BYSANGHPRIYA GAUTAMSIDDHARTH MSARVOTTEMAVISHAKHASAMDISHA SAHNI

RAVI SOAP FACTORY:A Case Study

Executive Summary• FMCG industry is the most emerging industry nowadays in Indian as

well as global market. In India it is the 4th largest market, which shows that how important the industry is and how much it contributes towards our economy.

• FMCG includes the personal care products also like soaps, shampoos, etc. so our case-study mainly focuses on the market and study of Laundry SOAPS IN INDIA. It consists various multi national and domestic companies. Major players are Unilever(HLL), Nirma, Godrej, Johnson & Johnson, colgate-palmolive, etc.

• The detergent market is gradually developing very fast and day by day many new varieties, flavours, and fragrances, are added in it by various companies to exist in the market which gives tough competition to our local and domestic laundry soap company-Ravi Soap Factory .

Executive Summary • Our project consists study of 3 major players of laundry

soap market and their SWOT analysis, BCG Matrix, 5 forces model of the industry and the companies. Various suggestions and recommendations are also been given to the Ravi Soap Factory.

• HLL is the most dominating company across the world in FMCG sector due to its vertical and horizontal integration. Then also Nirma and P&G are trying to give tough fight to it.

• Main mantra for success of the companies is the diversification of their business and their products. Thus the study provides detailed study of FMCG sector with focus on the Ravi Soap Factory.

INTRODUCTION History of Ravi Soap Factory

• Ravi Soap factory was established in 1980 at Rudrapur (now in Uttranchal) by Mr. Ram Singh.

• Mr. Ram Singh, a kirana merchant migrated from Pakistan at the time of partition.

• Mr. Ram Singh- ambitious, hardworking and social

History of Ravi Soap Factory

• In Lahore, Pakistan his association with a soap manufacturer of Lahore helped him visit a soap factory to have an overall view of soap manufacturing business.(NETWORKING SKILLS)

• 1947:Indo-Pak partition; Mr. Ram Singh had to migrate to India with his family.

• Opened his own kirana store after 2-3 years of struggle.

• Finally, in 1980 he managed to start a very small soap-manufacturing unit on experimental basis

History of Ravi Soap Factory

• During those days, traditionally clothes were washed by hand, using hard, yellow bars of laundry soap, which accounted for over 95% of the market.

• The laundry soap market: dominated by low priced products made by small-scale local manufacturers in different parts of the country.

• Mr. Ram Singh sold laundry soap to the main kirana merchants of the Rudrapur owing to his networking skills and common business he shared with them.

• The quality of his product was “ok” and the price of his product was lower then the other soaps of same quality available in the market.

Reasons for Low-PriceThe existence of S.P. Solvent Plant in the same city - the only Solvent plant in the whole state of Uttar Pradesh at that time which produced “rice bran oil”• Rice bran oil is the main ingredient of soap manufacturing and

the other ingredients are Caustic Soda, Sodium Silicate and Soap Stone Powder

• [Rice Bran Oil: Caustic Soda: Soap Stone Powder: Sodium Silicate :: 5: 1: 3: 2].(The ratio of soap stone powder and sodium silicate varies as per the quality of the product.) While the competitor soap manufacturers were situated at Bareilly, which is 90 kilometers from Rudrapura: transportation cost was involved.

• The soap stone powder is available at Haldwani Only, which is 30 kms from Rudrapur and 90 kms from Bareilly.

Reasons for Low-PriceThe availability of cheap labour. As Bareilly is a bigger city than Rudrapur, labour cost was high.

Progress in the past• By 1990 the firm was enjoying a good market share of soap

market in Rudrapur and nearby cities like Kiccha, Gadarpur, Bajpur, Pantnagar & Bilaspur.

• In the rural areas adjacent to Rudrapur city, the company was enjoying almost monopoly( Punjabi farmers dominate the region; Mr. Ram Singh started delivering soap at the doorsteps of the rural customers as per their requirement and most of the sales was on credit the farmers used to pay their dues twice in the year at the time of harvest, which the other manufacturers were unable to do.)

• Started with one product: HP with 65 % TFM (total fatty material). That product was supposed to cater High-income group of terai (Mostly Farmers in rural areas and Businessmen in urban areas).

Progress in the past• In 1990 he developed two more Brands to cater two more segments

while keeping the focus on urban markets of terai region: Satnam soap for Middle-income group and Uphar soap, for low-level income group.

• Terai region- famous for its Basmati rice• Rudrapur has 150 rice mills and huge no of labourers from Bihar and

Bengal are employed in these mills and in Lalkuan which is 10 kms from Rudrapur, where Century paper mill (Aditya Birla Group) is situated, a big no of these laborers are employed These laborers were the target market for the brand Uphar.

• This strategy worked well and the company started performing well in these cities.

• In 1999 Mr. Ram Singh gave the charge of the company to his son Mr. S. Singh and under his guidance company grew at a steady pace till 2007 but after that sales started declining.

Annual sales of the Ravi soap factory.(A SSI Unit Manufacturing, Non Detergent washing soap)

Impact of Digitalized Marketing

After the arrival of cable TV in Terai region, the companies like HLL, NIRMA, Procter & Gamble & TOMCO (Tata Oil Mills Company) started advertising heavily their products - Detergent Powder and Detergent Cake through cable TV. • HLL : “SURF” detergent powder and “WHEEL” detergent cake• TOMCO : “OK”, • P&G : Arial Microsystems (It was a powder, which used their

most advance and proprietary enzyme-based technology and was superior to Surf.)

