trend, ha)ing a

high presence of domestic companies.

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In !sia,domestic manufacturers such as 'irma and Godrej aregradually increasing their domestic market share, particularly at the lower end of theirmarkets.

"he ac?uisition of regional players represents a clear means ofestablishing or strengthening a position in a region. !c?uisition isalso being used as a means of balancing the geography of aportfolio where a large player is weak in a particular country. "hisseems to ha)e been a major factor in *nile)erNs ac?uisition of #elenCurtis. "he alternati)e to ac?uisition or creation of a manufacturingoperation in the target country, is to set up a licensing agreementwith a local manufacturer.

'@ '+ '5.+$% +( (%.'/$ &'50&$+&$'+ %&(+&$%

Many national soap manufacturers are matching the big playerNse1pansion strategies by e1panding into $, 5+(&% where brandloyalties are yet to form. "hey are becoming successful by ?uickly

identifying and meeting consumer needs,and by offering more competiti)ely priced products than themultinationals. !nother strategy in)ol)es offering products at lowretail prices and with small )alue shares in se)eral sectors withoutoccupying leading positions in any of them.

3hile new product de)elopment will be important in the strategy ofniche players, it is unlikely that it will be as inno)ati)e as thatachie)ed by the global players. "his is because in)estment funds

are not readily a)ailable in the same way, and new productde)elopment will therefore tend to take the form of brand and linee1tensions. 'onetheless, many local manufacturers are identifyingand e1ploiting pockets of inno)ation in niche markets especially,where global players do not ha)e dominant positions. In any case,the findings of this research indicate that many sectors of the globalmarket for soap are not yet saturated. It is belie)ed that additionalsales growth can be generated by targeting specific consumergroups, for e1ample, consumers in pro)incial and rural regions,

health conscious consumers, mothers, children and teenagers.

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T,(+&%

3ithout e1ception, all the major players and other manufacturers inthe industry list the following issues as threats to the uninhibitedgrowth of theindustry@#igh go)ernment custom duties on essential imported rawmaterialsB #igh production e1cise ta1es which in some cases arehigher than the import duty on raw materialsB #igh local energycosts including electricity and fuelB Increasing cost of policing theirproducts against local artisanal soap producers. "his takes the formof increasing research and de)elopment, as well as ad)ertising andpromotional e1penditure to differentiate their products in the massor lower market segment from local ones.

V Voopholes in go)ernment customs machinery ha)e led to the influ1of grey imports, i.e. unofficially imported products in the localmarket. In addition, official rela1ation of trade barriers in all regionalmarkets has increased the entry of imported soap into most regionalmarkets that were fairly stagnant in terms of new product de)elopment and launches.

Competition has intensified significantly o)er the last fi)e years and

has resulted in hea)y corporate in)estment in a wider range oftechnologically ad)anced products and new product de)elopment ingeneral. "his coincides with th e emergence of a more sophisticatedconsumer base, much greater segmentation in markets, andincreased demand for )alue added products.

asic products like bar soaps remain dominant in !sia, as the bulkof consumers in most markets earn low incomes and only buy lowcost items. #owe)er, this situation showed signs of change o)er the

last three years with bar soap increasing in )alue shire from A>.Dto


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"he regional market presents tremendous opportunities to the soapmanufacturer in terms of the share si6e of the formed population.3ith IndiaNs population officially e1ceeding one billion at the end ofthe last century and ChinaNs o)er 8. billion, the majority of them

li)ing under the po)erty line, appropriate marketing strategies areneeded to turn this region into an area of ad)antage for the industry.*nile)er is the most dominant player in the region with apanesecompanies,

U$( Countries of origin and bases@ *= 'etherlands*nile)er, the !nglo0(utch consumer goods company is among theworldNs largest soap manufacturers. It is unusual in its structure,which in)ol)es two parent companiesB *nile)er '5 and *nile)er&C. "his structure relates back to the 8E29s merger of the e)er$oap Company with the (utch edible +oil- fats company '5Margarine *nie. *nile)er started its in)ol)ement in the soap marketwith the manufacturers of &earls toilet soap, a major force in the

soap industry. $ince the mid 8E>9s *nile)er #as further de)elopedstrong position in the soap sector through ac?uisition of )ariousestablished brand names. *nile)er has been building its soap+skincare- acti)ities in the de)eloping regions through ac?uisition. In;astern ;urope, it ac?uired &"W, the C6ech state0owned producerof toilet soaps and skincare products in 8EED. In 8EE the $ingaporebased #a6e ine Company was ac?uired from Gla1o for *$H89million. "his has strengthened *nile)erNs skincare position in Chinaand $outh ;ast

!sia.

