soap industry
TRANSCRIPT
INTRODUCTION
WE regularly talk about things like butter potato chips
toothpastes razors household care products packaged food
and beverages etc But do we know under which category
these things come They are called FMCGs FMCG is an
acronym for Fast Moving Consumer Goods which refer to
things that we buy from local supermarkets on daily basis
the things that have high turnover and are relatively
cheaper
FMCG Products and Categories
- Personal Care Oral Care Hair Care Skin Care Personal
Wash (soaps)
- Cosmetics and ries deodorants perfumes feminine
hygiene paper products
- Household care fabric wash including laundry soaps and
synthetic detergents household cleaners such as
dishutensil cleaners floor cleaners cleaners air
fresheners insecticides and mosquito repellents metal
polish and furniture polish
FMCG in 2006
The performance of the industry was inconsistent in terms of
sales and growth for over 4 years The investors in the sector
were not gainers at par with other booming sectors After
two years of sinking performance of FMCG sector the year
2005 has witnessed the FMCGs demand growing Strong
growth was seen across various segments in FY06 With the
rise in disposable income and the economy in good health
the urban consumers continued with their shopping spree
- Food and health beverages branded flour branded
sugarcane bakery products such as bread biscuits etc
milk and dairy products beverages such as tea coffee
juices bottled water etc snack food chocolates etc
- Frequently replaced electronic products such as audio
equipments digital cameras Laptops CTVs other
electronic items such as Refrigerator washing machines
etc coming under the category of White Goods in FMCG
Sector Outlook
FMCG is the fourth largest sector in the Indian Economy with
a total market size of Rs 60000 crores FMCG sector
generates 5 of total factory employment in the country and
is creating employment for three million people especially in
small towns and rural India
Soap is a surfactant used in conjunction with water for
washing and cleaning that historically comes in solid bars
but also in the form of a thick liquid especially from soap
dispensers in public washrooms
Historically soap has been composed of sodium (soda ash)
or potassium (potash) salts of fatty acids derived by reacting
fat with lye in a process known as saponification The fats
are hydrolyzed by the base yielding glycerol and crude
soap
Many cleaning agents today are technically not soaps but
detergents which are less expensive and easier to
manufacture
How soap works
a diagram of the function of soap
Soaps are useful for cleaning because soap molecules attach
readily to both nonpolar molecules (such as grease or oil)
and polar molecules (such as water) Although grease will
normally adhere to skin or clothing the soap molecules can
attach to it as a handle and make it easier to rinse away
Applied to a soiled surface soapy water effectively holds
particles in suspension so the whole of it can be rinsed off
with clean water
(fatty end) CH3-(CH2)n - COONa
(water soluble end)
The hydrocarbon (fatty) portion dissolves dirt and oils
while the ionic end makes it soluble in water Therefore it
allows water to remove normally-insoluble matter by
emulsification
Soapmaking
The most popular soap making processes today is the cold
process method where fats such as olive oil react with lye
Soap makers sometimes use the melt and pour process
where a premade soap base is melted and poured in
individual molds but this is not really to be considered soap-
making Some soapers also practice other processes such
as the historical hot process and make special soaps such
as clear soap (glycerin soap)
soap differs from industrial soap in that usually an excess
of fat is used to consume the alkali (superfatting) and in
that the glycerin is not removed Superfatted soap soap
which contains excess fat is more skin-friendly than
industrial soap though if not properly formulated it can
leave users with a greasy feel to their skin Often
emollients such as jojoba oil or shea butter are added at
trace (the point at which the saponification process is
sufficiently advanced that the soap has begun to thicken)
after most of the oils have saponified so that they remain
unreacted in the finished soap
Lye
Reacting fat with sodium hydroxide will produce a hard soap
Reacting fat with potassium hydroxide will produce a soap
that is either soft or liquid Historically the alkali used was
potassium hydroxide made from the deliberate burning of
vegetation such as bracken or from wood ashes
Fat
Handicraft made Marseille soap
Soap is derived from either oils or fats Sodium tallowate a
common ingredient in many soaps is in fact derived from
rendered beef fat Soap can also be made of vegetable oils
such as palm oil and the product is typically softer If soap is
made from pure olive oil it may be called Castile soap or
Marseille soap Castile is also sometimes applied to soaps
with a mix of oils but a high percentage of olive oil
An array of quality oils and butters are used in the process
such as olive coconut palm cocoa butter hemp oil and
shea butter to list a few Each oil chosen by the soap maker
has unique characteristics that provide different qualities to
soaps including mildness lathering and hardness For
example olive oil provides mildness in soap coconut oil
provides lots of lather while coconut and palm oils provides
hardness
Process
In both cold-process and hot-process soapmaking heat is
required for saponification
Cold-process soapmaking takes place at a temperature
sufficiently above room temperature to ensure the
liquification of the fat being used and requires that the lye
and fat be kept warm after mixing to ensure that the soap is
completely saponified
Unlike cold-processed soap hot-processed soap can be used
right away because lye and fat saponify more quickly at the
higher temperatures used in hot-process soapmaking
Hot-process was used when the purity of lye was unreliable
and can use natural lye solutions such as potash The main
benefit of hot processing is that the exact concentration of
the lye solution does not need to be known to perform the
process with adequate success
Cold-process requires exact measurement of lye to fat using
saponification charts to ensure that the finished product is
mild and skin friendly Saponification charts can also be used
in hot-process soapmaking but are not as necessary as in
cold-process
Hot process
In the hot-process method lye and fat are boiled together at
80 ndash 100 degC until saponification occurs which the soapmaker
can determine by taste (the bright distinctive taste of lye
disappears once all the lye is saponified) or by eye (the
experienced eye can tell when gel stage and full
saponification have occurred)
After saponification has occurred the soap is sometimes
precipitated from the solution by adding salt and the excess
liquid drained off
The hot soft soap is then spooned into a mold
Cold process
A cold-process soapmaker first looks up the saponification
value of the fats being used on a saponification chart which
is then used to calculate the appropriate amount of lye
Excess unreacted lye in the soap will result in a very high pH
and can burn or irritate skin Not enough lye and the soap is
greasy and oily Most soap makers formulate their recipes
with 3-15 excess oil so that all of the lye is reacted and
that excess fat is left for skin conditioning benefits
The lye is dissolved in water and the resulting solution mixed
with fat Once it has cooled to about 80-90 degrees
Fahrenheit this lye-fat mixture is stirred until trace that is
the two thin clear substances become cloudy and thicken
(Modern-day amateur soapmakers often use a stick blender
to speed this process) After much stirring the mixture turns
to the consistency of a thin pudding
Essential oils fragrance oils botanicals herbs oatmeal or
other additives are added at light trace just as the mixture
starts to thicken
The batch is then poured into molds kept warm with towels
or blankets and left to continue saponification for 18 to 48
hours Milk soaps are the exception They do not require
insulation Insulation may cause the milk to burn During this
time it is normal for the soap to go through a gel phase
where the opaque soap will turn somewhat transparent for
several hours before turning opaque again The soap will
continue to give off heat for many hours after trace
After the insulation period the soap is firm enough to be
removed from the mold and cut into bars At this time it is
safe to use the soap since saponification is complete
However cold-process soaps are typically cured and
hardened on a drying rack for 2-6 weeks (depending on
initial water content) before use If using caustic soda it is
recommended that the soap is left to cure or at least 4
weeks
Purification and finishing
The common process of purifying soap involves removal of
sodium chloride sodium hydroxide and glycerol These
components are removed by boiling the crude soap curds in
water and re-precipitating the soap with salt
Most of the water is then removed from the soap This was
traditionally done on a chill roll which produced the soap
flakes commonly used in the 1940s and 1950s This process
was superseded by spray dryers and then by vacuum dryers
The dry soap (approximately 6-12 moisture) is then
compacted into small pellets These pellets are now ready
for soap finishing the process of converting raw soap pellets
into a salable product usually bars
Soap pellets are combined with fragrances and other
materials and blended to homogeneity in an amalgamator
(mixer) The mass is then discharged from the mixer into a
refiner which by means of an auger forces the soap through
a fine wire screen From the refiner the soap passes over a
roller mill (French milling or hard milling) in a manner similar
to calendering paper or plastic or to making chocolate liquor
The soap is then passed through one or more additional
refiners to further plasticize the soap mass Immediately
before extrusion it passes through a vacuum chamber to
remove any entrapped air It is then extruded into a long log
or blank cut to convenient lengths passed through a metal
detector and then stamped into shape in refrigerated tools
The pressed bars are packaged in many ways
Sand or pumice may be added to produce a scouring soap
This process is most common in creating soaps used for
human hygiene The scouring agents serve to remove dead
skin cells from the surface being cleaned This process is
called exfoliation Many newer materials are used for
exfoliating soaps which are effective but do not have the
sharp edges and poor size distribution of pumice
History
Early History
Soapnut Tree (Reeta Sapindus tree)
The earliest known use of a natural soap-like substance was
the powder of the Reeta(Sapindus) nut which was used by
Indians since antiquity Hindus in India were obliged to bathe
at least once a day every morning in accordance with
Ayurveda Evidence of manufactured soap use are
Babylonian clay cylinders dating from 2800 BC containing a
soap-like substance A formula for soap consisting of water
alkali and cassia oil was written on a Babylonian clay tablet
around 2200 BC
The Ebers papyrus (Egypt 1550 BC) indicates that ancient
Egyptians bathed regularly and combined animal and
vegetable oils with alkaline salts to create a soap-like
substance Egyptian documents mention that a soap-like
substance was used in the preparation of wool for weaving
Roman History
It is commonly reported that a soap factory with bars of
scented soap was found in the ruins of Pompeii (79 AD)
However this has proved to be a misinterpretation of the
survival of some soapy mineral substance [citation needed]
probably soapstone at the Fullonica where it was used for
dressing recently cleansed textiles Unfortunately this error
has been repeated widely and can be found in otherwise
reputable texts on soap history The ancient Romans were
generally ignorant of soaps detergent properties and made
use of the strigil to scrape dirt and sweat from the body The
word soap (Latin sapo) appears first in a European
language in Pliny the Elders Historia Naturalis which
discusses the manufacture of soap from tallow and ashes
but the only use he mentions for it is as a pomade for hair
he mentions rather disapprovingly that among the Gauls and
Germans men are likelier to use it than women
A story encountered in some places claims that soap takes
its name from a supposed Mount Sapo where ancient
Romans sacrificed animals Rain would send a mix of animal
tallow and wood ash down the mountain and into the clay
soil on the banks of the Tiber Eventually women noticed
that it was easier to clean clothes with this soap The
location of Mount Sapo is unknown as is the source of the
ancient Roman legend to which this tale is typically
credited In fact the Latin word sapo simply means soap it
was borrowed from a Celtic or Germanic language and is
cognate with Latin sebum tallow which appears in Pliny
the Elders account Roman animal sacrifices usually burned
only the bones and inedible entrails of the sacrificed
animals edible meat and fat from the sacrifices were taken
by the humans rather than the gods Animal sacrifices in the
ancient world would not have included enough fat to make
much soap The legend about Mount Sapo is probably
apocryphal
Arab History
The Arabs made soap from vegetable oil such as olive oil and
some aromatic oils such as thyme oil Lye (Al-Soda Al-Kawia)
was used for the first time and the formula hasnt changed
from the current soap sold in the market From the
beginning of the 7th century soap was produced in Nablus
(West BankPalestine) Kufa (Iraq) and Basra (Iraq) Soaps as
we know them today are descendants of historical Arabian
Soaps Arabian Soap was perfumed and colored some of the
soaps were liquid and others were hard They also had
special soap for shaving It was commercially sold for 3
Dirhams (03 Dinars) a piece in 981 AD Al-Razi rsquos manuscript
contains recipes for soap A recently discovered manuscript
from the 13th century details more recipes for soap making
eg take some sesame oil a sprinkle of potash alkali and
some lime mix them all together and boil When cooked
they are poured into molds and left to set leaving hard soap
Historically soap was made by mixing animal fats with lye
Because of the caustic lye this was a dangerous procedure
(perhaps more dangerous than any present-day home
activities) which could result in serious chemical burns or
even blindness Before commercially-produced lye (sodium
hydroxide) was commonplace potash potassium hydroxide
was produced at home for soap making from the ashes of a
hardwood fire
Castile soap was produced in Europe as early as the 16th
century
Modern History
1922 magazine advertisement for Palmolive Soap
In modern times the use of soap has become universal in
industrialized nations due to a better understanding of the
role of hygiene in reducing the population size of pathogenic
microorganisms Manufactured bar soaps first became
available in the late nineteenth century and advertising
campaigns in Europe and the United States helped to
increase popular awareness of the relationship between
cleanliness and health By the 1950s soap had gained public
acceptance as an instrument of personal hygiene
Rarely conditions allow for corpses to naturally turn in to a
soap-like substance such as the Soap Lady on exhibit in the
Mutter Museum
OBJECTIVE OF STUDY
The objective of the study is to understand the soap
industry in India Also there are following points that we
wanted to cover among the Soap Industry
1 Different players in the industry
2 Different types of soap
3 Price comparison
4 Companies involved and their various branding styles
5 branding strategy of different players
METHODOLOGY
Methodology is the major or the first step of any project If
the plan for methodology is not streamlined then the
project cannot flow without interruption
For our study we would majorly use secondary research as
our tool of research We would be using the journal past
researches articles new paper magazines internet as
our source of data collection We would strongly we would
be using different sites to collect data and then we would
analyze the collected data and then conclude the project
with recommendations
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
fresheners insecticides and mosquito repellents metal
polish and furniture polish
FMCG in 2006
The performance of the industry was inconsistent in terms of
sales and growth for over 4 years The investors in the sector
were not gainers at par with other booming sectors After
two years of sinking performance of FMCG sector the year
2005 has witnessed the FMCGs demand growing Strong
growth was seen across various segments in FY06 With the
rise in disposable income and the economy in good health
the urban consumers continued with their shopping spree
- Food and health beverages branded flour branded
sugarcane bakery products such as bread biscuits etc
milk and dairy products beverages such as tea coffee
juices bottled water etc snack food chocolates etc
- Frequently replaced electronic products such as audio
equipments digital cameras Laptops CTVs other
electronic items such as Refrigerator washing machines
etc coming under the category of White Goods in FMCG
Sector Outlook
FMCG is the fourth largest sector in the Indian Economy with
a total market size of Rs 60000 crores FMCG sector
generates 5 of total factory employment in the country and
is creating employment for three million people especially in
small towns and rural India
Soap is a surfactant used in conjunction with water for
washing and cleaning that historically comes in solid bars
but also in the form of a thick liquid especially from soap
dispensers in public washrooms
Historically soap has been composed of sodium (soda ash)
or potassium (potash) salts of fatty acids derived by reacting
fat with lye in a process known as saponification The fats
are hydrolyzed by the base yielding glycerol and crude
soap
Many cleaning agents today are technically not soaps but
detergents which are less expensive and easier to
manufacture
How soap works
a diagram of the function of soap
Soaps are useful for cleaning because soap molecules attach
readily to both nonpolar molecules (such as grease or oil)
and polar molecules (such as water) Although grease will
normally adhere to skin or clothing the soap molecules can
attach to it as a handle and make it easier to rinse away
Applied to a soiled surface soapy water effectively holds
particles in suspension so the whole of it can be rinsed off
with clean water
(fatty end) CH3-(CH2)n - COONa
(water soluble end)
The hydrocarbon (fatty) portion dissolves dirt and oils
while the ionic end makes it soluble in water Therefore it
allows water to remove normally-insoluble matter by
emulsification
Soapmaking
The most popular soap making processes today is the cold
process method where fats such as olive oil react with lye
Soap makers sometimes use the melt and pour process
where a premade soap base is melted and poured in
individual molds but this is not really to be considered soap-
making Some soapers also practice other processes such
as the historical hot process and make special soaps such
as clear soap (glycerin soap)
soap differs from industrial soap in that usually an excess
of fat is used to consume the alkali (superfatting) and in
that the glycerin is not removed Superfatted soap soap
which contains excess fat is more skin-friendly than
industrial soap though if not properly formulated it can
leave users with a greasy feel to their skin Often
emollients such as jojoba oil or shea butter are added at
trace (the point at which the saponification process is
sufficiently advanced that the soap has begun to thicken)
after most of the oils have saponified so that they remain
unreacted in the finished soap
Lye
Reacting fat with sodium hydroxide will produce a hard soap
Reacting fat with potassium hydroxide will produce a soap
that is either soft or liquid Historically the alkali used was
potassium hydroxide made from the deliberate burning of
vegetation such as bracken or from wood ashes
Fat
Handicraft made Marseille soap
Soap is derived from either oils or fats Sodium tallowate a
common ingredient in many soaps is in fact derived from
rendered beef fat Soap can also be made of vegetable oils
such as palm oil and the product is typically softer If soap is
made from pure olive oil it may be called Castile soap or
Marseille soap Castile is also sometimes applied to soaps
with a mix of oils but a high percentage of olive oil
An array of quality oils and butters are used in the process
such as olive coconut palm cocoa butter hemp oil and
shea butter to list a few Each oil chosen by the soap maker
has unique characteristics that provide different qualities to
soaps including mildness lathering and hardness For
example olive oil provides mildness in soap coconut oil
provides lots of lather while coconut and palm oils provides
hardness
Process
In both cold-process and hot-process soapmaking heat is
required for saponification
Cold-process soapmaking takes place at a temperature
sufficiently above room temperature to ensure the
liquification of the fat being used and requires that the lye
and fat be kept warm after mixing to ensure that the soap is
completely saponified
Unlike cold-processed soap hot-processed soap can be used
right away because lye and fat saponify more quickly at the
higher temperatures used in hot-process soapmaking
Hot-process was used when the purity of lye was unreliable
and can use natural lye solutions such as potash The main
benefit of hot processing is that the exact concentration of
the lye solution does not need to be known to perform the
process with adequate success
Cold-process requires exact measurement of lye to fat using
saponification charts to ensure that the finished product is
mild and skin friendly Saponification charts can also be used
in hot-process soapmaking but are not as necessary as in
cold-process
Hot process
In the hot-process method lye and fat are boiled together at
80 ndash 100 degC until saponification occurs which the soapmaker
can determine by taste (the bright distinctive taste of lye
disappears once all the lye is saponified) or by eye (the
experienced eye can tell when gel stage and full
saponification have occurred)
After saponification has occurred the soap is sometimes
precipitated from the solution by adding salt and the excess
liquid drained off
The hot soft soap is then spooned into a mold
Cold process
A cold-process soapmaker first looks up the saponification
value of the fats being used on a saponification chart which
is then used to calculate the appropriate amount of lye
Excess unreacted lye in the soap will result in a very high pH
and can burn or irritate skin Not enough lye and the soap is
greasy and oily Most soap makers formulate their recipes
with 3-15 excess oil so that all of the lye is reacted and
that excess fat is left for skin conditioning benefits
The lye is dissolved in water and the resulting solution mixed
with fat Once it has cooled to about 80-90 degrees
Fahrenheit this lye-fat mixture is stirred until trace that is
the two thin clear substances become cloudy and thicken
(Modern-day amateur soapmakers often use a stick blender
to speed this process) After much stirring the mixture turns
to the consistency of a thin pudding
Essential oils fragrance oils botanicals herbs oatmeal or
other additives are added at light trace just as the mixture
starts to thicken
The batch is then poured into molds kept warm with towels
or blankets and left to continue saponification for 18 to 48
hours Milk soaps are the exception They do not require
insulation Insulation may cause the milk to burn During this
time it is normal for the soap to go through a gel phase
where the opaque soap will turn somewhat transparent for
several hours before turning opaque again The soap will
continue to give off heat for many hours after trace
After the insulation period the soap is firm enough to be
removed from the mold and cut into bars At this time it is
safe to use the soap since saponification is complete
However cold-process soaps are typically cured and
hardened on a drying rack for 2-6 weeks (depending on
initial water content) before use If using caustic soda it is
recommended that the soap is left to cure or at least 4
weeks
Purification and finishing
The common process of purifying soap involves removal of
sodium chloride sodium hydroxide and glycerol These
components are removed by boiling the crude soap curds in
water and re-precipitating the soap with salt
Most of the water is then removed from the soap This was
traditionally done on a chill roll which produced the soap
flakes commonly used in the 1940s and 1950s This process
was superseded by spray dryers and then by vacuum dryers
The dry soap (approximately 6-12 moisture) is then
compacted into small pellets These pellets are now ready
for soap finishing the process of converting raw soap pellets
into a salable product usually bars
Soap pellets are combined with fragrances and other
materials and blended to homogeneity in an amalgamator
(mixer) The mass is then discharged from the mixer into a
refiner which by means of an auger forces the soap through
a fine wire screen From the refiner the soap passes over a
roller mill (French milling or hard milling) in a manner similar
to calendering paper or plastic or to making chocolate liquor
The soap is then passed through one or more additional
refiners to further plasticize the soap mass Immediately
before extrusion it passes through a vacuum chamber to
remove any entrapped air It is then extruded into a long log
or blank cut to convenient lengths passed through a metal
detector and then stamped into shape in refrigerated tools
The pressed bars are packaged in many ways
Sand or pumice may be added to produce a scouring soap
This process is most common in creating soaps used for
human hygiene The scouring agents serve to remove dead
skin cells from the surface being cleaned This process is
called exfoliation Many newer materials are used for
exfoliating soaps which are effective but do not have the
sharp edges and poor size distribution of pumice
History
Early History
Soapnut Tree (Reeta Sapindus tree)
The earliest known use of a natural soap-like substance was
the powder of the Reeta(Sapindus) nut which was used by
Indians since antiquity Hindus in India were obliged to bathe
at least once a day every morning in accordance with
Ayurveda Evidence of manufactured soap use are
Babylonian clay cylinders dating from 2800 BC containing a
soap-like substance A formula for soap consisting of water
alkali and cassia oil was written on a Babylonian clay tablet
around 2200 BC
The Ebers papyrus (Egypt 1550 BC) indicates that ancient
Egyptians bathed regularly and combined animal and
vegetable oils with alkaline salts to create a soap-like
substance Egyptian documents mention that a soap-like
substance was used in the preparation of wool for weaving
Roman History
It is commonly reported that a soap factory with bars of
scented soap was found in the ruins of Pompeii (79 AD)
However this has proved to be a misinterpretation of the
survival of some soapy mineral substance [citation needed]
probably soapstone at the Fullonica where it was used for
dressing recently cleansed textiles Unfortunately this error
has been repeated widely and can be found in otherwise
reputable texts on soap history The ancient Romans were
generally ignorant of soaps detergent properties and made
use of the strigil to scrape dirt and sweat from the body The
word soap (Latin sapo) appears first in a European
