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industry analysis
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“Kaya requires a completely different mindset to grow. So taking off the
Marico hat off Kaya and unshackling it from the Marico is the right thing to
do”
INDUSTRY ANALYSIS
KAYA SKIN CLINIC• Service sector • People – oriented• Skin Care industry• Indian skin care industry is
expected to grow 18% CAGR
MARICO LIMITED• Capital intensive sector• Product-oriented• FMCG products• Recent budget’s hike in
NREGS and relief to tax payers is expected to give a boost to the FMCG sector.
Porter’s Five Force Model SUPPLIER POWER
LowPORTER’S FIVE FORCE
MODEL
BARRIERSTO ENTRY
High
THREAT OFSUBSTITUTES
High
BUYER POWERHigh
DEGREE OF RIVALRY -Entry and Exit barriers- High -Industry growth - high -Switching costs - high-Brand identity - high-Diversity of rivals- High
Porter’s Five Force Model for Marico Limited
Porter’s Five Force Model SUPPLIER POWER
LowPORTER’S FIVE
FORCE MODEL
BARRIERSTO ENTRYModerate
Budding Dermatologists
THREAT OFSUBSTITUTES
ModerateHerbal and ayurvedic products
Eg. Himalaya’s products
BUYER POWERHigh
People prefer unorganised players- skin spencialists
Unwilling to pay premium prices
DEGREE OF RIVALRY -Entry and Exit barriers- High
-Industry growth -Product differences- Low-Switching costs - Low-Brand identity - Moderate-Diversity of rivals- High
Organised CompetitorsUnorganised competotors
Porter’s Five Force Model for Kaya Clinic
Generic Business Model
SWOT ANALYSIS
•Large number of services under one roof•Well trained staff•Good ambience (physical evidence)•Wide Geographical reach•Skin bars are expected to boost revenue by 30%
• Unorganised sector• Organised players like
VLCC, Dr. Batra’s
• Untapped middle class segment
• Introducing products and services for males as well
•Overpriced products•Marketing strategies only limited to social media.
STRENGTHS
THREATSOPPORTUNITY
WEAKNESS
Impact of Demerger on Marico and Kaya Skin Clinic
Impact on Marico’s valuations.
Focus on core activities.
Kaya Skin Clinic will have independent decision making. (There were strong cultural differences between Marico and Kaya that limited the growth prospects for Kaya.)
Business model will be focused industry wise. “The demerger will facilitate the consolidation of Marico’s FMCG business in India and overseas.
Financials
Revenue Growth
Revenue0
500
1000
1500
2000
2500
3000
3500
4000
4500
20082009201020112012
Returns
2008 2009 2010 2011 20120
10
20
30
40
50
60
70
80
ROCERONW
Segment AnalysisParticulars FMCG Kaya Total
Segment Revenue 3730.01 278.27 4008.28
Segment Results 443.82 (29.07) 414.75
Segment Assets 1751.89 354.28 2107.17
Segment Liabilities 496.06 161.25 657.31
Capital Expenditure 48.69 43.22 91.91
The Value of Kaya UNLOCKED
FMCG Kaya&
Make
Total Group Value
100 * 10 = 1000 -360 80 * 8 = 640
100 * 10 = 1000 X 1000 + X
Suggestions for Kaya Skin ClinicRework on the 4Ps
Product-Introducing newer products.-Cross-Selling and Up selling of products.-Introduce products and packages for middle class consumers
Price-Price Bundling can increase the average bill per customer-lower priced packages to cater to the middle class
Place-Expand your distribution base, through Organised retail shelves-Introduce skin bars, in tier 2 cities in a greater number
Promotion-Traditional marketing-Free samples-New brand ambassador (youth icon for e.g. Sonam Kapoor, Anushka Sharma)-A name like Kaya, rather than Kaya Skin Clinic--communication of schemes and packages using various media channels.
People-To deal with attrition rate, signing bonds with employees.-Have performance based rewards to motivate your sales force-Feedback from customers about the staff.-Delegation of authority, providing an intrapreneurial environment
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