MM _group 10 _ Pricing Strategy_final (1)

8/2/2019 MM _group 10 _ Pricing Strategy_final (1)

http://slidepdf.com/reader/full/mm-group-10-pricing-strategyfinal-1 1/39

PRESENTATION ON

PRICING STRATEGYFOR CLINIC ALL

CLEAR



PRESENTED BY

o SAISHANKAR SANABOINA

o RAHUL NAIR

o NAVEEN HEGDE

o KUNAL DHURI

o DHARMENDRA THAKUR







Shampoos

Did you know, that the word Shampoo is derived from

the Hindi word “Champi”.

Remember Johnny Walker’s famous song - Meri Jaan,Meri Jaan, Sunday Ke Sunday, Teil Maalish - Champi

Teil Maalish.

The British loved the massage so much, they startedcalling Champi as Shampoo



o Shampoo market is segmented on benefit

platforms• Cosmetic ( shine, health, strength )

• Anti - Dandruff

• Herbal

o Hair Shampoos and Conditioners are

targeted at

• Upper middle class• Now, also middle class and house wives

• Upper class rural consumers

• Teenagers - they are the major segment



HAIR CARE IN INDIA (FACTS)

o The frequency of shampoo usage is very low. Most consumers use

shampoo only once or twice in a week. In many cases, theseproducts are used on special occasions such as weddings, parties

etc

o Some customers use shampoo only to address a specific problem

such as dandruff or when they need to condition their hair

o Use of conditioners is not common. It is restricted to the super premium segment or those who are very involved with their hair

care

o About 50% of consumers use ordinary toilet soaps to wash their hair

o Major expectations from the product are improvement in texture and

manageability, giving softness and bounce to hair, curing andavoiding damage to the hair

o An Indian needs more shampoo for a proper wash ( average 6 ml )compared to 4 ml needed in Western countries as most Indianwomen have long hair

o Consumers attribute lathering to the act of cleaning



Major shampoo players

o HUL (Sun silk, clinic plus, clinic all clear….)

o Cavin care ( chik and nyle)

o P&G ( pantene pro V and head and

shoulder)

o Dabur (Vatika)

o RDM Traders ( Ayur).



MARKET SHARE OF

ANTIDANDRUFF SHAMPOO

INDUSTRY SOURCES ESTIMATE THE URBAN PENETRATION OF

SHAMPOO IS A MODEST 36 PERCENT.

RURAL MARKET IS EVEN MORE INFREQUENT WITH PENETRATION

LEVEL OF 12%.



Clinic all clear o

Clinic All clear is a leading hair care brand in India. ClinicPlus Health shampoo was launched in India in the year

1987

o The first brand in the anti-dandruff segment was clinic

plus. The line extension of clinic all clear is seen more as

the one of this segment after its emergence.

o It offers five most important hair health benefits,

strengthens weak hair, prevents hair breakage, softens

rough dry hair, shine for thick and healthy hair and

contains anti-dandruff ingredient.

o Clinic Plus has gone through a lot of changes in terms of

product variants, packaging and as well promotion

programs



Promotional activitieso Clinic all clear has targeted the young youthful

audience.

o To begin with shah rukh khan was the main face

for clinic all clear, with changing times we haveseen shahid kapoor take over as the choice of

brand ambassador.

o Shahid kapur and madhavan as their new brand

ambassador for clinic all clear total since they

personify youth freshness, confidence and fun

which are perfect synergy with brand attributes.



SWOT ANALYSIS

Strength 1. CLEAR has partnered with the world’s leading dermatologistsfrom the International Academy of Dermatology (IACD) to bring thefirst ever patented scalp nutrient technology –New CLEAR withNutrium 10 to its consumers

2. Available in 5 different variants for different types of hair needs

3. Clear brand available in over 14 countries worldwide

4. Clear is the only brand that offers specially formulated Anti

dandruff shampoo for men

5. Celebrity brand ambassadors and good advertising



SWOT ANALYSIS

Weakness 1. Dominance only in the anti-dandruff shampoo segment,no variants available for normal shampoo usage

2. Multiple re-brandings over the years – Clinic Special toClinic All Clear to ‘Clear’ at present. Can create confusionabout the brand name among consumers.

3. Low market share even in the anti-dandruff shampoosegment as compared to competitors like Head &Shoulders



SWOT ANALYSIS

Opportunity 1. To align itself to the international quality

standards this year Clinic All Clear has

been re-launched this year as Clear

2.Introduction of Anti Dandruff Hair Oil that

fights dandruff and strengthens hair fromscalp, as a brand extension



SWOT ANALYSIS

Threats 1.Highly competitive market having manyplayers with similar offerings and cheaper rates

2. P&G wrote to the Advertising StandardsCouncil of India, which sought a response fromHUL regarding an advertisement of Clear starring Bipasha Basu which had a mutedreference to Head & Shoulders in theadvertisement



Objectiveso Understand the internal & external factors affecting a

firm’s pricing decisions.

o Be able to contrast the three general approaches tosetting prices.

o Learn the major strategies for pricing initiatives andnew products.

o Understand how companies find a set of prices thatmaximizes the profits from the total product mix.

o Learn how companies adjust their prices to take intoaccount different types of customers and situations.

o Know the key issues related to initiating andresponding to price changes.