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O.(+&$ %&(0&0(

*nile)er has operations in more than E9 countries which pro)ide itwith a presence in e)ery continent. !part from direct presence,

*nile)erNs brands are on sale in a further E9 countries throughimport arrangements and agreements with local companies. ;uropeaccounted for o)er half of the companyNs turno)er and operatingprofit in D999. 3hen sales from ;uropean markets and 'orth

!merica are combined, they account for D2 of global turno)er "he business coordinates its acti)ities through di)isions, "hese are+i- foods +which accounts for 9 of Group turno)er in D999- +ii-detergents, +iii- personal products including soap +accounting for84 of Group turno)er in D999- +i)- specialty chemicals +)- other

products

C'(.'(+& %&(+&)

"he broad ranging interests of *nile)er are underpinned by a strongcorporate strategy which focuses on the core acti)ities and brands."he company has pursued a selecti)e ac?uisition and disposalstrategy with net e1penditures on disposals and ac?uisitionsamounting to o)er *$H 8billion in 8EEE."he company is also in)ol)ed in oint 5entures +5- where thismethod is pro)ed to be the most effecti)e means of entering a newmarket For e1ample, in 5ietnam the company operates through two5 agreements. *nile)er also seeks to e1pand through organicmarket de)elopment where appropriate."he key to the companyNs strategy is the importance of productinno)ation. ! world wide network of inno)ation centres is in placewhich allows rapid transfer of ideas and the identification of tailoringre?uired for local or regional markets. 3hile the company enjoys thebenefit of owning a number of global brands, its strategy

emphasi6es the importance of local re?uirements. "he company iskeen to position itself as the Multi0local MultinationalJ

L+/$ ;(+/%

*nile)er has significant in)ol)ement in the global soap marketthrough a portfolio of strong consumer brands marketed primarilythrough selecti)e mass outlets. In the detergent market, the mostestablished brand is %mo in the fabric detergent sector. %mo is sold

in o)er 9 countries with a wide number of formulations to reflect

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local washing preferences. Its u1, 7e1on, (o)e, &onds andifebuoy brands are presentin )irtually e)ery market around the world. %ther leading brandsinclude #ellmannNs:, iptons, =norr and &onds.

F0&0( %&(+&)

*nile)er is likely to continue to strengthen its presence in andfurther de)elop its soaps and bath shower product lines. "hecompany will continue to use the (o)e and u1 brands to e1pandinto new skincare related categories. "hese brands ha)e strongconsumer loyalty which will allow the brands to cross sector barrierswith relati)e ease.

N$(5+ L&/

'irma is a pri)ate family firm, which dominates the Indian ruralmarket. argest national detergent maker and second largest sellingsoap manufacturer. $uccess due to undercutting multinational ri)alseg. $urf. &roduction facilities at A places in India. It was able to cutcosts with a model focused on the poor. *sing a lower fat0towaterratio and indigenous oils in the formulation of the soap, thecompany was able to cut production costs dramatically, andproduce a more en)ironmentally sound product. It produces a rangeof industrial chemical products which primarily ser)e as raw materialor intermediates for soap and detergent business.

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'irma has cut the cost of distribution by doing away withintermediaries. "he product tra)els from the factory to the distributor:s doorstep. "hough the distributors ha)e slender margins,they make money from sheer )olume sold. "he company makes

e1tensi)e use of wallpaintings for ad)ertising.

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FINDINGS

#SUGGESTIONS

T+ (*'(5%

"he go)ernment has gradually remo)ed the restrictions on importsof consumer goods in the country and also significantly reducedcustom duties. "he domestic ta1 structure of these products,

howe)er, has not been rationalised to pro)ide le)el playing field forcompetition. "his is ad)ersely affecting the growth of the FMCGindustry and could ha)e far reaching ad)erse impact. "he followingta1ation issues need urgent attention of the go)ernment@

1> E&(5) ,$, $$/ '* &+ ' (&+$ .('/0&+&'($%

$ome FMCG products such as shampoos, processed food, soft

drinks and toiletries containing alcohol attract high rates of e1ciseduty and sales ta1. "he total ta1 incidence in some cases is morethan A9 per cent of the cost or more than 29 per cent of M7&. $uchhigh ta1 incidence hampers growth of these product categoriesbesides encouraging manufacture of spurious products andsmuggling.

It is recommended that the total e1cise incidence of FMCG productsshould not e1ceed 8A per cent in the case of non food items andeight per cent in the case of processed foods. $imilarly, the marginal

rates of sales ta1, which is currently in the range of 89 to D percent, should not e1ceed 8D per cent.

