Expanding Hair Conditioner market in India Shivani Pal Mansi Baranwal Aditya Mukherjee.

Expanding Hair Conditioner market in India

Shivani PalMansi Baranwal

Aditya Mukherjee

Driven by changing preferences,“look good” trend & rising incomes, Hair conditioner market grown~40%

An increasing middle class aspiring to buy more expensive products

Product innovations and further segmentation

Aggressive promotions by major players

• Premium and value-added products in the mass segment increase

•New functional claims: UV protection, scalp disorder and anti-aging conditioners

• Beauty-enhancing claims: Moisturizing/hydrating hair, protecting damaged hair

•Plant ingredients & Product naturalness

•Ethical claims: Not tested on animals

• Aggregate adv. expenses of the 3 prominent players increased by ~10% in FY10

1 2 3

Growth Drivers

Source:* ―Hair care India: Euromonitor.com

2009 2010 20150

20

40

60

80

100

120

140

Hair care Conditioners

CAGR ~ 40%

32%

16%13%

14%

25%

% Brand share

Clinic Plus Sunsilk Dove Pantene Others

Why is conditioner penetration so low, and frequency of use so limited in India?

How can we counter it?

Qriusteam

Oil: A substitute or complementary?

Primary surveys reveal a huge gap between what consumers perceive and what the actual product is

Gap Analysis1 2

Oil Vs. Conditioner

Nourishment

Long term effectsMoisturizing

(While oil is good for roots and scalp, conditioners are good for

nourishing hair strands)

(While Oil helps hair growth, conditioners

help in long term health )

(Unlike conditioners, oils do not contain

any hydrating element)

Conditioners are a necessary part of hair care regime for their long term benefits

•Conditioners help moisturize the hair strands • Proper hydration keeps hair healthier over years

• Not all are harmful• Need for specific hair conditioners for every Indian hair type

•Conditioners are not necessary for hair care• To be used only for “additional” care

• Conditioners give hair a “short-term” shine and de-tangling effect• Shine/ Softness lasts only for a day

• “Repeated usage can harm my hair”• “How do I know if this conditioner would suit my hair type”?

HAIR CONDITIONER COMPANIES

MARKET

Actual product need

Perceived product need

Actual product benefits

Actual experience

Perceived product benefits

Perceived experience

Actual Hair conditioner offering

Perceived Hair Conditioner offering

GAP

Conditioner penetration low due to perception of short-term use to hair & oil as nourishing substitute

Conditioner penetration lower than similar countries due to perception issues

Source: Expert interviews, primary data

Penetration driven by westernization of habits and conception of beauty

The perception problem has to be countered on three major points

People who’ve used conditioner think its usefulness to hair is temporary

•They feel its for looks, not nourishment, since it is chemical

•They feel that oil nourishes, hence are more loyal to hair oil People who haven’t used often do not know what it does or why it’s useful

Makes hair look shiny, smooth but not oily

•The combination is important in westernized aesthetics

As consumers get westernized they accept conditioner as part of habit like lipstick, gel, deodorant etc

•However volume sold to such consumers still low because of perception issues

Its not nourishing since its chemical1

2

3

No real long-term use for hair

Oil and shampoo together are enough

Product innovations with more natural, organic products

Focus on distinct usefulness:•Quality of hair strand against brittleness, dryness given by shampoo•Protection from sun

Competitive de-positioning of oil:•Oil is protects hair root & scalp, while conditioner protects hair strand•Oil y hair makes user look un-progressive

What is the pattern of lifestyle product adoption in India?

Who do we target?

Qriusteam

India is an aspiration-al, follower market in lifestyle products leading to distinct pattern of adoption

Indian lifestyle market follows western tastes with two main drivers*

•Exception is natural, organic products where Indian households can be early adopters since it ties in to traditional home remedies and cures•**Quantified by percentage of people in daily life they converse in English withSource: Expert interviews, primary data, analysis

• Since other countries have industrialized earlier, the standard for ‘modern’ life has been set

• Aspiration to global living standards is leading Indians to adopt new lifestyle products

• Direct influence of western culture happens via everyday interaction with globalized institutions

