PRICING STRATEGIES FOR HAIR OIL

Varun Jain

Nitin Chugh

Tanya Srivastava

Siddharth Venkataraman

Priyanshi Kejriwal

PRODUCT:-HAIR OIL

Hair oiling is an age-old traditional habit of Indians.

Benefits of Hair Oil- Nourishment, Strengthening hair , Faster &

Better growth ,Reducing Hair Fall. Cosmetic Appeal for hair styling ,soft &

shining

HAIR CARE INDUSTRY FMCG Rs.116,100 cr Hair Care Rs. 9,200 cr 8% salience Shampoo Rs. 2,840 cr Perfumed Oil Rs. 2,900cr Coconut Oil Rs.2,100 cr Hair Conditioners

Rs.100cr Hair Dyes Rs. 1,200 cr Branded hair oil

segment grew 19.8% CAGR in value terms during FY07-12

HAIR OIL MARKET Coconut based Oils (51%) Heavy Amla based Oils (15%) Light Hair Oils (14%) Cooling Oils (12%) Others (8%) Hair Oil is > 55% of the overall hair care industry in India  Unit Price Starting from 5 Rs/20ml and varies according to size of the product.  Life of the product Best before15 months from Mfd. Product Life Cycle Stage Growth Phase  Overall market SizeThe Indian hair oil market is estimated to be worth Rs 4,600crore. Market Potential  Volume growth for the hair oil category is currently pegged at 12.8 per cent and

value growth at 17.7 per cent.

HAIR OIL CATEGORIES Coconut Hair Oil

Dabur Vatika Enriched Coconut Hair oil Parashute Coconut oil Dabur Anmol Coconut Oil

Light hair oils(Fastest Growing Segment)

Bajaj Almond Drops 46.8 % Keo Karpin 21.5 % Marico's Hair & Care 15.2 % Others 16.5% 

Heavy Amla Oil Dabur Amla 69.5 % Marico's Shanti Amla Badam 8.3 % Dabur Sarson Amla 5.8 % Bajaj Brahmi Amla 3.4% Others 13%  Cooling Oil  Emami's Navratna 44 % Him Gange 29% Others (Ayurvedic Vasmol Thanda Tel)

27%

LEADER BRAND Leader Brand  Parachute is leader in oil market in India. Market share in India is 53.4%.

Strength- 100% pure coconut oil Edible oil Market Availability Brand Name Available in different packs (20ml,50ml,100ml,200ml,500ml,1litre)

Weakness-  More sticky as compare to other light hair oils   Replacement product   Hair poition,Hair Cream , and other conditioning and moisturising

shampoo(Sunsilk,Vivel etc)  Advantage-Non sticky as compare to Hair oil.  Disadvantage-Expensive as compare to Hair oil.(35Rs./15ml) 

53.4%18%

16%

12.6%

parachute

bajaj

dabur

others

DIFFERENT BRANDS AVAILABLE IN GREATER GHAZIABAD

Parachute (Parachute Coconut oil,parashute jasmine, Parachute Advanced)

Dabur ( Dabur Amla Hair Oil , Dabur Amla Flower Magic Hair oil , Dabur Vatika hair oils ,Vatika Enriched Coconut Hair Oil , Vatika Enriched Almond Hair Oil, Dabur Anmol Coconut Oil )

Bajaj ( Bajaj Brahmi Amla hair Oil ,Bajaj Coconut Hair Oil ,Bajaj almond drops hair oil)

Emami (Navaratna ,Emami Amla Plus Hair Oil) Clinic plus (Clinic All Clear Dandruff Oil) Godrej (Godrej Anoop Hair Oil)

Himani Navratna

Hair & Care

Dabur Vatika

Bajaj Almond Drops

Parachute Advanced Jasmine

Parachute Hair Oil

Parachute Advansed Hair Oil

Parachute Advansed Ayurvedic Hot Oil

Parachute Advansed Therapie

Himalaya Anti Hair Fall

Qty. (ml)

