Dial C for Celeb - hsilgroup.comhsilgroup.com/wp-content/themes/hindware/pdf/media... · Dial C for Celeb Growing competition and increased consumer involvement in the buying process

Dial C for CelebGrowing competition and increased consumer involvement in the buying process is pushing bath fitting manufacturers to ramp up brand building. The question is whether experiential retailing will suffice or will popular faces be needed to win the hearts of buyers.

THE `9,500-CRORE BATH products industry which includes sanitaryware, faucet and accessories is having a good run.

The Indian market has grown rapidly during the last few years to emerge as a major bath and sanitaryware hub in the Asia Pacific. Factors such as increasing disposable incomes, higher standards of living, and increasing expenditure on beautifying homes and use of premium products provide further impetus to this segment. What’s more interesting is that increased public and private spending in the space has presented the industry with a large demand pool, thus providing the fillip to ensure sustained growth.

Growing OpportunityThe sanitaryware sector has grown at a compounded annual rate of 18.1% during 2010-14 and stands at `3,500 crore today. It is expected to grow by about 12% each year till 2017. The organised segment, which accounts for 40% of the market supplies, however will witness a higher growth of 14-

15% in this period. The bath fittings and faucets sector on the other hand has reached `6,000 crore in 2015, by growing at a CAGR of 16.7% in the last five years. It is expected to continue growing at 15% till 2017, while its premium segment will grow by 25-30%.

Commenting on the nature of the growth potential, Roca Bathroom Products managing director Pau Abello says, “In India there is a significant potential in the low-cost or entry level segment. One in every five urban households, and an even higher proportion of rural households, does not have a bathroom or latrine. This only emphasises the tremendous potential to expand, what with rising incomes and urbanisation.” Abello observes that this relatively strong demand growth over the last five years is what has attracted various MNCs to India.

Capacity ExpansionSpurred by such promise the

industry has been witnessing incessant capacity building, and notable new entries have been of Toto and Kajaria. Toto has invested about $76 million (`380 crore) for its plant at Halol, in Panchmahal district of Gujarat, which has a capacity to produce five lakh units of sanitaryware in the first phase. Last year, Kajaria set up a sanitaryware plant in Morbi, also in Gujarat, with an initial annual production capacity of 7 lakh pcs and invested about `34 crore. It also invested `50 crore in a faucet plant at Gailpur in Rajasthan to initially produce up to 1.5 million pcs.

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Key Figures at a Glance

Estimated size of industry: `9,500 croreSanitaryware: `3,500 croreFaucets: `6,000 crore5 year CAGR: 18.1%, 16.7%Expected growth: 12%, 15%Organised vs Unorganised: 40:60; 45:55

Other players too are gearing up. Parryware for instance acquired two plastic factories from Chennai-based Espiem Plastics last year, and has been investing about `60-80 crore on a yearly basis to ramp up capacities of its five existing units. In the last two years it has invested `120 crore in its Dewas plant. “We have already invested `60 crore into the Dewas plant last year. This year we would be spending another `60 crore for installing 200 casting lines and importing testing machines from Spain,” Abello had informed Sourcing Hardware in 2014. At the company’s recent re-branding event in New Delhi, he had conveyed that Parryware will be further investing about `150 crore for capex in the next three years. “We have enough internal space left to do the next phase of expansion and won’t be looking at new factories for the moment.”

Cera Sanitaryware has also invested about `150 crore for ongoing expansion of its sanitaryware units, to increase production capacity to 3.2 million pcs by 2016, from the existing 2.7 million pcs. The company is currently using almost 100% of its capacity, and wants to set up a plant in Andhra Pradesh through a local JV. “We are in advanced stages of discussion with a few local partners to set up facilities for tiles and sanitaryware,” says the company’s executive director Atul Sanghvi. He confirms that the facilities would require investments of `50-100 crore. Cera will also increase its faucet manufacturing

capacity to 7,500 pieces a day (from 2,500) in the next two years. “We are planning to invest `125-150 crore over the next two years for upgrading our units and in the JVs.”

HSIL too has invested aggressively in expansion. In 2014, the company’s president R B Kabra informed that HSIL would invest `120 crore and `150 crore for greenfield plants of faucets and sanitaryware respectively. “We will also invest `60 crore in expanding capacity at our two sanitaryware plants, and `70 crore towards expanding capacity at the faucets plant,” he had said.

Kabra had revealed that HSIL would be investing nearly `400 crore in the next 2.5 years. And during an interaction with Sourcing Hardware earlier this year, joint managing director Sandip Sompany had stated, “We have acquired a 65-acre site at Dahej in Gujarat and expect to set up manufacturing capacity of 1.2 million units per annum with an approximate investment of `150 crore.” Interestingly, HSIL is also diversifying into pipe and fitting production, and has recently forayed into water heaters and air purifiers as well.

