Going Down the Pyramid
CONCEPT OF THE COMPANY
1800 STARTS!!!
RECKITT COLMAN
Reckitt Benckiser is No. 1 worldwide in its fabric care,
surface care and automatic dishwashing divisions, which
comprise, respectively, 24 percent, 19 percent and 12
percent of its revenue. In the fabric care segment, Reckitt's
brands include stain remover Spray 'n Wash, Woolite fabric
wash for delicate clothing and with America's bubble bath
but rather a solution for limescale buildup in both washing
machines and laundry. Reckitt's surface care leaders include
Lysol, America's No. 1 disinfectant, and Neutra Air,
introduced in 2003, which provides the pleasant scent of an
air freshener as well as acting as a disinfectant--it
purportedly kills odor-causing airborne germs, thereby
freshening a room. The company's washing products are
marketed as Calgonit in most of Europe, and as Vanish in
India.
RECKITT BENCKISER
INDIA LTD.
Reckitt Benckiser India Ltd appointmented Mr. Stefan Gaa
as the Regional Marketing Director, South Asia.
Mr. Gaa, who is replacing Ms Anne Engerant, will be
responsible for the marketing functions in South Asia, which
includes India, Sri-Lanka, Bangladesh and Indonesia. India
is the headquarters for Reckitt Benckiser's South Asia
business and Mr Gaa will be based in the corporate head
office at Gurgaon.
"India is a key market for Reckitt Benckiser and has been
doing well, with double digit growth for the past couple of
years. I am looking forward to this assignment and aim to
drive Reckitt Benckiser India and South Asia to greater
heights," said Mr Stefan Gaa.
Mr Gaa joined Reckitt Benckiser Germany in October 2000
in the marketing team, where he initially worked on Airwick
(a leading air care brand internationally). He then moved on
to working on products such as the automatic dish washing
(ADWD) brand, Calgonit (Finish in India), then to the UK as
Global Brand Manager responsible for ADWD for North
America and developing markets. In April 2005, he moved
as Global Brand Manager, Innovation, before moving to join
the Indian team in September 2006.
SECTORAL SYNOPSIS:-
Fast Moving Consumer Goods
(FMCG)
FMCG IN INDIA
India's rural markets have seen a lot of activity in the last few years.
Since penetration levels are pretty high in most categories, future
growth can come only from deeper rural penetration. FMCG majors
are aggressively looking at rural India since it accounts for 70% of the
total Indian households Despite the strong presence of MNC players,
the unorganized sector has a significant presence in this industry. In
most categories, unorganized sector is almost as big as the organized
sector, if not bigger.
Penetration level as well as per capita consumption in most product
categories like toothpaste, air spray, shoe polish, skin care, hand wash
etc in India is low indicating the untapped market potential.
Around 70 per cent of the total households in India (188 million) reside
in the rural areas. The total number of rural households is expected to
rise from 135 million in 2001-02 to 153 million in 2009-10. This presents
the largest potential market in the world. The annual size of the rural
FMCG market was estimated at around US$ 10.5 billion in 2001-02.
With growing incomes at both the rural and the urban level, the market
potential is expected to expand further.
CLASSIFICATION OF FMCG PRODUCTS IN INDIA
1.Household Care Products
Fabric wash (laundry soaps and synthetic detergents); household
cleaners (dish/utensil cleaners, floor cleaners, toilet cleaners, air
fresheners, insecticides and mosquito repellents, metal polish and
furniture polish).
2.Personal Care ProductsSkin care, personal wash (soaps); and toiletries; hygiene; paper floor
wash ; shoe polish ; hand wash products.
OVERVIEW
The consumer product sector mainly consists of personal care, and
home products segments. The sector can be further sub-divided into
soaps, detergents, surface cleaning products, skin care, hand care, and
toilet care products.
The sector is divided into two distinct segments - the premium segment
catering mostly to urban higher/upper middle class and the popular
segment with prices as low as 25%-30% of the premium segment,
catering to mass segments in urban and rural markets. The premium
segment is fewer prices sensitive and more brands conscious.
The industry is volume driven and is characterized by low margins. The
products are branded and backed by marketing, heavy advertising,
slick packaging and strong distribution networks. Also, raw material
prices play an important role in determining the pricing of the final
product.
