Business Strategy

About: Dabur

• Dr. S.K Burman started Dabur in 1884• 4th largest FMCG company in India• Revenues of US$750 Million (Rs 3416 Crore)• Market Capitalisation of US$3.5 Billion (Rs 16,000

Crore)• Perceived as a Herbal brand• Took over Balsara hygiene and home products

business- Largest Acquisiton• Launch of NUTRiGO in January, 2011

About Dabur

Management• Founder: Dr. S K Burman (1884)• Chairman: Dr. Anand Burman• Vice Chairman: Amit Burman• CEO: Mr. Sunil Duggal

Market Share

Vision & Values

Vision Statement

"Dedicated to the health and well being of every household"

Values

• Ownership• Passion For Winning• People Development• Consumer Focus• Team Work• Innovation• Integrity

PESTLE- Political factor

• Abolishment of ‘license raj’ and liberalization of Indian economy, resulted in a boom in the FMCG market through market expansion and greater product opportunities

• Excise and import duty reduced substantially

• Various states governments like Himachal Pradesh, Uttaranchal and Jammu & Kashmir encouraged companies to set up manufacturing facilities in their regions through a package of fiscal incentives

• FMCG companies eagerly awaits goods and services tax (a single nationwide tax, ) which will cut business costs

Pestle- Economic factors

• India is one of the largest economies in the world in terms of purchasing power

• The demand in FMCG sector is expected to triple in value by 2015 from its 2008 value; driven by the rise in the share of the middle class

• According to the BRIC's report indicates that India's per capita disposable income is expected to rise to USD 1150 by 2015.

• The fast rising economic performance of Indian Economy has created an environment of optimism on the part of the investors to invest more.

• However, the FMCG companies have to tackle inflation

Pestle- Social factors

• India is the second most populous country in the world, with over 1.18 billion people (estimate for April, 2010)

• Around 72.2 per cent of the total households in India (742 million) reside in the rural areas (2001 census)

• Rapid urbanization, increased literacy and rising per capita income have all caused rapid growth and change in demand patterns, leading to an explosion of new opportunities

Pestle- Technological and Legal factors

Technological-

• Indian consumers are becoming internet savvy• FMCG firms need to be up-to-date to stay ahead of the competition• The country is seeing technological developments like the EDI (Electronic

Data Interchange)• Dabur invested Rs. 15 crores in hardware and software for its go downs and

branches to be directly linked with its headquarters through direct emails

Legal-• Indian Laws pertaining to Consumers, Employments, labour, Health and

safety are applicable for Dabur

SWOT Analysis

Strengths

• Strong presence in well defined niches(like value added Hair Oil and Ayurvedaspecialties)

• Core knowledge of Ayurveda as competitive advantage• Strong Brand Image• Product Development Strength• Strong Distribution Network• Extensive Supply Chain• IT Initiatives• R & D - a key strength

Weakness

• Seasonal Demand( like chyawanprash in winter and Vatika not in winter)

• Low Penetration(Chyawanprash)• High price(Vatika)• Limited differentiation (Vatika)• Unbranded players account for the 2/3rd of the

total market(Vatika)

Opportunities

• Untapped Market(Chyawanprash)• Market Development• Export opportunities.• Innovation• Increasing income level of the middle class• Creating additional consumption pattern

Threats

• Existing Competition( like Himani,baidyanath and Zandu for DaburChyawanprash and Marico,Keo Karpin,HLL and Bajaj for Vatika Hair Oil)

• New Entrants• Threat from substitutes (like Bryllcream for

Vatika hair oil)

Strategic Planning

Corporate Level strategy:• Focus is on expansion in domestic and foreign

market, new product launches and acquisitions, which will increase sales and profits.

• This strategy has paid rich dividends for Dabur and has delivered sales growth ahead of the consumer non-durable sector average

Strategic Planning

Business Level Strategy• Dabur laid down a business strategy called ASTRA to boost

rural sales and to achieve a steady growth in retail.• Taking help of ACCENTURE to improve the supply chain and

distribution network.• Dabur also aims at achieving doubled sales by aggressive ACQUSITIONS.

• The growth strategy for international markets would revolve around EXPANSION.

• Dabur India has also chalked out its plans to enter the health and beauty RETAIL market in the country.

Strategic Planning

Functional Level Strategy• Dabur is targeting sales growth of above 15 per cent after

implementing Astra, and expects nearly 40 per cent growth in sales.

• It runs refresher-training courses every six months. About 75 per cent of the company's sales come form rural areas, hence, it has created the Astra training consultancy module in five vernacular languages - Bengali, Tamil, Telugu, Malayalam and Kannada.

