Final Report Marico

Marico is a leading Indian Group in Consumer Products & Services

in the Global Beauty and Wellness space. Marico's Products and Services

in Hair care, Skin Care and Healthy Foods generated a Turnover of about

Rs. 23.9 billion (about USD 478 Million) during 2008-09. Marico markets

well-known brands such as Parachute, Saffola, Sweekar, Hair & Care,

Nihar, Shanti, Mediker, Revive, Manjal, Kaya, Aromatic, Fiancee, HairCode,

Caivil and Black Chic. Marico's brands and their extensions occupy

leadership positions with significant market shares in most categories-

Coconut Oil, Hair Oils, Post wash hair care, Anti-lice Treatment, Premium

Refined Edible Oils, niche Fabric Care etc. Marico is present in the Skin

Care Solutions segment through Kaya Skin Clinics (95 in India and The

Middle East) and its soap franchise (in India and Bangladesh).

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Marketing policy

Marico is an organization, which is flat with only five levels of

reporting between the Managing Director and an operator on the shop

floor.

Marico believes that a flat structure helps them in being more

responsive to the environment while providing enriched roles for their

members. The structure defines clear roles and supporting relationships

but is by no means rigid. Keeping in mind the fast and ever changing

business environments, Marico's structure is dynamic and constantly

evolving.

Marico believes that all their efforts and strengths MUST mean a

better quality of life for their consumers as the maxim "Consumer is the

King" is sacrosanct in this organization. “We strive towards this goal by

constantly evolving new methods and practices that enhance the quality

of our service.”

The uncommon policy of marketing

Advertising is commonly understood in its narrowest commercial

context making it seem more superfluous than necessary and more hype

than relevant. Both its study and practice often focus more on what is

advertising and how it is done, ignoring vital aspects like why it works.

This unique book instead looks at the key aspects of advertising from a

holistic perspective of brands and marketing. It is designed to equip

young potential marketing and advertising professionals with all the

fundamental and conceptual aspects required to produce quality

advertising in the real world. The book explains and simplifies hardcore

advertising and marketing concepts while taking the understanding of

advertising to a higher level of insightful learning. This is done in part

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through the introduction of fresh concepts and terms in a novel way. The

author also highlights the criticality of consumer insights in developing

great advertising and how and where to

look for tem. The book is aimed largely at beginners and students, as its

down-to-earth approach will help newcomers be better prepared to start

their careers in the advertising and marketing world. This is because it

draws more from the real and practicing world of advertising, rather than

from the theoretical one.

The Uncommon Sense program equips businesses to make desired

changes in their operations and empowers them to become sustainability

leaders in their communities and industry sectors.

To graduate from UnCommon Sense, each business is required to

complete assignments from each module and prepare a final presentation

and written report that summarizes their actions and operational

improvements. Businesses achieve points for completing these action

items, and a minimum number of points are required to graduate.

Examples of the action items include conducting waste stream audits and

measuring waste stream, baseline energy and water audits and use

tracking, calculating CAFÉ measure (Corporate Average Fuel Economy)

and conducting a greenhouse gas inventory.

Businesses are required to document and quantify all action and

operational improvements made. Upon completing the course, they

compile all documentation and action items and present to the group.

This information comes in many forms: spreadsheets and tracking

matrices, graphs, work plans, surveys, communications strategies,

mission/vision statements, resource lists, job descriptions, photographs,

policies, marketing materials. The intent of this reporting is to actually

quantify what a business was able to achieve over the two- year period.

Each graduating class is profiled in an Uncommon Sense annual

report highlighting their accomplishments and positive changes over the

two-year course. This report will detail each business’ individual

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accomplishment and how the participants’ collective efforts are improving

the region’s economy, communities and environment.

o Stop playing at the margins; re-think everything.

o Build the firm around the 5- to 8-year associates, servicing partners

and similar talent.

o Move the firm to the suburbs and sell the artwork / cut the non-law-

related overhead.

o Reduce attrition of mid-level and senior associates and servicing

partners, especially because the investment in them is so great and

they are capable of delivering real value.

o Hire far fewer first year associates and actually train them and pay

for their learning curves, as opposed to staffing them randomly in

and out of client work, and seeing which sink and which swim,

which is a very expensive and wasteful management technique.

