SUPER SHAMPOO PRODUCTS AND THE INDIAN MASS MARKET – A CASE STUDY

Submitted by:

SUMAN SEKHAR PRADHAN

PGDM 2012-14

IMI-BHUBANESWAR

Submitted to:

DR. D.D.SWAIN

Associate Professor

(Marketing)

DECLARATION

I,Suman Sekhar Pradhan hereby declare that the report titled “Super Shampoo Products and the Indian Mass Market – A Case Study” submitted to IMI-Bhubaneswar, analysis has been entirely done by me and no help has been undertaken by others in any form. I have tried my best to be linear with the information, that I could collect for the case study.

INTRODUCTION

This case studies analyses how Mr. Suresh Venkataraman, a successful marketer of

industrial products, works upon an idea of getting into the business of consumer

products in general and the shampoo industry in particular. He was amazed by the

notion of single packaging and how with the invention of sachets, shampoo was

transformed from an unaffordable product to an affordable one. He emphasised that

the rural market offered a huge potential for consumer products. He often wondered

why several brands of shampoos did not have a brand name that was simple to

understand. So he came up with an idea to name the product as "Super Shampoo".

He selected the name "Super" as it was easy to pronounce and had an English

overtone that was considered a part of the aspirations of rural consumers. Moreover,

the word “super” was amplified by the media to celebrate film stars by projecting

them as “superstars”. The word “super” triggered a superior image amongst

whatever it was competing against in a specific context.

1.1. Framing of Shampoo

Deen Muhammad, the head massage expert, is mentioned in the Oxford Dictionary

of National Biography (ODNB) for helping Europe coin the word “shampoo”. He

hailed from Bihar.

Deen’s father was an employee of the East India Company and collected tax from

the people of Bihar and Bengal around mid 1700. It is believed that Deen was born

in Buxar where the famous Battle of Buxar between the East India Company and

early India revolutionaries took place. Deen’s father had fought for the Company in

that battle.

Beginning his career as a servant of the Company, Deen used to massage the

heads of war-fatigued soldiers with soap and a special oil. He was called the

shampoo champion by these soldiers because they could not pronounce “champi”,

the Hindi word for head massage. In England, Ireland and Scotland, Deen gained

fame as a shampoo surgeon. The ODNB describes Deen by this name. Deen learnt

the art of massaging from local barbers, and hakims from the different towns of

Bihar.

MARKET ANALYSIS

FMCG Market in India

FMCGbgoods are popularly named as consumer packaged goods. The most

common in the list are toilet soaps, detergents, shampoos, toothpaste, shaving

products, shoe polish, packaged foodstuff, and household accessories and extends

to certain electronic goods. The Indian FMCG sector is the fourth largest sector in

the economy with a total market size in excess of US$ 17 billion.

Availability of key raw materials, cheaper labour costs and presence across the

entire value chain gives India a competitive advantage. The FMCG market is set to

reach US$ 33 billion in 2015. Penetration level as well as per capita consumption in

most product categories like jams, toothpaste, skin care, hair wash etc in India is low

indicating the untapped market potential.

The increasing disposable income and improved standard of living in most tier II and

tire III cities are spearheading the FMCG growth across the nation. Over the years

companies like HUL, ITC and Dabur have improved performance with innovation and

strong distribution channels. Their key categories have strengthened their presence

and out performed peers in the FMCG sector. On the contrary, Pepsodent and

Britannia Industries are strong in single product category i.e. tooth pastes and

Biscuits. In addition companies have been successful in reviving their presence in

the semi-urban and rural markets.

2.2. Shampoo Market in India

Shampoo comes under the hair care category of the FMCG sector. The value of the

shampoo market in India is US$ 600 million with a penetration rate at 13 percent. But

it is expected to increase because of the potential recognized in the rural market by

the major players in this segment. The market is also expected to increase due to

lower duties and aggressive marketing by players. Shampoo is also available in a

sachet, which is affordable and makes upto 40% of the total shampoo sale.

Since long HUL has been the market leader in the shampoo industry. With rivals like

Procter & Gamble and Dabur giving tough competition, FMCG major Hindustan

Unilever’s market share in shampoo segment is declining and analysts pointed out

that there is a concern over the firm losing out to competition in its other core

segments.

According to the Neilsen’s January-February data, HUL’s market share (volumes) in

shampoo segment declined by 1.3 percentage points to 47.3 per cent while P&G

gained by 2.4 percentage points with a market share of 17.7 per cent.

Dabur on the other hand gained 0.8 percentage points capturing 6.7 per cent market

share in the estimated Rs 3,000 crore Indian shampoo market.