language in Pliny the Elders Historia Naturalis which
discusses the manufacture of soap from tallow and ashes
but the only use he mentions for it is as a pomade for hair
he mentions rather disapprovingly that among the Gauls and
Germans men are likelier to use it than women
A story encountered in some places claims that soap takes
its name from a supposed Mount Sapo where ancient
Romans sacrificed animals Rain would send a mix of animal
tallow and wood ash down the mountain and into the clay
soil on the banks of the Tiber Eventually women noticed
that it was easier to clean clothes with this soap The
location of Mount Sapo is unknown as is the source of the
ancient Roman legend to which this tale is typically
credited In fact the Latin word sapo simply means soap it
was borrowed from a Celtic or Germanic language and is
cognate with Latin sebum tallow which appears in Pliny
the Elders account Roman animal sacrifices usually burned
only the bones and inedible entrails of the sacrificed
animals edible meat and fat from the sacrifices were taken
by the humans rather than the gods Animal sacrifices in the
ancient world would not have included enough fat to make
much soap The legend about Mount Sapo is probably
apocryphal
Arab History
The Arabs made soap from vegetable oil such as olive oil and
some aromatic oils such as thyme oil Lye (Al-Soda Al-Kawia)
was used for the first time and the formula hasnt changed
from the current soap sold in the market From the
beginning of the 7th century soap was produced in Nablus
(West BankPalestine) Kufa (Iraq) and Basra (Iraq) Soaps as
we know them today are descendants of historical Arabian
Soaps Arabian Soap was perfumed and colored some of the
soaps were liquid and others were hard They also had
special soap for shaving It was commercially sold for 3
Dirhams (03 Dinars) a piece in 981 AD Al-Razi rsquos manuscript
contains recipes for soap A recently discovered manuscript
from the 13th century details more recipes for soap making
eg take some sesame oil a sprinkle of potash alkali and
some lime mix them all together and boil When cooked
they are poured into molds and left to set leaving hard soap
Historically soap was made by mixing animal fats with lye
Because of the caustic lye this was a dangerous procedure
(perhaps more dangerous than any present-day home
activities) which could result in serious chemical burns or
even blindness Before commercially-produced lye (sodium
hydroxide) was commonplace potash potassium hydroxide
was produced at home for soap making from the ashes of a
hardwood fire
Castile soap was produced in Europe as early as the 16th
century
Modern History
1922 magazine advertisement for Palmolive Soap
In modern times the use of soap has become universal in
industrialized nations due to a better understanding of the
role of hygiene in reducing the population size of pathogenic
microorganisms Manufactured bar soaps first became
available in the late nineteenth century and advertising
campaigns in Europe and the United States helped to
increase popular awareness of the relationship between
cleanliness and health By the 1950s soap had gained public
acceptance as an instrument of personal hygiene
Rarely conditions allow for corpses to naturally turn in to a
soap-like substance such as the Soap Lady on exhibit in the
Mutter Museum
OBJECTIVE OF STUDY
The objective of the study is to understand the soap
industry in India Also there are following points that we
wanted to cover among the Soap Industry
1 Different players in the industry
2 Different types of soap
3 Price comparison
4 Companies involved and their various branding styles
5 branding strategy of different players
METHODOLOGY
Methodology is the major or the first step of any project If
the plan for methodology is not streamlined then the
project cannot flow without interruption
For our study we would majorly use secondary research as
our tool of research We would be using the journal past
researches articles new paper magazines internet as
our source of data collection We would strongly we would
be using different sites to collect data and then we would
analyze the collected data and then conclude the project
with recommendations
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
etc coming under the category of White Goods in FMCG
Sector Outlook
FMCG is the fourth largest sector in the Indian Economy with
a total market size of Rs 60000 crores FMCG sector
generates 5 of total factory employment in the country and
is creating employment for three million people especially in
small towns and rural India
Soap is a surfactant used in conjunction with water for
washing and cleaning that historically comes in solid bars
but also in the form of a thick liquid especially from soap
dispensers in public washrooms
Historically soap has been composed of sodium (soda ash)
or potassium (potash) salts of fatty acids derived by reacting
fat with lye in a process known as saponification The fats
are hydrolyzed by the base yielding glycerol and crude
soap
Many cleaning agents today are technically not soaps but
detergents which are less expensive and easier to
manufacture
How soap works
a diagram of the function of soap
Soaps are useful for cleaning because soap molecules attach
readily to both nonpolar molecules (such as grease or oil)
and polar molecules (such as water) Although grease will
normally adhere to skin or clothing the soap molecules can
attach to it as a handle and make it easier to rinse away
Applied to a soiled surface soapy water effectively holds
particles in suspension so the whole of it can be rinsed off
with clean water
(fatty end) CH3-(CH2)n - COONa
(water soluble end)
The hydrocarbon (fatty) portion dissolves dirt and oils
while the ionic end makes it soluble in water Therefore it
allows water to remove normally-insoluble matter by
emulsification
Soapmaking
The most popular soap making processes today is the cold
process method where fats such as olive oil react with lye
Soap makers sometimes use the melt and pour process
where a premade soap base is melted and poured in
individual molds but this is not really to be considered soap-
making Some soapers also practice other processes such
as the historical hot process and make special soaps such
as clear soap (glycerin soap)
soap differs from industrial soap in that usually an excess
of fat is used to consume the alkali (superfatting) and in
that the glycerin is not removed Superfatted soap soap
which contains excess fat is more skin-friendly than
industrial soap though if not properly formulated it can
leave users with a greasy feel to their skin Often
emollients such as jojoba oil or shea butter are added at
trace (the point at which the saponification process is
sufficiently advanced that the soap has begun to thicken)
after most of the oils have saponified so that they remain
unreacted in the finished soap
Lye
Reacting fat with sodium hydroxide will produce a hard soap
Reacting fat with potassium hydroxide will produce a soap
that is either soft or liquid Historically the alkali used was
potassium hydroxide made from the deliberate burning of
vegetation such as bracken or from wood ashes
Fat
Handicraft made Marseille soap
Soap is derived from either oils or fats Sodium tallowate a
common ingredient in many soaps is in fact derived from
rendered beef fat Soap can also be made of vegetable oils
such as palm oil and the product is typically softer If soap is
made from pure olive oil it may be called Castile soap or
Marseille soap Castile is also sometimes applied to soaps
with a mix of oils but a high percentage of olive oil
An array of quality oils and butters are used in the process
such as olive coconut palm cocoa butter hemp oil and
shea butter to list a few Each oil chosen by the soap maker
has unique characteristics that provide different qualities to
soaps including mildness lathering and hardness For
example olive oil provides mildness in soap coconut oil
provides lots of lather while coconut and palm oils provides
hardness
Process
In both cold-process and hot-process soapmaking heat is
required for saponification
Cold-process soapmaking takes place at a temperature
sufficiently above room temperature to ensure the
liquification of the fat being used and requires that the lye
and fat be kept warm after mixing to ensure that the soap is
completely saponified
Unlike cold-processed soap hot-processed soap can be used
right away because lye and fat saponify more quickly at the
higher temperatures used in hot-process soapmaking
Hot-process was used when the purity of lye was unreliable
and can use natural lye solutions such as potash The main
benefit of hot processing is that the exact concentration of
the lye solution does not need to be known to perform the
process with adequate success
Cold-process requires exact measurement of lye to fat using
saponification charts to ensure that the finished product is
mild and skin friendly Saponification charts can also be used
in hot-process soapmaking but are not as necessary as in
cold-process
Hot process
In the hot-process method lye and fat are boiled together at
80 ndash 100 degC until saponification occurs which the soapmaker
can determine by taste (the bright distinctive taste of lye
disappears once all the lye is saponified) or by eye (the
experienced eye can tell when gel stage and full
saponification have occurred)
After saponification has occurred the soap is sometimes
precipitated from the solution by adding salt and the excess
liquid drained off
The hot soft soap is then spooned into a mold
Cold process
A cold-process soapmaker first looks up the saponification
value of the fats being used on a saponification chart which
is then used to calculate the appropriate amount of lye
Excess unreacted lye in the soap will result in a very high pH
and can burn or irritate skin Not enough lye and the soap is
greasy and oily Most soap makers formulate their recipes
with 3-15 excess oil so that all of the lye is reacted and
that excess fat is left for skin conditioning benefits
The lye is dissolved in water and the resulting solution mixed
with fat Once it has cooled to about 80-90 degrees
Fahrenheit this lye-fat mixture is stirred until trace that is
the two thin clear substances become cloudy and thicken
(Modern-day amateur soapmakers often use a stick blender
to speed this process) After much stirring the mixture turns
to the consistency of a thin pudding
Essential oils fragrance oils botanicals herbs oatmeal or
other additives are added at light trace just as the mixture
starts to thicken
The batch is then poured into molds kept warm with towels
or blankets and left to continue saponification for 18 to 48
hours Milk soaps are the exception They do not require
insulation Insulation may cause the milk to burn During this
time it is normal for the soap to go through a gel phase
where the opaque soap will turn somewhat transparent for
several hours before turning opaque again The soap will
continue to give off heat for many hours after trace
After the insulation period the soap is firm enough to be
removed from the mold and cut into bars At this time it is
safe to use the soap since saponification is complete
However cold-process soaps are typically cured and
hardened on a drying rack for 2-6 weeks (depending on
initial water content) before use If using caustic soda it is
recommended that the soap is left to cure or at least 4
weeks
Purification and finishing
The common process of purifying soap involves removal of
sodium chloride sodium hydroxide and glycerol These
components are removed by boiling the crude soap curds in
water and re-precipitating the soap with salt
Most of the water is then removed from the soap This was
traditionally done on a chill roll which produced the soap
flakes commonly used in the 1940s and 1950s This process
was superseded by spray dryers and then by vacuum dryers
The dry soap (approximately 6-12 moisture) is then
compacted into small pellets These pellets are now ready
for soap finishing the process of converting raw soap pellets
into a salable product usually bars
Soap pellets are combined with fragrances and other
materials and blended to homogeneity in an amalgamator
(mixer) The mass is then discharged from the mixer into a
refiner which by means of an auger forces the soap through
a fine wire screen From the refiner the soap passes over a
roller mill (French milling or hard milling) in a manner similar
to calendering paper or plastic or to making chocolate liquor
The soap is then passed through one or more additional
refiners to further plasticize the soap mass Immediately
before extrusion it passes through a vacuum chamber to
remove any entrapped air It is then extruded into a long log
or blank cut to convenient lengths passed through a metal
detector and then stamped into shape in refrigerated tools
The pressed bars are packaged in many ways
Sand or pumice may be added to produce a scouring soap
This process is most common in creating soaps used for
human hygiene The scouring agents serve to remove dead
skin cells from the surface being cleaned This process is
called exfoliation Many newer materials are used for
exfoliating soaps which are effective but do not have the
sharp edges and poor size distribution of pumice
History
Early History
Soapnut Tree (Reeta Sapindus tree)
The earliest known use of a natural soap-like substance was
the powder of the Reeta(Sapindus) nut which was used by
Indians since antiquity Hindus in India were obliged to bathe
at least once a day every morning in accordance with
Ayurveda Evidence of manufactured soap use are
Babylonian clay cylinders dating from 2800 BC containing a
soap-like substance A formula for soap consisting of water
alkali and cassia oil was written on a Babylonian clay tablet
around 2200 BC
The Ebers papyrus (Egypt 1550 BC) indicates that ancient
Egyptians bathed regularly and combined animal and
vegetable oils with alkaline salts to create a soap-like
substance Egyptian documents mention that a soap-like
substance was used in the preparation of wool for weaving
Roman History
It is commonly reported that a soap factory with bars of
scented soap was found in the ruins of Pompeii (79 AD)
However this has proved to be a misinterpretation of the
survival of some soapy mineral substance [citation needed]
probably soapstone at the Fullonica where it was used for
dressing recently cleansed textiles Unfortunately this error
has been repeated widely and can be found in otherwise
reputable texts on soap history The ancient Romans were
generally ignorant of soaps detergent properties and made
use of the strigil to scrape dirt and sweat from the body The
word soap (Latin sapo) appears first in a European
language in Pliny the Elders Historia Naturalis which
discusses the manufacture of soap from tallow and ashes
but the only use he mentions for it is as a pomade for hair
he mentions rather disapprovingly that among the Gauls and
Germans men are likelier to use it than women
A story encountered in some places claims that soap takes
its name from a supposed Mount Sapo where ancient
Romans sacrificed animals Rain would send a mix of animal
tallow and wood ash down the mountain and into the clay
soil on the banks of the Tiber Eventually women noticed
that it was easier to clean clothes with this soap The
location of Mount Sapo is unknown as is the source of the
ancient Roman legend to which this tale is typically
credited In fact the Latin word sapo simply means soap it
was borrowed from a Celtic or Germanic language and is
cognate with Latin sebum tallow which appears in Pliny
the Elders account Roman animal sacrifices usually burned
only the bones and inedible entrails of the sacrificed
animals edible meat and fat from the sacrifices were taken
by the humans rather than the gods Animal sacrifices in the
ancient world would not have included enough fat to make
much soap The legend about Mount Sapo is probably
apocryphal
Arab History
The Arabs made soap from vegetable oil such as olive oil and
some aromatic oils such as thyme oil Lye (Al-Soda Al-Kawia)
was used for the first time and the formula hasnt changed
from the current soap sold in the market From the
beginning of the 7th century soap was produced in Nablus
(West BankPalestine) Kufa (Iraq) and Basra (Iraq) Soaps as
we know them today are descendants of historical Arabian
Soaps Arabian Soap was perfumed and colored some of the
soaps were liquid and others were hard They also had
special soap for shaving It was commercially sold for 3
Dirhams (03 Dinars) a piece in 981 AD Al-Razi rsquos manuscript
contains recipes for soap A recently discovered manuscript
from the 13th century details more recipes for soap making
eg take some sesame oil a sprinkle of potash alkali and
some lime mix them all together and boil When cooked
they are poured into molds and left to set leaving hard soap
Historically soap was made by mixing animal fats with lye
Because of the caustic lye this was a dangerous procedure
(perhaps more dangerous than any present-day home
activities) which could result in serious chemical burns or
even blindness Before commercially-produced lye (sodium
hydroxide) was commonplace potash potassium hydroxide
was produced at home for soap making from the ashes of a
hardwood fire
Castile soap was produced in Europe as early as the 16th
century
Modern History
1922 magazine advertisement for Palmolive Soap
In modern times the use of soap has become universal in
industrialized nations due to a better understanding of the
role of hygiene in reducing the population size of pathogenic
microorganisms Manufactured bar soaps first became
available in the late nineteenth century and advertising
campaigns in Europe and the United States helped to
increase popular awareness of the relationship between
cleanliness and health By the 1950s soap had gained public
acceptance as an instrument of personal hygiene
Rarely conditions allow for corpses to naturally turn in to a
soap-like substance such as the Soap Lady on exhibit in the
Mutter Museum
OBJECTIVE OF STUDY
The objective of the study is to understand the soap
industry in India Also there are following points that we
wanted to cover among the Soap Industry
1 Different players in the industry
2 Different types of soap
3 Price comparison
4 Companies involved and their various branding styles
5 branding strategy of different players
METHODOLOGY
Methodology is the major or the first step of any project If
the plan for methodology is not streamlined then the
project cannot flow without interruption
For our study we would majorly use secondary research as
our tool of research We would be using the journal past
researches articles new paper magazines internet as
our source of data collection We would strongly we would
be using different sites to collect data and then we would
analyze the collected data and then conclude the project
with recommendations
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Many cleaning agents today are technically not soaps but
detergents which are less expensive and easier to
manufacture
How soap works
a diagram of the function of soap
Soaps are useful for cleaning because soap molecules attach
readily to both nonpolar molecules (such as grease or oil)
and polar molecules (such as water) Although grease will
normally adhere to skin or clothing the soap molecules can
attach to it as a handle and make it easier to rinse away
Applied to a soiled surface soapy water effectively holds
particles in suspension so the whole of it can be rinsed off
with clean water
(fatty end) CH3-(CH2)n - COONa
(water soluble end)
The hydrocarbon (fatty) portion dissolves dirt and oils
while the ionic end makes it soluble in water Therefore it
allows water to remove normally-insoluble matter by
emulsification
Soapmaking
The most popular soap making processes today is the cold
process method where fats such as olive oil react with lye
Soap makers sometimes use the melt and pour process
where a premade soap base is melted and poured in
individual molds but this is not really to be considered soap-
making Some soapers also practice other processes such
as the historical hot process and make special soaps such
as clear soap (glycerin soap)
soap differs from industrial soap in that usually an excess
of fat is used to consume the alkali (superfatting) and in
that the glycerin is not removed Superfatted soap soap
which contains excess fat is more skin-friendly than
industrial soap though if not properly formulated it can
leave users with a greasy feel to their skin Often
emollients such as jojoba oil or shea butter are added at
trace (the point at which the saponification process is
sufficiently advanced that the soap has begun to thicken)
after most of the oils have saponified so that they remain
unreacted in the finished soap
Lye
Reacting fat with sodium hydroxide will produce a hard soap
Reacting fat with potassium hydroxide will produce a soap
that is either soft or liquid Historically the alkali used was
potassium hydroxide made from the deliberate burning of
vegetation such as bracken or from wood ashes
Fat
Handicraft made Marseille soap
Soap is derived from either oils or fats Sodium tallowate a
common ingredient in many soaps is in fact derived from
rendered beef fat Soap can also be made of vegetable oils
such as palm oil and the product is typically softer If soap is
made from pure olive oil it may be called Castile soap or
Marseille soap Castile is also sometimes applied to soaps
with a mix of oils but a high percentage of olive oil
An array of quality oils and butters are used in the process
such as olive coconut palm cocoa butter hemp oil and
shea butter to list a few Each oil chosen by the soap maker
has unique characteristics that provide different qualities to
soaps including mildness lathering and hardness For
example olive oil provides mildness in soap coconut oil
provides lots of lather while coconut and palm oils provides
hardness
Process
In both cold-process and hot-process soapmaking heat is
required for saponification
Cold-process soapmaking takes place at a temperature
sufficiently above room temperature to ensure the
liquification of the fat being used and requires that the lye
and fat be kept warm after mixing to ensure that the soap is
completely saponified
Unlike cold-processed soap hot-processed soap can be used
right away because lye and fat saponify more quickly at the
higher temperatures used in hot-process soapmaking
Hot-process was used when the purity of lye was unreliable
and can use natural lye solutions such as potash The main
benefit of hot processing is that the exact concentration of
the lye solution does not need to be known to perform the
process with adequate success
Cold-process requires exact measurement of lye to fat using
saponification charts to ensure that the finished product is
mild and skin friendly Saponification charts can also be used
in hot-process soapmaking but are not as necessary as in
cold-process
Hot process
In the hot-process method lye and fat are boiled together at
80 ndash 100 degC until saponification occurs which the soapmaker
can determine by taste (the bright distinctive taste of lye
disappears once all the lye is saponified) or by eye (the
experienced eye can tell when gel stage and full
saponification have occurred)
After saponification has occurred the soap is sometimes
precipitated from the solution by adding salt and the excess
liquid drained off
The hot soft soap is then spooned into a mold
Cold process
A cold-process soapmaker first looks up the saponification
value of the fats being used on a saponification chart which
is then used to calculate the appropriate amount of lye
Excess unreacted lye in the soap will result in a very high pH
and can burn or irritate skin Not enough lye and the soap is
greasy and oily Most soap makers formulate their recipes
with 3-15 excess oil so that all of the lye is reacted and
that excess fat is left for skin conditioning benefits
The lye is dissolved in water and the resulting solution mixed
with fat Once it has cooled to about 80-90 degrees
Fahrenheit this lye-fat mixture is stirred until trace that is
the two thin clear substances become cloudy and thicken
(Modern-day amateur soapmakers often use a stick blender
to speed this process) After much stirring the mixture turns
to the consistency of a thin pudding
Essential oils fragrance oils botanicals herbs oatmeal or
other additives are added at light trace just as the mixture
starts to thicken
The batch is then poured into molds kept warm with towels
or blankets and left to continue saponification for 18 to 48
hours Milk soaps are the exception They do not require
insulation Insulation may cause the milk to burn During this
time it is normal for the soap to go through a gel phase
where the opaque soap will turn somewhat transparent for
several hours before turning opaque again The soap will
continue to give off heat for many hours after trace
After the insulation period the soap is firm enough to be
removed from the mold and cut into bars At this time it is
safe to use the soap since saponification is complete
However cold-process soaps are typically cured and
hardened on a drying rack for 2-6 weeks (depending on
initial water content) before use If using caustic soda it is
recommended that the soap is left to cure or at least 4
weeks
Purification and finishing
The common process of purifying soap involves removal of
sodium chloride sodium hydroxide and glycerol These
components are removed by boiling the crude soap curds in
water and re-precipitating the soap with salt
Most of the water is then removed from the soap This was
traditionally done on a chill roll which produced the soap
flakes commonly used in the 1940s and 1950s This process
was superseded by spray dryers and then by vacuum dryers
The dry soap (approximately 6-12 moisture) is then
compacted into small pellets These pellets are now ready
for soap finishing the process of converting raw soap pellets
into a salable product usually bars
Soap pellets are combined with fragrances and other
materials and blended to homogeneity in an amalgamator
(mixer) The mass is then discharged from the mixer into a
refiner which by means of an auger forces the soap through
a fine wire screen From the refiner the soap passes over a
roller mill (French milling or hard milling) in a manner similar
to calendering paper or plastic or to making chocolate liquor
The soap is then passed through one or more additional
refiners to further plasticize the soap mass Immediately
before extrusion it passes through a vacuum chamber to
remove any entrapped air It is then extruded into a long log
or blank cut to convenient lengths passed through a metal
detector and then stamped into shape in refrigerated tools
The pressed bars are packaged in many ways
Sand or pumice may be added to produce a scouring soap
This process is most common in creating soaps used for
human hygiene The scouring agents serve to remove dead
skin cells from the surface being cleaned This process is
called exfoliation Many newer materials are used for
exfoliating soaps which are effective but do not have the
sharp edges and poor size distribution of pumice
History
Early History
Soapnut Tree (Reeta Sapindus tree)
The earliest known use of a natural soap-like substance was
the powder of the Reeta(Sapindus) nut which was used by
Indians since antiquity Hindus in India were obliged to bathe
at least once a day every morning in accordance with
Ayurveda Evidence of manufactured soap use are
Babylonian clay cylinders dating from 2800 BC containing a
soap-like substance A formula for soap consisting of water
alkali and cassia oil was written on a Babylonian clay tablet
