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1
Vizag 1990Launch of Concentrated Detergent Powders
Launch into test market of Ariel Concentrate detergent powder in Vizag, India. July 1991
2
Background
Indian Fabric Wash (1990)
• Size well over US$ 1,000,000,000• Traditional: NSD Bars & Powders, Laundry soap
No Concentrates or liquid detergents.
• Key players• Unilever 40%• Nirma 30%
• Key Brands• Powders: Surf, Nirma, Wheel– Bars: Rin, Nirma, Wheel
3
BackgroundDetergent War
• Unilever and P&G ... global giants in Fabric Wash and Personal Wash markets
• P&G enters Indian Market in mid-80
• P&G confronts Unilever with launch of Ariel Concentrate into test market, in Vizag
4
Surf
• Dominated the premium segment in detergent powders• Key brand messages centred on
– performance (‘washes whitest’) – It makes better sense to buy Surf
• Surf was perceived as the most powerful and best quality detergent, a position that concentrate powders were likely to challenge in the future
This was the era of Lalitaji in advertising, a hard-headed bargain-hunting housewife who demanded value for money and not just cheap price. (‘Sasti cheez or achchi cheez me farak hota hai, bhai saab' ... ‘there’s difference between cheap and good quality’).
5
Rin
• Dominated the premium detergent bar market
• Contributed more to HLL’s bottom line than any other brand
• In that concentrates possessed greater stain and grime removal properties than conventional powders, there was concern that the use of bars would decrease with the growth and development of concentrate powders
6
Ariel Microsystem
• First concentrate or compact detergent powder to be launched into India
• Key message centred on performance and a good bargain– “removes stains as well as tough and stubborn dirt” Initial ads
communicated the wisdom of selecting a superior product that was cost effective.
• Technologically superior– first among concentrates– first product to use enzymes as active ingredient
for superior detection and removal of stains
7
Background
Unilever’s Initial Response
• Developed and launched Triple Power Rin (TPR)… a competing, less expensive concentrate NSD Powder
• Intensified R&D efforts to develop a new concentrate powder
• Intensified Marketing Research. Set up a consumer panel in Vizag soon after Ariel’s test launch
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Research Objective
To assess likely impact of concentrates on the Indian market, based on the Vizag research findings
Significance• The wash market is huge• Need to protect cash cows like Surf, Rin and Wheel.• Advent of concentrates posed new challenges / Opportunities• First battle between P&G and Unilever in India
9
Case Analysis
• Based on the research findings provided in this case, address the following questions that were uppermost on the minds of the detergent brand managers at HLL:– How significant is the demand for concentrates?– What’s the impact of concentrates on market Structure?
(Detergent powder & detergent bar) – To what extent would it change wash habits?– How cost effective are concentrate powders?– What’s the impact on Unilever, other players?
• Recommend what course of action HLL should take to confront the challenges posed by the concentrates.
10
Value Share Jun91/Nov90 (% powders)
43 41
33.226
10.3
9.7
13.523.3
Triple Power Rin (Unilever)
Surf (Unilever)
Discount Powders(including Unilever’s Wheel)
Nov-90 Jun-91
Ariel (P&G)
11
72.6 74.5
20.1 14.9
4.0 4.4
Volume Share Jun91/Nov90 (% powders)
Nov-90 Jun-91
6.23.2
Triple Power Rin (Unilever)
Surf (Unilever)
Discount Powders(including Unilever’s Wheel)
Ariel (P&G)
12
33
100
140
210
Price Index – (Surf:100)
Surf: 100(Apr...June ‘91)
Price indexed to Surf = 100. Ariel is 2.1 times more expensive than Surf. Discount powders are 67% cheaper.
Triple Power Rin
Surf
Discount Powders
Ariel
13
38
73
44
20
184
Source of Growth of ArielGain loss Jun91/Nov90 (in powders)
% Volume Gained from
% Volume Share (Nov)
Jun-91/Nov-90 Nov-90
Triple Power Rin (Unilever)
Surf (Unilever)
Discount Powders(including Unilever’s Wheel)
Refer notes pane for explanation
14
Source of Growth of ArielGain Loss: Jun91/Nov90
(Nov..Jun) % Vol Share Growth
Gains From % Gain (Nov 90) (Jun 91) Jun/Nov
Ariel 3.2 6.2 78.3%
Triple Power Rin 18 4.0 4.4 1.1%Surf 44 20.1 14.9 -31.4%Other Powders 38 72.6 74.5 -4.8%Total Powders 100 100 100
Powders 90 52Bars 10 48
15
68
27
12
25
% Buyers(Apr to June ‘91)
35%: % buyers of Concentrates
Penetration (% Buyers)
Triple Power Rin
Surf
Discount Powders
Ariel
Refer notes pane for explanation
16
Market Structure
Note: Consumption refers to purchases measured as gm / month
Nov 90 Mar 91 Jun 91
100
90
93
100
98
101
Powder Bar
Detergent Powder and Bar: Volume Index
Index (Nov = 100)
Nov 90 Mar 91 Jun 91
Volume (tons) 292 273 282Powder (%) 56 54 54Bar (%) 44 46 46
Index (Nov=100) 100 93 96Powder (%) 100 90 93Bar (%) 100 98 101
Consumption (gm/HHLD)Powder + Bar 1,989 1,859 1,917Powder 1,116 1,007 1,035
Refer notes pane for explanation
17
Wash Habits: Product Usage
Powder
Bar
Only Powder 6%
94%
Only Bar 0%
Use Patterns: (Jun 91)% Users who use only Powder, Powder + Bar and only Bar
Refer notes pane for explanation
18
Concentrate UserBefore they started to
use concentrates
Concentrate UserAfter switching (Jun)
82%
Any Brand User(Jun)
Powder
Bar
Wash Habits: Product Usage
Only Powder 10%
90%
Only Bar 0%
Only Powder 18%
82%
Only Bar 0%
Only Powder 6%
94%
Only Bar 0%
19
Wash HabitProduct Usership
% Buyers Ariel TPR AllBuyers Buyers Buyers
Solus 12 14 4
Combine with other powder only 5 4 2
Combine with bar only 55 63 77
Combine bar+other powder 28 19 17
100 100 100
(use only one powder brand, no bar)
Refer notes pane for explanation
20
Wash Basket Analysis
Refer notes pane for explanation
Ariel Buyer Surf Buyer
Brand 380 700
Powder 740 1,000Bar 700 750
Wash Basket (gm) 1,440 1,750Wash Basket (Rs) 49.00 49.50
Loyalty %Brand/Powder 51 70Brand/Basket 26 40
Consumption (Purchases) gm/householdJune 91
21
Case Analysis (repeated)
• Based on the research findings provided in this case, address the following questions that were uppermost on the minds of the detergent brand managers at HLL:– How significant is the demand for concentrates?– What’s the impact of concentrates on market Structure?
(Detergent powder & detergent bar) – To what extent would it change wash habits?– How cost effective are concentrate powders?– What’s the impact on Unilever, other players?
• Recommend what course of action HLL should take to confront the challenges posed by the concentrates.
22