The company’s brands ‘Clinic Plus’, ‘Dove’ and ‘Pantene’ competes against the likes

of P&G’s ‘Head & Shoulder’ and Dabur’s ‘Vatika’, ITC’s ‘Fiama Di Wills’

The Indian shampoo market is characterised by a twin-benefit platform: cosmetic

and anti-dandruff. It is basically an upper middle class product, as more than 50% of

the consumers use ordinary toilet soap for washing hair. While the awareness level

is high, the penetration level is very low even in the metros which is only 30%. Urban

markets account for 80% of the total shampoo market, The penetration level is

rapidly increasing due to decline in excise duty, which was 120% in 1993 to 30%

currently. The hair conditioner market is estimated at around Rs 200 crores and is

growing at about 40 to 50 percent a year. In India, the share of hair conditioners is

merely one-fifteenth of the shampoo market. In most mature markets , the share of

hair conditioners is about one-third.

2.2.1. Classification of Shampoo

Different categories of shampoo products available in the Indian market can be

broadly classified into the following:

Dandruff

Gluten and wheat care

All Natural

Baby

Animal

Solid

Jelly/Gel

Paste/Cream

The biggest consumer hair problem in India was hair fall. However the fastest 

growing segment at 12 to 15 percent growth year on year was the anti-dandruff

segment, which was around 15 to 20 percent of the market. The key benefit segment

were cosmetic (which refers to shine, strength and lustre), anti-dandruff and herbal.

2.2.2. Shampoo Market in Rural South India

The top three shampoo brands in rural South India (total region encompassing Tamil

Nadu, Kerala, Karnataka and Andhra Pradesh) were Clinic Plus, Head & Shoulders

and Chik.

2.2.2.1. Clinic Plus-Background

Clinic Plus was a cosmetic shampoo brand of Unilever. It was in the

popular/economy tier in terms of pricing and targeted at the low income consumer

(semi-urban and rural). The brand was sold in bottles ranging from 25 ml to 300 ml,

sachets of 7.5 ml and value packs or multi-sachet bundles. The brand’s place in the

company’s shampoo portfolio seemed to be a “Family Value and Health Foundation”

brand.

2.2.2.2. Head & Shoulders-Background

Head & Shoulders was an anti-dandruff shampoo brand of P&G. It was in the

premium tier in terms of pricing and targeted at consumers who sought a chemically

mild yet effective anti-dandruff solution. The brand was sold in bottles ranging from

100 ml to 400 ml, sachets of 7.5 ml and value packs or multi-sachet bundles. The

brand’s place in the company’s shampoo portfolio seemed to be the lead anti-

dandruff shampoo, which was endorsed by experts.

2.2.2.3. Chick-Background

Chik was a cosmetic shampoo brand of Cavin Kare. It was in the popular/economy

tier in terms of pricing and targeted at the low-income consumer (semi-urban and

rural). The brand was sold in bottles ranging from 25 ml to 100 ml and sachets of

7.5 ml. The brand’s place in the company’s shampoo portfolio seemed to be the

flagship brand that promised soft, nourished, beautiful hair for the confiden zindian

woman.

2.3. Buying Behaviour of Indian Consumer

The Indian consumers are noted for the high degree of value orientation. Such

orientation to value has labeled Indians as one of the most discerning consumers in

the world. Even, luxury brands have to design a unique pricing strategy in order to

get a foothold in the Indian market.

Indian consumers have a high degree of family orientation. This orientation in fact,

extends to the extended family and friends as well. Brands with identities that

support family values tend to be popular and accepted easily in the Indian market.

Indian consumers are also associated with values of nurturing, care and affection.

These values are far more dominant that values of ambition and achievement.

Product which communicate feelings and emotions gel with the Indian consumers.

Apart from psychology and economics, the role of history and tradition in shaping the

Indian consumer behavior is quite unique. Perhaps, only in India, one sees

traditional products along side modern products. For example, hair oils and tooth

powder existing with shampoos and toothpaste.

2.3.1. Rural vs Urban Consumer

Buying behaviour is different among urban and rural customers in the same income

bracket as the rural mind is troubled by uncertainties which may be irrelevant in the

urban context. The rural consumer is socially, psycho graphically, economically

different from their urban counterparts. Therefore, companies need to understand

the social dynamics and attitude variations within each village though nationally it

follows a consistent pattern.

One of the main influencer in the rural market is the retailer. He is the person who

pushes a brand to the consumer, as the consumer is unaware of different brands

existing and has no choice or preference.

The rural consumer only asks for the generic product from the retailer and the

retailer pushes a particular brand according to the availability and the returns he gets

out of that brand. Hence, educating, training and networking with these retailers

should be emphasized.

