2015 Marketing Management Group 4 [PREMIUM SOAP MARKET MARKETING MIX] The scope of the project is to study the premium Indian soap market marketing mix.Submitted By: Group 4 Ankur Chugh Alok Arvind Jahagirdar Rohit Deo Shrinet Rohan Gupta Shiven Vasudeo Kalelkar Vivek Kumar Agarwal 2 Topic: STUDY OF INDIAN PREMIUM SOAP MARKET'S MARKETING MIX. Project Scope:The scope of the project is to study the premium Indian soap market marketing mix. Though we have analysed the marketing mix of the premium Indian soap market, we have taken specific example of Dove soap of Unilever to add to our analysis. Introduction: The Indian Soap market consists of retail sales of bath and shower products. The Indian soap and hygiene market has experienced strong double digit growth in recent years (13.4% in 2013 to a value of $ 23.16 Billion Dollars). This is predicted to continue through the forecast period, but at a decelerated rate (Market Line Industry profile: Personal Hygiene in India, August 2014). Unilever is the biggest player in the Indian Soap Market, generating 44.7 % share of the market value. Additionally, Market consumption volume increased with a CAGR of 7.3% between 2009 and 2013, to reach a total of 6,800.6 million units in 2013. The market's volume is expected to rise to 8,859.9 million units by the end of 2018, representing a CAGR of 5.4% for the 2013-2018 periods. Market ShareUnilever is the leading player in the Indian soap Market with multiple products across the price points. It has 44.7% share of the market value. Godrej is the second in the list with 12.2 % of the market.Indian Soap Market 2009-2013 Market Value 3 The market has several, leading national and global brands and a large number of small brands. The popular and premium brands include Lux, Cinthol, Liril, Rexona, and Dove. As the market is constituted now, it can be divided into four price segments: premium, popular, discount and economy soaps. Premium soaps are estimated to have a market volume of about 14 to 15% of the market size. Situation Analysis: Market Structure The Indian soap market is growing at a strong rate and there are opportunities to gain market share particularly with a greater premiumisation requirement from increasingly discerning customer. This makes the personal hygiene market attractive to prospective entrants. The major companies are large firms whose scale economies allow them to compete more effectively on price, and invest in research and development activities; therefore small companies entering the market may find it difficult to compete. With companies like Unilever being able to saturate a market with a promotion of its product, smaller companies need a strong strategy to gain brand recognition. Substantial funds are needed to start a successful business, with investments required for investment in production, distribution, and also advertising (which is crucial for success in this market). Moreover, consumers are paying closer attention to what comes directly in contact with their skin to check skin problems which has given rise to soap products with natural ingredients or at least products free from synthetic chemical constituents and aluminum or alcohol. Although this provides new entrants with an opportunity to enter this niche market; products with natural ingredients can be expensive to produce and established players such as Dove (owned by Unilever) are already well established in this sector. This can also act as a barrier to entry. It is also vitally important for new entrants to find a place on the supermarket shelves to distribute their products widely; new entrants must persuade retailers that it is worth displacing older brands to make way for a new, unknown product. Competitive Strategy:Porters Five Forces: The soap market will be analyzed by taking manufacturers of soap as players. The key buyers will be taken as distributors of personal hygiene products such as retailers, and packagers and suppliers of raw materials such as surfactants, bio-fuels such as palm oil, Potassium and sodium salts, etc. as the key suppliers. 