2> I((+&$'+ /'5%&$ &+ %&(0&0( '0(+$ $5.'(&%

$ignificant reduction in custom duty rates of consumer goods hasmade imported product cheaper as compared to indigenouslymanufactured products, due to irrational domestic ta1 structure. Forinstance, goods manufactured in India suffer from cascading effects

of ta1es on inputs as additional cost compared to imports.

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"he cascading effect of sales ta1 and local le)ies on inputs used indomestic manufacture should be eliminated by pro)iding eitherM%(5!" credit or by introducing notional 5!" co)ering bothcentral and state ta1es on an urgent basis. Moreo)er, M7&0based

e1cise duty is le)ied on a large number of FMCG products.Counter)ailing duty on the same product when imported is chargedon CIF )alue. "he M7& based assessable )alue for e1cise dutydoes not allow abatement for post manufacturing costs such asad)ertising and selling e1penses whereas CIF )alue considered forthe purpose of import duty does not include costs of these elementsincurred subse?uently by importers.

"his differential basis creates unfair competition as ta1 incidence ondomestic manufacture could be considerably higher in case of thoseproducts which incur significant marketing and distribution cost."here is a need to bring parity in ta1 incidence between domesticmanufacture and imports by including all such elements of postmanufacturing costs while deciding the abatement percentage ofM7& based duty.

3> I(&/ D0&) %&(0&0( *'( %&/ $.0&%

(uty on certain raw materials is higher or the same as compared to

finished products in which these materials are used. $uch rawmaterials include oils and chemicals like $oda ash, caustic sodaand !. In addition to customs duty, raw materials are also subjectto $!(sales ta1 and octroi and therefore total ta1 incidence andcost of indigenous manufacture goes up. "he import duty on rawmaterials needs to be rationalised so that it does not e1ceed A9 to N/ *'( (+&$'+$%+&$' '* &+% ' .('%%/ *''/%

&rocessed food industry, with its )ertical integration with theagricultural sector has significant potential for employmentgeneration and economic growth. "he e1isting ta1 structure and itshigh o)erall incidence, howe)er, has been hampering the growth ofthe processed industry. "he increase in e1cise duty in last yearNsbudget from eight per cent to 8A per cent has ad)ersely affected thegrowth of processed foods industry. It is recommended thatmarginal rate of e1cise duty on processed foods should not be morethan eight per cent and the sales ta1 should be le)ied at four per

cent.

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"> C+%+/$ **& '* S.$+ E$% D0&)

"he special e1cise duty introduced last year is not Ocen)atableNNe1cept in the case of selected products. Most FMCG products

co)ered by tariff chapter 22 such as shampoos, ice creams andcosmetics are subject to $;(. "his tariff chapter also contains )erywide definition of the term OmanufactureNN which includes labeling,relabeling or con)ersion of large packs into small packs. "he le)y of$;( on such products therefore leads to double ta1ation whengoods are labeled or con)erted into small packs after manufacture.It is recommended that $;( should be made Ocen)atableNNBalternati)ely the term OmanufactureNN needs modification , atleast forthe purpose of $;( by e1cluding labeling, relabeling or con)ersioninto small packs.

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O&,( %0%&$'%

8. ! joint industry Kgo)ernment initiati)e for building a OMade inIndiaNN brand for FMCG products is re?uired. 3ith many

multinationals mo)ing into the Indian FMCG market, a concertedmarketing strategy which creates strong brands will be needed forIndian FMCGs to gain recognition in the market.

D. etter packaging materials are necessary as a large number ofFMCG products are perishable . "he go)ernment must facilitatemore 7/( in packaging materials as this will help in cutting wastesand costs in the sector. "he possibility of a longer shelf life willencourage production of goods of higher )alue addition by

companies in the sector.

2. 3hile import of most items has been allowed, the go)ernment isnot geared to pre)ent import of spurious products. In othercountries, FMCG goods ha)e to be cleared by regulatory authoritiesbefore they are allowed to enter domestic shores. "his is nothappening in India and the go)ernment needs to undertake acomprehensi)e crackdown on these products.

4. "he small0scale reser)ation policy should be re)iewed as it

hampers the growth of this sector. Many reser)ed products,including se)eral FMCG products can be freely imported. *nder thecurrent policy, not only are Indian producers of many FMCGproducts restricted from attaining economies of scale, they alsoha)e to compete against import that do not face constraints onsmall scale reser)ations.

. Food laws such as the &F! !ct should be amended and be madecontemporary.

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CONCLUSIONFrom the abo)e detailed study of the FMCG industry with the focuson bath soap segment we can make out that FMCG is the mostemerging sector and industry not only in India but all o)er the world.

"he main leaders of the bath soap segment like #, 'I7M!. !'(G%(7; are focused in the study which shows that # is theleader in FMCG industry and has a large amount of market shareabout A


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