1. SWOT ANALYSIS OF SUPER SHAMPOO

Strength:

Marketing Experience of Mr. Suresh Venkataraman.

Proper selection of the sample for survey.

Good understanding of rural culture and market.

Naming of the product as “Super” to which rural people could connect.

Weakness:

Finance

Lack of proper distribution channel

No brand name as it was new in the market

Opportunity:

Significant growth in rural market.

Huge untapped rural market.

75 % of the BoP (Bottom of the Pyramid) consumers live in the rural market.

Threat:

Less affordability of low income strata customers.

Advertising blitzkrieg of megabrands.

Lack of advertising media in the rural market.

Availability of homemade Ayurvedic substitutes.

2. ISSUES/CHALLENGES FACED BY SUPER

SHAMPOO IN THE RURAL MARKET

Since Super shampoo is a new brand, therefore it could face quite a few challenges

before it positions itself comfortably in the rural market. Some of the major issues

and decision points that could crop up are as follows:

Addressing the established brands of shampoos :

There were basically three major brands of shampoos in rural South India. They

were Clinic Plus, Head & Shoulders and Chik. These brands were quite

established in their own rights and it would be quite difficult for new entrant to

displace these brands from the market.

Competing against the advertising blitzkrieg of the established brands :

The above mentioned brands of shampoos are the products of large business

houses like HLL, P&G and Cavin Kare respectively. Therefore, they have a huge

financial backup to spent on advertising which is invariably the most popular

method of marketing a FMCG product. On the contrary, a new entrant like Super

Shampoo does not have the required financial prowess to spent on advertising.

Understanding the diversity of cultures :

There is a huge difference between the urban and rural mindset. There exists a

huge gap between consumer behaviour in rural areas and urban areas. Since,

Mr. Venkataram is from an urban area and his mind thinks in an urban style, there

can be difficulty in relating to the rural consumer.

Understanding the consumer psyche in the changing environment :

Demand for a product is varied for people living in different areas with

different climatic conditions, occupations, literacy level, outlook towards life

and their exposure to modern goods and services. The income difference

between the few wealthy people and poor create differences in the demand,

customs and beliefs, making segmentation difficult.

Low per capita income :

Rural consumers have low per capita income, low purchasing power and a low

literacy rate, contributing to a low standard of living. However, this is changing as

consumers are becoming slowly literate.

Sales Management :

Rural marketing involves a greater amount of personal selling effort

compared to urban marketing. The rural salesman must be able to guide

the rural consumers in the choice of products, who sometimes do not

properly motivate customers. Channel management poses a problem as

distribution networks in rural villages are lengthy, involving more

intermediaries and consequently higher consumer process. Also, dealers with

experience are not available.

Proper media channel :

Unlike urban India, rural India was what one might call a significantly dark media

market in terms of the most penetrated urban media; for example, TV was the

media with the highest reach, yet it penetrated only 38% of rural India. Radio was

ahead of print in terms of reach, likely owing to literacy barriers. It reached 18%

while print reached 15%. Cinema had a mere 5% reach. Therefore, it was very

important to choose the right media for advertising in rural area.

Liberalisation and globalization :

India is passing through a transition phase, and urban markets are flooded

with foreign products. These will soon enter the rural markets questioning

the survival of Indian brands. India‘s consumer base is poor, and customers

prefer value-for-money products. Foreign brands, with inherent cost structures are

delivering affordable products. To survive, there is a need for better distribution

systems and retailer service.

3. STRATEGIES ADOPTED BY MR. VENKATARAMAN

Mr. Venkataraman decided to commission a survey to obtain some insights related

to the consumer behaviour towards shampoo category as well as towards the

brands. For the purpose of sampling, the target population was defined in terms of

elements, sampling units, extent and time. The element was as below:

Females aged 18 to 50, belonging to rural or semi-urban household basis income

classification (annual household income of less than Rs 75,000 or between

Rs 75,000 and Rs 150,000).

Category (shampoo) non-users or low frequency users, yet aware of the top three

shampoo brands in the market.

Significant TV media consumption and enjoys watching advertisements.

The sampling unit was households, since the income parameter was used at the

household level. The second level included individuals fitting the demographics. With

regard to sampling frame, the basis of selection of representative elements of the

target population were taken as gender, age group, household income, category

consumption and media consumption.

The extent was rural Karnataka; specifically, two towns (Bidadi and Hoskote) which

are part of the Bangalore Rural District and a cluster of adjoining villages (Jigani)

were selected for the study. The questionnaires formulated in English as well as the

brand communication material were translated into the local language of the

consumer while it was administered.