around 2200 BC
The Ebers papyrus (Egypt 1550 BC) indicates that ancient
Egyptians bathed regularly and combined animal and
vegetable oils with alkaline salts to create a soap-like
substance Egyptian documents mention that a soap-like
substance was used in the preparation of wool for weaving
Roman History
It is commonly reported that a soap factory with bars of
scented soap was found in the ruins of Pompeii (79 AD)
However this has proved to be a misinterpretation of the
survival of some soapy mineral substance [citation needed]
probably soapstone at the Fullonica where it was used for
dressing recently cleansed textiles Unfortunately this error
has been repeated widely and can be found in otherwise
reputable texts on soap history The ancient Romans were
generally ignorant of soaps detergent properties and made
use of the strigil to scrape dirt and sweat from the body The
word soap (Latin sapo) appears first in a European
language in Pliny the Elders Historia Naturalis which
discusses the manufacture of soap from tallow and ashes
but the only use he mentions for it is as a pomade for hair
he mentions rather disapprovingly that among the Gauls and
Germans men are likelier to use it than women
A story encountered in some places claims that soap takes
its name from a supposed Mount Sapo where ancient
Romans sacrificed animals Rain would send a mix of animal
tallow and wood ash down the mountain and into the clay
soil on the banks of the Tiber Eventually women noticed
that it was easier to clean clothes with this soap The
location of Mount Sapo is unknown as is the source of the
ancient Roman legend to which this tale is typically
credited In fact the Latin word sapo simply means soap it
was borrowed from a Celtic or Germanic language and is
cognate with Latin sebum tallow which appears in Pliny
the Elders account Roman animal sacrifices usually burned
only the bones and inedible entrails of the sacrificed
animals edible meat and fat from the sacrifices were taken
by the humans rather than the gods Animal sacrifices in the
ancient world would not have included enough fat to make
much soap The legend about Mount Sapo is probably
apocryphal
Arab History
The Arabs made soap from vegetable oil such as olive oil and
some aromatic oils such as thyme oil Lye (Al-Soda Al-Kawia)
was used for the first time and the formula hasnt changed
from the current soap sold in the market From the
beginning of the 7th century soap was produced in Nablus
(West BankPalestine) Kufa (Iraq) and Basra (Iraq) Soaps as
we know them today are descendants of historical Arabian
Soaps Arabian Soap was perfumed and colored some of the
soaps were liquid and others were hard They also had
special soap for shaving It was commercially sold for 3
Dirhams (03 Dinars) a piece in 981 AD Al-Razi rsquos manuscript
contains recipes for soap A recently discovered manuscript
from the 13th century details more recipes for soap making
eg take some sesame oil a sprinkle of potash alkali and
some lime mix them all together and boil When cooked
they are poured into molds and left to set leaving hard soap
Historically soap was made by mixing animal fats with lye
Because of the caustic lye this was a dangerous procedure
(perhaps more dangerous than any present-day home
activities) which could result in serious chemical burns or
even blindness Before commercially-produced lye (sodium
hydroxide) was commonplace potash potassium hydroxide
was produced at home for soap making from the ashes of a
hardwood fire
Castile soap was produced in Europe as early as the 16th
century
Modern History
1922 magazine advertisement for Palmolive Soap
In modern times the use of soap has become universal in
industrialized nations due to a better understanding of the
role of hygiene in reducing the population size of pathogenic
microorganisms Manufactured bar soaps first became
available in the late nineteenth century and advertising
campaigns in Europe and the United States helped to
increase popular awareness of the relationship between
cleanliness and health By the 1950s soap had gained public
acceptance as an instrument of personal hygiene
Rarely conditions allow for corpses to naturally turn in to a
soap-like substance such as the Soap Lady on exhibit in the
Mutter Museum
OBJECTIVE OF STUDY
The objective of the study is to understand the soap
industry in India Also there are following points that we
wanted to cover among the Soap Industry
1 Different players in the industry
2 Different types of soap
3 Price comparison
4 Companies involved and their various branding styles
5 branding strategy of different players
METHODOLOGY
Methodology is the major or the first step of any project If
the plan for methodology is not streamlined then the
project cannot flow without interruption
For our study we would majorly use secondary research as
our tool of research We would be using the journal past
researches articles new paper magazines internet as
our source of data collection We would strongly we would
be using different sites to collect data and then we would
analyze the collected data and then conclude the project
with recommendations
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
(fatty end) CH3-(CH2)n - COONa
(water soluble end)
The hydrocarbon (fatty) portion dissolves dirt and oils
while the ionic end makes it soluble in water Therefore it
allows water to remove normally-insoluble matter by
emulsification
Soapmaking
The most popular soap making processes today is the cold
process method where fats such as olive oil react with lye
Soap makers sometimes use the melt and pour process
where a premade soap base is melted and poured in
individual molds but this is not really to be considered soap-
making Some soapers also practice other processes such
as the historical hot process and make special soaps such
as clear soap (glycerin soap)
soap differs from industrial soap in that usually an excess
of fat is used to consume the alkali (superfatting) and in
that the glycerin is not removed Superfatted soap soap
which contains excess fat is more skin-friendly than
industrial soap though if not properly formulated it can
leave users with a greasy feel to their skin Often
emollients such as jojoba oil or shea butter are added at
trace (the point at which the saponification process is
sufficiently advanced that the soap has begun to thicken)
after most of the oils have saponified so that they remain
unreacted in the finished soap
Lye
Reacting fat with sodium hydroxide will produce a hard soap
Reacting fat with potassium hydroxide will produce a soap
that is either soft or liquid Historically the alkali used was
potassium hydroxide made from the deliberate burning of
vegetation such as bracken or from wood ashes
Fat
Handicraft made Marseille soap
Soap is derived from either oils or fats Sodium tallowate a
common ingredient in many soaps is in fact derived from
rendered beef fat Soap can also be made of vegetable oils
such as palm oil and the product is typically softer If soap is
made from pure olive oil it may be called Castile soap or
Marseille soap Castile is also sometimes applied to soaps
with a mix of oils but a high percentage of olive oil
An array of quality oils and butters are used in the process
such as olive coconut palm cocoa butter hemp oil and
shea butter to list a few Each oil chosen by the soap maker
has unique characteristics that provide different qualities to
soaps including mildness lathering and hardness For
example olive oil provides mildness in soap coconut oil
provides lots of lather while coconut and palm oils provides
hardness
Process
In both cold-process and hot-process soapmaking heat is
required for saponification
Cold-process soapmaking takes place at a temperature
sufficiently above room temperature to ensure the
liquification of the fat being used and requires that the lye
and fat be kept warm after mixing to ensure that the soap is
completely saponified
Unlike cold-processed soap hot-processed soap can be used
right away because lye and fat saponify more quickly at the
higher temperatures used in hot-process soapmaking
Hot-process was used when the purity of lye was unreliable
and can use natural lye solutions such as potash The main
benefit of hot processing is that the exact concentration of
the lye solution does not need to be known to perform the
process with adequate success
Cold-process requires exact measurement of lye to fat using
saponification charts to ensure that the finished product is
mild and skin friendly Saponification charts can also be used
in hot-process soapmaking but are not as necessary as in
cold-process
Hot process
In the hot-process method lye and fat are boiled together at
80 ndash 100 degC until saponification occurs which the soapmaker
can determine by taste (the bright distinctive taste of lye
disappears once all the lye is saponified) or by eye (the
experienced eye can tell when gel stage and full
saponification have occurred)
After saponification has occurred the soap is sometimes
precipitated from the solution by adding salt and the excess
liquid drained off
The hot soft soap is then spooned into a mold
Cold process
A cold-process soapmaker first looks up the saponification
value of the fats being used on a saponification chart which
is then used to calculate the appropriate amount of lye
Excess unreacted lye in the soap will result in a very high pH
and can burn or irritate skin Not enough lye and the soap is
greasy and oily Most soap makers formulate their recipes
with 3-15 excess oil so that all of the lye is reacted and
that excess fat is left for skin conditioning benefits
The lye is dissolved in water and the resulting solution mixed
with fat Once it has cooled to about 80-90 degrees
Fahrenheit this lye-fat mixture is stirred until trace that is
the two thin clear substances become cloudy and thicken
(Modern-day amateur soapmakers often use a stick blender
to speed this process) After much stirring the mixture turns
to the consistency of a thin pudding
Essential oils fragrance oils botanicals herbs oatmeal or
other additives are added at light trace just as the mixture
starts to thicken
The batch is then poured into molds kept warm with towels
or blankets and left to continue saponification for 18 to 48
hours Milk soaps are the exception They do not require
insulation Insulation may cause the milk to burn During this
time it is normal for the soap to go through a gel phase
where the opaque soap will turn somewhat transparent for
several hours before turning opaque again The soap will
continue to give off heat for many hours after trace
After the insulation period the soap is firm enough to be
removed from the mold and cut into bars At this time it is
safe to use the soap since saponification is complete
However cold-process soaps are typically cured and
hardened on a drying rack for 2-6 weeks (depending on
initial water content) before use If using caustic soda it is
recommended that the soap is left to cure or at least 4
weeks
Purification and finishing
The common process of purifying soap involves removal of
sodium chloride sodium hydroxide and glycerol These
components are removed by boiling the crude soap curds in
water and re-precipitating the soap with salt
Most of the water is then removed from the soap This was
traditionally done on a chill roll which produced the soap
flakes commonly used in the 1940s and 1950s This process
was superseded by spray dryers and then by vacuum dryers
The dry soap (approximately 6-12 moisture) is then
compacted into small pellets These pellets are now ready
for soap finishing the process of converting raw soap pellets
into a salable product usually bars
Soap pellets are combined with fragrances and other
materials and blended to homogeneity in an amalgamator
(mixer) The mass is then discharged from the mixer into a
refiner which by means of an auger forces the soap through
a fine wire screen From the refiner the soap passes over a
roller mill (French milling or hard milling) in a manner similar
to calendering paper or plastic or to making chocolate liquor
The soap is then passed through one or more additional
refiners to further plasticize the soap mass Immediately
before extrusion it passes through a vacuum chamber to
remove any entrapped air It is then extruded into a long log
or blank cut to convenient lengths passed through a metal
detector and then stamped into shape in refrigerated tools
The pressed bars are packaged in many ways
Sand or pumice may be added to produce a scouring soap
This process is most common in creating soaps used for
human hygiene The scouring agents serve to remove dead
skin cells from the surface being cleaned This process is
called exfoliation Many newer materials are used for
exfoliating soaps which are effective but do not have the
sharp edges and poor size distribution of pumice
History
Early History
Soapnut Tree (Reeta Sapindus tree)
The earliest known use of a natural soap-like substance was
the powder of the Reeta(Sapindus) nut which was used by
Indians since antiquity Hindus in India were obliged to bathe
at least once a day every morning in accordance with
Ayurveda Evidence of manufactured soap use are
Babylonian clay cylinders dating from 2800 BC containing a
soap-like substance A formula for soap consisting of water
alkali and cassia oil was written on a Babylonian clay tablet
around 2200 BC
The Ebers papyrus (Egypt 1550 BC) indicates that ancient
Egyptians bathed regularly and combined animal and
vegetable oils with alkaline salts to create a soap-like
substance Egyptian documents mention that a soap-like
substance was used in the preparation of wool for weaving
Roman History
It is commonly reported that a soap factory with bars of
scented soap was found in the ruins of Pompeii (79 AD)
However this has proved to be a misinterpretation of the
survival of some soapy mineral substance [citation needed]
probably soapstone at the Fullonica where it was used for
dressing recently cleansed textiles Unfortunately this error
has been repeated widely and can be found in otherwise
reputable texts on soap history The ancient Romans were
generally ignorant of soaps detergent properties and made
use of the strigil to scrape dirt and sweat from the body The
word soap (Latin sapo) appears first in a European
language in Pliny the Elders Historia Naturalis which
discusses the manufacture of soap from tallow and ashes
but the only use he mentions for it is as a pomade for hair
he mentions rather disapprovingly that among the Gauls and
Germans men are likelier to use it than women
A story encountered in some places claims that soap takes
its name from a supposed Mount Sapo where ancient
Romans sacrificed animals Rain would send a mix of animal
tallow and wood ash down the mountain and into the clay
soil on the banks of the Tiber Eventually women noticed
that it was easier to clean clothes with this soap The
location of Mount Sapo is unknown as is the source of the
ancient Roman legend to which this tale is typically
credited In fact the Latin word sapo simply means soap it
was borrowed from a Celtic or Germanic language and is
cognate with Latin sebum tallow which appears in Pliny
the Elders account Roman animal sacrifices usually burned
only the bones and inedible entrails of the sacrificed
animals edible meat and fat from the sacrifices were taken
by the humans rather than the gods Animal sacrifices in the
ancient world would not have included enough fat to make
much soap The legend about Mount Sapo is probably
apocryphal
Arab History
The Arabs made soap from vegetable oil such as olive oil and
some aromatic oils such as thyme oil Lye (Al-Soda Al-Kawia)
was used for the first time and the formula hasnt changed
from the current soap sold in the market From the
beginning of the 7th century soap was produced in Nablus
(West BankPalestine) Kufa (Iraq) and Basra (Iraq) Soaps as
we know them today are descendants of historical Arabian
Soaps Arabian Soap was perfumed and colored some of the
soaps were liquid and others were hard They also had
special soap for shaving It was commercially sold for 3
Dirhams (03 Dinars) a piece in 981 AD Al-Razi rsquos manuscript
contains recipes for soap A recently discovered manuscript
from the 13th century details more recipes for soap making
eg take some sesame oil a sprinkle of potash alkali and
some lime mix them all together and boil When cooked
they are poured into molds and left to set leaving hard soap
Historically soap was made by mixing animal fats with lye
Because of the caustic lye this was a dangerous procedure
(perhaps more dangerous than any present-day home
activities) which could result in serious chemical burns or
even blindness Before commercially-produced lye (sodium
hydroxide) was commonplace potash potassium hydroxide
was produced at home for soap making from the ashes of a
hardwood fire
Castile soap was produced in Europe as early as the 16th
century
Modern History
1922 magazine advertisement for Palmolive Soap
In modern times the use of soap has become universal in
industrialized nations due to a better understanding of the
role of hygiene in reducing the population size of pathogenic
microorganisms Manufactured bar soaps first became
available in the late nineteenth century and advertising
campaigns in Europe and the United States helped to
increase popular awareness of the relationship between
cleanliness and health By the 1950s soap had gained public
acceptance as an instrument of personal hygiene
Rarely conditions allow for corpses to naturally turn in to a
soap-like substance such as the Soap Lady on exhibit in the
Mutter Museum
OBJECTIVE OF STUDY
The objective of the study is to understand the soap
industry in India Also there are following points that we
wanted to cover among the Soap Industry
1 Different players in the industry
2 Different types of soap
3 Price comparison
4 Companies involved and their various branding styles
5 branding strategy of different players
METHODOLOGY
Methodology is the major or the first step of any project If
the plan for methodology is not streamlined then the
project cannot flow without interruption
For our study we would majorly use secondary research as
our tool of research We would be using the journal past
researches articles new paper magazines internet as
our source of data collection We would strongly we would
be using different sites to collect data and then we would
analyze the collected data and then conclude the project
with recommendations
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
as the historical hot process and make special soaps such
as clear soap (glycerin soap)
soap differs from industrial soap in that usually an excess
of fat is used to consume the alkali (superfatting) and in
that the glycerin is not removed Superfatted soap soap
which contains excess fat is more skin-friendly than
industrial soap though if not properly formulated it can
leave users with a greasy feel to their skin Often
emollients such as jojoba oil or shea butter are added at
trace (the point at which the saponification process is
sufficiently advanced that the soap has begun to thicken)
after most of the oils have saponified so that they remain
unreacted in the finished soap
Lye
Reacting fat with sodium hydroxide will produce a hard soap
Reacting fat with potassium hydroxide will produce a soap
that is either soft or liquid Historically the alkali used was
potassium hydroxide made from the deliberate burning of
vegetation such as bracken or from wood ashes
Fat
Handicraft made Marseille soap
Soap is derived from either oils or fats Sodium tallowate a
common ingredient in many soaps is in fact derived from
rendered beef fat Soap can also be made of vegetable oils
such as palm oil and the product is typically softer If soap is
made from pure olive oil it may be called Castile soap or
Marseille soap Castile is also sometimes applied to soaps
with a mix of oils but a high percentage of olive oil
An array of quality oils and butters are used in the process
such as olive coconut palm cocoa butter hemp oil and
shea butter to list a few Each oil chosen by the soap maker
has unique characteristics that provide different qualities to
soaps including mildness lathering and hardness For
example olive oil provides mildness in soap coconut oil
provides lots of lather while coconut and palm oils provides
hardness
Process
In both cold-process and hot-process soapmaking heat is
required for saponification
Cold-process soapmaking takes place at a temperature
sufficiently above room temperature to ensure the
liquification of the fat being used and requires that the lye
and fat be kept warm after mixing to ensure that the soap is
completely saponified
Unlike cold-processed soap hot-processed soap can be used
right away because lye and fat saponify more quickly at the
higher temperatures used in hot-process soapmaking
Hot-process was used when the purity of lye was unreliable
and can use natural lye solutions such as potash The main
benefit of hot processing is that the exact concentration of
the lye solution does not need to be known to perform the
process with adequate success
Cold-process requires exact measurement of lye to fat using
saponification charts to ensure that the finished product is
mild and skin friendly Saponification charts can also be used
in hot-process soapmaking but are not as necessary as in
cold-process
Hot process
In the hot-process method lye and fat are boiled together at
80 ndash 100 degC until saponification occurs which the soapmaker
can determine by taste (the bright distinctive taste of lye
disappears once all the lye is saponified) or by eye (the
experienced eye can tell when gel stage and full
saponification have occurred)
After saponification has occurred the soap is sometimes
precipitated from the solution by adding salt and the excess
liquid drained off
The hot soft soap is then spooned into a mold
Cold process
A cold-process soapmaker first looks up the saponification
value of the fats being used on a saponification chart which
is then used to calculate the appropriate amount of lye
Excess unreacted lye in the soap will result in a very high pH
and can burn or irritate skin Not enough lye and the soap is
greasy and oily Most soap makers formulate their recipes
with 3-15 excess oil so that all of the lye is reacted and
that excess fat is left for skin conditioning benefits
The lye is dissolved in water and the resulting solution mixed
with fat Once it has cooled to about 80-90 degrees
Fahrenheit this lye-fat mixture is stirred until trace that is
the two thin clear substances become cloudy and thicken
(Modern-day amateur soapmakers often use a stick blender
to speed this process) After much stirring the mixture turns
to the consistency of a thin pudding
Essential oils fragrance oils botanicals herbs oatmeal or
other additives are added at light trace just as the mixture
starts to thicken
The batch is then poured into molds kept warm with towels
or blankets and left to continue saponification for 18 to 48
hours Milk soaps are the exception They do not require
insulation Insulation may cause the milk to burn During this
time it is normal for the soap to go through a gel phase
where the opaque soap will turn somewhat transparent for
several hours before turning opaque again The soap will
continue to give off heat for many hours after trace
After the insulation period the soap is firm enough to be
removed from the mold and cut into bars At this time it is
safe to use the soap since saponification is complete
However cold-process soaps are typically cured and
hardened on a drying rack for 2-6 weeks (depending on
initial water content) before use If using caustic soda it is
recommended that the soap is left to cure or at least 4
weeks
Purification and finishing
The common process of purifying soap involves removal of
sodium chloride sodium hydroxide and glycerol These
components are removed by boiling the crude soap curds in
water and re-precipitating the soap with salt
Most of the water is then removed from the soap This was
traditionally done on a chill roll which produced the soap
flakes commonly used in the 1940s and 1950s This process
was superseded by spray dryers and then by vacuum dryers
The dry soap (approximately 6-12 moisture) is then
compacted into small pellets These pellets are now ready
for soap finishing the process of converting raw soap pellets
into a salable product usually bars
Soap pellets are combined with fragrances and other
materials and blended to homogeneity in an amalgamator
(mixer) The mass is then discharged from the mixer into a
refiner which by means of an auger forces the soap through
a fine wire screen From the refiner the soap passes over a
roller mill (French milling or hard milling) in a manner similar
to calendering paper or plastic or to making chocolate liquor
The soap is then passed through one or more additional
refiners to further plasticize the soap mass Immediately
before extrusion it passes through a vacuum chamber to
remove any entrapped air It is then extruded into a long log
or blank cut to convenient lengths passed through a metal
detector and then stamped into shape in refrigerated tools
The pressed bars are packaged in many ways
Sand or pumice may be added to produce a scouring soap
This process is most common in creating soaps used for
human hygiene The scouring agents serve to remove dead
skin cells from the surface being cleaned This process is
called exfoliation Many newer materials are used for
exfoliating soaps which are effective but do not have the
sharp edges and poor size distribution of pumice
History
Early History
Soapnut Tree (Reeta Sapindus tree)
The earliest known use of a natural soap-like substance was
the powder of the Reeta(Sapindus) nut which was used by
Indians since antiquity Hindus in India were obliged to bathe
at least once a day every morning in accordance with
Ayurveda Evidence of manufactured soap use are
Babylonian clay cylinders dating from 2800 BC containing a
soap-like substance A formula for soap consisting of water
alkali and cassia oil was written on a Babylonian clay tablet
around 2200 BC
The Ebers papyrus (Egypt 1550 BC) indicates that ancient
Egyptians bathed regularly and combined animal and
vegetable oils with alkaline salts to create a soap-like
substance Egyptian documents mention that a soap-like
substance was used in the preparation of wool for weaving
Roman History
It is commonly reported that a soap factory with bars of
scented soap was found in the ruins of Pompeii (79 AD)
However this has proved to be a misinterpretation of the
survival of some soapy mineral substance [citation needed]
probably soapstone at the Fullonica where it was used for
dressing recently cleansed textiles Unfortunately this error
has been repeated widely and can be found in otherwise
reputable texts on soap history The ancient Romans were
generally ignorant of soaps detergent properties and made
use of the strigil to scrape dirt and sweat from the body The
word soap (Latin sapo) appears first in a European
language in Pliny the Elders Historia Naturalis which
discusses the manufacture of soap from tallow and ashes
but the only use he mentions for it is as a pomade for hair
he mentions rather disapprovingly that among the Gauls and
Germans men are likelier to use it than women
A story encountered in some places claims that soap takes
its name from a supposed Mount Sapo where ancient
Romans sacrificed animals Rain would send a mix of animal
tallow and wood ash down the mountain and into the clay
soil on the banks of the Tiber Eventually women noticed
that it was easier to clean clothes with this soap The
location of Mount Sapo is unknown as is the source of the