o Balance mentoring/training against hiring experienced lawyers –

plan in advance who you want to train and bring up in the ranks,

versus who you want to go out and “buy” who’s ready to hit the

ground running.

o Look at tiers because most firms are too flat: contract lawyers, flex

plans, remote workers, paralegals, non-legal staff, etc. Not just

associates who have to become partners and partners who have bill

with very high returns (or else they have no home at the firm and

are considered off track/out the door).

o Create a service culture. Don’t just value legal skills if they are

divorced from business savvy or personal skills or communication

skills, etc.

o Stop competing solely for the top graduates from top law schools –

broaden the search and look for matches specific to the firm’s (and

clients’!) needs.

o Provide clients with “boots-on-the-ground lawyers.”

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o Develop different groups of lawyers by skill set (rather than just by

practice expertise), such as some who are like contractors and can

do research, contract writers, discovery experts, investigations

leaders, etc.

o Make money on volume and length of relationship.

o Offer alternative means of compensation for firm lawyers when

appropriate to the client’s objectives and pricing concerns.

Market status

Marico's focus on sustainable profitable growth is manifested

through its consistent financial performance - a CAGR of 24% in Turnover

and 27% in profits over the past 5 years- while setting a record of several

consecutive quarters of year on year growth- 38 for Profits and 34 for

Sales.

Over the past 17 years, Marico has been constantly improvising and

building new brands.

Marico's Consumer Products Business houses well-known brands

such as Parachute, Saffola, Sweekar, Hair & Care, Nihar, Shanti, Mediker,

Revive, among others, which occupy leadership positions with significant

market shares in most categories- Coconut Oil, Hair Oils, Post wash hair

care, Anti-lice Treatment, Premium Refined Edible Oils, niche Fabric Care

etc.

Every month, over 70 Million consumer packs from Marico reach

approximately 130 Million consumers in about 23 Million households,

through a widespread distribution network of more than 2.5 Million outlets

in India and overseas.

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MARICO STEPS UP TOPLINE GROWTH – UP 28%

Marico recorded a turnover of Rs 601 crore during Q1FY09, a growth

of 28% over Q1FY08. The growth was across all its businesses (consumer

products in India, international business and Kaya skin solutions). More

than half of the growth – about 15%- came from volume expansion.

During the quarter, Marico achieved a Profit after Tax (PAT) of Rs 46

crore, a growth of 15% over Q1FY08.

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Consumer Products Business – Domestic:

Parachute continued to maintain its leadership in India. Parachute

commands a 48 per cent market share by volume in a Rs 1,300-crore

market, of which another 6 per cent was gained by acquiring Nihar from

Unilever. Revenues from Parachute in 2007-08 were Rs 620 crore. The

Saffola refined edible oils franchise grew by 28% in volume over Q1FY08,

led by Saffola Gold. The volume growth was boosted by the introduction

of a new variant, Saffola Active. Even as the brand operates in the niche

super premium segment of the market in India, its strong and relevant

proposition ensures a broadening consumer base. Saffola, accounted for

Rs 286 crore in revenues for 2007-08

The Hair Oils category experienced healthy growth. As in the past,

the company has focused on rigid pack sales of its portfolio. Marico’s hair

oils in rigid packs grew 26% in volume over the corresponding quarter in

the previous year. During the quarter, Marico commenced the prototype

of Parachute Advanced Night Repair Cream and Maha Thanda Hair Oil.

Other new products recently rolled out include Parachute Advanced Starz,

Hair & Care Almond Gold and Saffola functional food for Diabetics.

Marico generates 75% of its revenue from domestic FMCG, which

has been largely unaffected by the current slowdown. Marico's

"Parachute" brand has maintained market share over the past two years,

with volume growth of 11-12% pa driven by the consumer shift from loose

unbranded oil to branded oil. The positioning of "Saffola" edible oil has

been successfully transformed from a ''curative'' product to a

''preventive'' measure, thus driving increased penetration.