Brand building and extensive distribution network is a key factor. A
successful brand is a precious asset, which could fetch a price many
times the cost of assets required to make the product
MAJOR COMPETITORS TO THE COMPANY:
Colgate-Palmolive India
Colgate Palmolive India is a 51 per cent subsidiary of Colgate Palmolive
Company, USA. It is the market leader in the Indian oral care market,
with a 51 per cent market share in the toothpaste segment, 48 per cent
market share in the toothpowder market and a 30 per cent share in the
toothbrush market. The company also has a presence in the premium
toilet soap segment and in shaving products, which are sold under the
Palmolive brand. Other well-known consumer brands include Charmis
skin cream and Axion dish wash. The company reported sales of US$
226 million in 2003-04. The company’s strategy is to focus on growing
volumes by improving penetration through aggressive campaigning and
consumer promotions. The company plans to launch new products in
oral and personal care segments and is prepared to continue spending
on advertising and marketing to gain market share. Margin gains are
being targeted through efficient supply chain management and bringing
down cost of operations.
Hindustan Lever Ltd (HLL)
Hindustan Lever Ltd is a 51 per cent owned subsidiary of the Anglo-
Dutch giant Unilever, which has been expanding the scope of its
operations in India since 1888. It is the country’s biggest consumer
goods company with net sales of US$ 2.4 billion in 2003. HLL is
amongst the top five exporters of the country and also the biggest
exporter of tea and castor oil. The product portfolio of the company
includes household and personal care products like soaps, detergents,
shampoos, skin care products, colour cosmetics, deodorants and
fragrances. It is also the market leader in tea, processed coffee, branded
wheat flour, tomato products, ice cream, jams and squashes. HLL
enjoys a formidable distribution network covering over 3,400
distributors and 16 million outlets. In the future, the company plans to
concentrate on its herbal health care portfolio (Ayush) and
confectionary business (Max). Its strategy to grow includes focusing on
the power brands’ growth through consumer relevant information,
cross category extensions, leveraging channel opportunities and
increased focus on rural growth.
Procter & Gamble Hygiene and Health Care Limited
Richardson Hindustan Limited (RHL), manufacturer of the Vicks
range of products, was rechristened ‘Procter & Gamble India’ in
October 1985, following its affiliation to the ‘Procter & Gamble
Company’, USA. Procter & Gamble Hygiene and Health Care Limited
(PGHHCL) acquired its current name in 1998, reflecting the two key
segments of its business. P&G, USA has a 65 per cent stake in
PGHHCL. The parent also has a 100 per cent subsidiary, Procter &
Gamble Home Products (PGHP). The overall portfolio of the company
includes healthcare; feminine-care; hair care and fabric care businesses.
PGHH operates in just two business segments - Vicks range of cough &
cold remedies and Whisper range of feminine hygiene. The detergent
and shampoo business has been relocated globally to Vietnam. The
company imports and markets most of the products from South East
Asian countries and China, while manufacturing, marketing and export
of Vicks and sanitary napkins has been retained in India. The company
reported sales of US$ 91 million in 2002-03. The parent company has
announced its plan to explore further external collaborations in India to
meet its global innovation and knowledge needs.
Nirma Limited
Nirma Ltd, promoted by Karsanbhai Patel, is a homegrown FMCG
major with a presence in the detergent and soap markets. It was
incorporated in 1980 as a private company and was listed in fiscal 1994.
Associate companies’ Nirma Detergents, Shiva Soaps and Detergents,
Nirma Soaps and Detergents and Nilnita Chemicals were merged with
Nirma in 1996-1997. The company has also set up a wholly owned
subsidiary Nirma Consumer Care Ltd, which is the sole marketing
licensee of the Nirma brand in India. Nirma also makes alfa olefin, fatty
acid and glycerin. Nirma is one of the most successful brands in the
rural markets with extremely low priced offerings. Nirma has plants
located in Gujarat, Madhya Pradesh and Uttar Pradesh. Its new LAB
plant is located in Baroda and the soda ash complex is located in
Gujarat. Nirma has strong distributor strength of 400 and a retail reach
of over 1 million outlets. The company reported gross sales of US$ 561
million in 2003-04. It plans to continue to target the mid and mass
segments for future growth.
PRODUCT OFFERING :
This is a list of the brands owned by Reckitt Benckiser. Not all brands
are sold in every country, and the same product may be sold under
different brands in different countries. In INDIA the products are
LIZOL
LIZOL is dish washing liquid which was introduced to India in 1998. it
was the first product which was in liquid format. Lizol in 2007 has a
25% market share and it’s a middle class oriented product.