ancient Roman legend to which this tale is typically
credited In fact the Latin word sapo simply means soap it
was borrowed from a Celtic or Germanic language and is
cognate with Latin sebum tallow which appears in Pliny
the Elders account Roman animal sacrifices usually burned
only the bones and inedible entrails of the sacrificed
animals edible meat and fat from the sacrifices were taken
by the humans rather than the gods Animal sacrifices in the
ancient world would not have included enough fat to make
much soap The legend about Mount Sapo is probably
apocryphal
Arab History
The Arabs made soap from vegetable oil such as olive oil and
some aromatic oils such as thyme oil Lye (Al-Soda Al-Kawia)
was used for the first time and the formula hasnt changed
from the current soap sold in the market From the
beginning of the 7th century soap was produced in Nablus
(West BankPalestine) Kufa (Iraq) and Basra (Iraq) Soaps as
we know them today are descendants of historical Arabian
Soaps Arabian Soap was perfumed and colored some of the
soaps were liquid and others were hard They also had
special soap for shaving It was commercially sold for 3
Dirhams (03 Dinars) a piece in 981 AD Al-Razi rsquos manuscript
contains recipes for soap A recently discovered manuscript
from the 13th century details more recipes for soap making
eg take some sesame oil a sprinkle of potash alkali and
some lime mix them all together and boil When cooked
they are poured into molds and left to set leaving hard soap
Historically soap was made by mixing animal fats with lye
Because of the caustic lye this was a dangerous procedure
(perhaps more dangerous than any present-day home
activities) which could result in serious chemical burns or
even blindness Before commercially-produced lye (sodium
hydroxide) was commonplace potash potassium hydroxide
was produced at home for soap making from the ashes of a
hardwood fire
Castile soap was produced in Europe as early as the 16th
century
Modern History
1922 magazine advertisement for Palmolive Soap
In modern times the use of soap has become universal in
industrialized nations due to a better understanding of the
role of hygiene in reducing the population size of pathogenic
microorganisms Manufactured bar soaps first became
available in the late nineteenth century and advertising
campaigns in Europe and the United States helped to
increase popular awareness of the relationship between
cleanliness and health By the 1950s soap had gained public
acceptance as an instrument of personal hygiene
Rarely conditions allow for corpses to naturally turn in to a
soap-like substance such as the Soap Lady on exhibit in the
Mutter Museum
OBJECTIVE OF STUDY
The objective of the study is to understand the soap
industry in India Also there are following points that we
wanted to cover among the Soap Industry
1 Different players in the industry
2 Different types of soap
3 Price comparison
4 Companies involved and their various branding styles
5 branding strategy of different players
METHODOLOGY
Methodology is the major or the first step of any project If
the plan for methodology is not streamlined then the
project cannot flow without interruption
For our study we would majorly use secondary research as
our tool of research We would be using the journal past
researches articles new paper magazines internet as
our source of data collection We would strongly we would
be using different sites to collect data and then we would
analyze the collected data and then conclude the project
with recommendations
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
potassium hydroxide made from the deliberate burning of
vegetation such as bracken or from wood ashes
Fat
Handicraft made Marseille soap
Soap is derived from either oils or fats Sodium tallowate a
common ingredient in many soaps is in fact derived from
rendered beef fat Soap can also be made of vegetable oils
such as palm oil and the product is typically softer If soap is
made from pure olive oil it may be called Castile soap or
Marseille soap Castile is also sometimes applied to soaps
with a mix of oils but a high percentage of olive oil
An array of quality oils and butters are used in the process
such as olive coconut palm cocoa butter hemp oil and
shea butter to list a few Each oil chosen by the soap maker
has unique characteristics that provide different qualities to
soaps including mildness lathering and hardness For
example olive oil provides mildness in soap coconut oil
provides lots of lather while coconut and palm oils provides
hardness
Process
In both cold-process and hot-process soapmaking heat is
required for saponification
Cold-process soapmaking takes place at a temperature
sufficiently above room temperature to ensure the
liquification of the fat being used and requires that the lye
and fat be kept warm after mixing to ensure that the soap is
completely saponified
Unlike cold-processed soap hot-processed soap can be used
right away because lye and fat saponify more quickly at the
higher temperatures used in hot-process soapmaking
Hot-process was used when the purity of lye was unreliable
and can use natural lye solutions such as potash The main
benefit of hot processing is that the exact concentration of
the lye solution does not need to be known to perform the
process with adequate success
Cold-process requires exact measurement of lye to fat using
saponification charts to ensure that the finished product is
mild and skin friendly Saponification charts can also be used
in hot-process soapmaking but are not as necessary as in
cold-process
Hot process
In the hot-process method lye and fat are boiled together at
80 ndash 100 degC until saponification occurs which the soapmaker
can determine by taste (the bright distinctive taste of lye
disappears once all the lye is saponified) or by eye (the
experienced eye can tell when gel stage and full
saponification have occurred)
After saponification has occurred the soap is sometimes
precipitated from the solution by adding salt and the excess
liquid drained off
The hot soft soap is then spooned into a mold
Cold process
A cold-process soapmaker first looks up the saponification
value of the fats being used on a saponification chart which
is then used to calculate the appropriate amount of lye
Excess unreacted lye in the soap will result in a very high pH
and can burn or irritate skin Not enough lye and the soap is
greasy and oily Most soap makers formulate their recipes
with 3-15 excess oil so that all of the lye is reacted and
that excess fat is left for skin conditioning benefits
The lye is dissolved in water and the resulting solution mixed
with fat Once it has cooled to about 80-90 degrees
Fahrenheit this lye-fat mixture is stirred until trace that is
the two thin clear substances become cloudy and thicken
(Modern-day amateur soapmakers often use a stick blender
to speed this process) After much stirring the mixture turns
to the consistency of a thin pudding
Essential oils fragrance oils botanicals herbs oatmeal or
other additives are added at light trace just as the mixture
starts to thicken
The batch is then poured into molds kept warm with towels
or blankets and left to continue saponification for 18 to 48
hours Milk soaps are the exception They do not require
insulation Insulation may cause the milk to burn During this
time it is normal for the soap to go through a gel phase
where the opaque soap will turn somewhat transparent for
several hours before turning opaque again The soap will
continue to give off heat for many hours after trace
After the insulation period the soap is firm enough to be
removed from the mold and cut into bars At this time it is
safe to use the soap since saponification is complete
However cold-process soaps are typically cured and
hardened on a drying rack for 2-6 weeks (depending on
initial water content) before use If using caustic soda it is
recommended that the soap is left to cure or at least 4
weeks
Purification and finishing
The common process of purifying soap involves removal of
sodium chloride sodium hydroxide and glycerol These
components are removed by boiling the crude soap curds in
water and re-precipitating the soap with salt
Most of the water is then removed from the soap This was
traditionally done on a chill roll which produced the soap
flakes commonly used in the 1940s and 1950s This process
was superseded by spray dryers and then by vacuum dryers
The dry soap (approximately 6-12 moisture) is then
compacted into small pellets These pellets are now ready
for soap finishing the process of converting raw soap pellets
into a salable product usually bars
Soap pellets are combined with fragrances and other
materials and blended to homogeneity in an amalgamator
(mixer) The mass is then discharged from the mixer into a
refiner which by means of an auger forces the soap through
a fine wire screen From the refiner the soap passes over a
roller mill (French milling or hard milling) in a manner similar
to calendering paper or plastic or to making chocolate liquor
The soap is then passed through one or more additional
refiners to further plasticize the soap mass Immediately
before extrusion it passes through a vacuum chamber to
remove any entrapped air It is then extruded into a long log
or blank cut to convenient lengths passed through a metal
detector and then stamped into shape in refrigerated tools
The pressed bars are packaged in many ways
Sand or pumice may be added to produce a scouring soap
This process is most common in creating soaps used for
human hygiene The scouring agents serve to remove dead
skin cells from the surface being cleaned This process is
called exfoliation Many newer materials are used for
exfoliating soaps which are effective but do not have the
sharp edges and poor size distribution of pumice
History
Early History
Soapnut Tree (Reeta Sapindus tree)
The earliest known use of a natural soap-like substance was
the powder of the Reeta(Sapindus) nut which was used by
Indians since antiquity Hindus in India were obliged to bathe
at least once a day every morning in accordance with
Ayurveda Evidence of manufactured soap use are
Babylonian clay cylinders dating from 2800 BC containing a
soap-like substance A formula for soap consisting of water
alkali and cassia oil was written on a Babylonian clay tablet
around 2200 BC
The Ebers papyrus (Egypt 1550 BC) indicates that ancient
Egyptians bathed regularly and combined animal and
vegetable oils with alkaline salts to create a soap-like
substance Egyptian documents mention that a soap-like
substance was used in the preparation of wool for weaving
Roman History
It is commonly reported that a soap factory with bars of
scented soap was found in the ruins of Pompeii (79 AD)
However this has proved to be a misinterpretation of the
survival of some soapy mineral substance [citation needed]
probably soapstone at the Fullonica where it was used for
dressing recently cleansed textiles Unfortunately this error
has been repeated widely and can be found in otherwise
reputable texts on soap history The ancient Romans were
generally ignorant of soaps detergent properties and made
use of the strigil to scrape dirt and sweat from the body The
word soap (Latin sapo) appears first in a European
language in Pliny the Elders Historia Naturalis which
discusses the manufacture of soap from tallow and ashes
but the only use he mentions for it is as a pomade for hair
he mentions rather disapprovingly that among the Gauls and
Germans men are likelier to use it than women
A story encountered in some places claims that soap takes
its name from a supposed Mount Sapo where ancient
Romans sacrificed animals Rain would send a mix of animal
tallow and wood ash down the mountain and into the clay
soil on the banks of the Tiber Eventually women noticed
that it was easier to clean clothes with this soap The
location of Mount Sapo is unknown as is the source of the
ancient Roman legend to which this tale is typically
credited In fact the Latin word sapo simply means soap it
was borrowed from a Celtic or Germanic language and is
cognate with Latin sebum tallow which appears in Pliny
the Elders account Roman animal sacrifices usually burned
only the bones and inedible entrails of the sacrificed
animals edible meat and fat from the sacrifices were taken
by the humans rather than the gods Animal sacrifices in the
ancient world would not have included enough fat to make
much soap The legend about Mount Sapo is probably
apocryphal
Arab History
The Arabs made soap from vegetable oil such as olive oil and
some aromatic oils such as thyme oil Lye (Al-Soda Al-Kawia)
was used for the first time and the formula hasnt changed
from the current soap sold in the market From the
beginning of the 7th century soap was produced in Nablus
(West BankPalestine) Kufa (Iraq) and Basra (Iraq) Soaps as
we know them today are descendants of historical Arabian
Soaps Arabian Soap was perfumed and colored some of the
soaps were liquid and others were hard They also had
special soap for shaving It was commercially sold for 3
Dirhams (03 Dinars) a piece in 981 AD Al-Razi rsquos manuscript
contains recipes for soap A recently discovered manuscript
from the 13th century details more recipes for soap making
eg take some sesame oil a sprinkle of potash alkali and
some lime mix them all together and boil When cooked
they are poured into molds and left to set leaving hard soap
Historically soap was made by mixing animal fats with lye
Because of the caustic lye this was a dangerous procedure
(perhaps more dangerous than any present-day home
activities) which could result in serious chemical burns or
even blindness Before commercially-produced lye (sodium
hydroxide) was commonplace potash potassium hydroxide
was produced at home for soap making from the ashes of a
hardwood fire
Castile soap was produced in Europe as early as the 16th
century
Modern History
1922 magazine advertisement for Palmolive Soap
In modern times the use of soap has become universal in
industrialized nations due to a better understanding of the
role of hygiene in reducing the population size of pathogenic
microorganisms Manufactured bar soaps first became
available in the late nineteenth century and advertising
campaigns in Europe and the United States helped to
increase popular awareness of the relationship between
cleanliness and health By the 1950s soap had gained public
acceptance as an instrument of personal hygiene
Rarely conditions allow for corpses to naturally turn in to a
soap-like substance such as the Soap Lady on exhibit in the
Mutter Museum
OBJECTIVE OF STUDY
The objective of the study is to understand the soap
industry in India Also there are following points that we
wanted to cover among the Soap Industry
1 Different players in the industry
2 Different types of soap
3 Price comparison
4 Companies involved and their various branding styles
5 branding strategy of different players
METHODOLOGY
Methodology is the major or the first step of any project If
the plan for methodology is not streamlined then the
project cannot flow without interruption
For our study we would majorly use secondary research as
our tool of research We would be using the journal past
researches articles new paper magazines internet as
our source of data collection We would strongly we would
be using different sites to collect data and then we would
analyze the collected data and then conclude the project
with recommendations
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
An array of quality oils and butters are used in the process
such as olive coconut palm cocoa butter hemp oil and
shea butter to list a few Each oil chosen by the soap maker
has unique characteristics that provide different qualities to
soaps including mildness lathering and hardness For
example olive oil provides mildness in soap coconut oil
provides lots of lather while coconut and palm oils provides
hardness
Process
In both cold-process and hot-process soapmaking heat is
required for saponification
Cold-process soapmaking takes place at a temperature
sufficiently above room temperature to ensure the
liquification of the fat being used and requires that the lye
and fat be kept warm after mixing to ensure that the soap is
completely saponified
Unlike cold-processed soap hot-processed soap can be used
right away because lye and fat saponify more quickly at the
higher temperatures used in hot-process soapmaking
Hot-process was used when the purity of lye was unreliable
and can use natural lye solutions such as potash The main
benefit of hot processing is that the exact concentration of
the lye solution does not need to be known to perform the
process with adequate success
Cold-process requires exact measurement of lye to fat using
saponification charts to ensure that the finished product is
mild and skin friendly Saponification charts can also be used
in hot-process soapmaking but are not as necessary as in
cold-process
Hot process
In the hot-process method lye and fat are boiled together at
80 ndash 100 degC until saponification occurs which the soapmaker
can determine by taste (the bright distinctive taste of lye
disappears once all the lye is saponified) or by eye (the
experienced eye can tell when gel stage and full
saponification have occurred)
After saponification has occurred the soap is sometimes
precipitated from the solution by adding salt and the excess
liquid drained off
The hot soft soap is then spooned into a mold
Cold process
A cold-process soapmaker first looks up the saponification
value of the fats being used on a saponification chart which
is then used to calculate the appropriate amount of lye
Excess unreacted lye in the soap will result in a very high pH
and can burn or irritate skin Not enough lye and the soap is
greasy and oily Most soap makers formulate their recipes
with 3-15 excess oil so that all of the lye is reacted and
that excess fat is left for skin conditioning benefits
The lye is dissolved in water and the resulting solution mixed
with fat Once it has cooled to about 80-90 degrees
Fahrenheit this lye-fat mixture is stirred until trace that is
the two thin clear substances become cloudy and thicken
(Modern-day amateur soapmakers often use a stick blender
to speed this process) After much stirring the mixture turns
to the consistency of a thin pudding
Essential oils fragrance oils botanicals herbs oatmeal or
other additives are added at light trace just as the mixture
starts to thicken
The batch is then poured into molds kept warm with towels
or blankets and left to continue saponification for 18 to 48
hours Milk soaps are the exception They do not require
insulation Insulation may cause the milk to burn During this
time it is normal for the soap to go through a gel phase
where the opaque soap will turn somewhat transparent for
several hours before turning opaque again The soap will
continue to give off heat for many hours after trace
After the insulation period the soap is firm enough to be
removed from the mold and cut into bars At this time it is
safe to use the soap since saponification is complete
However cold-process soaps are typically cured and
hardened on a drying rack for 2-6 weeks (depending on
initial water content) before use If using caustic soda it is
recommended that the soap is left to cure or at least 4
weeks
Purification and finishing
The common process of purifying soap involves removal of
sodium chloride sodium hydroxide and glycerol These
components are removed by boiling the crude soap curds in
water and re-precipitating the soap with salt
Most of the water is then removed from the soap This was
traditionally done on a chill roll which produced the soap
flakes commonly used in the 1940s and 1950s This process
was superseded by spray dryers and then by vacuum dryers
The dry soap (approximately 6-12 moisture) is then
compacted into small pellets These pellets are now ready
for soap finishing the process of converting raw soap pellets
into a salable product usually bars
Soap pellets are combined with fragrances and other
materials and blended to homogeneity in an amalgamator
(mixer) The mass is then discharged from the mixer into a
refiner which by means of an auger forces the soap through
a fine wire screen From the refiner the soap passes over a
roller mill (French milling or hard milling) in a manner similar
to calendering paper or plastic or to making chocolate liquor
The soap is then passed through one or more additional
refiners to further plasticize the soap mass Immediately
before extrusion it passes through a vacuum chamber to
remove any entrapped air It is then extruded into a long log
or blank cut to convenient lengths passed through a metal
detector and then stamped into shape in refrigerated tools
The pressed bars are packaged in many ways
Sand or pumice may be added to produce a scouring soap
This process is most common in creating soaps used for
human hygiene The scouring agents serve to remove dead
skin cells from the surface being cleaned This process is
called exfoliation Many newer materials are used for
exfoliating soaps which are effective but do not have the
sharp edges and poor size distribution of pumice
History
Early History
Soapnut Tree (Reeta Sapindus tree)
The earliest known use of a natural soap-like substance was
the powder of the Reeta(Sapindus) nut which was used by
Indians since antiquity Hindus in India were obliged to bathe
at least once a day every morning in accordance with
Ayurveda Evidence of manufactured soap use are
Babylonian clay cylinders dating from 2800 BC containing a
soap-like substance A formula for soap consisting of water
alkali and cassia oil was written on a Babylonian clay tablet
around 2200 BC
The Ebers papyrus (Egypt 1550 BC) indicates that ancient
Egyptians bathed regularly and combined animal and
vegetable oils with alkaline salts to create a soap-like
substance Egyptian documents mention that a soap-like
substance was used in the preparation of wool for weaving
Roman History
It is commonly reported that a soap factory with bars of
scented soap was found in the ruins of Pompeii (79 AD)
However this has proved to be a misinterpretation of the
survival of some soapy mineral substance [citation needed]
probably soapstone at the Fullonica where it was used for
dressing recently cleansed textiles Unfortunately this error
has been repeated widely and can be found in otherwise
reputable texts on soap history The ancient Romans were
generally ignorant of soaps detergent properties and made
use of the strigil to scrape dirt and sweat from the body The
word soap (Latin sapo) appears first in a European
language in Pliny the Elders Historia Naturalis which
discusses the manufacture of soap from tallow and ashes
but the only use he mentions for it is as a pomade for hair
he mentions rather disapprovingly that among the Gauls and
Germans men are likelier to use it than women
A story encountered in some places claims that soap takes
its name from a supposed Mount Sapo where ancient
Romans sacrificed animals Rain would send a mix of animal
tallow and wood ash down the mountain and into the clay
soil on the banks of the Tiber Eventually women noticed
that it was easier to clean clothes with this soap The
location of Mount Sapo is unknown as is the source of the
ancient Roman legend to which this tale is typically
credited In fact the Latin word sapo simply means soap it
was borrowed from a Celtic or Germanic language and is
cognate with Latin sebum tallow which appears in Pliny
the Elders account Roman animal sacrifices usually burned
only the bones and inedible entrails of the sacrificed
animals edible meat and fat from the sacrifices were taken
by the humans rather than the gods Animal sacrifices in the
ancient world would not have included enough fat to make
much soap The legend about Mount Sapo is probably
apocryphal
Arab History
The Arabs made soap from vegetable oil such as olive oil and
some aromatic oils such as thyme oil Lye (Al-Soda Al-Kawia)
was used for the first time and the formula hasnt changed
from the current soap sold in the market From the
beginning of the 7th century soap was produced in Nablus
(West BankPalestine) Kufa (Iraq) and Basra (Iraq) Soaps as
we know them today are descendants of historical Arabian
Soaps Arabian Soap was perfumed and colored some of the
soaps were liquid and others were hard They also had
special soap for shaving It was commercially sold for 3
Dirhams (03 Dinars) a piece in 981 AD Al-Razi rsquos manuscript
contains recipes for soap A recently discovered manuscript
from the 13th century details more recipes for soap making
eg take some sesame oil a sprinkle of potash alkali and
some lime mix them all together and boil When cooked
they are poured into molds and left to set leaving hard soap
Historically soap was made by mixing animal fats with lye
Because of the caustic lye this was a dangerous procedure
(perhaps more dangerous than any present-day home
activities) which could result in serious chemical burns or
even blindness Before commercially-produced lye (sodium
hydroxide) was commonplace potash potassium hydroxide
was produced at home for soap making from the ashes of a
hardwood fire
Castile soap was produced in Europe as early as the 16th
century
Modern History
1922 magazine advertisement for Palmolive Soap
In modern times the use of soap has become universal in
industrialized nations due to a better understanding of the
role of hygiene in reducing the population size of pathogenic
microorganisms Manufactured bar soaps first became
available in the late nineteenth century and advertising
campaigns in Europe and the United States helped to
increase popular awareness of the relationship between
cleanliness and health By the 1950s soap had gained public
acceptance as an instrument of personal hygiene
Rarely conditions allow for corpses to naturally turn in to a
soap-like substance such as the Soap Lady on exhibit in the
Mutter Museum
OBJECTIVE OF STUDY
The objective of the study is to understand the soap
industry in India Also there are following points that we
wanted to cover among the Soap Industry
1 Different players in the industry
2 Different types of soap
3 Price comparison
4 Companies involved and their various branding styles
5 branding strategy of different players
METHODOLOGY
Methodology is the major or the first step of any project If
the plan for methodology is not streamlined then the
project cannot flow without interruption
For our study we would majorly use secondary research as
our tool of research We would be using the journal past
researches articles new paper magazines internet as
our source of data collection We would strongly we would
be using different sites to collect data and then we would
analyze the collected data and then conclude the project
with recommendations
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Unlike cold-processed soap hot-processed soap can be used
right away because lye and fat saponify more quickly at the
higher temperatures used in hot-process soapmaking
Hot-process was used when the purity of lye was unreliable
and can use natural lye solutions such as potash The main
benefit of hot processing is that the exact concentration of
the lye solution does not need to be known to perform the
process with adequate success
Cold-process requires exact measurement of lye to fat using
saponification charts to ensure that the finished product is
mild and skin friendly Saponification charts can also be used
in hot-process soapmaking but are not as necessary as in
cold-process
Hot process
In the hot-process method lye and fat are boiled together at
80 ndash 100 degC until saponification occurs which the soapmaker
can determine by taste (the bright distinctive taste of lye