4 The market is well developed with many players selling similar products, leading to an intensely competitive environment. Buyers within the market include supermarkets and hypermarkets, which are likely to exert strong buyer power. Suppliers to the personal hygiene market are also weakened by the scale of market players. Suppliers of ingredients and packaging are smaller relative to manufacturers, which decreases supplier power in this market. However, suppliers provide for a diverse client base and correspondingly supplier power is assessed as moderate overall. Attempting to enter this market is difficult, with new entrants competing with numerous long-established companies that have large scale economies. Bargaining power of Suppliers: Several raw material suppliers available India South-East Asia Free trade agreement allows easy availability of raw materials from south East Asia Overall supplier power is low. Customer: Multiple options available with little differentiation for end customers. Intermediate customers/Organised Retails pushing its own brand offering. Overall customer power is moderate. Substitute: Products like herbal gels, spa treatments, and ayurvedic alternatives reduce usage frequency. Consider shower gel as a soap alternative; not much threat of substitution, as it in itself is a soap. Overall threat of substitute is assessed as weak. Threat of New Entrant: No patent to protect products intellectual property India South-East Asia Free Trade Agreement now enables easier/cheaper imports from south East Asian countries.Large investments required for plants, distribution, and above all promotion and advertisement. Overall threat of new entrant is moderate (Last major entrant was ITC, which had a sizeable distribution strength, with its Vivel and Fiama Di Wills brand). Customer Decision Making Process for premium soap: The customer decision making process forsoap encompasses the following methodology, going throughfive stages which are shown below: 5 Initialproblemawarenessandneedrecognitionareoftentriggeredbyafeelingordesiretofulfillaneed. Individuals, who purchase premium soap, do so for personal reasons, but one of the main reasons isfor skin nourishment. Therefore, consumers purchase it to fulfill both the basic and the augmented needs. Family and advertisementsareoftenthefirststimuliwhichtriggerneedrecognitionandproblemawareness.Need recognition and problem awareness could arise from perceived quality differences or be triggered by a desire for higher quality product. Informationsearchiswhereindividualswillobtaininformation.Thiscouldbeginwithmembersofhis/her peergroupincludingfriends,familyregardingtheirownperceptionsandknowledge.Thedecisionmaker may also utilize other sources such as Marketing mixtouch points to further his or her knowledge about the product. The evaluation of alternatives will be different for each individual, but would often include assessments of the productitselfforfeaturessuchasskincare,hygiene,fragranceandotherassociatedfeaturessuchas packaging,design,andbranding.Itwouldalsoincludebrandperceptionoftheproductanditsparent company.Inthecontextofpurchasingasoap,consumersfeelittobealowinvolvementbutahabitual purchase. The woman of the house is normally considered as the ultimate decision-maker in terms of this kind of purchase. Afterthefinalpurchasingdecision,thelaststageincludesthepost-purchaseevaluation,wherebythe individualwouldexaminethepurchase.Often,cognitivedissonanceariseswhentheindividuals expectations arenot met. Therefore, companies spenda lot of money onquality control andR/D sothat the consumers get a consistent and a good experience of using the product.

Marketing Mix: (Ordinary Market Vs Premium Market) The focus of the market mix is to compare the ordinary soap market with the premium soap market. Each P then further delves deep into Premium soap market in particular to cater to intricacies of the market. PRODUCT: Premium soap consumers have different needs, leading to companies going for differentiated product portfolio strategy. Premium soap producers use specialized ingredients to differentiate its product in the mind of the consumer. The premium product user looks for more differentiation as compared to that in a normal soap. Body soaps with emollients and emulsifiers are the requirements of premium soap users.Delving into the subject, we will use customer value hierarchy to do further analysis: 6 Core Product: At the core of any soap is the cleansing and hygiene need required by the consumer from the product. To address this need the company uses products like sodium salts combined with fats and oil. Expected Product:At this level the customer expects the soap to have attributes such as antiseptic and perfuming (fragrance) properties. These attributes are provided by both normal and premium soaps. Augmented Product Hierarchy: This is the level at which the main differentiation lies between the premium and normal soap brands. To differentiate on this level the soap companies try to bring attributes such as skin nourishment and moisturization provided by the product .For e.g. for apremium soap such as Dove,Unilever came with a new idea of moisturizing of skin which was not there before its inception. Potential Product: At this level companies may look at ingraining newer attributes such as medicinal properties and anti-aging attributes to the