Priceo The amount of money charged for a product, or

the sum of the values that consumersexchange for the benefits of having/using theproduct or service.

o Price and the Marketing Mix• Only element to produce revenues

• Most flexible element

• Can be changed quickly

o Price as a tool of Competition

o Common Pricing Mistakes



Marketing

Objectives

SurvivalLow Prices to Cover Variable Costs andSome Fixed Costs to Stay in Business.

Current Profit Maximization Choose the Price that Produces the

Maximum Current Profit, Etc.

Market Share Leadership

Low as Possible Prices to Becomethe Market Share Leader.

Product Quality LeadershipHigh Prices to Cover Higher

Performance Quality and R & D.

Internal Factors Affecting Pricing

Decisions: Marketing Objectives



Price

Product Design

Distribution

Promotion

NonpricePositions

Internal Factors Affecting Pricing

Decisions: Marketing Mix



Internal Factors Affecting Pricing Decisions:

Cost Organizational considerations



EXTERNAL FACTORS

Nature of Competitors’ costs Other environmental

market and prices, and offers elementsdemand

,

elements



Cost-Based Pricing

Certainty AboutCosts

Pricing isSimplified

Price CompetitionIs Minimized

U n e x p e c t e d S i t u a t i o n a l F a c t o r s

Attitudesof

Others

Ethical

IgnoresCurrent

Demand & Competition

Cost-Plus Pricing

is an ApproachThat Adds a

StandardMarkup to the

Cost of theProduct.

Simplest

PricingMethod

Much Fairer to

Buyers & Sellers



2. Value-Based Pricingo Uses buyers’ perceptions

of value rather than seller’scosts to set price.

o Measuring perceived valuecan be difficult.

o Consumer attitudes towardprice and quality have

shifted during the lastdecade.• Introduction of less expensive

versions of establishedbrands has become common.

General Pricing Approaches (contd.)

o Business-to-businessfirms seek to retain

pricing power • Value-added strategies

can help

o Value pricing at the

retail level• Everyday low pricing

(EDLP) vs. high-lowpricing



ProductProduct

CostCost

PricePrice

Value Value

CustomersCustomers

CustomerCustomer

Value Value

PricePrice

CostCost

ProductProduct

Cost-Based Pricing Value-Based Pricing

Cost-Based Versus Value-Based

Pricing

CHPT: 14-24



b) Break-Even Analysis & Target Profit Pricing

o Break-even charts show total cost and total revenues at different levels

of unit volume.

o The intersection of the total revenue and total cost curves is the break-

even point.

o Companies wishing to make a profit must exceed the break-even unitvolume.


Fixed Costs

Total Costs

Revenues

Sales Volume in Thousands of Units

T h o u s a n d s

T a k a

0 10 20 30 40

1000

800

600

400

200

Break-even

point

Target Profit Tk. 200,000

Quantity To Be Sold ToMeet Target Profit

Fixed Costs

Total Costs

Revenues

Sales Volume in Thousands of Units

T h o u s a n d s

T a k a

0 10 20 30 40

1000

800

600

400

200

Break-even

point

Target Profit Tk. 200,000

Quantity To Be Sold ToMeet Target Profit



3. Competition-Based Pricing

• Also called going-rate pricing

• May price at the same level, above, or below the

competition

• Bidding for jobs is another variation of competition-

based pricing

• Sealed bid pricing




o Market-Skimming Pricing

• Setting a high price for a new product to skim maximum revenueslayer by layer from segments willing to pay the high price.

o Market-Penetration Pricing

• Setting a low price for a new product in order to attract a large

number of buyers and a large market share.

o Market Rate Pricing • Ceding the initiative to the key competitors to set the price.

• Dangerous for leaving the strategic initiative to competitors

• Potential threat of ‘Sudden Price Shift’ by newer, or ‘Changes indelivery system capability’.

o Relationship Pricing

• Different price for Different class of customers depending on

relationship and the potentiality of cross-selling or future business.

Other Pricing Approaches



Price Adjustment Strategies

o Discount / allowance

o Segmented

o Psychological

o Promotional

StrategiesStrategies



Special-Event PricingSpecial-Event Pricing

Cash RebatesCash Rebates

Low-Interest FinancingLow-Interest Financing

Longer WarrantiesLonger Warranties

Free MerchandiseFree Merchandise

DiscountsDiscounts

Loss LeadersLoss Leaders Temporarily PricingProducts Below List

Price to IncreaseShort-Term Sales

Through:

Promotional Pricing

P i Adj t t St t i



Price-Adjustment StrategiesPrice-Adjustment Strategies

Hold Current Price;Continue to Monitor Competitor’s Price.

Hold Current Price;Continue to Monitor Competitor’s Price.

Reduce PriceReduce Price

Raise Perceived

Quality

Raise Perceived

Quality

Improve Quality& Increase Price

Improve Quality& Increase Price

Launch Low-Price“Fighting Brand”

Launch Low-Price“Fighting Brand”

Has Competitor CutPrice?