disappears once all the lye is saponified) or by eye (the
experienced eye can tell when gel stage and full
saponification have occurred)
After saponification has occurred the soap is sometimes
precipitated from the solution by adding salt and the excess
liquid drained off
The hot soft soap is then spooned into a mold
Cold process
A cold-process soapmaker first looks up the saponification
value of the fats being used on a saponification chart which
is then used to calculate the appropriate amount of lye
Excess unreacted lye in the soap will result in a very high pH
and can burn or irritate skin Not enough lye and the soap is
greasy and oily Most soap makers formulate their recipes
with 3-15 excess oil so that all of the lye is reacted and
that excess fat is left for skin conditioning benefits
The lye is dissolved in water and the resulting solution mixed
with fat Once it has cooled to about 80-90 degrees
Fahrenheit this lye-fat mixture is stirred until trace that is
the two thin clear substances become cloudy and thicken
(Modern-day amateur soapmakers often use a stick blender
to speed this process) After much stirring the mixture turns
to the consistency of a thin pudding
Essential oils fragrance oils botanicals herbs oatmeal or
other additives are added at light trace just as the mixture
starts to thicken
The batch is then poured into molds kept warm with towels
or blankets and left to continue saponification for 18 to 48
hours Milk soaps are the exception They do not require
insulation Insulation may cause the milk to burn During this
time it is normal for the soap to go through a gel phase
where the opaque soap will turn somewhat transparent for
several hours before turning opaque again The soap will
continue to give off heat for many hours after trace
After the insulation period the soap is firm enough to be
removed from the mold and cut into bars At this time it is
safe to use the soap since saponification is complete
However cold-process soaps are typically cured and
hardened on a drying rack for 2-6 weeks (depending on
initial water content) before use If using caustic soda it is
recommended that the soap is left to cure or at least 4
weeks
Purification and finishing
The common process of purifying soap involves removal of
sodium chloride sodium hydroxide and glycerol These
components are removed by boiling the crude soap curds in
water and re-precipitating the soap with salt
Most of the water is then removed from the soap This was
traditionally done on a chill roll which produced the soap
flakes commonly used in the 1940s and 1950s This process
was superseded by spray dryers and then by vacuum dryers
The dry soap (approximately 6-12 moisture) is then
compacted into small pellets These pellets are now ready
for soap finishing the process of converting raw soap pellets
into a salable product usually bars
Soap pellets are combined with fragrances and other
materials and blended to homogeneity in an amalgamator
(mixer) The mass is then discharged from the mixer into a
refiner which by means of an auger forces the soap through
a fine wire screen From the refiner the soap passes over a
roller mill (French milling or hard milling) in a manner similar
to calendering paper or plastic or to making chocolate liquor
The soap is then passed through one or more additional
refiners to further plasticize the soap mass Immediately
before extrusion it passes through a vacuum chamber to
remove any entrapped air It is then extruded into a long log
or blank cut to convenient lengths passed through a metal
detector and then stamped into shape in refrigerated tools
The pressed bars are packaged in many ways
Sand or pumice may be added to produce a scouring soap
This process is most common in creating soaps used for
human hygiene The scouring agents serve to remove dead
skin cells from the surface being cleaned This process is
called exfoliation Many newer materials are used for
exfoliating soaps which are effective but do not have the
sharp edges and poor size distribution of pumice
History
Early History
Soapnut Tree (Reeta Sapindus tree)
The earliest known use of a natural soap-like substance was
the powder of the Reeta(Sapindus) nut which was used by
Indians since antiquity Hindus in India were obliged to bathe
at least once a day every morning in accordance with
Ayurveda Evidence of manufactured soap use are
Babylonian clay cylinders dating from 2800 BC containing a
soap-like substance A formula for soap consisting of water
alkali and cassia oil was written on a Babylonian clay tablet
around 2200 BC
The Ebers papyrus (Egypt 1550 BC) indicates that ancient
Egyptians bathed regularly and combined animal and
vegetable oils with alkaline salts to create a soap-like
substance Egyptian documents mention that a soap-like
substance was used in the preparation of wool for weaving
Roman History
It is commonly reported that a soap factory with bars of
scented soap was found in the ruins of Pompeii (79 AD)
However this has proved to be a misinterpretation of the
survival of some soapy mineral substance [citation needed]
probably soapstone at the Fullonica where it was used for
dressing recently cleansed textiles Unfortunately this error
has been repeated widely and can be found in otherwise
reputable texts on soap history The ancient Romans were
generally ignorant of soaps detergent properties and made
use of the strigil to scrape dirt and sweat from the body The
word soap (Latin sapo) appears first in a European
language in Pliny the Elders Historia Naturalis which
discusses the manufacture of soap from tallow and ashes
but the only use he mentions for it is as a pomade for hair
he mentions rather disapprovingly that among the Gauls and
Germans men are likelier to use it than women
A story encountered in some places claims that soap takes
its name from a supposed Mount Sapo where ancient
Romans sacrificed animals Rain would send a mix of animal
tallow and wood ash down the mountain and into the clay
soil on the banks of the Tiber Eventually women noticed
that it was easier to clean clothes with this soap The
location of Mount Sapo is unknown as is the source of the
ancient Roman legend to which this tale is typically
credited In fact the Latin word sapo simply means soap it
was borrowed from a Celtic or Germanic language and is
cognate with Latin sebum tallow which appears in Pliny
the Elders account Roman animal sacrifices usually burned
only the bones and inedible entrails of the sacrificed
animals edible meat and fat from the sacrifices were taken
by the humans rather than the gods Animal sacrifices in the
ancient world would not have included enough fat to make
much soap The legend about Mount Sapo is probably
apocryphal
Arab History
The Arabs made soap from vegetable oil such as olive oil and
some aromatic oils such as thyme oil Lye (Al-Soda Al-Kawia)
was used for the first time and the formula hasnt changed
from the current soap sold in the market From the
beginning of the 7th century soap was produced in Nablus
(West BankPalestine) Kufa (Iraq) and Basra (Iraq) Soaps as
we know them today are descendants of historical Arabian
Soaps Arabian Soap was perfumed and colored some of the
soaps were liquid and others were hard They also had
special soap for shaving It was commercially sold for 3
Dirhams (03 Dinars) a piece in 981 AD Al-Razi rsquos manuscript
contains recipes for soap A recently discovered manuscript
from the 13th century details more recipes for soap making
eg take some sesame oil a sprinkle of potash alkali and
some lime mix them all together and boil When cooked
they are poured into molds and left to set leaving hard soap
Historically soap was made by mixing animal fats with lye
Because of the caustic lye this was a dangerous procedure
(perhaps more dangerous than any present-day home
activities) which could result in serious chemical burns or
even blindness Before commercially-produced lye (sodium
hydroxide) was commonplace potash potassium hydroxide
was produced at home for soap making from the ashes of a
hardwood fire
Castile soap was produced in Europe as early as the 16th
century
Modern History
1922 magazine advertisement for Palmolive Soap
In modern times the use of soap has become universal in
industrialized nations due to a better understanding of the
role of hygiene in reducing the population size of pathogenic
microorganisms Manufactured bar soaps first became
available in the late nineteenth century and advertising
campaigns in Europe and the United States helped to
increase popular awareness of the relationship between
cleanliness and health By the 1950s soap had gained public
acceptance as an instrument of personal hygiene
Rarely conditions allow for corpses to naturally turn in to a
soap-like substance such as the Soap Lady on exhibit in the
Mutter Museum
OBJECTIVE OF STUDY
The objective of the study is to understand the soap
industry in India Also there are following points that we
wanted to cover among the Soap Industry
1 Different players in the industry
2 Different types of soap
3 Price comparison
4 Companies involved and their various branding styles
5 branding strategy of different players
METHODOLOGY
Methodology is the major or the first step of any project If
the plan for methodology is not streamlined then the
project cannot flow without interruption
For our study we would majorly use secondary research as
our tool of research We would be using the journal past
researches articles new paper magazines internet as
our source of data collection We would strongly we would
be using different sites to collect data and then we would
analyze the collected data and then conclude the project
with recommendations
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
experienced eye can tell when gel stage and full
saponification have occurred)
After saponification has occurred the soap is sometimes
precipitated from the solution by adding salt and the excess
liquid drained off
The hot soft soap is then spooned into a mold
Cold process
A cold-process soapmaker first looks up the saponification
value of the fats being used on a saponification chart which
is then used to calculate the appropriate amount of lye
Excess unreacted lye in the soap will result in a very high pH
and can burn or irritate skin Not enough lye and the soap is
greasy and oily Most soap makers formulate their recipes
with 3-15 excess oil so that all of the lye is reacted and
that excess fat is left for skin conditioning benefits
The lye is dissolved in water and the resulting solution mixed
with fat Once it has cooled to about 80-90 degrees
Fahrenheit this lye-fat mixture is stirred until trace that is
the two thin clear substances become cloudy and thicken
(Modern-day amateur soapmakers often use a stick blender
to speed this process) After much stirring the mixture turns
to the consistency of a thin pudding
Essential oils fragrance oils botanicals herbs oatmeal or
other additives are added at light trace just as the mixture
starts to thicken
The batch is then poured into molds kept warm with towels
or blankets and left to continue saponification for 18 to 48
hours Milk soaps are the exception They do not require
insulation Insulation may cause the milk to burn During this
time it is normal for the soap to go through a gel phase
where the opaque soap will turn somewhat transparent for
several hours before turning opaque again The soap will
continue to give off heat for many hours after trace
After the insulation period the soap is firm enough to be
removed from the mold and cut into bars At this time it is
safe to use the soap since saponification is complete
However cold-process soaps are typically cured and
hardened on a drying rack for 2-6 weeks (depending on
initial water content) before use If using caustic soda it is
recommended that the soap is left to cure or at least 4
weeks
Purification and finishing
The common process of purifying soap involves removal of
sodium chloride sodium hydroxide and glycerol These
components are removed by boiling the crude soap curds in
water and re-precipitating the soap with salt
Most of the water is then removed from the soap This was
traditionally done on a chill roll which produced the soap
flakes commonly used in the 1940s and 1950s This process
was superseded by spray dryers and then by vacuum dryers
The dry soap (approximately 6-12 moisture) is then
compacted into small pellets These pellets are now ready
for soap finishing the process of converting raw soap pellets
into a salable product usually bars
Soap pellets are combined with fragrances and other
materials and blended to homogeneity in an amalgamator
(mixer) The mass is then discharged from the mixer into a
refiner which by means of an auger forces the soap through
a fine wire screen From the refiner the soap passes over a
roller mill (French milling or hard milling) in a manner similar
to calendering paper or plastic or to making chocolate liquor
The soap is then passed through one or more additional
refiners to further plasticize the soap mass Immediately
before extrusion it passes through a vacuum chamber to
remove any entrapped air It is then extruded into a long log
or blank cut to convenient lengths passed through a metal
detector and then stamped into shape in refrigerated tools
The pressed bars are packaged in many ways
Sand or pumice may be added to produce a scouring soap
This process is most common in creating soaps used for
human hygiene The scouring agents serve to remove dead
skin cells from the surface being cleaned This process is
called exfoliation Many newer materials are used for
exfoliating soaps which are effective but do not have the
sharp edges and poor size distribution of pumice
History
Early History
Soapnut Tree (Reeta Sapindus tree)
The earliest known use of a natural soap-like substance was
the powder of the Reeta(Sapindus) nut which was used by
Indians since antiquity Hindus in India were obliged to bathe
at least once a day every morning in accordance with
Ayurveda Evidence of manufactured soap use are
Babylonian clay cylinders dating from 2800 BC containing a
soap-like substance A formula for soap consisting of water
alkali and cassia oil was written on a Babylonian clay tablet
around 2200 BC
The Ebers papyrus (Egypt 1550 BC) indicates that ancient
Egyptians bathed regularly and combined animal and
vegetable oils with alkaline salts to create a soap-like
substance Egyptian documents mention that a soap-like
substance was used in the preparation of wool for weaving
Roman History
It is commonly reported that a soap factory with bars of
scented soap was found in the ruins of Pompeii (79 AD)
However this has proved to be a misinterpretation of the
survival of some soapy mineral substance [citation needed]
probably soapstone at the Fullonica where it was used for
dressing recently cleansed textiles Unfortunately this error
has been repeated widely and can be found in otherwise
reputable texts on soap history The ancient Romans were
generally ignorant of soaps detergent properties and made
use of the strigil to scrape dirt and sweat from the body The
word soap (Latin sapo) appears first in a European
language in Pliny the Elders Historia Naturalis which
discusses the manufacture of soap from tallow and ashes
but the only use he mentions for it is as a pomade for hair
he mentions rather disapprovingly that among the Gauls and
Germans men are likelier to use it than women
A story encountered in some places claims that soap takes
its name from a supposed Mount Sapo where ancient
Romans sacrificed animals Rain would send a mix of animal
tallow and wood ash down the mountain and into the clay
soil on the banks of the Tiber Eventually women noticed
that it was easier to clean clothes with this soap The
location of Mount Sapo is unknown as is the source of the
ancient Roman legend to which this tale is typically
credited In fact the Latin word sapo simply means soap it
was borrowed from a Celtic or Germanic language and is
cognate with Latin sebum tallow which appears in Pliny
the Elders account Roman animal sacrifices usually burned
only the bones and inedible entrails of the sacrificed
animals edible meat and fat from the sacrifices were taken
by the humans rather than the gods Animal sacrifices in the
ancient world would not have included enough fat to make
much soap The legend about Mount Sapo is probably
apocryphal
Arab History
The Arabs made soap from vegetable oil such as olive oil and
some aromatic oils such as thyme oil Lye (Al-Soda Al-Kawia)
was used for the first time and the formula hasnt changed
from the current soap sold in the market From the
beginning of the 7th century soap was produced in Nablus
(West BankPalestine) Kufa (Iraq) and Basra (Iraq) Soaps as
we know them today are descendants of historical Arabian
Soaps Arabian Soap was perfumed and colored some of the
soaps were liquid and others were hard They also had
special soap for shaving It was commercially sold for 3
Dirhams (03 Dinars) a piece in 981 AD Al-Razi rsquos manuscript
contains recipes for soap A recently discovered manuscript
from the 13th century details more recipes for soap making
eg take some sesame oil a sprinkle of potash alkali and
some lime mix them all together and boil When cooked
they are poured into molds and left to set leaving hard soap
Historically soap was made by mixing animal fats with lye
Because of the caustic lye this was a dangerous procedure
(perhaps more dangerous than any present-day home
activities) which could result in serious chemical burns or
even blindness Before commercially-produced lye (sodium
hydroxide) was commonplace potash potassium hydroxide
was produced at home for soap making from the ashes of a
hardwood fire
Castile soap was produced in Europe as early as the 16th
century
Modern History
1922 magazine advertisement for Palmolive Soap
In modern times the use of soap has become universal in
industrialized nations due to a better understanding of the
role of hygiene in reducing the population size of pathogenic
microorganisms Manufactured bar soaps first became
available in the late nineteenth century and advertising
campaigns in Europe and the United States helped to
increase popular awareness of the relationship between
cleanliness and health By the 1950s soap had gained public
acceptance as an instrument of personal hygiene
Rarely conditions allow for corpses to naturally turn in to a
soap-like substance such as the Soap Lady on exhibit in the
Mutter Museum
OBJECTIVE OF STUDY
The objective of the study is to understand the soap
industry in India Also there are following points that we
wanted to cover among the Soap Industry
1 Different players in the industry
2 Different types of soap
3 Price comparison
4 Companies involved and their various branding styles
5 branding strategy of different players
METHODOLOGY
Methodology is the major or the first step of any project If
the plan for methodology is not streamlined then the
project cannot flow without interruption
For our study we would majorly use secondary research as
our tool of research We would be using the journal past
researches articles new paper magazines internet as
our source of data collection We would strongly we would
be using different sites to collect data and then we would
analyze the collected data and then conclude the project
with recommendations
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
the two thin clear substances become cloudy and thicken
(Modern-day amateur soapmakers often use a stick blender
to speed this process) After much stirring the mixture turns
to the consistency of a thin pudding
Essential oils fragrance oils botanicals herbs oatmeal or
other additives are added at light trace just as the mixture
starts to thicken
The batch is then poured into molds kept warm with towels
or blankets and left to continue saponification for 18 to 48
hours Milk soaps are the exception They do not require
insulation Insulation may cause the milk to burn During this
time it is normal for the soap to go through a gel phase
where the opaque soap will turn somewhat transparent for
several hours before turning opaque again The soap will
continue to give off heat for many hours after trace
After the insulation period the soap is firm enough to be
removed from the mold and cut into bars At this time it is
safe to use the soap since saponification is complete
However cold-process soaps are typically cured and
hardened on a drying rack for 2-6 weeks (depending on
initial water content) before use If using caustic soda it is
recommended that the soap is left to cure or at least 4
weeks
Purification and finishing
The common process of purifying soap involves removal of
sodium chloride sodium hydroxide and glycerol These
components are removed by boiling the crude soap curds in
water and re-precipitating the soap with salt
Most of the water is then removed from the soap This was
traditionally done on a chill roll which produced the soap
flakes commonly used in the 1940s and 1950s This process
was superseded by spray dryers and then by vacuum dryers
The dry soap (approximately 6-12 moisture) is then
compacted into small pellets These pellets are now ready
for soap finishing the process of converting raw soap pellets
into a salable product usually bars
Soap pellets are combined with fragrances and other
materials and blended to homogeneity in an amalgamator
(mixer) The mass is then discharged from the mixer into a
refiner which by means of an auger forces the soap through
a fine wire screen From the refiner the soap passes over a
roller mill (French milling or hard milling) in a manner similar
to calendering paper or plastic or to making chocolate liquor
The soap is then passed through one or more additional
refiners to further plasticize the soap mass Immediately
before extrusion it passes through a vacuum chamber to
remove any entrapped air It is then extruded into a long log
or blank cut to convenient lengths passed through a metal
detector and then stamped into shape in refrigerated tools
The pressed bars are packaged in many ways
Sand or pumice may be added to produce a scouring soap
This process is most common in creating soaps used for
human hygiene The scouring agents serve to remove dead
skin cells from the surface being cleaned This process is
called exfoliation Many newer materials are used for
exfoliating soaps which are effective but do not have the
sharp edges and poor size distribution of pumice
History
Early History
Soapnut Tree (Reeta Sapindus tree)
The earliest known use of a natural soap-like substance was
the powder of the Reeta(Sapindus) nut which was used by
Indians since antiquity Hindus in India were obliged to bathe
at least once a day every morning in accordance with
Ayurveda Evidence of manufactured soap use are
Babylonian clay cylinders dating from 2800 BC containing a
soap-like substance A formula for soap consisting of water
alkali and cassia oil was written on a Babylonian clay tablet
around 2200 BC
The Ebers papyrus (Egypt 1550 BC) indicates that ancient
Egyptians bathed regularly and combined animal and
vegetable oils with alkaline salts to create a soap-like
substance Egyptian documents mention that a soap-like
substance was used in the preparation of wool for weaving
Roman History
It is commonly reported that a soap factory with bars of
scented soap was found in the ruins of Pompeii (79 AD)
However this has proved to be a misinterpretation of the
survival of some soapy mineral substance [citation needed]
probably soapstone at the Fullonica where it was used for
dressing recently cleansed textiles Unfortunately this error
has been repeated widely and can be found in otherwise
reputable texts on soap history The ancient Romans were
generally ignorant of soaps detergent properties and made
use of the strigil to scrape dirt and sweat from the body The
word soap (Latin sapo) appears first in a European
language in Pliny the Elders Historia Naturalis which
discusses the manufacture of soap from tallow and ashes
but the only use he mentions for it is as a pomade for hair
he mentions rather disapprovingly that among the Gauls and
Germans men are likelier to use it than women
A story encountered in some places claims that soap takes
its name from a supposed Mount Sapo where ancient
Romans sacrificed animals Rain would send a mix of animal
tallow and wood ash down the mountain and into the clay
soil on the banks of the Tiber Eventually women noticed
that it was easier to clean clothes with this soap The
location of Mount Sapo is unknown as is the source of the
ancient Roman legend to which this tale is typically
credited In fact the Latin word sapo simply means soap it
was borrowed from a Celtic or Germanic language and is
cognate with Latin sebum tallow which appears in Pliny
the Elders account Roman animal sacrifices usually burned
only the bones and inedible entrails of the sacrificed
animals edible meat and fat from the sacrifices were taken
by the humans rather than the gods Animal sacrifices in the
ancient world would not have included enough fat to make
much soap The legend about Mount Sapo is probably
apocryphal
Arab History
The Arabs made soap from vegetable oil such as olive oil and
some aromatic oils such as thyme oil Lye (Al-Soda Al-Kawia)
was used for the first time and the formula hasnt changed
from the current soap sold in the market From the
beginning of the 7th century soap was produced in Nablus
(West BankPalestine) Kufa (Iraq) and Basra (Iraq) Soaps as
we know them today are descendants of historical Arabian
Soaps Arabian Soap was perfumed and colored some of the
soaps were liquid and others were hard They also had
special soap for shaving It was commercially sold for 3
Dirhams (03 Dinars) a piece in 981 AD Al-Razi rsquos manuscript
contains recipes for soap A recently discovered manuscript
from the 13th century details more recipes for soap making
eg take some sesame oil a sprinkle of potash alkali and
some lime mix them all together and boil When cooked
they are poured into molds and left to set leaving hard soap
Historically soap was made by mixing animal fats with lye
Because of the caustic lye this was a dangerous procedure
(perhaps more dangerous than any present-day home
activities) which could result in serious chemical burns or
even blindness Before commercially-produced lye (sodium
hydroxide) was commonplace potash potassium hydroxide
was produced at home for soap making from the ashes of a
hardwood fire
Castile soap was produced in Europe as early as the 16th
century
Modern History
1922 magazine advertisement for Palmolive Soap
In modern times the use of soap has become universal in
industrialized nations due to a better understanding of the
role of hygiene in reducing the population size of pathogenic
microorganisms Manufactured bar soaps first became
available in the late nineteenth century and advertising
campaigns in Europe and the United States helped to
increase popular awareness of the relationship between
cleanliness and health By the 1950s soap had gained public
acceptance as an instrument of personal hygiene
Rarely conditions allow for corpses to naturally turn in to a
soap-like substance such as the Soap Lady on exhibit in the
Mutter Museum
OBJECTIVE OF STUDY
The objective of the study is to understand the soap
industry in India Also there are following points that we
wanted to cover among the Soap Industry
1 Different players in the industry
2 Different types of soap
3 Price comparison
4 Companies involved and their various branding styles
5 branding strategy of different players
METHODOLOGY
Methodology is the major or the first step of any project If
the plan for methodology is not streamlined then the
project cannot flow without interruption
For our study we would majorly use secondary research as