• Under Astra, Dabur has categorized its sales and distribution channels into finer segments, such as key grocers, mass grocers, chemist, wholesale, small outlet and modern trade.

Dabur SBU’s:

Dabur India Limted has 3 major strategic business units:

• Consumer Care Division• Consumer Health Division• International Business

Dabur- Their Strategic Intent• Focus on growing our core brands across categories, reaching out

to new geographies, within and outside India, and improve operational efficiencies by leveraging technology

• Be the preferred company to meet the health and personal grooming needs of our target consumers with safe, efficacious, natural solutions by synthesizing our deep knowledge of ayurveda and herbs with modern science

• Provide our consumers with innovative products within easy reach• Build a platform to enable Dabur to become a global ayurvedic

leader• Be a professionally managed employer of choice, attracting,

developing and retaining quality personnel

The Dabur Strategy

• Dabur is present in categories ranging from mosquito repellents and juices to face packs and honey, some acquired and some developed in-house

• Dabur believes in in few power brands that are nurtured to offer huge returns

• It aims to create a few champion brands to result in sustainable margins

The Dabur Strategy

• Dabur leverages under its two power brand i.e. Dabur and Vatika

• Dabur the strategy for a new brand launch- by the third year, a new brand must contribute to common overheads and by the fifth year, it should make "some profit“

• The company does not intend to be the market leader but aims at growing faster than the market

• Dabur is consciously entering only those categories that offer a platform for herbal products

Dabur outsources

• To build competitive edge, Dabur asked Accenture to help identify specific opportunities that would lead to short-term advantage and long-term growth

• Accenture recommended a two-pronged strategy:

– migration to a nimbler outsourcing model that would generate value through agility

– support business initiatives and maintenance of its SAP enterprise resource planning (ERP) system

Measures Taken• Accenture launched a three-phase ERP improve-ment program that

involved:

– Correcting the transactional and management information systems.

– Conducting change management and synchronizing Dabur’s business processes with realities in an ERP context.

– Developing value realization project

• Leveraging IT for business initiatives– By designing a Web-based demand planning and

trade promotion forecasting tool, and installed point-of-sale software at select retail and wholesale sites

• Outsourcing IT operations• New sales and distribution strategy was

implemented

Market share and Growth rate for SBU’s

BCG matrix as per SBU’s

International Business Division

Consumer Care Division

Consumer Healthcare Division

Growth rate and market share of business categories in Dabur IL.

BCG matrix as per business categories

HealthSupplements(Chyawanprash, Honey, Glucose)

Foods(Real, Activ)

Oral Care(Dabur Red, Babool, Meswak)

Hair Care(Dabur Amla, Vatika Hair Oil, Vatika Shampoos)

HomeCare(Odonil, Odomos, Sanifresh) Digestives(Hajmola)

Skin Care(Gulabari, Fem)

Porter’s Five Forces Model

1) The threat of substitute products:•threat of generic substitution•happens where products and services compete for disposable income•sells a lot of varied products in all price range•should ensure that it offers quality products for all income groups2) The threat of the entry of new competitors:•Dabur should focus on product differentiation • one of the most trusted names in the FMCG sector•enjoys a loyal customer base

• as the demand increases, should focus on aggressive marketing strategy

• should focus on targeting middle aged consumers3) The intensity of competitive rivalry:• players and competitors are Hindustan Unilever Ltd.,

Tata Tea, Nestle India Ltd., Britannia Industries Ltd., Colgate Palmolive Ltd., Marico Ltd.

• strategy in order to increase its global dominance• If a company doesn't differentiate its products• leads to an increased rivalry between competitors

4) The bargaining power of customers:• have increased dramatically with Globalisation• Improve the quality and• reduce the prices over the period5) The bargaining power of suppliers:• very strong bond with the suppliers• policy of having good relations• This helps in having a good relation with the

suppliers• being accountable to stakeholders, shareholders

Future Strategies

• Focus on growing its core brands - reaching out to new geographies – leveraging technology

• Strive for top recall• Become global ayurvedic leader• Innovation of Products• Be a professionally managed employer• Provide superior returns to shareholders &

customers

Future Strategies

• Stress on making more competitive logistics and inventory management system

• Advertising strategy for rural markets• Retail Stores• Implementation of ASTRA

Presented By:

• Sanjeev Vishwakarma – 76• Shilpa Panda – 93• Rashmi Vishth – 95• Megha Gandhi – 96• Varidhi Agarwal – 117• Jitendra Sharma – 118

Thank You…!