• What has ‘value’ is based on underlying cultural assumptions

Underlying prosperity leading to expanding lifestyle

Related to importance of western culture in their everyday life

King Regent•Politicians•Family biz owners in t3,rural

Mister Pukka•Professionals (doctors, law) in tier2•Family business owners in tier 2

Big Boss•IT and medical sectors in metros•Lawyers, bankers, execs in metros

Dharam Vir•Big farmers•Government officials in tier 3•Shop-keepers in t1, t2

Babu Moshai•Academics in tier 2 and smaller tier 1 institutions•Professionals in vernacular media

City Sahib•Class 1 civil servants and army•Academia in premier institutes•Professionals in English media, BPO

Workmen•Small farmers•Barbers, domestic help

Oliver Twist•Staff in mid-market services•Workers in semi-skilled jobs

Metro Slick•Staff in malls, cafes, upmarket restaurants, salons

Leading to the following household segmentation for propensity to adopt:

House-hold

income

Strength of direct linkage to western institutions**

Within households, younger people have higher propensity to adopt new lifestyle products

21

* Primary survey from shopkeepers Strength of direct linkage to western institutions

King Regent

Mister Pukka

Big Boss

Dharam Vir Babu Moshai

City Sahib

Workmen Oliver Twist Metro Slick

Expansion can be done in stages by targeted widening of ages and household types of users

House-hold

income

0 to 10 10 to 20 20 to 30 30 to 40 40 to 50 50 to 60

Segment’s value distribution by age*

Current users

Currently users focused in the 20s in Big Boss and City Sahib households

Phase 1 increases frequency & expands to 30s, 40s age segments in these households

Phase 2 and Phase 3 focuses on expanding to new households in 20s, 30s and 40s

Strength of direct linkage to western institutions

House-hold

income

Strength of direct linkage to western institutions

House-hold

income

King Regent

Mister Pukka

Big Boss


City Sahib


King Regent

Mister Pukka

Big Boss


City Sahib


What are the specific needs of these segments that we want to target?

How do we meet these needs?

Qriusteam

The Big Boss, City Sahibsegments

20s – 30s


Profile• Modern progressive youth• Smart, compete globally• Riding on economic progress - High

disposable income• Take own decisions• Looking good is important• Less sensitive to price

30s – 50s

• IT and medical service professionals• Lawyers, bankers, other execs• Class I civil servants, army personnel• Professional in media, BPO

Profile• Educated adults who have seen the

economy transform• Worked hard for success• Respect roots but enjoy ‘high class’

living, status is important• Partly value & partly class

conscious, family important

•Based on product information and brand association•Through visits to salons, beauty clinics & malls•Magazines & word-of-mouth

Purchase Decision

•Based on family preferences, brand & product value•Also buy for teenagers in Indian homes•Magazines, televisions & word-of-mouth

Purchase Decision

Repeated use of conditioner leads to long-term quality of hair

Oil and shampoo as a combination are not enough for healthy, beautiful hair

Push positioning using celebrity ads and salons

Society will judge you on your looks, including hair

Oily hair is not connected with upper class aesthetics nowadays

Push positioning through product placement in primetime soaps

Positioning Strategy

The Mister Pukka, Metro Slick segments

20s – 30s


Profile• Full of aspirations • Attracted towards modernity• Value conscious but not for

products symbolizing better living• Adaption accelerated by Big Boss• Looking good indicator of status• Want to feel different & special

30s – 50s

• Professionals (doctors, lawyers) in Tier II• Family business owners in Tier II• Staff in malls, cafes, upmarket

restaurants, salons, tourism industry

Profile • Adaption rate decreases with age

and value consciousness increases• Looks are important only on

special occasions• Unstated/secret need to look sexy,

young, beautiful• Family is important

•Oscillation between own aspiration and family needs•Beauty products used to express identity•Influenced by advertisements and branding

Purchase Decision

•Women of the house take shopping decisions•Buy for teenagers as well in Indian homes•Associate with ideal mothers and wives

Purchase Decision

Beautiful hair helps gain self-confidence, social upwardness

Oil and shampoo as a combination are not enough for healthy, beautiful hair

Push positioning using celebrity ads and promo deals

Looks including hair a component in family’s prestige

A good mom takes care of family’s hair care needs

Push positioning through family based ads and product placement in primetime soaps