product. E.g. of the above isP& G Olay brand of Hygiene products and high end premium medicinal stores provided by exclusive organic stores. Product Classification and product mix: Nondurableproduct:Sincesoapisanon-durableproductandispurchasedfrequently,theappropriate strategyistomakeitavailableinmanylocations,andadvertiseheavilytoinducetrialandtobuild preferences.Alsosincesoapisaconveniencegoodwhichisboughtimmediatelyandwithminimaleffort, premiumsoapcompaniesusedeeperunderstandingofcustomerneedstocomeoutwithdifferentiated productsandbrands.Thecompanyusesadiverseproductportfoliostrategytocapturevalueatallprice points.E.g.theproductslineofDoveisdevelopedaftercarefullyexaminingthetraitsandbehaviorsof customers, primarily women when it comes to beauty and personal care. The product line of dove has a lot of products ranging from variety of skin care soaps, body wash, moisturizing lotions and body care products to doveformen,whichwaslaunchedin2010.Unileverhasreacheditstargetgroupbyproducingarangeof productsaccordingtotheneedsofcurrentandprospectiveconsumers.Dovehasfivedifferentclassesof product viz . Skin care Products, Men care, Lotions, Beauty Bars/body wash and Deodorants. Dove has a range ofproductsinitseachmaincategoryi.e.inbodyCareProductsithas44differentproducts,inmencare,in lotion, in beauty Bars/Body Wash and deodorants has sub products. Ingredient Branding: Thepremiumsoapproducerstrytobuildbrandequityfortheproductbyusingstrategyofingredient branding such as by building on equity of ingredients such as potassium based salts in place of sodium based salts in the product . Additionally, companies like Unilever try to differentiate its Dove soap brand by building onproductingredientssuchasmoisturizer.Toimplementtheabovestrategythecompanytriesto communicatetheuniquenessoftheproductingredientsthroughitsbrandcommunicationandalsothrough theusageexperienceandaftereffectsofusingtheproduct.Secondly,companiestrytopositionthe ingredientsasproprietaryanddifferentiatedtocreateexclusivityforthebrand.Thirdly,thecompaniesuse 7 distinguished brand and logo,e.g. thedovegolden logotoposition Dove as a cream barrather than as soap. Lastly,companiesofpremiumsoapuseacoordinatedpushpullstrategytocommunicatethedifferenceby goingforcampaignssuchastheDoveinnerbeautycampaignscombinedwithretailmerchandising programs to differentiate the product. Design: To differentiate premium soap from lesser offerings, companies make use of design features to differentiate a product together with the packaging. The design is built into the premium soap by the way a soap looks, feels and smells. The design features try to build on the aesthetics and functional points to appeal to the emotional and rational side of the consumer. The companies go for design features through packaging, point of sale feel and design (bright colored and attractive selling stands etc) Packaging: Thepackagingofthepremiumsoapisattractiveanddistinctivefromnormalsoaps.Thepackageisbuyers first encounter with the product, therefore it should give a premium feel for product such as the hard packing ofDoveandthatofITCsFiamaDeWills.Thepackagingalsohelpsthelaterproductexperiencewhenthe customer opens the package to usethe product. Also packaging is accompaniedby distinctive and attractive logo and ingredientmarkings ontheproduct to createdifferentiation. Therefore labeling combined with the product packaging is an important feature in differentiating the premium soap from ordinary soap. PRICE: (Note we did empirical analysis, provided in Appendix B, to arrive at several insights in the following analysis) Pricing is an important signaling factor for soap brands. There are several pricing strategies used by soap brands, which we will discuss below. There are certain lower end premium brands that do go for mixed bundling such as pears. However, the bundling process is not common in premium soap market. Taking Dove as an example, with the brand now priced at Rs 50/100gm, the price hassomewhat become reasonable. We feel that still the brand does not fit into the value for money" proposition for the Indian consumer. In spite of the fact that consumer looks for Value even in premium products. Dove has a negative 8 point in that the soap usually does not last enough (partly because of Indian bathroom habits). This has reduced the value proposition for this brand. With the emergence of an attractive market in the premium cosmetic market in India, Dove has a potential to become a key player, as it has got its positioning right, and Value" right for the Indian consumer. We have observed premium market pricing being used for certain products like Dove Green. Dove green is another variant of Dove and is priced at 50% higher than regular dove catering to