Market share and the Rank of different products:

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International Business:

Marico’s international business grew by 37% during Q1FY09. In its

traditional markets (the Middle East and Bangladesh) the FMCG business

continued to grow and record share gains. In Bangladesh, Parachute

coconut oil extended its market dominance backed by strong marketing

support. During the 12 months ended May ’08, its market share was 69%.

The thrust on expanding the franchise of Parachute hair cream in the

Middle East continues. A refurbished campaign for the anti-dandruff

variant of the cream was launched targeting Asian Males in the GCC

region, helping in capturing the “problem solution” user segment. The

Egyptian brands, Fiancée and HairCode currently enjoy a market share of

62%. The process of integration of the business in South Africa is

progressing well. During Q1FY09, Marico South Africa, led by the brands

Caivil, Black Chic and Hercules clocked a turnover of Rs 14 crore.

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International Business growth over the years:

Kaya:

In December 2002, a New York – based company asked Mariwala if

he would be interested in selling laser hair removal machines. At first,

Mariwala was not impressed – the product could be commoditized too

easily. But what emerged was the idea of a service offered around such

machines. Mariwala had found his entry to the skincare business through

the concept of COSMETIC DERMATOLOGY. The next year, Kaya Skin

Clinics was set up as a subsidiary of Marico. The year before Kaya’s birth,

Hindustan Lever had launched Ayush Centres. It had also tried to make

headway with a launderette service and Lakme Salons. But where the

Rs.10, 245 crore FMCG giant seems to be slow-mover at the service

game, the Rs.953 crore Marico has covered some good ground.

The goal was to convert Marico into a beauty and wellness company

that would not be a victim of brand and price wars.

The Confederation of Indian Industry (CII) estimated the size of the

beauty and wellness market at approximately Rs 12,500 crore. So the

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move to launch Kaya (body in Sanskrit) skin care seemed a gamble that

could pay off.

In the two years since its launch, Kaya has set up 37 clinics in India

and two in Dubai. At these clinics, it claims to have serviced more than

50,000 patrons. It has also launched its own products, like a skin

lightening complex, under eye gels, and a recharging night crème.

Together, these products brought in 15 per cent of Kaya’s Rs.18.6 crore

revenues last year. The company, though, is still bleeding - the

accumulated losses run to Rs.12 crore. But these are the early days of a

fast – expanding business that incurs a lot of capital cost; each clinic costs

Rs. 1 – 1.5 crore to set up. The good point is that the early ones are

reaching cash break – even in 9 months.

During Q1FY09, Kaya recorded a turnover of Rs 36 crore, a growth

of 62% over Q1FY08. Revenue growth in clinics in India in Q1FY09 that

were operational in Q1FY08 too was 25%. Kaya introduced a Deep

Pigment Reducer Peel under its skin renewal system in Mumbai. The

results have been encouraging and the service has been extended to

Delhi with plans of a national roll out during Q2FY09.At the beginning of

FY09, 108 skin clinics were operational, 95 in India and 13 in the Middle

East. During Q1FY09, Kaya has opened 4 new clinics. Three of these are in

existing cities. Kaya is now offering its services for the first time to

customers in Lucknow. In the Middle East, a new clinic was opened in

Sharjah. Kaya is well on track to open about 15 clinics during the year.

Kaya Life offering holistic weight management solution which was

launched in FY08 currently has 3 centers – all in the city of Mumbai. About

40 per cent of people in urban cities are obese and there is a great

demand and potential for this business.

  Development of products and market

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Kaya Ltd was an entrepreneurial leap of faith marking Marico's

entry into skin care solutions business. It was a true reflection of

uncommon sense for a company in hair care products to move, instead of

merely logical product extensions, straight into skin care services. It

attempted to leverage Marico's strengths in the Personal Care business

and in-depth understanding of the needs of the Indian consumer and

her/his desire to enhance her/his natural beauty with the best cosmetic

dermatology procedures available internationally.

Kaya Ltd. has been focused on meeting the emerging needs of the

modern day consumers by providing useful and effective services in the

beauty and wellness space. The pioneering effort has been in the

area of skin care with Kaya Skin Clinic. For over 5 years Kaya Skin Clinic

has refined the standards and professionalisms of the skin care industry

through innovative, world class treatments and services that have been

tailor made to suit Indian skin.