our tool of research We would be using the journal past
researches articles new paper magazines internet as
our source of data collection We would strongly we would
be using different sites to collect data and then we would
analyze the collected data and then conclude the project
with recommendations
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
hardened on a drying rack for 2-6 weeks (depending on
initial water content) before use If using caustic soda it is
recommended that the soap is left to cure or at least 4
weeks
Purification and finishing
The common process of purifying soap involves removal of
sodium chloride sodium hydroxide and glycerol These
components are removed by boiling the crude soap curds in
water and re-precipitating the soap with salt
Most of the water is then removed from the soap This was
traditionally done on a chill roll which produced the soap
flakes commonly used in the 1940s and 1950s This process
was superseded by spray dryers and then by vacuum dryers
The dry soap (approximately 6-12 moisture) is then
compacted into small pellets These pellets are now ready
for soap finishing the process of converting raw soap pellets
into a salable product usually bars
Soap pellets are combined with fragrances and other
materials and blended to homogeneity in an amalgamator
(mixer) The mass is then discharged from the mixer into a
refiner which by means of an auger forces the soap through
a fine wire screen From the refiner the soap passes over a
roller mill (French milling or hard milling) in a manner similar
to calendering paper or plastic or to making chocolate liquor
The soap is then passed through one or more additional
refiners to further plasticize the soap mass Immediately
before extrusion it passes through a vacuum chamber to
remove any entrapped air It is then extruded into a long log
or blank cut to convenient lengths passed through a metal
detector and then stamped into shape in refrigerated tools
The pressed bars are packaged in many ways
Sand or pumice may be added to produce a scouring soap
This process is most common in creating soaps used for
human hygiene The scouring agents serve to remove dead
skin cells from the surface being cleaned This process is
called exfoliation Many newer materials are used for
exfoliating soaps which are effective but do not have the
sharp edges and poor size distribution of pumice
History
Early History
Soapnut Tree (Reeta Sapindus tree)
The earliest known use of a natural soap-like substance was
the powder of the Reeta(Sapindus) nut which was used by
Indians since antiquity Hindus in India were obliged to bathe
at least once a day every morning in accordance with
Ayurveda Evidence of manufactured soap use are
Babylonian clay cylinders dating from 2800 BC containing a
soap-like substance A formula for soap consisting of water
alkali and cassia oil was written on a Babylonian clay tablet
around 2200 BC
The Ebers papyrus (Egypt 1550 BC) indicates that ancient
Egyptians bathed regularly and combined animal and
vegetable oils with alkaline salts to create a soap-like
substance Egyptian documents mention that a soap-like
substance was used in the preparation of wool for weaving
Roman History
It is commonly reported that a soap factory with bars of
scented soap was found in the ruins of Pompeii (79 AD)
However this has proved to be a misinterpretation of the
survival of some soapy mineral substance [citation needed]
probably soapstone at the Fullonica where it was used for
dressing recently cleansed textiles Unfortunately this error
has been repeated widely and can be found in otherwise
reputable texts on soap history The ancient Romans were
generally ignorant of soaps detergent properties and made
use of the strigil to scrape dirt and sweat from the body The
word soap (Latin sapo) appears first in a European
language in Pliny the Elders Historia Naturalis which
discusses the manufacture of soap from tallow and ashes
but the only use he mentions for it is as a pomade for hair
he mentions rather disapprovingly that among the Gauls and
Germans men are likelier to use it than women
A story encountered in some places claims that soap takes
its name from a supposed Mount Sapo where ancient
Romans sacrificed animals Rain would send a mix of animal
tallow and wood ash down the mountain and into the clay
soil on the banks of the Tiber Eventually women noticed
that it was easier to clean clothes with this soap The
location of Mount Sapo is unknown as is the source of the
ancient Roman legend to which this tale is typically
credited In fact the Latin word sapo simply means soap it
was borrowed from a Celtic or Germanic language and is
cognate with Latin sebum tallow which appears in Pliny
the Elders account Roman animal sacrifices usually burned
only the bones and inedible entrails of the sacrificed
animals edible meat and fat from the sacrifices were taken
by the humans rather than the gods Animal sacrifices in the
ancient world would not have included enough fat to make
much soap The legend about Mount Sapo is probably
apocryphal
Arab History
The Arabs made soap from vegetable oil such as olive oil and
some aromatic oils such as thyme oil Lye (Al-Soda Al-Kawia)
was used for the first time and the formula hasnt changed
from the current soap sold in the market From the
beginning of the 7th century soap was produced in Nablus
(West BankPalestine) Kufa (Iraq) and Basra (Iraq) Soaps as
we know them today are descendants of historical Arabian
Soaps Arabian Soap was perfumed and colored some of the
soaps were liquid and others were hard They also had
special soap for shaving It was commercially sold for 3
Dirhams (03 Dinars) a piece in 981 AD Al-Razi rsquos manuscript
contains recipes for soap A recently discovered manuscript
from the 13th century details more recipes for soap making
eg take some sesame oil a sprinkle of potash alkali and
some lime mix them all together and boil When cooked
they are poured into molds and left to set leaving hard soap
Historically soap was made by mixing animal fats with lye
Because of the caustic lye this was a dangerous procedure
(perhaps more dangerous than any present-day home
activities) which could result in serious chemical burns or
even blindness Before commercially-produced lye (sodium
hydroxide) was commonplace potash potassium hydroxide
was produced at home for soap making from the ashes of a
hardwood fire
Castile soap was produced in Europe as early as the 16th
century
Modern History
1922 magazine advertisement for Palmolive Soap
In modern times the use of soap has become universal in
industrialized nations due to a better understanding of the
role of hygiene in reducing the population size of pathogenic
microorganisms Manufactured bar soaps first became
available in the late nineteenth century and advertising
campaigns in Europe and the United States helped to
increase popular awareness of the relationship between
cleanliness and health By the 1950s soap had gained public
acceptance as an instrument of personal hygiene
Rarely conditions allow for corpses to naturally turn in to a
soap-like substance such as the Soap Lady on exhibit in the
Mutter Museum
OBJECTIVE OF STUDY
The objective of the study is to understand the soap
industry in India Also there are following points that we
wanted to cover among the Soap Industry
1 Different players in the industry
2 Different types of soap
3 Price comparison
4 Companies involved and their various branding styles
5 branding strategy of different players
METHODOLOGY
Methodology is the major or the first step of any project If
the plan for methodology is not streamlined then the
project cannot flow without interruption
For our study we would majorly use secondary research as
our tool of research We would be using the journal past
researches articles new paper magazines internet as
our source of data collection We would strongly we would
be using different sites to collect data and then we would
analyze the collected data and then conclude the project
with recommendations
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Purification and finishing
The common process of purifying soap involves removal of
sodium chloride sodium hydroxide and glycerol These
components are removed by boiling the crude soap curds in
water and re-precipitating the soap with salt
Most of the water is then removed from the soap This was
traditionally done on a chill roll which produced the soap
flakes commonly used in the 1940s and 1950s This process
was superseded by spray dryers and then by vacuum dryers
The dry soap (approximately 6-12 moisture) is then
compacted into small pellets These pellets are now ready
for soap finishing the process of converting raw soap pellets
into a salable product usually bars
Soap pellets are combined with fragrances and other
materials and blended to homogeneity in an amalgamator
(mixer) The mass is then discharged from the mixer into a
refiner which by means of an auger forces the soap through
a fine wire screen From the refiner the soap passes over a
roller mill (French milling or hard milling) in a manner similar
to calendering paper or plastic or to making chocolate liquor
The soap is then passed through one or more additional
refiners to further plasticize the soap mass Immediately
before extrusion it passes through a vacuum chamber to
remove any entrapped air It is then extruded into a long log
or blank cut to convenient lengths passed through a metal
detector and then stamped into shape in refrigerated tools
The pressed bars are packaged in many ways
Sand or pumice may be added to produce a scouring soap
This process is most common in creating soaps used for
human hygiene The scouring agents serve to remove dead
skin cells from the surface being cleaned This process is
called exfoliation Many newer materials are used for
exfoliating soaps which are effective but do not have the
sharp edges and poor size distribution of pumice
History
Early History
Soapnut Tree (Reeta Sapindus tree)
The earliest known use of a natural soap-like substance was
the powder of the Reeta(Sapindus) nut which was used by
Indians since antiquity Hindus in India were obliged to bathe
at least once a day every morning in accordance with
Ayurveda Evidence of manufactured soap use are
Babylonian clay cylinders dating from 2800 BC containing a
soap-like substance A formula for soap consisting of water
alkali and cassia oil was written on a Babylonian clay tablet
around 2200 BC
The Ebers papyrus (Egypt 1550 BC) indicates that ancient
Egyptians bathed regularly and combined animal and
vegetable oils with alkaline salts to create a soap-like
substance Egyptian documents mention that a soap-like
substance was used in the preparation of wool for weaving
Roman History
It is commonly reported that a soap factory with bars of
scented soap was found in the ruins of Pompeii (79 AD)
However this has proved to be a misinterpretation of the
survival of some soapy mineral substance [citation needed]
probably soapstone at the Fullonica where it was used for
dressing recently cleansed textiles Unfortunately this error
has been repeated widely and can be found in otherwise
reputable texts on soap history The ancient Romans were
generally ignorant of soaps detergent properties and made
use of the strigil to scrape dirt and sweat from the body The
word soap (Latin sapo) appears first in a European
language in Pliny the Elders Historia Naturalis which
discusses the manufacture of soap from tallow and ashes
but the only use he mentions for it is as a pomade for hair
he mentions rather disapprovingly that among the Gauls and
Germans men are likelier to use it than women
A story encountered in some places claims that soap takes
its name from a supposed Mount Sapo where ancient
Romans sacrificed animals Rain would send a mix of animal
tallow and wood ash down the mountain and into the clay
soil on the banks of the Tiber Eventually women noticed
that it was easier to clean clothes with this soap The
location of Mount Sapo is unknown as is the source of the
ancient Roman legend to which this tale is typically
credited In fact the Latin word sapo simply means soap it
was borrowed from a Celtic or Germanic language and is
cognate with Latin sebum tallow which appears in Pliny
the Elders account Roman animal sacrifices usually burned
only the bones and inedible entrails of the sacrificed
animals edible meat and fat from the sacrifices were taken
by the humans rather than the gods Animal sacrifices in the
ancient world would not have included enough fat to make
much soap The legend about Mount Sapo is probably
apocryphal
Arab History
The Arabs made soap from vegetable oil such as olive oil and
some aromatic oils such as thyme oil Lye (Al-Soda Al-Kawia)
was used for the first time and the formula hasnt changed
from the current soap sold in the market From the
beginning of the 7th century soap was produced in Nablus
(West BankPalestine) Kufa (Iraq) and Basra (Iraq) Soaps as
we know them today are descendants of historical Arabian
Soaps Arabian Soap was perfumed and colored some of the
soaps were liquid and others were hard They also had
special soap for shaving It was commercially sold for 3
Dirhams (03 Dinars) a piece in 981 AD Al-Razi rsquos manuscript
contains recipes for soap A recently discovered manuscript
from the 13th century details more recipes for soap making
eg take some sesame oil a sprinkle of potash alkali and
some lime mix them all together and boil When cooked
they are poured into molds and left to set leaving hard soap
Historically soap was made by mixing animal fats with lye
Because of the caustic lye this was a dangerous procedure
(perhaps more dangerous than any present-day home
activities) which could result in serious chemical burns or
even blindness Before commercially-produced lye (sodium
hydroxide) was commonplace potash potassium hydroxide
was produced at home for soap making from the ashes of a
hardwood fire
Castile soap was produced in Europe as early as the 16th
century
Modern History
1922 magazine advertisement for Palmolive Soap
In modern times the use of soap has become universal in
industrialized nations due to a better understanding of the
role of hygiene in reducing the population size of pathogenic
microorganisms Manufactured bar soaps first became
available in the late nineteenth century and advertising
campaigns in Europe and the United States helped to
increase popular awareness of the relationship between
cleanliness and health By the 1950s soap had gained public
acceptance as an instrument of personal hygiene
Rarely conditions allow for corpses to naturally turn in to a
soap-like substance such as the Soap Lady on exhibit in the
Mutter Museum
OBJECTIVE OF STUDY
The objective of the study is to understand the soap
industry in India Also there are following points that we
wanted to cover among the Soap Industry
1 Different players in the industry
2 Different types of soap
3 Price comparison
4 Companies involved and their various branding styles
5 branding strategy of different players
METHODOLOGY
Methodology is the major or the first step of any project If
the plan for methodology is not streamlined then the
project cannot flow without interruption
For our study we would majorly use secondary research as
our tool of research We would be using the journal past
researches articles new paper magazines internet as
our source of data collection We would strongly we would
be using different sites to collect data and then we would
analyze the collected data and then conclude the project
with recommendations
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
roller mill (French milling or hard milling) in a manner similar
to calendering paper or plastic or to making chocolate liquor
The soap is then passed through one or more additional
refiners to further plasticize the soap mass Immediately
before extrusion it passes through a vacuum chamber to
remove any entrapped air It is then extruded into a long log
or blank cut to convenient lengths passed through a metal
detector and then stamped into shape in refrigerated tools
The pressed bars are packaged in many ways
Sand or pumice may be added to produce a scouring soap
This process is most common in creating soaps used for
human hygiene The scouring agents serve to remove dead
skin cells from the surface being cleaned This process is
called exfoliation Many newer materials are used for
exfoliating soaps which are effective but do not have the
sharp edges and poor size distribution of pumice
History
Early History
Soapnut Tree (Reeta Sapindus tree)
The earliest known use of a natural soap-like substance was
the powder of the Reeta(Sapindus) nut which was used by
Indians since antiquity Hindus in India were obliged to bathe
at least once a day every morning in accordance with
Ayurveda Evidence of manufactured soap use are
Babylonian clay cylinders dating from 2800 BC containing a
soap-like substance A formula for soap consisting of water
alkali and cassia oil was written on a Babylonian clay tablet
around 2200 BC
The Ebers papyrus (Egypt 1550 BC) indicates that ancient
Egyptians bathed regularly and combined animal and
vegetable oils with alkaline salts to create a soap-like
substance Egyptian documents mention that a soap-like
substance was used in the preparation of wool for weaving
Roman History
It is commonly reported that a soap factory with bars of
scented soap was found in the ruins of Pompeii (79 AD)
However this has proved to be a misinterpretation of the
survival of some soapy mineral substance [citation needed]
probably soapstone at the Fullonica where it was used for
dressing recently cleansed textiles Unfortunately this error
has been repeated widely and can be found in otherwise
reputable texts on soap history The ancient Romans were
generally ignorant of soaps detergent properties and made
use of the strigil to scrape dirt and sweat from the body The
word soap (Latin sapo) appears first in a European
language in Pliny the Elders Historia Naturalis which
discusses the manufacture of soap from tallow and ashes
but the only use he mentions for it is as a pomade for hair
he mentions rather disapprovingly that among the Gauls and
Germans men are likelier to use it than women
A story encountered in some places claims that soap takes
its name from a supposed Mount Sapo where ancient
Romans sacrificed animals Rain would send a mix of animal
tallow and wood ash down the mountain and into the clay
soil on the banks of the Tiber Eventually women noticed
that it was easier to clean clothes with this soap The
location of Mount Sapo is unknown as is the source of the
ancient Roman legend to which this tale is typically
credited In fact the Latin word sapo simply means soap it
was borrowed from a Celtic or Germanic language and is
cognate with Latin sebum tallow which appears in Pliny
the Elders account Roman animal sacrifices usually burned
only the bones and inedible entrails of the sacrificed
animals edible meat and fat from the sacrifices were taken
by the humans rather than the gods Animal sacrifices in the
ancient world would not have included enough fat to make
much soap The legend about Mount Sapo is probably
apocryphal
Arab History
The Arabs made soap from vegetable oil such as olive oil and
some aromatic oils such as thyme oil Lye (Al-Soda Al-Kawia)
was used for the first time and the formula hasnt changed
from the current soap sold in the market From the
beginning of the 7th century soap was produced in Nablus
(West BankPalestine) Kufa (Iraq) and Basra (Iraq) Soaps as
we know them today are descendants of historical Arabian
Soaps Arabian Soap was perfumed and colored some of the
soaps were liquid and others were hard They also had
special soap for shaving It was commercially sold for 3
Dirhams (03 Dinars) a piece in 981 AD Al-Razi rsquos manuscript
contains recipes for soap A recently discovered manuscript
from the 13th century details more recipes for soap making
eg take some sesame oil a sprinkle of potash alkali and
some lime mix them all together and boil When cooked
they are poured into molds and left to set leaving hard soap
Historically soap was made by mixing animal fats with lye
Because of the caustic lye this was a dangerous procedure
(perhaps more dangerous than any present-day home
activities) which could result in serious chemical burns or
even blindness Before commercially-produced lye (sodium
hydroxide) was commonplace potash potassium hydroxide
was produced at home for soap making from the ashes of a
hardwood fire
Castile soap was produced in Europe as early as the 16th
century
Modern History
1922 magazine advertisement for Palmolive Soap
In modern times the use of soap has become universal in
industrialized nations due to a better understanding of the
role of hygiene in reducing the population size of pathogenic
microorganisms Manufactured bar soaps first became
available in the late nineteenth century and advertising
campaigns in Europe and the United States helped to
increase popular awareness of the relationship between
cleanliness and health By the 1950s soap had gained public
acceptance as an instrument of personal hygiene
Rarely conditions allow for corpses to naturally turn in to a
soap-like substance such as the Soap Lady on exhibit in the
Mutter Museum
OBJECTIVE OF STUDY
The objective of the study is to understand the soap
industry in India Also there are following points that we
wanted to cover among the Soap Industry
1 Different players in the industry
2 Different types of soap
3 Price comparison
4 Companies involved and their various branding styles
5 branding strategy of different players
METHODOLOGY
Methodology is the major or the first step of any project If
the plan for methodology is not streamlined then the
project cannot flow without interruption
For our study we would majorly use secondary research as
our tool of research We would be using the journal past
researches articles new paper magazines internet as
our source of data collection We would strongly we would
be using different sites to collect data and then we would
analyze the collected data and then conclude the project
with recommendations
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Soapnut Tree (Reeta Sapindus tree)
The earliest known use of a natural soap-like substance was
the powder of the Reeta(Sapindus) nut which was used by
Indians since antiquity Hindus in India were obliged to bathe
at least once a day every morning in accordance with
Ayurveda Evidence of manufactured soap use are
Babylonian clay cylinders dating from 2800 BC containing a
soap-like substance A formula for soap consisting of water
alkali and cassia oil was written on a Babylonian clay tablet
around 2200 BC
The Ebers papyrus (Egypt 1550 BC) indicates that ancient
Egyptians bathed regularly and combined animal and
vegetable oils with alkaline salts to create a soap-like
substance Egyptian documents mention that a soap-like
substance was used in the preparation of wool for weaving
Roman History
It is commonly reported that a soap factory with bars of
scented soap was found in the ruins of Pompeii (79 AD)
However this has proved to be a misinterpretation of the
survival of some soapy mineral substance [citation needed]
probably soapstone at the Fullonica where it was used for
dressing recently cleansed textiles Unfortunately this error
has been repeated widely and can be found in otherwise
reputable texts on soap history The ancient Romans were
generally ignorant of soaps detergent properties and made
use of the strigil to scrape dirt and sweat from the body The
word soap (Latin sapo) appears first in a European
language in Pliny the Elders Historia Naturalis which
discusses the manufacture of soap from tallow and ashes
but the only use he mentions for it is as a pomade for hair
he mentions rather disapprovingly that among the Gauls and
Germans men are likelier to use it than women
A story encountered in some places claims that soap takes
its name from a supposed Mount Sapo where ancient
Romans sacrificed animals Rain would send a mix of animal
tallow and wood ash down the mountain and into the clay
soil on the banks of the Tiber Eventually women noticed
that it was easier to clean clothes with this soap The
location of Mount Sapo is unknown as is the source of the
ancient Roman legend to which this tale is typically
credited In fact the Latin word sapo simply means soap it
was borrowed from a Celtic or Germanic language and is
cognate with Latin sebum tallow which appears in Pliny
the Elders account Roman animal sacrifices usually burned
only the bones and inedible entrails of the sacrificed
animals edible meat and fat from the sacrifices were taken
by the humans rather than the gods Animal sacrifices in the
ancient world would not have included enough fat to make
much soap The legend about Mount Sapo is probably
apocryphal
Arab History
The Arabs made soap from vegetable oil such as olive oil and
some aromatic oils such as thyme oil Lye (Al-Soda Al-Kawia)
was used for the first time and the formula hasnt changed
from the current soap sold in the market From the
beginning of the 7th century soap was produced in Nablus
(West BankPalestine) Kufa (Iraq) and Basra (Iraq) Soaps as
we know them today are descendants of historical Arabian
Soaps Arabian Soap was perfumed and colored some of the
soaps were liquid and others were hard They also had
special soap for shaving It was commercially sold for 3
Dirhams (03 Dinars) a piece in 981 AD Al-Razi rsquos manuscript
contains recipes for soap A recently discovered manuscript
from the 13th century details more recipes for soap making
eg take some sesame oil a sprinkle of potash alkali and
some lime mix them all together and boil When cooked
they are poured into molds and left to set leaving hard soap
Historically soap was made by mixing animal fats with lye
Because of the caustic lye this was a dangerous procedure
(perhaps more dangerous than any present-day home
activities) which could result in serious chemical burns or
even blindness Before commercially-produced lye (sodium
hydroxide) was commonplace potash potassium hydroxide
was produced at home for soap making from the ashes of a
hardwood fire
Castile soap was produced in Europe as early as the 16th
century
Modern History
1922 magazine advertisement for Palmolive Soap
In modern times the use of soap has become universal in
industrialized nations due to a better understanding of the
role of hygiene in reducing the population size of pathogenic
microorganisms Manufactured bar soaps first became
available in the late nineteenth century and advertising
campaigns in Europe and the United States helped to
increase popular awareness of the relationship between
cleanliness and health By the 1950s soap had gained public
acceptance as an instrument of personal hygiene
Rarely conditions allow for corpses to naturally turn in to a
soap-like substance such as the Soap Lady on exhibit in the
Mutter Museum
OBJECTIVE OF STUDY
The objective of the study is to understand the soap
industry in India Also there are following points that we
wanted to cover among the Soap Industry
1 Different players in the industry
2 Different types of soap
3 Price comparison
4 Companies involved and their various branding styles
5 branding strategy of different players
METHODOLOGY
Methodology is the major or the first step of any project If
the plan for methodology is not streamlined then the
project cannot flow without interruption
For our study we would majorly use secondary research as
our tool of research We would be using the journal past
researches articles new paper magazines internet as
our source of data collection We would strongly we would