The King Regent and Babu Moshai segments

KING REAGENT (20s – 40s)


• Wealthy, well respected individuals in small towns & big villages

• High disposable income, price insensitive, spend on status symbol

• Don’t spend much on beauty. Most toiletries buying habitual

• Family is important

BABU MOSHAI (20s – 40s)

• Politicians• Family business owners in Tier III & rural• Academics in Tier II & smaller Tier I• Professionals in vernacular media

• Slow adapters, slow lives• Value conscious, need based

shopping, price sensitive• Modernity is a marketing gimmick• Close to their roots & nature• Family & values important• Not affected by economic flight

•Ladies of the house take most purchasing decisions•Not much exposure to fashion trends except from television & movies

Purchase Decision•Lives are about their own community and work •Watch TV and have strong association with movies •Men do most shopping, decisions affected by women

Purchase Decision


Oily hair is not connected with upper class aesthetics

Introduce herbal variants to bridge perception gap

Prestige based ads and primetime soaps


Introduce herbal variants to bridge perception gap

Push positioning through touch points promo deals


Based on these consumer insights we have created three broad positioning statements


“It’s a Beautiful Life”

‘Aaj Duniya Hamari Hai’ – Today the World is Ours

Oil nourishes hair root and scalp, conditioner nourishes hair strand

• Showcasing the idea of comfortable living• Pushing the idea that beauty is important thus encouraging beautifying yourself

• Setting a youthful mood

• States ambition, aspiration and the idea of self-confidence• Also shows that the world is new and changing ; and the rules have changed

• Gives a clear logic for why conditioner is needed• De-positions oil

• Nonetheless positions oil and conditioner as complimentary

“It’s a Beautiful Life”

‘Aaj Duniya Hamari Hai’ – Today the World is Ours

Oil nourishes hair root and scalp, conditioner nourishes hair strand

How do we implement our media and market strategy?

Which channels do we use?

Qriusteam

Our 3-year Media rollout plan ties our positioning strategy to a clear channel roadmap

CYCLE

CORE THEME

MONTHS

MEDIUMTV PR Internet Radio Print Media

0

1. Educate the consumers: Create an awareness about oil and conditioner 2. Portray

the difference between oil and conditioners; project them as complimentary

products

Pre-campaign Teaser commercials on Oil versus conditioners

1. “Indian hair needs not just oil “

2.Hair health trivia in malls and transits

Facebook and Twitter activities commence

You can make the difference to your

hair's long health 10 sec commercial

Hair needs long-term care! On TOI, Femina,

Cosmopolitan

June Making people realize about

the hair nourishing vs. conditioning cause

1. Transit advertisements

2. Posterior of autos 3. News channel coverage

Website launched with "check your hair

type" app

Launch of ads to show difference is made by regular

usage of conditioners 30 sec commercials

"You can make a difference to your hair's long health" Full and half page

length ads

1 Connect with the audience via a compelling story

July How can you carve your hair story?

Concept popularized through in-mall

promotional activities

Blogging, tweeting about the campaign

starts. People update their tweets and status messages

How you can carve your hair story? ads. Adv. For goal 1

AugustRemedies to make hair conditioning a successSeptember Event promotional

ads. Adv. For goal 1

2

Connect with the Indian family and make people

realize how their daily hair care habits could go a long

way

October Family values: Oil and conditioner good for hair Launches calendar for

an average Indian's monthly Hair care

Get customer feedback through an online survey. Viral

videos on Consumer feedback

Adv for Goals 1 & 2November

DecemberCustomer testimonials focus

on interviewing satisfied customers

3Connect with the audience

through the holiday festivities and season its

opportunities

January

Season's greetings themes ads Rope in celebrity

New year resolution campaign. People

post their resolutions to give hair care

requisite attention, starting with conditioning

Season's greetings & tips on how to get the right conditioner to help turn a new

leaf in your personality February

March

4 Brand buildingApril Office goers, housewives

joining ads; use conditioners daily

"I care for my hair" freebies

"Keep your hair cool this summer with Dove conditioner"

short campaignAdv for Goals 1 & 2

May June

Based on our financial analysis, the media plan offers scale and sustained future profitability for HUL