Today's consumer is awakening to the benefits of health and

wellness. Changing lifestyles and the fast pace leading to deterioration in

overall health and the growing obesity in the country led us to launch our

new initiative Kaya Life. At Kaya Life we have created an innovative

approach to a healthy lifestyle through effective, holistic, healthy and

customised weight control solutions. With Kaya Life the aim is to raise the

bar higher and create a new brand of weight control centers that deliver

on the Kaya promise of trust, safety, dependability and achievement of

personal goals in weight control.

# A lot of research has gone into setting up Kaya. Marico’s

innovation cell first tested the concept through a mock clinic in its own

office. At the clinic, all the parameters that would go into creating the

aspired ‘Kaya experience’ were tested – from client greeting, to the walk –

through, to the doctor’s presentation and the bed design.

# For ensuring safety, it has used equipment approved by the US

Food and Drug Administration. For ensuring proper use, it has kept 100

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dermatologists on a retainer basis. The 300 odd skin practitioners’ have

been put through 300 hours of training at the company.

# Every consumable used during a service is disposable, and the

standards of cleanliness are maintained scrupulously ensuring that the

services are carried out in the most hygienic manner.

# The concept is of a medi-spa. The ‘medi’ part gives results

through dermatologists, and the ‘spa’ part provides the experience. This

is where Kaya differs from the positioning of an Ayush or even an

independent dermatologist dispensing the same services.

# Kaya is creating a new experience space that goes beyond

skincare products and services. Kaya has been designed around how

customers want to interact and the outcomes they desire.

# All the parameters that would go into creating the aspired

“KAYA EXPERIENCE” were tested for complete customer satisfaction

before being implemented.

# After an in depth marketing research by IMRB, Kaya realized

that people go for skincare treatments to feel good and get pampered.

Hence a combination of superior quality tangibles and an array of

exclusive skin enhancement services is being offered. The end result

being the creation of a unique concept of MEDI-SPA.

# The biggest differentiating factor in case of services being

provided by Kaya is that of VALUE CREATION and INNOVATION, leading

not only to customer satisfaction but sheer customer delight.

Brand building and promotion strategy

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Marico spends more than 10 percent of its sale on the sale

promotion and advertisement on its various products.

As the above chart shows the material costs are same but the

advertisement and sales promotion expenditure has decreased this year.

This is because most of the products of Marico are at the maturity stage

of the product life cycle where people are aware about the product and

therefore it not necessary to advertise or promote the product the way

done at the introduction stage.

Kaya has still not reached the maturity stage of the product life

cycle and therefore Kaya is focusing to increase the market share (which

is currently 22%).

Kaya will spend 10 per cent of its total advertising and marketing

budget on the digital medium. The brand will use digital marketing to

expand into the health and wellness space with professional weight

control centers called Kaya Life

The Kaya skin clinic venture is expected to contribute as a strong

growth engine for sales and profits and help Marico move up the value

chain through high value added solutions.

Kaya launched the ‘Bridal Campaign’ – offering specialized

skincare services customized to the needs of to-be brides and grooms.

The objective was to: create awareness for the Kaya bridal packages,

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educate consumers about the possibility of glowing skin, and position

Kaya’s services as scientific solutions; a step ahead of home remedies.

Target Customers:

Primary Customers:

– Young women

– Age group of over 22 years

Secondary Customers

– Young men

– Age group of over 25 years

Psychographics:

– Well educated; appreciates scientific processes

– Seeks options; but makes informed choices

– Individualistic; Values customized offerings

– Information seeking; Actively looks out for solutions

What Marico did?

Target AudienceTarget AudienceTarget AudienceTarget Audience

Bride(Primary

customer)

Bride(Primary

customer)

Relatives – Mother, Sister, etc

Relatives – Mother, Sister, etc

Groom(Secondry customer)

Groom(Secondry customer)

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Marico plans to open up to 45 outlets of its beauty and wellness centre

Kaya Clinic in the next three years, besides setting up a manufacturing

facility for hair care products by the end of this fiscal.

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Bibliography:

-www.marico.com

-Marico’s Annual report 2008-09

-Marico’s Information updates

-Marico’s Media release

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