Brand BuildingSince a major chunk of sales in this industry comes from retail, brand building has gained prominence. The focus on marketing is clearly visible from the swollen budgets of all the players. Besides, with consumers becoming more involved in the purchasing process, the scope of brand building has gone beyond B2B. More and more players are investing in communicating directly to end consumers, and inadvertently the focus is on TV commercials and celebrity endorsements.

The endorsement trend has picked up momentum only in the last couple of years. In June 2013, tile industry leader H&R Johnson had signed up Katrina Kaif as its brand ambassador. As a part of that association, she was roped in to endorse the tile, bathroom products, engineered marble & quartz,

and modular kitchen businesses of the company under its umbrella Johnson brand. Sushil Matey, the company’s COO, told Sourcing Hardware, “HRJ’s association with Katrina reinforces the values that she stands for—global image, freshness and contemporariness.”

In the sanitaryware space Gujarat-based Cera Sanitayware was amongst the first to engage celebrities when it signed up Diya Mirza for its TV commercial in 2012. However, it appointed a brand ambassador only a year later, when in November 2013 it roped in style icon Sonam Kapoor to represent the Cera brand. “Cera, which embodies style, value and innovation, could not have found a better fit than the style diva Sonam to be its face,” said Sanghvi. According to Sanghvi, Sonam and Cera find a common connection with the brand’s core value–style. “Cera’s USP is style and innovation. And Sonam spells

Demand Drivers

Urbanisation: Urban population will account for 41.8% of the total population in India by 2030. India has the potential to become the world’s largest middle class consumer market, with a total consumer spend of nearly $ 13 trillion by 2030.

Premium products: Bathrooms and bathroom products have become a means for consumers to show their wealth and premium lifestyle. This behaviour is largely attributed to higher spending power, change in perception, and a desire for good living, all of which is pushing the industry towards premium and niche segments.

Housing shortage: The government’s aim to provide housing to all citizens by 2022 and the proposal of 100 smart cities, all point towards long term sustained demand.

Swachh Bharat: The cleanliness campaign may not directly impact the premium end of the market, but will surely pull the industry forward.

Replacement: The average life of a bathroom in urban India is expected to come down from 20 years to 10 years; urban Indians are upgrading at a faster pace.

Sonam Kapoor connects well with young and positive India, just like Cera Atul Sanghvi, Cera Sanitaryware

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Manufacturer’s View

“Association with celebrity enhances aspiration and credibility”HSIL claims to control 40% of the sanitaryware market; it is leading the way in capex while simultaneously diversifying into different businesses. And brand ambassador King Khan eloquently matches its leadership position. In an interaction with Sourcing Hardware, Manish Bhatia, president of HSIL’s building products division, throws light on the marketing and brand building activities for Hindware. Excerpts:

Why is endorsement by a celebrity and retailing similar when it comes to experience? How is Hindware leveraging these marketing techniques?Having a celebrity associated with a product or service provides two very important things to a brand: aspiration and credibility. And at this juncture it is apt for bathroom product brands to cash in on this route, as both the industry and consumers have matured. Additionally, in today’s cluttered and competitive marketplace, celebrity endorsement gives instant recognition.

We are no different and chose to take the opportunity as well. What is important, however, is to ensure that the celebrity should seamlessly portray the brand’s values. This is one of the reasons Hindware has opted for SRK as its brand ambassador. A superstar who transcends gender, and someone who embodies the spirit of a hard working individual, were the key factors behind zeroing in on SRK. Today consumers do not merely buy products or services, they buy an experience, which is driving experiential retailing in this category. Brand Hindware has two types of retail outlets; Hindware Galleria and

Hindware Lacasa display centres. There are over 125 Gallerias across the country and three Lacasa stores in Ahmedabad, Mumbai and Kochi. Lacasas are purely display centres targeted at influencers who can view the entire product portfolio of Hindware.

What are the other trends in sanitaryware marketing? What brand building activities do you have in store? Creating new and unique products which blend design and technology is becoming important. This category of products is gaining popularity owing to aesthetically pleasing looks and tech-driven eco-friendly properties.

Brand Hindware has always been an innovative brand, with products such as the NANO, a 1.5 ltr/flush water closet and PONCHO, a kids range, earning laurels. Moving forward, our marketing will focus more on creating consumer connect opportunities, such as the ongoing contest around our new bathroom set launch Kylis and a ‘blockbuster celebration’ #MeetSRKWithHindware. We are the first in this category to adopt a consumer focussed strategy seen mostly in the FMCG sector, and the rational lies in

our extensive research and understanding of the consumer.

How does your strategy differ while marketing for projects and retail?In the last couple of years projects business hasn’t really picked up as expected. The delay in completions has really affected demand. And there is also the cost consideration. While marketing to project or retail clients, our focus is purely on consumer’s expectation. In projects, the client needs a certain type of product that will usually fit with the type or ambience of the project.