MORTEIN
Mortein was introduced in India in 1999. it was a anti mosquito
Liquid vaporizer, which gave a big competition to the other products
like jet and all-out. It started getting the market share and achieved
45% out of total market share in India.
DETTOL
Dettol is a very famous product in India. Total market share of dettol is
86%. This product has a monopoly in the market , instead of having
competetors
AIRWICK
It is a latest product of the company. which was launched in India in
2006. it’s a freshener used cars and room. It’s a world famous product
and having 70 % of market share in America and 66 % in uk.
CLEARSIL
Clearasil is a world famous product of the company and having 56%
market share in India. It is one of its kind and very famous in uk.
DIP IT
It’s a stain washer, and highly use full product steal and other antiques.
DISPRIN
It’s a medical product and very famous in people for headache. It’s a
pain reliever and having 40 % market share in India according to latest
reports.
HARPIC
Harpic is a disinfectant and a toilet cleaner. Having 67%
market share in India, it’s a very famous product which
is consistently grabbing the trust of the market.
STREPSILS
Strepsils sore throat lozenges.
VANISH
Vanish is a product which already famous in the world and introduced
in India at the time when the economy is booming in India. The market
of VANISH is not very much in India but the company is still hoping
that the market will grow in the next 4-5 years.
EASY OFF
EASY OFF BANG is a stain remover. It is meant for middle and higher
level families. It has a 41% of market share in its category.
VEET
Veet is a latest product of the company which was introduced in India
in 2001 and in 2003 this product was re-launched after some correction
in the product’s quality. Right now the product is having 39% of the
total market share.
Cherry
It’s a shoe polish and was introduced in Indian market in 1988. The
market share of the product is 44% in liquid format and 65% in paste
format.
STRATEGY OF THE COMPANY
Our strategy for profitable growth involves:
1.Focusing on our strong brands in the categories with highest growth
potential.
2.Innovative product and brand development.
3.Geographic roll out of our key brands and categories.
4.Above-average investment in brand building.
5.Tight cost control to fund reinvestment in core brands and grow
shareholder returns.
6.Selective add-on acquisitions.
FUTURE PLANS
FUTURE: GURGAON: The Rs 1,200-crore Reckitt Benckiser, maker of
brands such as Dettol, Lizol, Cherry Blossom and Disprin, has kicked
off an aggressive strategy aimed at safeguarding the germ protection
positioning its flagship Dettol soap and liquid antiseptic brand has ruled
over for years.
Though the Rs 400-crore Dettol continues to lead the antiseptic liquid
handwash market with over 50% share, rival Hindustan Unilever’s
(HUL) mass-priced soap brand Lifebuoy has begun taking away share
from Dettol in recent months, even though marginally. HUL has been
pushing Lifebuoy on the same hygiene and germ protection platform
that Dettol is synonymous with.
Reckitt Benckiser has decided to reposition Dettol — its highest selling
brand — from just premium to address the mass segment as well. Dettol
liquid handwash is in the process of being rolled out in 135-ml packs
priced at Rs 38 across all three variants — original, skincare and
sensitive. Dettol soap, too, has been introduced in a smaller SKU of 35
gm priced at Rs 6.
When contacted by ET, Reckitt Benckiser India MD Chander Sethi
said: “It’s the first time we have introduced Dettol in small packs such
as these. The move is part of our overall strategy to address diverse
consumer needs.”
While the Rs 1,200-crore Reckitt has had small SKUs for other brands
in its portfolio such as disinfectants Harpic and Lizol and mosquito
repellent Mortein, it’s the first time that Dettol’s soap variants are being
introduced in small packs.
Prices of other Dettol variants remain unchanged as of now. The 250-ml
handwash continues to be priced at Rs 55, the 1-litre pack is priced at
Rs 150 while the 100-ml refill pouch is priced at Rs 30. Rival Lifebuoy
handwash soap is currently available in three SKUs: Rs 40 for 200-ml,
Rs 70 for 540 ml, and at Rs 150 for 900 ml. Its refill pack is priced at Rs
25 for 180 ml.
Dettol is poised for a spate of brand extensions in the personal care
space including gels, sanitisers and beauty products. While declining to
divulge specific future plans, Mr Sethi indicated:
“We are planning to roll out many variants of Dettol, but each of these
will continue to occupy the brand’s core germ protection positioning.”
Reckitt Benckiser has set a sales target of Rs 1,000 crore for its Dettol
brand by year 2010. The company recently concluded a Rs 125-crore
capacity expansion exercise with two new plants in Jammu and
Sitargunj in Uttaranchal.