the different market for skin care oriented customer base.There exists a sub ultra-premium soap market as well. The market is highly fragrance oriented apart from great quality in soap ingredients. There is a Rustic art-sandal brand priced far above the other incumbents at Rs 155/100gm. Although Premium markets Soaps gives its customers a lot in terms of the product itself, it cannot provide a better pricing. This is due to some constraints in the beauty soap industry. Beauty soap is a product with a vulnerable demand in India. A change in price has a high risk of creating price war among the rivals which will eventually cause a loss of profit. Its prices are almost equal to its competitor. Dove price is in comparison with its major competitor such as Fiama di wills. Company carries out research on competitors price and brand loyalty when it feels extreme necessity of changing price.Brands are sometimes forced to increase price of its popular soap and skin care brands to offset high input costs. The country's largest consumer products company increased the price of Lux soap in 2011 and followed it up with 5-8 % hike in prices of other premium soap brands such as Dove and Pears. HUL offers discounts in several of their brands for the Republic day sale period, which exhaust most of the existing stock. However, premium soaps tend to stay out of this discount sale. Premium soap like Dove and Pears saw price increase in 2011 due to steep increase in raw material prices. It should be noted that increase in cost of some commodities was exceptionally high. Prices of palm oil, a key ingredient for soaps, increased 45% year-on-year in 2011, forcing most companies to consider price increase. Continuing inflation and soaring crude oil prices forced other companies to increase prices as well. Despite of all the above mentioned factors, its not an easy decision to increase prices. Most companies have managed double-digit volume growth by keeping prices low. Higher price tag may affect volume growth. However, the positive characteristic of the premium market over the ordinary market is that the volume growth is not much impacted by the price increase. HUL for example, takes price increase to pass on raw materials inflation across brands or it attempts to squeeze out competition by keeping their prices low and wean out smaller local players in this high inflation time. HUL tries to pass on the cost more on the premium soaps compared to the ordinary market soaps such as Lux. Companies prefer to attract consumers and gain market share while reducing other costs to protect margins. 9 PROMOTION: Promotion strategy The premium soap product does not only call for a good product, pricing and making it accessible to target customers. Companies need to also promote the product by following different promotional strategies such as advertising, sales promotion, publicity, interactive marketing, word of mouth marketing and personal selling, each geared towards the target group. Push strategy and pull strategies are used by companies for the above categories, by using appropriate communication message targeted towards each customer segment. For our analysis, we will analyze both the push and pull strategies used by the premium soap making companies. Target group for premium soap We identified following segment for the premium soap market (For discussion on how we segmented the market please refer to Appendix A) SegmentCategoryBenefitsProductDecision Maker a)FamilyHigh IncomeUniquenessDoveMother/Wife b)Commercial Hospitality High EndLuxury to customer Expensive Captive Soap Purchase Department c)PersonalHigh Aspirational Treat and feel good factor DoveSelf Push Strategy A push promotional strategy involves taking the product directly to the customer via various means and ensuring the customer is aware of the brand at the point of purchase. Push tactics followed by the companies in premium soap segment are Direct selling to customers in stores using appropriate retail channel. By entering into commercial agreements with retailers to incentivize retailers in selling the product. By ensuring efficient supply chain allowing retailers to meet expected demand. Attractive packaging, design and logos are used by companies in the premium soap market to encourage purchase. Points of sale displays are made attractive and distinctive to encourage purchase of premium soap. An example of the above is the Push tactics followed by Dove such as posters displayed at retailers and elegant design and packaging used to sell the product. 