The selection of the towns was performed based on the judgement of rural

household penetration and category awareness. Within these geographies,

probability sampling was the chosen technique, in which simple random sampling

was performed to select the elements. The individuals were tested through the filter

questionnaire to ensure that they met the demographic and category criteria that was

required for the study. Seventy five respondents were chosen based on the above

criteria.

4. FINDINGS AND RECOMMENDATIONS

To succeed in rural market the company will need to adapt the 4P’s of marketing to

the 4A’s in their strategy – Awareness, Acceptability, Availability and Affordability.

Due to the limited reach of mass media the marketer would have to focus more on

traditional media like melas, haats or mandis, which were places where the entire

population of a village congregated on a periodic basis to purchase a multitude of

essential goods while also seeking a say’s entertainment for the family.

Access and availability are equally important There should be deep distribution and

easy availability. Availability is the biggest challenge. Affordability is the key driver in

rural India because of which the sachets needs to be carefully priced. With low

disposable income product needs to be affordable to the customer.

6.1. STRATEGIZING

As seen above there are several challenges for the product can face in the rural

market hence they can use try devising some strategy to overcome the challenges.

Some of the strategies that the company can adopt are:

Product Strategy:

The packaging of the product should be in colourful and decent sachets in order to

attract the rural consumers. The rural consumers are more concerned with the utility

of the products. The brand awareness and loyalty in rural areas is quite high.

Therefore, first a brand value must be created among the rural customers.

Distribution Channels:

Most manufacturers and marketers do follow a distribution arrangement for a

village with the population of atleast 5000 people. While it is essential to formulate

specific strategies for distribution in rural areas, the characteristics of product, its

shelf life and other factors have to be kept in mind. the distribution strategy

especially framed for rural India are-

Co-operatives society

Public distribution system

Multipurpose distribution canters

Distribution up to feeder markets/mandi towns/hats etc.

Pricing Strategy:

The per capita income of consumers in rural areas is quite low as compared to urban

areas. Therefore, the price of the product in rural market should be lower than that of

urban market. Also refill packs can be introduced as they reduce the price.

Promotion Strategy:

In rural markets, TV, radio, print media and cinema are not that popular. Therefore,

new and innovative modes of promotion strategies should be adopted. One strategy

could be promoting the product at village haats, melas and mandis. Also, leaflets, in

local languages, describing the product could be distributed among the villagers.

5. CONCLUSION

It is quite evident from the case that a proper market survey is required for a new

FMCG product in general and a new shampoo product in particular to enter into the

rural market. There were days when huge organizations flocked to rural markets to

establish their brands. Today, rural markets are critical for every marketer be it for a

branded soap or an automobile. As urban markets are getting saturated for consumer

goods (FMCG & Durables), marketing executives are fanning out and discovering the

strengths of large rural markets.

The Indian hair care market is undergoing a sea change in the respects of the buying

behaviour and consumer preferences. The consumers are willing to experiment with

new products and manufacturers can therefore take advantage of this situation and

gradually venture into the market.

There is a strong wave in favour of anti dandruff shampoos and shampoos with

minerals and proteins which nurture the health of the hair. There is a stiff competition

and the rural market can be exploited for revenue. The income pattern of the

population in rural areas is a bit wayward and the manufacturer can tap this situation

and make profit by use of “Sachets”.

According to the analysed data, the major dilemma for companies today is the

gap between the rural and the urban consumer. The reason why only few

companies have managed to venture out is because of the lack of

understanding into the psyche of the rural consumer.

Thus looking at the challenges and the opportunities which rural markets offer

to the marketers, it can be said that the future is very promising for those

who can understand the dynamics of rural markets and exploit them to their

best advantage. A radical change in attitudes of marketers towards the vibrant

and burgeoning rural markets is called for, so they can successfully impress on

the 230 million rural consumers spread over approximately six hundred thousand

villages in rural India.

BIBLIOGRAPHY AND WEBLIOGRAPHY

Pandey, Mukesh (2009): Contemporary Indian cases in Marketing

Raut, Sidhartha and Kashyap, Pradeep (2009): The Rural marketing Book

Fast moving Consumer Goods : http://www.ciionline.org/Sectors.aspx?enc=prvePUj2bdMtgTmvPwvisYH+5EnGjyGXO9hLECvTuNvwUH5MWzEuAiG8dfH+/Z7F

Indian FMCG Industry outlook 2013 : http://www.salisonline.org/market-research /indian-fmcg-industry-outlook-2013/

Consumer Products- Sector Research and Analysis : http://www.equitymaster.com/research-it/sector-info/consprds/consprds-products . html

Rivals eat into HUL’s shampoo market share : http://www.thehindubusinessline.com/industry-and-economy/ marketing/ article 1684908.ece