• NIRMA was also doing well in detergent cake and detergent powder segment.

HLL• HLL worked hard to expand the detergent market by

familiarizing potential users.• Salesmen toured the villages in vans and, ‘like high

priests’, preached to villagers about the usefulness and importance of Surf in daily life and its advantages over other soaps:

‘Surf has more lather and is more soapy than any other soap’• HLL also ran advertisements showing how clothes

could be washed by soaking them in a bucket containing detergent dissolved in the water.

Product Characteristics

• Products belonging to the FMCG segment generally have the following characteristics:

• They are used at least once a month • They are used directly by the end-consumer • They are non-durable • They are sold in packaged form • They are branded

The Lead Players and their Market Share

Company Percentage of Market Share

HLL 67

Godrej 10

Nirma 8

Colgate Palmolive 1

Others 14

Source: Vanscom Database

The Lead Players and their Market Share

Present Scenario• With the increasing use of washing machines by the people in

Terai region it was easy to use detergent powder though the detergent powder may cause some skin related problems.

• After looking at the declining sales graph of his company in 2008-09 Mr. S Singh also decided to advertise his products in the Cinema Halls. But this strategy did not work.

• After this Mr. S. Singh is thinking to manufacturer the detergent

powder (NSD powder). The key challenge in the manufacturing process lay in producing a consistent-quality product over large volumes and long time periods.

1-What can be suggested to Mr. Singh to increase the sales of Ravi soap factory?

2- Should Mr. Singh invest in the new technology of NSD or not?

SWOT ANALYSIS

Strengths:• Quality product at low price.• The existence of S.P. Solvent Plant in the

same city.• Monopoly in agricultural regions.• Strong distribution network.• The availability of cheap labour.

SWOT ANALYSIS

Weaknesses:• For distribution of goods outside the city the company is

totally dependent on external transport agencies, which are not reliable ones.

• The factory does not have NSD powder plant• The factory is not aggressively advertising its products and is

not able to build a brand name for itself to boost the sales of its products.

• No marketing manager in its organizational structure• Old methods of computing and management

SWOT ANALYSIS

Opportunities:• Long established network• Proximity to various rural areas• Digitialization

SWOT ANALYSIS

Threats:• Rising need and demand for detergent• Competitors rising in the area by

aggressive marketing• HLL, NIRMA, P&G penetrating the area• Laundry cake becoming obsolete

Proposed Solution & Strategy

1. Improved Marketing Strategy

Marketing Campaigns

ATL BTL

Improved Marketing Strategy

• By focussing more on “BTL”- Below The Line marketing campaigns, Ravi Soap Factory can reach the market at the same pace as its competitors.

• BTL may include giving calculated discounts to distributors upon achieving the targets.

• Introducing discount offers to attract the low-income families.

• Irresistible offers attracting different age groups.

Improved Marketing Strategy • Besides BTL marketing, a range of printed

advertisement through newspapers, pamphlets, hoardings etc. can improve the product awareness.

• Radio and TV can give better results than “only Cinema”

• The inclusion of a marketing manager/advisor in the organization can provide a dynamic marketing strategy.

Proposed Solution & Strategy

2. Market & Product Growth

Proposed Solution & Strategy3. Contract Manufacturing• The process for NSD and soap cake production is

similar till the slurry stage.• Competitors and other manufacturers in and near

Rudrapur do not enjoy the advantage of low operation and production cost similar to Ravi Soap Factory.

• In order to bring up the sales, a contract manufacturing system can allow Ravi Soap Factory to provide slurry to them in return reducing their transportation cost.

Proposed Solution & Strategy

4. Brand Repositioning• A market potential research for NSD bars must

be performed.• The quality of the product must be improved.• Effective promotional strategies emphasizing

the quality of the product must be adopted.• Improved distribution network.

Proposed Solution & Strategy5. Vision & Mission Philosophy• Customer-focused company committed to consistently offer better

quality products and services that maximize value to the customer.• Phenomenon and synonymous with Value for Money. • The brand transcends the specific dynamic of any particular

product category, which is best captured in its above mission statement

• Different soaps of Ravi Soap Factory : The following can be the different soap products:

Bath SoapLaundry SoapLime Fresh SoapRoseSandalOrganic

Proposed Solution & Strategy6. Others1. A joint industry –government initiative for building a "Made in India’’ brand for FMCG products is required. With many multinationals moving into the Indian FMCG market, a concerted marketing strategy which creates strong brands will be needed for Indian FMCGs to gain recognition in the market. 2. Better packaging materials are necessary as a large number of FMCG products are perishable 3. While import of most items has been allowed, the government is not geared to prevent import of spurious products. 4. The small-scale reservation policy should be reviewed as it hampers the growth of this sector.

Should or Should not?

• The sales figure need improvements and time before establishment of the Air Spray tower.

• In order to survive in the dynamic market, Ravi soap factory must keep itself at par or ahead of competitors.

• Business forecasting coupled with continuously changing technology must be integrated with the existing set up.

• Eventually, the factory must establish the NSD tower.