be using different sites to collect data and then we would
analyze the collected data and then conclude the project
with recommendations
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
The Ebers papyrus (Egypt 1550 BC) indicates that ancient
Egyptians bathed regularly and combined animal and
vegetable oils with alkaline salts to create a soap-like
substance Egyptian documents mention that a soap-like
substance was used in the preparation of wool for weaving
Roman History
It is commonly reported that a soap factory with bars of
scented soap was found in the ruins of Pompeii (79 AD)
However this has proved to be a misinterpretation of the
survival of some soapy mineral substance [citation needed]
probably soapstone at the Fullonica where it was used for
dressing recently cleansed textiles Unfortunately this error
has been repeated widely and can be found in otherwise
reputable texts on soap history The ancient Romans were
generally ignorant of soaps detergent properties and made
use of the strigil to scrape dirt and sweat from the body The
word soap (Latin sapo) appears first in a European
language in Pliny the Elders Historia Naturalis which
discusses the manufacture of soap from tallow and ashes
but the only use he mentions for it is as a pomade for hair
he mentions rather disapprovingly that among the Gauls and
Germans men are likelier to use it than women
A story encountered in some places claims that soap takes
its name from a supposed Mount Sapo where ancient
Romans sacrificed animals Rain would send a mix of animal
tallow and wood ash down the mountain and into the clay
soil on the banks of the Tiber Eventually women noticed
that it was easier to clean clothes with this soap The
location of Mount Sapo is unknown as is the source of the
ancient Roman legend to which this tale is typically
credited In fact the Latin word sapo simply means soap it
was borrowed from a Celtic or Germanic language and is
cognate with Latin sebum tallow which appears in Pliny
the Elders account Roman animal sacrifices usually burned
only the bones and inedible entrails of the sacrificed
animals edible meat and fat from the sacrifices were taken
by the humans rather than the gods Animal sacrifices in the
ancient world would not have included enough fat to make
much soap The legend about Mount Sapo is probably
apocryphal
Arab History
The Arabs made soap from vegetable oil such as olive oil and
some aromatic oils such as thyme oil Lye (Al-Soda Al-Kawia)
was used for the first time and the formula hasnt changed
from the current soap sold in the market From the
beginning of the 7th century soap was produced in Nablus
(West BankPalestine) Kufa (Iraq) and Basra (Iraq) Soaps as
we know them today are descendants of historical Arabian
Soaps Arabian Soap was perfumed and colored some of the
soaps were liquid and others were hard They also had
special soap for shaving It was commercially sold for 3
Dirhams (03 Dinars) a piece in 981 AD Al-Razi rsquos manuscript
contains recipes for soap A recently discovered manuscript
from the 13th century details more recipes for soap making
eg take some sesame oil a sprinkle of potash alkali and
some lime mix them all together and boil When cooked
they are poured into molds and left to set leaving hard soap
Historically soap was made by mixing animal fats with lye
Because of the caustic lye this was a dangerous procedure
(perhaps more dangerous than any present-day home
activities) which could result in serious chemical burns or
even blindness Before commercially-produced lye (sodium
hydroxide) was commonplace potash potassium hydroxide
was produced at home for soap making from the ashes of a
hardwood fire
Castile soap was produced in Europe as early as the 16th
century
Modern History
1922 magazine advertisement for Palmolive Soap
In modern times the use of soap has become universal in
industrialized nations due to a better understanding of the
role of hygiene in reducing the population size of pathogenic
microorganisms Manufactured bar soaps first became
available in the late nineteenth century and advertising
campaigns in Europe and the United States helped to
increase popular awareness of the relationship between
cleanliness and health By the 1950s soap had gained public
acceptance as an instrument of personal hygiene
Rarely conditions allow for corpses to naturally turn in to a
soap-like substance such as the Soap Lady on exhibit in the
Mutter Museum
OBJECTIVE OF STUDY
The objective of the study is to understand the soap
industry in India Also there are following points that we
wanted to cover among the Soap Industry
1 Different players in the industry
2 Different types of soap
3 Price comparison
4 Companies involved and their various branding styles
5 branding strategy of different players
METHODOLOGY
Methodology is the major or the first step of any project If
the plan for methodology is not streamlined then the
project cannot flow without interruption
For our study we would majorly use secondary research as
our tool of research We would be using the journal past
researches articles new paper magazines internet as
our source of data collection We would strongly we would
be using different sites to collect data and then we would
analyze the collected data and then conclude the project
with recommendations
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
but the only use he mentions for it is as a pomade for hair
he mentions rather disapprovingly that among the Gauls and
Germans men are likelier to use it than women
A story encountered in some places claims that soap takes
its name from a supposed Mount Sapo where ancient
Romans sacrificed animals Rain would send a mix of animal
tallow and wood ash down the mountain and into the clay
soil on the banks of the Tiber Eventually women noticed
that it was easier to clean clothes with this soap The
location of Mount Sapo is unknown as is the source of the
ancient Roman legend to which this tale is typically
credited In fact the Latin word sapo simply means soap it
was borrowed from a Celtic or Germanic language and is
cognate with Latin sebum tallow which appears in Pliny
the Elders account Roman animal sacrifices usually burned
only the bones and inedible entrails of the sacrificed
animals edible meat and fat from the sacrifices were taken
by the humans rather than the gods Animal sacrifices in the
ancient world would not have included enough fat to make
much soap The legend about Mount Sapo is probably
apocryphal
Arab History
The Arabs made soap from vegetable oil such as olive oil and
some aromatic oils such as thyme oil Lye (Al-Soda Al-Kawia)
was used for the first time and the formula hasnt changed
from the current soap sold in the market From the
beginning of the 7th century soap was produced in Nablus
(West BankPalestine) Kufa (Iraq) and Basra (Iraq) Soaps as
we know them today are descendants of historical Arabian
Soaps Arabian Soap was perfumed and colored some of the
soaps were liquid and others were hard They also had
special soap for shaving It was commercially sold for 3
Dirhams (03 Dinars) a piece in 981 AD Al-Razi rsquos manuscript
contains recipes for soap A recently discovered manuscript
from the 13th century details more recipes for soap making
eg take some sesame oil a sprinkle of potash alkali and
some lime mix them all together and boil When cooked
they are poured into molds and left to set leaving hard soap
Historically soap was made by mixing animal fats with lye
Because of the caustic lye this was a dangerous procedure
(perhaps more dangerous than any present-day home
activities) which could result in serious chemical burns or
even blindness Before commercially-produced lye (sodium
hydroxide) was commonplace potash potassium hydroxide
was produced at home for soap making from the ashes of a
hardwood fire
Castile soap was produced in Europe as early as the 16th
century
Modern History
1922 magazine advertisement for Palmolive Soap
In modern times the use of soap has become universal in
industrialized nations due to a better understanding of the
role of hygiene in reducing the population size of pathogenic
microorganisms Manufactured bar soaps first became
available in the late nineteenth century and advertising
campaigns in Europe and the United States helped to
increase popular awareness of the relationship between
cleanliness and health By the 1950s soap had gained public
acceptance as an instrument of personal hygiene
Rarely conditions allow for corpses to naturally turn in to a
soap-like substance such as the Soap Lady on exhibit in the
Mutter Museum
OBJECTIVE OF STUDY
The objective of the study is to understand the soap
industry in India Also there are following points that we
wanted to cover among the Soap Industry
1 Different players in the industry
2 Different types of soap
3 Price comparison
4 Companies involved and their various branding styles
5 branding strategy of different players
METHODOLOGY
Methodology is the major or the first step of any project If
the plan for methodology is not streamlined then the
project cannot flow without interruption
For our study we would majorly use secondary research as
our tool of research We would be using the journal past
researches articles new paper magazines internet as
our source of data collection We would strongly we would
be using different sites to collect data and then we would
analyze the collected data and then conclude the project
with recommendations
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
much soap The legend about Mount Sapo is probably
apocryphal
Arab History
The Arabs made soap from vegetable oil such as olive oil and
some aromatic oils such as thyme oil Lye (Al-Soda Al-Kawia)
was used for the first time and the formula hasnt changed
from the current soap sold in the market From the
beginning of the 7th century soap was produced in Nablus
(West BankPalestine) Kufa (Iraq) and Basra (Iraq) Soaps as
we know them today are descendants of historical Arabian
Soaps Arabian Soap was perfumed and colored some of the
soaps were liquid and others were hard They also had
special soap for shaving It was commercially sold for 3
Dirhams (03 Dinars) a piece in 981 AD Al-Razi rsquos manuscript
contains recipes for soap A recently discovered manuscript
from the 13th century details more recipes for soap making
eg take some sesame oil a sprinkle of potash alkali and
some lime mix them all together and boil When cooked
they are poured into molds and left to set leaving hard soap
Historically soap was made by mixing animal fats with lye
Because of the caustic lye this was a dangerous procedure
(perhaps more dangerous than any present-day home
activities) which could result in serious chemical burns or
even blindness Before commercially-produced lye (sodium
hydroxide) was commonplace potash potassium hydroxide
was produced at home for soap making from the ashes of a
hardwood fire
Castile soap was produced in Europe as early as the 16th
century
Modern History
1922 magazine advertisement for Palmolive Soap
In modern times the use of soap has become universal in
industrialized nations due to a better understanding of the
role of hygiene in reducing the population size of pathogenic
microorganisms Manufactured bar soaps first became
available in the late nineteenth century and advertising
campaigns in Europe and the United States helped to
increase popular awareness of the relationship between
cleanliness and health By the 1950s soap had gained public
acceptance as an instrument of personal hygiene
Rarely conditions allow for corpses to naturally turn in to a
soap-like substance such as the Soap Lady on exhibit in the
Mutter Museum
OBJECTIVE OF STUDY
The objective of the study is to understand the soap
industry in India Also there are following points that we
wanted to cover among the Soap Industry
1 Different players in the industry
2 Different types of soap
3 Price comparison
4 Companies involved and their various branding styles
5 branding strategy of different players
METHODOLOGY
Methodology is the major or the first step of any project If
the plan for methodology is not streamlined then the
project cannot flow without interruption
For our study we would majorly use secondary research as
our tool of research We would be using the journal past
researches articles new paper magazines internet as
our source of data collection We would strongly we would
be using different sites to collect data and then we would
analyze the collected data and then conclude the project
with recommendations
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Historically soap was made by mixing animal fats with lye
Because of the caustic lye this was a dangerous procedure
(perhaps more dangerous than any present-day home
activities) which could result in serious chemical burns or
even blindness Before commercially-produced lye (sodium
hydroxide) was commonplace potash potassium hydroxide
was produced at home for soap making from the ashes of a
hardwood fire
Castile soap was produced in Europe as early as the 16th
century
Modern History
1922 magazine advertisement for Palmolive Soap
In modern times the use of soap has become universal in
industrialized nations due to a better understanding of the
role of hygiene in reducing the population size of pathogenic
microorganisms Manufactured bar soaps first became
available in the late nineteenth century and advertising
campaigns in Europe and the United States helped to
increase popular awareness of the relationship between
cleanliness and health By the 1950s soap had gained public
acceptance as an instrument of personal hygiene
Rarely conditions allow for corpses to naturally turn in to a
soap-like substance such as the Soap Lady on exhibit in the
Mutter Museum
OBJECTIVE OF STUDY
The objective of the study is to understand the soap
industry in India Also there are following points that we
wanted to cover among the Soap Industry
1 Different players in the industry
2 Different types of soap
3 Price comparison
4 Companies involved and their various branding styles
5 branding strategy of different players
METHODOLOGY
Methodology is the major or the first step of any project If
the plan for methodology is not streamlined then the
project cannot flow without interruption
For our study we would majorly use secondary research as
our tool of research We would be using the journal past
researches articles new paper magazines internet as
our source of data collection We would strongly we would
be using different sites to collect data and then we would
analyze the collected data and then conclude the project
with recommendations
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Modern History
1922 magazine advertisement for Palmolive Soap
In modern times the use of soap has become universal in
industrialized nations due to a better understanding of the
role of hygiene in reducing the population size of pathogenic
microorganisms Manufactured bar soaps first became
available in the late nineteenth century and advertising
campaigns in Europe and the United States helped to
increase popular awareness of the relationship between
cleanliness and health By the 1950s soap had gained public
acceptance as an instrument of personal hygiene
Rarely conditions allow for corpses to naturally turn in to a
soap-like substance such as the Soap Lady on exhibit in the
Mutter Museum
OBJECTIVE OF STUDY
The objective of the study is to understand the soap
industry in India Also there are following points that we
wanted to cover among the Soap Industry
1 Different players in the industry
2 Different types of soap
3 Price comparison
4 Companies involved and their various branding styles
5 branding strategy of different players
METHODOLOGY
Methodology is the major or the first step of any project If
the plan for methodology is not streamlined then the
project cannot flow without interruption
For our study we would majorly use secondary research as
our tool of research We would be using the journal past
researches articles new paper magazines internet as
our source of data collection We would strongly we would
be using different sites to collect data and then we would
analyze the collected data and then conclude the project
with recommendations
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Rarely conditions allow for corpses to naturally turn in to a
soap-like substance such as the Soap Lady on exhibit in the
Mutter Museum
OBJECTIVE OF STUDY
The objective of the study is to understand the soap
industry in India Also there are following points that we
wanted to cover among the Soap Industry
1 Different players in the industry
2 Different types of soap
3 Price comparison
4 Companies involved and their various branding styles
5 branding strategy of different players
METHODOLOGY
Methodology is the major or the first step of any project If
the plan for methodology is not streamlined then the
project cannot flow without interruption
For our study we would majorly use secondary research as
our tool of research We would be using the journal past
researches articles new paper magazines internet as
our source of data collection We would strongly we would
be using different sites to collect data and then we would
analyze the collected data and then conclude the project
with recommendations
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
OBJECTIVE OF STUDY
The objective of the study is to understand the soap
industry in India Also there are following points that we
wanted to cover among the Soap Industry
1 Different players in the industry
2 Different types of soap
3 Price comparison
4 Companies involved and their various branding styles
5 branding strategy of different players
METHODOLOGY
Methodology is the major or the first step of any project If
the plan for methodology is not streamlined then the
project cannot flow without interruption
For our study we would majorly use secondary research as
our tool of research We would be using the journal past
researches articles new paper magazines internet as
our source of data collection We would strongly we would
be using different sites to collect data and then we would
analyze the collected data and then conclude the project
with recommendations
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
METHODOLOGY
Methodology is the major or the first step of any project If
the plan for methodology is not streamlined then the
project cannot flow without interruption
For our study we would majorly use secondary research as
our tool of research We would be using the journal past
researches articles new paper magazines internet as
our source of data collection We would strongly we would
be using different sites to collect data and then we would
analyze the collected data and then conclude the project
with recommendations
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
FINDING amp ANALYSIS
ABOUT THE INDUSTRY
Soap Industry in India
soap industry is one of the oldest Fast Moving Consumer
Goods (FMCG) industry in India It is among the highest
penetrated category within FMCG sector reaching an
estimated 95 urban and 87 of the rural households In
value terms the industry is worth Rs45000 million and in
volume terms it is worth 53 million (in 2001 as reported by
Operations Research Group (ORG) Survey) The main
characteristic of the industry was severe competition and
high level of brand proliferation The industry witnessed 7
decline in value in year 2001 (Vanscom Database)8
There were 45 leading national brands None of the national
brands had more than 5 market share and many more
regional and unorganised sectorlocal brands 9Hindustan
Lever was the market leader with about 30 (number) of
soap brands with a total market share of 67 in 1998-99 in
organised sector as seen from Table-1 below which gives
the lead players and their respective market share
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
The leading brands in the market are Dove Pears Lux
Dettol Liril Rexona Lifebouy Nirma
Palmolive and Hamam A survey reported in Vanscom which
was conducted in Ahmedabad
showed that 103 s soap brands were available in this city
alone
The industry had witnessed many innovative sales promotion
activities in the recent past
Numerous factors were responsible for such a phenomenon
One of the reasons being that the market being sluggish
companies were trying to increase market share in stagnant
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
to declining (volume terms) market in order to retain
consumers to encourage switching to induce trials and
liquidate excessive inventories Another reason possible was
that with the presence of so many brands the competition
had increased severally leading to fight for market share and
shelf space Inflationary trend had made both the consumer
as well as trade deal prone Hence sales promotion activities
in soap industry posed a very interesting study and
consumer and retailer perceptions thereof
On the basis of information collected on various brands and
their prices (see Exhibit-1) following three segments
emerge
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Table-2 Price Segments of Soaps
The brands in popular segments were found to be frequently
promoted as there was intensive price competition in this
segment The brands could also be classified based on
medicinal benefits cosmetic benefits perfumes
naturalherbal properties For the purpose of this study
only price segments were considered
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
PRICE RANGE
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
It could be inferred from the above table that upper income
segment showed greater preference for premium brand of
soaps like Dove Pears Nivea with the exception being Lux
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
The soaps were available in different sizes - 75 gms 100
gms 125 gms and 150 gms The popular sizes were 75
gms and 100 gms
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
DIFFERENT SOAP PRODUCTS IN INDIAN MARKET
INTERNATIONAL PLAYERS
Hindustan Lever Soaps (Lux Liril Lifebuoy Breeze Rexona
Pears Pears Glycerine Dove Le-Sance Ayush)
Nivea Ponds Johnson baby soap Dettol Camay OK Clearsil
DOMESTIC PLAYERS
Mysore sadal soap Mysore baby soap Margo Godrej
(Cinthol FairGlow) Santhoor Keshnikar Chandan
Chandrika Nirma Himani Jasmine Kastoori Neema Gold
smith Rose Gramodhyog soaps
Pears Soap Box of 3
by Pears
44 oz ea box of soap
$695
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Mysore Sandalwood Soap
by Mysore
125 g bar
$300
Nag Champa Beauty Soap
by Satya Sai Baba
5 oz bar
$367
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Medimix Soap Large
by Medimix
125 g bar
$295
Pears Body Wash
by Pears
85 oz shower gel
$750
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Sandalwood Soap
by Chandrika
75 g bar
$195
Pears Original Transparent Soap
by Pears
44 oz bar
$250
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Chandrika Soap
by Sorya Lab
262 oz bar
$150
Dettol Liquid Soap
by Dettol
250 ml liquid soap
$550
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Nag Champa Bar
by Satya Sai Baba
4 oz bar
$435
Mysore Sandal Soap
by Mysore
75 g bar
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Sandal Soap
by Moti
525 oz bar
$350
Sandalwood Ayurvedi Soap
by Herbal Vedic
262 oz bar
$295
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Lux Black Honey Soap
by Hindustan Lever
100 g bar
$250
Mysore Gold Sandalwood Soap
by Mysore
150 g bar
$450
Sandal Soap 1
by Godrej Soaps
75 g bar
$195
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Medimex Soap
by Medimex
75 g bar
$195
Aloe Vera Soap
by Dabur
125 g soap bar
$195
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Moti Rose Soap
by Moti
150 g bar
$250
Limda (Neem Soap)
by Nirmal
75 g soap bar
$195
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Tulsi Neem Mitti Soap
by Ayur
75 g soap bar
$195
Dettol Soap Large
by Dettol
125 g bar
$250
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Gulab Soap
by Moti
525 oz bar
$250
Lavender Ayurvedic Soap
by Herbal Vedic
262 oz bar
$295
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Cinthol Soap
by Godrej Soaps
75 g bar
$195
Hamam Soap
by Hamam
100 g bar
$195
Liril Soap
by Liril
75 g bar
$195
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
COMPANIES INVOLVED AND THEIR VARIOUS
BRANDING STYLES
More washes More suds So declares a hawker or a
sometime sales rep from Hindustan Lever Ltd the local
subsidiary of Dutch giant Unilever the worlds largest
consumer-products manufacturer The rep makes his case
with a microphone and a truck well stocked with detergents
soaps and toothpastes His rival standing a few feet away
and armed with a megaphone pitches Lever knockoffs
Costs less Cleaner wash The spirited volley of pitches in
Kannada the local language attracts a jostling crowd
Welcome to the new frontier of global capitalism the spot
where state-of-the-art marketing meets the dirt road The
typical family in this town earns 4800 rupees (about $103) a
year from raising crops and from working occasional jobs in
the city Most wash their clothes and their bodies in nearby
ponds or at community water taps If soap is used at all its
usually whichever brand is cheapest -- and people tend to
use that soap for everything their bodies their hair and
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
their garments In this country the notion of brand and
brand loyalty is fleeting to say the least
But Hindustan Lever in ways at once ingenious dogged and
culturally sensitive is changing all of that Over the past two
decades the company has built a remarkable distribution
system that moves its soaps and detergents to every corner
of India Now it has started to leverage that valuable
infrastructure to expand its reach to a huge and overlooked
group of consumers the rural poor Everybody wants
brands argues Keki Dadiseth 55 who is in charge of home-
and personal-care products worldwide and who is also a
director of Hindustan Lever And there are a lot more poor
people in the world than rich people To be a global business
and to have a global market share you have to participate in
all segments
M (Venky) Venkatesh 42 is one of Hindustan Levers field
generals in this campaign He is regional sales manager for a
chunk of India (total population more than one billion) that
is home to more than 200 million people -- as many as reside
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
in Russia and the Ukraine combined -- comprising some
150000 villages His mission to sell Lever products to rich
and poor alike
Venkatesh takes that mission seriously A 20-year Lever
veteran he still spends two days a week visiting stores and
markets across his region When he spots Lever products
hidden behind another brand in a storefront he walks in and
rearranges the display He smells soaps to make sure that
the scent is fresh Thanks to the spreadsheet on his IBM
Thinkpad he can recite the demographics for every village
on his itinerary -- from the number of bank deposits above a
certain amount to literacy rates In two years his team has
driven Lever products into 47 of the state of Karnataka up
from 30 Rural consumers want value not just volume
Venkatesh says
Venkatesh strikes up a conversation with Mahaboobjan an
open-shirted man selling incense from a weathered wooden
cart at the haat Mahaboobjan has been peddling his wares
in the region for 20 years His long-standing relationships
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
with customers position him as a reliable expert and adviser
to local villagers Venkatesh asks him what he thinks of the
pitch being delivered by the Lever hawkers on the truck
Mahaboobjan grabs the microphone In classic salesmans