50 Rs. 30

75 Rs. 33

90 Rs. 43

100 Rs. 55Rs. 44

Rs. 50 Rs. 34 Rs. 27 Rs. 125 Rs. 100

150 Rs. 65

175 Rs. 47 Rs. 61

190 Rs. 76Rs. 225

200 Rs. 100

Rs. 80

Rs. 95 Rs. 65 Rs. 180

250 Rs. 64

300 Rs. 130Rs. 125

Rs. 94

Available SKU’s & Pricing For Different Brands

BRAND PRICE/100 ML MARKET SHARE OF THE COMPANY

MEDICATED

VALUE PROPOSITION NICHE/MASS MARKET

Himani Navratna Rs. 55 6% YES cooling sensation has multiple benefits of providing relief from headache, tension, sleeplessness, Body ache and other hair related problems

MASS MARKET

Hair & Care Rs. 44 4% NO nourishment without adding stickiness MASS MARKET

Bajaj Almond Drops Rs. 50 5% NO nourishment without adding stickiness to the hair with purity and effectivness

MASS MARKET

Parachute Advanced Jasmine

Rs. 34 3% NO lingering fragrance of Jasmine that nourishes hair to keep it healthy and beautiful. While the goodness of Coconut acts as a moisturizer.

MASS MARKET

Parachute Hair Oil Rs. 27 10% NO Nourishment and shiny hair MASS MARKET

Parachute Advansed Therapie

Rs. 125 1% NO strengthen hair from within leaving it looking nourished and healthy. when applied pre-wash, reduces protein loss up to 28% and restores the health of hair

NICHE MARKET

Himalaya Anti Hair Fall

Rs. 100 <1% YES Prevent hair loss NICHE MARKET

Brand Comparison

DIFFERENCE IN PRICING

Cost Structure1. Bajaj Almond hiked prices by 8.6% to offset input cost pressures. 2. Key raw materials, Light Liquid Paraffin (LLP) and vegetable oil prices increased

over 25% in the last fiscal year, while glass bottles were expensive by around 12%.

Market Segments Targeted1. HUL has launched Dove hair-oil at a price point ranging Rs 180-200 for 100 ml

bottle," said one of them. This would make it a super-premium brand. 2. Specialty hair oils, which are growing faster in modern trade and earn better

margins for retailer and brands.

3. Targeting urban youth by introducing it in super premium category Dove will be super premium at Rs 180-200 for 100 ml. The same quantity of Bajaj Almond Drops and Parachute Scalp Therapie will cost Rs 125, while Marico's Hair & Care is priced just Rs 44 for 100 ml.

URBAN MARKET

Channel Management

Greater Ghaziabad market is mostly having semi-urban markets and urban markets is mostly consisting of some supermarkets, hypermarkets 

 Major brands      Dabur amla

     Bajaj Almond

Parachute/Parachute Jasmine

      Clear oil

·     Few Luxury brands like Loreal, Garnier etc

 Target Consumers – Females of all ages ,mainly with age 14–30 years & Males of age group 25-40 years

 SKUs sizeMost prevalent SKU size was 50 ml and 100ml  though the size got even smaller as we went into

the interior and smaller localities 

 Brand awareness – was mainly through Television commercials and few billboards,

newspapers,magazine

   Margins – Dependent on the service level in distribution channels;

a)      Distributer : 2-4%

b)      Retailers : 7-9 %

c)      Whole seller – 8-10 %

RURAL MARKET

Channel management

Major brands      Dabur amla      Bajaj brahmi amla      Parachute      Navratan Local brand/commodity

 Target Consumers – Mainly young females with age 14 – 30 yrs. Males either do not use hair oil at all or use locally available mustard oil.

SKUs size - Prevalent SKU size was 50 ml though the size got even smaller as we went into the interior and smaller sized villages. In villages like sekhaira where population size was less than 4000 only 1 re pack (2.7 – 3.5 ml) were available.