Has Competitor Cut

Price?

Will Lower PriceNegatively Affect Our Market Share & Profits?

Will Lower PriceNegatively Affect Our

Market Share & Profits?

Can/ Should EffectiveAction be Taken?

Can/ Should EffectiveAction be Taken? Yes

No

No

No



o Initiating Price Cuts is Desirable When a Firm

• Has excess capacity

• Faces falling market share due to price competition

• Desires to be a market share leader

o Price Increases are Desirable

• If a firm can increase profit, faces cost inflation, or faces

greater demand than can be supplied.

o Methods of Increasing Price

o Alternatives to Increasing Price

• Reducing product size, using less expensive materials,

unbundling the product.

Price Changes



o Buyer reactions to price changes must be considered.o Competitors are more likely to react to price changes

under certain conditions.• Number of firms is small

• Product is uniform• Buyers are well informed

o Respond to Price Changes only if:

• Market share / profits will be negatively affected if nothing ischanged.• Effective action can be taken:

• Reducing price• Raising perceived quality•

Improving quality and increasing price• Launching low-price “fighting brand”

Price Changes (contd.)



Price war triggered by the cavin kare

attacked the market share of HUL.

o Cavin Kare introduced smaller 50 paise sachet of Chik, whenmost of other sachets retailed at Rs 2'.

Due this Chik Brand Expanded By 40%.

o A new 50 ml bottle of Chik priced at Rs 6 (when most other

brands were available in 100 ml bottles and above)

o HUL responded with its own 50 paise version of Lux shampoo'

o The company launched 30 ml bubble pack for Clinic Plus (Rs 8)

which was an innovative and cost-effective alternative for sachet

users.

o While sachets are difficult to store and re-use, the bubble pack

allows the user to extract just the right quantity for a single

wash.

o HUL had taken a bigger price cut in shampoo realization by

offering8 ml clinic Plus sachets at Re 1, a 50% mark down. This

had brought it on par with low priced brands such as chik by

cavinKare.( Ref : analysts at research house ICICI)'



Price war triggered by the cavin kare (contd)

o Anti-dandruff shampoos represent this attempt Clinic Plus'

one of the first anti dandruff brands, is the largestshampoo brand today, with a market share of 31 Per cent.

o clinic All clear, the anti-dandruff extension that targeted

at the youth has also managed to garner a 13 per cent

share' Due to its low pricing( Rs 71 for a 160 ml bott|e

against Rs68 for a l00ml bottle of Head & Shou|ders

antidandruff shampoo) the brand also has a significant

rural market share of 44 per cent

o Pantene Pro-V and Head & Shoulders P&G discontinued

its shampoo manufacturing operations in India in 2000 toother Asian countries Thailand, Taiwan etc



Further steps taken by HUL to increase the

market share (since may 2004)

o The re launch of Clinic Plus Health Shampoo, with its five-in-one

benefit formulation and the new reduced price points, was HUL's

second major initiative to offer outstanding consumer value in

this category

o The re launched clinic Plus bottles come at reduced price points.

The new prices were Rs30, Rs55 and Rs90 for100ml, 200ml and

300ml bottles, down from Rs37.50,Rs.70 and Rs90 respectively.

o Clinic Plus also had a25-ml bottle priced at Rs5, which was

aggressively distributed across the country and in Sachets of 50Paise,Re1 and Rs2.

o Improved packing and buy one get one free initiative on clinic plus

shampoo,sunsilk helped it increase the sales by 10 percent.




market share (since may 2004)o HUL recently upped its ante in the shampoo war..

o It launched Clinic All Clear at a higher price to narrow the

price differential between All Clear and Procter &

Gamble's Head & Shoulders in the anti-dandruff segment.

It decided to increase the price of its 100 ml bottle by

Rs 5 to Rs 55 and 200 ml by Rs 10 to

Rs 105. On All Clear sachets and 40 ml bottles, the

company decided to maintain status quo.o HUL dared to hike prices of Clinic All Clear as it saw

an opportunity which can add to its top line and bottom-

line growth, without jeopardizing its current market

share.




market share (since may 2004)

o Head & Shoulders, despite its premium pricing, is the

leader in the anti-dandruff segment. The 100 ml bottle

carries a price tag of Rs 62 and 200 ml of Rs 120.

Despite the Rs 7-15 price difference, it commands a35-36% market share as against HUL's 32-33%.

o Results of this battle are yet to be out. But then this is just

a battle and not the war. HUL is on the path of recovery,this may just be an indicator of what things

are to come.



Barriers to shampoo use

o The company has identified three major

barriers to shampoos use in India

• The perception that shampoos contain harshchemicals that could damage the hair

• High price

• The view that the shampoo is more of glamour product rather than a hygiene

product.



G 10

Marketing Debate

Is the right price a fair price?

Take a position:

1. Prices should reflect the value thatconsumers are willing to pay.

or

2. Prices should primarily just reflect the costinvolved in making a product.

Date post:	06-Apr-2018
Category:	Documents
Upload:	saishankar-sanaboina
View:	222 times
Download:	0 times

MM _group 10 _ Pricing Strategy_final (1)

Documents