10 Pull Strategy Pull strategy involves motivating customers to seek out the companies brand in an active process. Since the target group for a premium soap market is a discerning customer with his or her own likes and dislikes, the premium soap marketing company designs target group specific communication and advertising campaign. Pull tactics followed in premium soap industry are a)Using Advertising and mass media promotion such as Dove Self Esteem and inner beauty campaigns. b)Word of mouth referrals by delighting the customer through the product experience. c)Customer relationship management process is used to address customer requirements and grievances. d)Additional strategy involves sales promotions and random discounting which are used to get customers to buy the product. Promotional Channel Different strategies such as Push/Pull strategy, Promotional Strategy, Advertising Strategy, Brand Awareness among others support each other. For e.g. Dove Evolution Film is a Pull Strategy using Promotional Channel of Digital Media. Advertising Strategy To illustrate the advertising strategy of premium soap we are using the advertising strategy of Dove as a point of reference. Dove uses targeted advertising strategy to target different segment of consumers. Firstly, Dove tried to provide a message that it is not Soap, but a moisturizing bar. It targeted the segment which wanted their skin to be vibrant and moist. Secondly it targeted Women with a simple message of Real Beauty. Its focus was women and message was,real women wants real beauty, which gives them confidence and portrayed that these real women make their own choices in life and that they believe in DOVE. Brand Awareness Through campaigns such as Real Beauty Campaign and program such as DOVE Self Esteem fund, Dove tried to spread the awareness of the brand in the urban market (though the campaign was global , we can extrapolate a similar effect in the Indian urban market)where it had the majority of the target customers. Therefore, as described above the promotional strategy of premium soap is different from that of a normal soap. Normal soap are more concerned about reaching the consumer to communicate its value proposition whereas,premium soap such as Dove try to have more customer engagement and use innovative ways to reach the consumer and create campaigns which make the user the star of the promotion. 11 PLACEMENT: Distribution channel structure for personal hygiene products in India As shown in the table above, In India the main distribution channel for soap products are independent retailers. Thus, the size of the average buyer (ultimate seller of the product to the end consumer) is not as significant as in other countries, which often have supermarkets as the main distribution channel. This reduces independent retailers negotiating position and in turn decreases buyer power. Retailers often occupy a position of power in the supply chain which allows them to negotiate favorable contracts with manufacturers. Consequently, this enhances buyer power. Although products are not so different in term of ingredients, commoditization is not an issue here and branded soap products manage to stand out due to certain benefits and specific qualities. Branding is an important way of maintaining end-user loyalty, and as a result retailers are required to stock the more popular brands, which reduce their bargaining strength and buyer power. Further key points regarding placement of the premium product are as follows:- Placing a product is the next key aspect in the marketing strategy. This is vital since its important to have the right product available in the right quantities and in the right locations when the customer requires them. The Place selection is chiefly driven by the target customers. The place so decided must be such that it provides easy and convenient purchase point for the customer. For premium category soap, the following is the Place of sale. Independent retailers: This section mainly consist of local stores (without proper display and self-service)and independent stores (display facilities and self-service).The shelves displaying these soaps are easily visible from any corner of the store and preferably placed at the corners such that they could even be seen through the shops outer facade . Independent store and Kirana stores are volume drivers of Economic and medium segment of soaps. Some of the premium stores display premium and high premium soap as relevant customer visit these store. Regular Kirana store get most demand from economic and medium segment. 