Brand awareness – was mainly through Television commercials.TV was available in almost every household even in small villages with population less than 4000. However people were not very aware and particular about a brand, they only recall product feature.

Margins – Dependent on the service level in distribution channels; In case of HUL in town Pilkhuwa where there were no whole sellers in the channels margins were as under :-

a)      Distributer – 4.75 % b)      Retailers – 10 % While in case of Dabur margins were as under:- a)      Distributer – 2.75 % b)      Whole seller – 3 % c)       Retailers – 10 %

AREA WISE SALES OF BRAND

Area Max. sales

Navyug Market Dabur Amla

Syani Gate Parachute Coconut Oil

Choupla mandir Dabur Amla

Ghantaghar Dabur Amla

Patel Nagar Dabur Amla

Kirana Mandi Dabur Amla

Maliwada Chowk Parachute Coconut Oil

Mohun Nagar Dabur Amla

Vaishali Dabur Amla

Indirapuram Parachute Coconut Oil

RDC Parachute Coconut Oil

Sector-10 Dabur Amla

Sanjay Nagar Parachute Coconut Oil

PRICING STRATEGY FOR PARACHUTE –LEADER BRAND

Analysis of 100ml Parachute hair oil

MRP 28

Retailer Profit 13%

Distributor selling price orRetailer cost price 24.77876

Distributor profit margin 4%

Distributor cost price 23.82573

Company profit 12%

Company Cost price 21.27297

MRP 28

Retailer Profit 8%

Distributor selling price orRetailer cost price 25.92593

Distributor profit margin 3%

Distributor cost price 25.17081

Wholeseller profit margin 8%

Wholeseller cost price 23.3063

Company profit 12%

Company Cost price 20.8092

PRICING STRATEGIES USED BY BRANDS OF VARIOUS CATEGORIES :

As in coconut oil category, parachute is the market leader and hence all the new brands coming in generally follow their pricing and thus this follows the Going Rate Pricing Policy

Different Schemes that are offered by brands like navratna and bajaj almond tends to destroy the leader and thus follow the predator pricing strategy.

  Some luxury brands like Loreal and Garnier give

value to customers and thus follow the value pricing strategy.

PRICING STRATEGIES BY DIFFERENT RETAILERS:

Easy Day(SuperMarket) Buyers decide on pricing strategies depending on locality and

nearby retailers.Selling at a discount of Rs1 or 0.50 paise for most hair oils.

Big Bazaar (Hyper Market) Sell in packs of three and reduces the total mrp by Rs5-8

Smaller SKU’s are also sometimes free with shampoo and other hair care products

WholeSaler Sell at a margin of 8-10%.Sell it local kirana stores incase stock is

leftover.

Kirana Stores/Medical Stores Sold at MRP and earned a margin fixed by the distributor of the

company

FIELD EXPERIENCES:-

1. Difficulties In Comparison of prices

2. Shopkeepers in supermarkets/hypermarkets were not willing to let us note down their pricing strategy.

3. Wholesalers were not willing to explain their pricing strategy or talk about the margin earned.

4. Harder to compare the pricing since they sold in boxes of 12 or 10 (min)

5. Some brands sold their products in different sku’s such as 190 ml or 50 ml.Doubling the qty did not give accurate results.

6. Parachute even though the market leader brand some of its product lines were very expensive targeting niche segments which we observed only during this experience.

eg Parachute Advanced Therapie Hair oil(Rs125) 100ml was costlier than Himalaya Anti Dandruff Shampoo(Rs100).

CONCLUSION

Pricing based on their target profits

Various products targeting Various customers.

Channel for distribution decides the amount at which the product reaches the consumer

More the number of middlemen, more is the price

Better inventory management & better channel management effectively reduces the operational costs and thus can reduce the price further.

 

THANK YOU