HyderabadBangalore

Mumbai

Chennai

Delhi

Kolkata

Phase-I: 6 metros Phase-II: 14 major cities1

Year 1 Year 2 to 3

0-3

m3

-9

m9

-12

mMap cityAppoint Promotion plan

Establish ~5 billboards/ city

Establish total ~20 billboards/city

PuneNagpur

Ludhiana

AhmedabadSurat

Coimbatore

Faridabad

AmritsarChandigarh

JaipurKanpur

Lucknow

Bhopal

0-3

m3

-12

m

12

-36

m

Map cityAppoint Promo plan

Geogra

phic

al

Expansi

on

Establish ~3 billboards/ city

Establish total ~10 billboards/ city

Financi

al A

naly

sis

Yr 0 Yr 1 Yr 2 Yr 3 Total Capex Expenditure (Rs. Mn) 36 Revenues- Rinse-off (Rs. Mn) 7662 18476 47307 Revenues- Sachets (Rs. Mn) 215 386 693 Revenues-Leave on (Rs. Mn) 9295 32756 117604 Total Revenues (Rs. Mn) 17171 51618 165604 Raw material cost (Leave-on) (Rs. Mn) 72 72 72 Raw material cost (rinse-off) (Rs. Mn) 60 60 60 Packaging material (bottle + sachets) (Rs. Mn) 16511 31627 61747 General Expenditure (Rs. Mn) 12 12 12 Advertising & Sales promotion (Rs. Mn) 477 477 477 Total Operating Expenses (Rs. Mn) 17132 32248 62368 EBITDA (Rs. Mn) -36 39 19370 103236 Depreciation (Rs. Mn) 0 36 0 0 PBT (Rs. Mn) -36 3 19370 103236

0 1 2 3-50

50000

100050

Years

PBT

(Rs.

mn)

0

Rinse-off80%

Leave-in20%

~ 30% margin

AssumptionProduct Mix

~ 25% margin

Break-Even analysisCash flow analysis for Company

Break-even achieved in ~ 1.5 yrs

Backup

Qriusteam

Deep knowledge of consumer needs & diverse habits forms the basis of category wise performance

Second-tier cities like Rajkot and Aurangabad, for e.g., are growing fast but lack awareness about post-shampoo hair care

Additionally, a diversity in top consumer hair needs

Tier 1 Sec A

Tier 2Sec A/B

Tier 3 Sec A/B

Rural Sec C/D

Pre-wash habit Oiling Oiling Oiling Oiling

Shampoo Usage days

Conditioner usage days

Preferred packs Tubes Bottles Bottles/Sachets Sachets

Tier 1 Tier 2 Tier 3 Rural

Hair Fall 3 3 1 2

Damage 2 4 5 5

Longer/ Strong 4 5 3 1

Dandruff 5 2 2 3

Shine 1 1 4 4

Sharply tailoring market development

Need for Awareness on conditioners

Nee

d fo

r pro

duct

In

nova

tion Tier 1

Tier 2 & 3

Rural

Pen Profile of theTarget customer

• Mid-twenties to late-thirties. Female. Independent and Working women, mostly in a fast paced-work place

Demographic Profile

• Socially conscious, eager to please, fashionable, desire to look young, beautiful and fit within the peer group

Psychographic Profile

• „On-the-go“women, specific need users. Trust in big brands important

Behavourial Profile

Among competitors in the Tier 1 cities, HUL compares favorably on most of the relevant parameters

What does the Customer look for in a Conditioner?*

38%

42%

1%

10% 9%Specific functional usageBeauty enhancement Product naturalnessPeer review of condi-tionerBrand loyalty

* Based on Primary Research (43 respondents)

* All competitors analyzed are within the city of Banga-lore

Mark

et

Analy

sis Attributes DOVE SUNSILK PANTENE L’OREAL

Price High Intermediate High Very High

Promotion Very High High Intermediate Intermediate

Distribution Very High High High Low

Range of Conditioners

High High Low High

Expanding Hair Conditioner market in India Shivani Pal Mansi Baranwal Aditya Mukherjee.

Documents

perceived hair conditioner

hair growth

hair healthier

moisturizinghydrating

specific hair conditioners

hair oil people

hair care india

hair care regime