patter he begins talking about Lux the soap that film stars
use and about the power of Wheel detergent He keeps up a
barrage of conversation to drown out an amplified tape
recording used by the rival selling knockoffs The market is
transformed as villagers flock to the Lever truck In less than
an hour Mahaboobjan sells soap to 15 customers nearly
half of that mornings sales Venkatesh offers him a hawkers
position on the spot
The moral of the story Even the poorest of the poor when
given a choice can be choosy about brands In a nation
where more than one-third of rural consumers watch TV
(everything from Ally McBeal to religious soap operas) and
even more visit commercial centers people arent naturally
inclined to settle for throwaway versions of the real deal -- if
the companies that make the real deal bother to explain the
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
difference If you only have two rupees (about four cents) to
spare you want value for your money -- and quality products
for your children Casting a glance at the Wheel knockoffs in
the market a silk sari-clad woman named Maryamma
sneers Only village people buy duplicates I want the real
thing
How far should a giant company go to understand poor
customers in faraway markets How does such a company
manage to sell its product profitably to hundreds of millions
of people dispersed and isolated with hardly any disposable
income to spend How does it develop brand loyalty in
markets where for generations people have chosen to buy
the product that was cheapest or the items that a store
actually had in stock -- if they bought anything at all
These are not questions that occupy the minds of high-level
strategists and marketers at most powerful global
companies They are too busy trying to sell high-priced
high-profit products to middle-class customers in the richest
countries Hindustan Lever the largest consumer-goods
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
company in India has embraced a different strategy It sells
everything from soups to soaps by going wherever its
customers are whether its the weekly cattle market or the
well where village women wash their clothes Why bother
Because it is the smart (and the right) thing to do Poor
people the companys executives believe can become just
as discerning about brands as rich consumers And if brands
exist as a store of value -- a promise about a products
distinctive qualities and features -- then offering poor
consumers a real choice of brands means offering them a
slightly better quality of life Marketing well-made products
to the poor isnt just a business opportunity it is a sign of
commercial respect for people whose needs are usually
overlooked
To be sure plenty of companies peddle low-quality products
at cheap prices to maximize their profits But thats not the
Unilever model Poor countries it believes may hold the key
to the companys long-term prosperity Unilever (annual
revenues $43 billion) anticipates that by 2010 half of its
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
sales will come from the developing world up 32 from its
current sales Hindustan Lever is the model and the engine
for that shift Indias rural people who comprise 12 of the
worlds population present a huge untapped market What
the company is developing now are the strategies and
tactics to reach that market even as its competitors waver
in their commitment
It is a crucial growth opportunity for Hindustan Lever
perhaps the most effective way for it to retain its number-
one position in consumer goods The company reported
continuous sales growth in India for three decades Then
late last year sales were nearly flat and actually declined in
some categories Given the large scale of the company
says MS Banga 46 chairman of Hindustan Lever our
biggest challenge is to keep growth rates where they are
Thats why every Lever management trainee begins his or
her career by spending six to eight weeks in a rural village
eating sleeping and talking with the locals Marketing
executives make frequent two-day visits to low-income
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
areas Why all of this trouble Its important to ensure that
our sales guys are connecting with our consumers says
Banga whose tenure with the company began in a village
Once you spend time with consumers you realize that they
want the same things you want They want a good quality of
life
Indeed Lever recognizes that meeting the demand of poor
consumers isnt just about lowering prices Its about
creativity developing products and processes that do more
with less Hindustan Lever creates markets where most
companies see only problems Somehow this company of
36000 employees -- a notorious bureaucracy -- nurtures a
willingness to constantly redefine markets marketing and
brands Its growth in rural India is a case study in strategic
reinvention
Change Who Does the Selling
On November 28 2006 in a meeting hall in Nalgonda in the
southern state of Andhra Pradesh Hindustan Lever
assembled a group of about 150 women The women had
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
come by bus or by train some at the companys expense
from 50 villages with fewer than 2000 residents Many were
illiterate agrarian workers who were hard-pressed even to
say which products Hindustan Lever makes They wanted to
start a business and the programs name -- Shakti or
strength -- validated their bold decision
The women belonged to self-help groups that ran microcredit
operations Each of them had saved money from their daily
wages or crop sales and were committed to finding ways to
make their collective savings grow So Lever pitched to them
what seemed like an exciting proposition If they used some
of their savings to buy the companys products at cost they
would learn how to sell them to their friends and to other
community groups and how to sell them at a profit Amway
and Avon had already pioneered a similar strategy for the
middle class in urban India But for Hindustan Lever the
direct-sales model was a huge departure from stratified
distribution channels and highly trained sales reps
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Its not enough to give people access to money says Pratik
Pota 32 a marketing manager on the new-ventures team
(or New Adventures as its dubbed) We have to give them
opportunities and train them in what to do with their savings
Our growth prospects are inextricably linked to these
womens income generation
Shakti represents a huge cultural challenge in India And in
many places Pota faces tough going In the village of
Pochampally he visits the home of Anjamma a promising
participant Anjamma is the local leader of the Telugu Desam
political party and she runs one of the larger womens
microcredits Shes blunt Its hard to sell products to local
villagers she says pointing to the boxes of soap bars and
shampoo sachets stacked in the corner of her living room
Though accustomed to charging interest on her groups
loans shes struggling with how to sell the products at a
margin
But in the next village Ravenpalli Pota finds evidence of
progress In their spare time a group of women weavers
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
have taken to selling soaps and detergents to their
neighbors I thought that we could sell the products for less
than at the store and still make a profit says Maheshwari
the leader Though shes never sold before and has just a
second-grade education her billing book is perfectly
organized Sitting cross-legged on her dirt floor Pota looks
pleased
Were not doing this out of charity Pota says But if you
can contribute to a social cause while being profitable then
why not
Change How You Market
As twilight sets on a weekly cattle-and-trade market in a
village in Bihar buyers collect their wares and gather in front
of a stage A performer lights a small fire on a plate to purify
the stage A mythological tale of romance begins Then the
performers -- magicians singers dancers -- offer a bit of
local news and call out to surrounding villages
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
In the next scene performers are acting again this time in
the role of rural laborers One man is worried that hes not
strong enough to do his work The other tells him Your
body cant breathe if its covered with mud What he means
is if youre not clean youre not strong and you cant
support your family Variations of this message are sung to a
catchy tune The backdrop a banner advertising Lifebuoy
Unilevers 106-year-old mass-market brand of soap in India
Is rural folklore the best way to explain useful hygiene
practices Or does it co-opt a centuries-old tradition in the
interest of crass consumerism Cultivating poor consumers
is often a series of long-term gambles that test the line
between whats creative and whats exploitative After
producing 7000 such live shows across rural India to
promote Lifebuoy and five other brands Hindustan Lever
itself is unsure of the best method for connecting with
consumers But complicated circumstances call for a
willingness to experiment
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
In Bihar and in other villages of the more rural states of
northeastern India the landscape is different from that of
the south Television ownership is less widespread Men
rather than women go to the weekly haats Here swaying
consumers doesnt involve switching from counterfeit brands
to Lever brands Instead it involves switching people from
infrequent to everyday washes using soap without making
them feel profligate or inauthentic The marketing challenge
is to integrate the product into consumers lives
One strategy relied on science Soap executives realized that
people who didnt see dirt on their hands thought that their
hands were clean This attitude partly explained why people
didnt wash their hands after washing clothes in the river or
feeding the cows a key cause of disease transmission
Although the connection was clear in the executives mind
they had to create a similar urgency and emotional
connection to soap for the consumer
And what better place to educate people about the
importance of frequent soap use than where 70 million
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
people come to clean themselves Hindustan Lever joined
the pilgrims visiting Allahabad for Kumbh Mela the religious
festival held every 12 years Executives wanted to show that
dirt is always present though often invisible Marketers
waved an ultraviolet-light wand over attendees hands to
show where germs and dirt resided While the pilgrims came
to bathe at the confluence of Indias sacred rivers to cleanse
their souls they also learned to keep their hands free of
pathogens
The village street theaters represented a more emotional
play Lever and Ogilvy Outreach the unconventional
marketing arm of Ogilvy amp Mather recruited local magicians
dancers and actors who knew each market and village that
the company wanted to target In total 50 teams of 13
performers were recruited to serve as connections between
the brands and the residents Scripts were changed for
different dialects education levels and religions In all
Ogilvy coordinated two-hour performances at 2005 haats
over six months
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
The results seem compelling Awareness of Breeze a low-
cost soap with more of a beauty pitch increased from 22
to 30 over the six months that the performances were
running Awareness of Rin Shakti a moderately priced
detergent bar and powder brand increased from 28 to
36 a company spokesman says And in all five states
sales of Surf Excel a premium washing detergent shot up in
the first half of 2000 compared with 1999 while sales of Rin
shot up in four states
More than that Hindustan Lever may actually be improving
health conditions Its not enough for the company to look
at market-share increase says Anand Kripalu 42 the
companys head of detergents and a creative thinker behind
many of the companys rural-outreach strategies We want
to spread the message of hygiene and really use the
Lifebuoy brand to deliver that benefit to consumers This
isnt just good for us as a brand its good for the country
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Change How You Develop Products
Most big companies assume that developing products for
poor consumers requires less strategic flexibility less
marketing inspiration and less expensive RampD than
developing products for rich consumers Hindustan Lever has
learned that in fact the opposite is true It takes a genuinely
creative company that is filled with highly imaginative
product developers to reach the poorest of the poor
Consider Indian women and their hair India is home to 16
of the worlds population but also home to 28 of the
worlds hair thanks to the long tresses that Indian women
maintain throughout their life In a culture in which many
poor women still avoid any appearance of self-indulgence
hair grooming is often their one luxury Even women with
faded saris and little jewelry rarely leave home with a hair
out of place
Which means that women look for unexpected opportunities
to care for their hair This insight led to two product-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
development strategies One reinforced a prevailing
consumer habit that of using soap for hair and body wash
Just over half of consumers especially low-income
consumers use soap to wash both their hair and their body
every day Levers research shows Rather than fight it
marketers decided to create an opportunity Two years ago
Hindustan Lever marketers thought of testing a prototype
hair soap But that development still didnt acknowledge the
fact that consumers use one soap because its more
convenient and because it costs less
And so came the idea for a low-cost soap that cleans the
body and the hair Product developers spent a year in the lab
before finding the right formula Marketers had already built
a strong beauty brand in Breeze a discount soap Now
marketers could build the Breeze brand even further The
new soap is called Breeze 2-in-1 and distribution is targeted
at smaller towns and rural areas Its an example of product
marketers piecing together insights from the field and
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
stretching their imaginations says Mukul Deoras 38 head
of the personal-wash business
Its also an example of how Lever gets consumers to buy
higher-quality products or how it gets them to buy up the
value chain as company executives say Deoras
acknowledges that this brand may cannibalize users of
Levers other discount soaps and shampoos But he says
even if theres cannibalization its okay Consumers are
buying a value-added product which is likely to increase
loyalty
The other strategy targeted women who werent even willing
to try shampoo because they thought that it was too harsh
Marketers decided to tackle the harshness issue head on An
ad campaign showed a straw broom (what happens to hair
with soap) alongside soft tresses (the benefits of shampoo)
Coupled with this campaign the company developed a
sachet of Lux shampoo It capitalized on the Lux-soap brand
and it cost less than any other sachet just 50 paise
compared with two rupees The visual cues and sachet size
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
were so powerful that in the test state of Andhra Pradesh
volume sales of shampoo jumped by 50 in just three
months
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
BRANDING STRATEGY
Segment-wise Frequency of Schemes
Thirteen schemes (47) announced were found to be on
popular segment (Rs8-15 for 75 gms) of soap brands This
was closely followed by 11 schemes (40) in premium
segment (gt Rs15 for 75 gm) Thus it could be inferred that
companies were trying to upgrade consumers of
economypopular brands to popularpremium soap
brands respectively
Nature of Schemes
With respect to the nature of the schemes premium (free
gifts) were found to be the most frequently used schemes in
both premium and popular segment of soap industry No
such scheme was offered by any brand in the economy
segment It could be inferred that as the price of soap in this
segment was less than Rs8 it might not be
possible for the companies to offer this type of premium
promotion Secondly the consumers in this segment were
likely to be price sensitive and such a promotion might not
be of value to them compared to price offs
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Premium (Free Gift) Offers
Six out of 13 premium offers were a part of the companies
own portfolio eg on buying 2 Dettol soaps a Dettol Talc 18
grams worth Rs25 was given free
Underlying Objectives
Based on Table-3 a set of underlying objectives behind the
various sales promotion schemes were inferred
151 Bonus Packs
bull To reward existing loyal customers
bull To off-load inventory at factory and distribution level (to
attain push)
bull Bonus pack schemes (Buy one get one freemore for the
same price) were used to load the consumers so that they
would not buy competitive brand at least for short period
152 Premium (Free Gifts)
bull To reward and retain existing loyal customers and to
enhance brand image through interactionsassociations
bull To act as a constant reminder of the brand
bull To encourage brand switching amongst deal prone
consumers through innovative gifts
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
bull To induce trial of new products of the company by
leveraging on the existing brand and its equity eg giving
(new) Mysore Sandal Talc free with the purchase of 2 Mysore
Sandal soaps
153 Price-offs
bull Contrary to belief premium soap brands were giving price
offs (3 price off out of 11 scheme announcements in this
category ndash Table-3) The underlying objective could be to
offload inventory by pulling customers from popular soap
segment as the size of the premium segment especially the
higher end of the premium segment might be very small eg
Dove (priced at Rs45 for 100 gm) Rs10 off It could be
inferred that frequent use of sales promotion activities in
premium segment might dilute the brandrsquos exclusivity which
could lead to dissatisfaction and disillusionment among the
regular users
Incentive Price (outlay) Ratio
The incentive price ratio was calculated by taking the
monetary value of the incentive offered to the consumer and
dividing it by the amount of money heshe needs to spend in
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
order to avail the offer The ratio varied from 015 to 100
among various brands The ratios in premium brands varied
from 15 to 71 For example in case of Mysore Sandal and
Palmolive Natural (premium soaps) the incentive ratio
was 15 and 17 respectively With this level of incentive
neither regular premium soap users will feel rewarded or get
attracted nor the popular soap users will be motivated to
switch The highest incentive ratio in case of Fair and Lovely
soap was an introductory offer Such a high incentive again
was not likely to generate desired response in terms of trial
Instead the company could have leveraged on its parent
brand namely Fair amp Lovely Cream which is well entrenched
in the market So with the purchase of Fair amp Lovely tube
free soap would have given better results in our opinion
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Willingness to buy on sales promotion offer
Sixty-three per cent of the sample did not show willingness
to buy a brand due to promotion while 27 showed
willingness and 10 were not sure This indicates that
when 27 showed willingness and 10 consumers who
were not sure these groups might be lured through
innovative and lucrative sales promotion offer
Ability to induce trial
Forty per cent of the respondents had said that sales
promotion had the ability to induce trial which reinforces the
above inference (34)
Long-term impact
In order to understand ability of the promotions to increase
long-term sales respondents were asked about continuity of
purchase of a brand after the withdrawal of promotion
Eighty per cent of the respondents indicated that they would
not continue But 20 said they would Thus it could be
inferred that promotions in this category (low involvement
products) might encourage trial and brand switching but not
long term loyalty
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Preference of Schemes
Price off was the most preferred type of scheme Sixty-three
per cent of the respondents ranked price-offs as number one
or two This was from an upper income (biased sample in
which 18 out of 30 were from income group category
gt300000- pa
Perceived Quality
Ninety-three per cent of the respondents had a perception
that the quality of the promoted brands remained the same
during promotion while 7 felt that it was inferior than
before It can be inferred that promotions were not leading
to negative brand quality perceptions It was further
reinforced when 53 of the respondents said that sales
promotion would not weaken their loyalty towards the brand
Perceptions regarding underlying company
motivations
On tapping perceptions regarding underlying company
motivations for sales promotion ldquoto increase salesrdquo was
ranked highest followed by ldquoto attract switchersrdquo and ldquoto sell
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
excess stocksrdquo While providing value to customersrdquo and ldquoto
reinforce company imagerdquo were ranked lowest This
indicates that consumers believed that companies were
undertaking such activities only for their own benefit and not
for the benefit of consumers
Corroborating findings from retailer and consumer
perception studies it is evident that there was a matching of
perceptions regarding nature of scheme (price offs as most
preferred type of scheme mentioned by consumers and
retailersrsquo perceptions about consumer preferences)
Since retailers observe consumers instore beahviour were
frequently and directly their perceptions regarding providing
consumer behaviour are likely to be accurate Such inputs
from the retailers would be useful to companies
The retailers had the perception that those schemes which
were announced through mass media had better response
This was reinforced by the consumer survey which showed
that recall in case of heavily promoted schemes on TV was
found to be very high
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
Retailersrsquo prediction of companiesrsquo motivation for offering
sales promotion were matching with the consumer
perception regarding the same Thus both viewed that
companies were using sales promotion activities mainly to
increase short term sales or encourage switching or selling
excess stock and not really to give value benefit or reinforce
brandcompany image
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
PROMOTIONS IN THE SOAP INDUSTRY TO BUILD
BRAND
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
CONCLUSION amp RECOMMENDATION
The findings of the empirical study indicate that unless the
brand to be promoted is in the consideration set of the
consumer sales promotion by itself is unlikely to have any
major impact Clearly this shows that managers need to
invest into brand building exercise so that hisher brand
appears in the consideration set of the target consumers
Only after this should he spend time money and energy on
sales promotion activities Sales promotion should not be
used in isolation but need to be integrated with other tools
and in line with the overall positioning of the brand Also the
importance of the role of mass media came out clearly in
both the studies Companies need to create sufficient
awareness about sales promotion schemes through mass
media in order to create awareness The role of retailer in
influencing consumer in brand choice decision in a toilet
soap category was found to be insignificant which also
supports the above observations Toilet soaps are low
involvement products characterized by switching
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
behavior Also the person going to the shop for the purchase
of soap is the final decision maker of the brand Hence it is
essential that companies need to design attractive striking
visible POPs for scheme announcements
With respect to nature of scheme the finding suggested that
premium (free gift) was popular with companies While both
retailers and consumers preferred price offs So it is
necessary that the perceived value of a free gift has to be
appealing and high for the target consumers Repetitive use
of the same premium (soap dish) for a prolonged period may
have negative effect on the loyal customers When the
company is giving its own product free as premium it needs
to ensure the quality of the product from it as it is likely to
jeopardize the image of both its products
The findings exhibited that both the retailers and consumers
perceived that sales promotion activities carried out by the
companies for increasing sales in short term and clearing
excess stocks What it implies is that companies need to use
sales promotion synergistically and communicate so that
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
they provide value to the target audience and enhance
brand qualityimage perceptions
Companies need to systematise information flow regarding
sales promotion activities particularly at dealer 1048774 retailer
level Ensuring proper information flow and devising checks
and measures to reduce misappropriations and
implementation flows should be considered critical aspects
for the success of sales promotion activities by the
companies As retailing is fragmented direct reach by
companies is next to impossible Through dealers and proper
feedback mechanism companies keep in touch with the
market From the study it was found that smaller retailers
felt neglected and not enthused to implement the schemes
particularly when additional handling stocking accounting
was required on the part of a retailer without compensatory
margins It can be seen that the retailer and consumer
perceptions matched with respect to preferences of
schemes underlying motivations and role of mass media
This implies that the retailer would be a rich source of
information about the consumer and the likely response to
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
sales promotion activities Developing a system to tap such
responses from time to time both at retailer and consumer
level would be helpful for planning future sales promotion
activities In order to build trust and commitment companies
should tap preferences perceptions of retailers as well as
consumers
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
SWOT ANALYSIS OF SOAP INDUSTRY
Strengths
1 Low operational costs
2 Presence of established distribution networks in both
urban and rural areas
3 Presence of well-known brands in FMCG sector
Weaknesses
1 Lower scope of investing in technology and achieving
economies of scale especially in small sectors
2 Low exports levels
3 Me-too products which illegally mimic the labels of
the established brands These products narrow the scope
of FMCG products in rural and semi-urban market
Opportunities
1 Untapped rural market
2 Rising income levels ie increase in purchasing power
of consumers
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-
3 Large domestic market- a population of over one billion
4 Export potential
5 High consumer goods spending
Threats
1 Removal of import restrictions resulting in replacing of
domestic brands
2 Slowdown in rural demand
Tax and regulatory structure
- How soap works
- Soapmaking
-
- Lye
- Fat
- Process
- Purification and finishing
-
- History
-
- Early History
- Roman History
- Arab History
- Modern History
- Change Who Does the Selling
- Change How You Market
- Change How You Develop Products
-