So, for a mass project they need products that are easy to install, convenient to use and have consistency. Service and quality considerations are also there. But a project client doesn’t look at a huge range – he operates within a certain type of product range only. We have product ranges that can satisfy the requirements of a project client. But when it comes to retail, suddenly the importance is more on varieties and the focus more on quality, designs and versatility.

them both. Hence, she is the perfect fit to be Cera’s ambassador for its range of sanitaryware, faucets, wellness and tiles,” he said, adding that Sonam connected well with the young and positive India, just like Cera.

Tile maker Kajaria roped in actress Nargis Fakhri as brand ambassador while launching its sanitaryware brand

Kerovit in December 2013. “Our association with Fakhri is an apt extension of our brand’s core identity. Kerovit is synonymous with a blend of simply elegant aesthetics, enduring style and subtle luxury,” opined Rakesh Sambyal, general manager – marketing at Kajaria Bathware during an interaction with Sourcing Hardware on the

sidelines of AceTech Delhi exhibition. He added that Fakhri has emerged as a promising hallmark of raw talent, sophistication, elan and affability, which “resonates perfection in terms of a brand fit for Kerovit.”

The latest to join the endorsement bandwagon, and in the most emphatic manner, is HSIL which markets its

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products under the Hindware brand. In April this year the company appointed King of Bollywood Shah Rukh Khan as the brand ambassador of Hindware. The superstar has been featured in Hindware’s new 360-degree integrated campaign. Commenting on this association, Sandip Somany said, “Shah Rukh Khan embodies the spirit of a hardworking individual who rose to prominence by his consistent performances and raising the bar himself along the way, a trait which resonates well with brand Hindware and its unfailing desire for success.” Somany further asserted that the actor, who has won a number of awards, is admired by people of all age groups, cutting across territorial borders and communities.

HSIL has gone a step further by differentiating Hindware from its other brand. For its British luxury brand Queo, it has appointed Jacqueline Fernandez as brand ambassador. “The new TVCs featuring Jacqueline Fernandez resonate Queo’s luxurious offerings in the bathware space. We believe that luxury cannot be defined in a few words and must be experienced. The TVC starring Jacqueline reiterates the message that the bathroom space has elevated to being a stylish and indulgent place. We are happy to see Jacqueline exemplify our brand, which perfectly matches her elegance and beauty,” HSIL’s vice president-marketing V Krishnamurthy has commented.

Parryware’s rebranding has been a

much more intensive exercise and has gone beyond logo redesign and TVCs. According to Abello, “We are doing a complete reengineering of our logistics to be able to reduce the time to market our products, focusing on lesser in number and bigger in size warehouses, launching of our own portal for order management and stock availability request, setting up of a centralised Customer Service department, launching a new website, opening our Parryware page on Facebook, releasing a toll-free after-sales number, etc. All of these steps along with a reinforced marketing and communication campaign will make us reachable to every Indian who wishes to experience our functionally and aesthetically advanced product range.”

Abello believes that India’s vast size and difference requirements among different regions calls for greater flexibility and customisation in communications. “Consequently, the strategy has to be different for every place and the unique way of reaching to all is through a robust network of internal sales people that helps the distributors in getting the proper portfolio of products in every place.”

Whether the impact of a celebrity endorsing the product ranges on actual sales justifies the cost and the underlying economics is yet to be proven, but this sure has become a trend. But Abello is not impressed. “I believe it’s an entity’s choice. There are different ways for marketing and promoting a brand and celebrity

endorsement could be one of them, but not the most essential.”

Here’s how he describes the thought behind the film that Roca has commissioned, “Parryware’s ad aims at focussing on the emotional connect between generations, dovetailing it with the range of products to match with every emotion. The film uses a ‘through the years’ metaphor and is narrated by a woman who tells us about her beautiful life – how she grows from being a three-year-old child to a teen to an adult and finally maturing into a woman and then a mother, all captured in a series of beautiful emotional moments. This was our idea of marketing the brand and reaching out to the customers.”

Echoing a similar thought, Anil Kumar Beejawat, group CEO of Simpolo Ceramics, adds, “A quality product coupled with a celebrity is a good combo. However, in most cases focusing on the products and promoting its various aspects would be sufficient. Plus for products like sanitaryware and tiles, consumers go by the opinion of neighbours who have recently constructed or renovated their house or by the opinion of architects, masons and dealers more than relying on advertisements or celebrity endorsements.”

A point to be noted here is that despite operating in the premium range, sanitaryware and bath-fitting players like Duravit and Grohe have not engaged any celebrities, yet. They have relied more on word of mouth and experiential retailing. Same is the case with bath fittings category leader Jaquar, which however invests heavily in TVCs and is known for utilising the power of experiential retailing to the hilt.

While the verdict is still out on the efficacy of endorsement by popular faces, there’s no doubt that more effort will be made to identify with the right personality and larger budgets will be allocated to get them to convince their fans about using a particular brand. n

Mrinmoy Dey

Celebrity endorsement is one way of promoting brands, but not the most essentialPau Abello, Roca India

Our association with Fakhri is an extension of our brand’s core identity

Rakesh Sambyal, Kajaria Bathware

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