12 Supermarkets: These are usually very large self-service shops selling food and house hold stuff. These are the stores where one gets all the varieties of products in various price ranges. The turnover at these stores is very large with customers having wide range of choices. Though the number of premium products sold at these stores may be a small fraction of the total sales, but nonetheless they are an attractive option for marketing the product and making the product familiar to the consumer. Various promotional offers such as providing free sachet of the soap to the customers at the billing counter are the means used by companies to reach out to a large segment of people. Soaps are positioned in the shelves segregated by different categories. Supermarket is a place that store whole range of soap (just leaving ultra-premium segment). Shelves are managed to segregate these categories properly. Budget segment are kept in the lower shelves (mostly bundled with discount offers). Premium segment soaps are kept in middle shelve to get maximum attention from customers. Medical stores:Soaps are one of many products sold in addition to medicines at such stores. Many people prefer to purchase soaps from such stores and hence companies use this channel strategically. Soap with meditational characteristics are sold in medical store as customer like to buy these product with other medicines. Herbal and speciality soaps also marketed here to the targeted. The soaps are placed on some of the lower shelves in the store which would also be closer to the counter. An advertisement of the soap near counter helps in grabbing the attention of the customer. Convenience stores: A convenience store is the one which is located within the close vicinity of a locality, or at a petrol pump and which has extended opening hours, and which stock a limited range of household goods. Even though these stores might not be a great source of revenues, the soap is still displayed in limited number for those who might be the one-off buyers. In such stores, the placing of the soap critical for its sales. Budget soaps are normally sold through this channel. Other Channels: Selling ultra-premium segment soaps require very different channel strategy. This category of soap cannot be placed with other category of soap in the conventional market places. Five star hotels, premium spas, special kiosk in luxury malls are some point, where these categories of soaps are placed. Another place gaining popularity recently is e-selling. Most of the customers using premium quality, high priced soaps are tech-savvy and prefer convenience in purchasing. Considering this fact, online revenue could turn into big revenues for speciality and niche soap products. The online selling is done through online grocery retailers such as bread-and-basket.com and producers own e-store. Conclusion: Our analysis regarding the marketing mix of premium soap makes it amply clear that companies can only create sustainable value for its shareholders, if the company carefully combines all the marketing mix attributes to carefully craft a strategy targeted towards customer segment in the STP analysis done before implementing the 4P- strategy. 13 Appendix A Decision RoleSegmentDecision makerDecision Maker CategoryBenefitsExample PurchaserFamilyHomemakerLow Income household Value Driven Lifebuoy Medium Income household Aspiration driven Lux High Income household Uniqueness Dove Commercial - Hospitality Purchasing Department Low EndROI Driven Cheap Captive Soaps Medium EndFuture Value driven Medium Captive Soaps High EndCustomer Driven Expensive Captive soaps UserPersonalIn-PersonValue Conscious Value Driven Detol Image Conscious UniquenessCinthol 14 Appendix B Soap nameMRP Sale price bundle size weight (gm) price/ soap price/ gram Discount % Budget Soaps Godrej6864410017.000.175.88 Lifeboy10915010.000.2010.00 Cinthol10899510021.600.228.33 Lux2422110024.000.248.33 Rexona2422110024.000.248.33 Patanjali191917519.000.250.00 Hamam2624110026.000.267.69 Santoor145145412536.250.290.00 Noramal Vivel9489310031.330.315.32 Park avenue4038112540.000.325.00 Dettol123116312541.000.335.69 Savlon252217525.000.3312.00 Camay126119312542.000.345.56 Aramusk4545112545.000.360.00 Pears232220512546.400.375.17 Premium Liril5046112550.000.408.00 Himalaya302817530.000.406.67 Khadi5552112555.000.445.45 Pears168159312556.000.455.36 Fiama di wills168159312556.000.455.36 Dove242215024.000.488.33 Dove174159310058.000.588.62 Biotique9081115090.000.6010.00 Dove Green464317546.000.616.52 Aloe veda7575110075.000.750.00 Vitro naturals555017055.000.799.09 Ultra Premium White House105971100105.001.057.62 Bodyherbals - neem1291221100129.001.295.43 Bathing bar - Jasmine1291221100129.001.295.43 Bathing bar - Lemon1291221100129.001.295.43 Rustic art - sandal1551391100155.001.5510.32 15 References 1.Market Line Industry profile: Personal Hygiene in India, August 2014 2.Data monitor industry profile: Indian Personal hygiene market, 2014. 3.Dove, beauty inside campaign case, YouTube 4.Secondary research on internet.