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P&G Case: Proctor and Gamble India: Gap in The Product Portfolio?

The document discusses P&G's operations in India and strategies to expand into emerging markets and different consumer segments in India. It provides details on P&G's product portfolio, including brands like Tide and Ariel. It also discusses the highly competitive laundry detergent market in India and competitors like HUL and Nirma. P&G is examining ways to better cover all consumer segments, such as having more product variants or entering the low-cost segment not fully tapped. The competitive landscape and strategies of players like HUL to reach rural consumers are also summarized.

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218 views6 pages

P&G Case: Proctor and Gamble India: Gap in The Product Portfolio?

The document discusses P&G's operations in India and strategies to expand into emerging markets and different consumer segments in India. It provides details on P&G's product portfolio, including brands like Tide and Ariel. It also discusses the highly competitive laundry detergent market in India and competitors like HUL and Nirma. P&G is examining ways to better cover all consumer segments, such as having more product variants or entering the low-cost segment not fully tapped. The competitive landscape and strategies of players like HUL to reach rural consumers are also summarized.

Uploaded by

Param Nagda
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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P&G Case

Proctor and gamble India: Gap in the Product Portfolio?


- Wanted to sift the focus away from saturated western markets to
emerging markets
- Developing economics accounted for jut 30% of global sales
- Leaders in
o Healthcare
o Blades and razors
o Feminine care
o Baby care
o Ant-ageing skin care
o Hair care
- Thrived on premium brands
- P&G focused on driving distribution deeper into the villages than on
launching new products and entering new categories
o Doubled its distribution reach over the last couple of years
o 1.3 million outlets as comparted to HUL’s 1.6 million outlets
- Classified the market into three categories
o India 1: 8.5 million households of affluent Indians
o India 2: the rest of urban India that comprised 56 million
households
o India 3: rural marker consisting of 130 million households
- Trying to score wins in all three categories by 2015
o India 1: wanted to double revenue from detergent, hair care,
and feminine hygiene
o India 2: double revenues from Tide and Head & Shoulders
o India 3: almost triple revenue on the back of low-cot distribution
models
Laundry Detergents
- Rs. 99 billion market
- Largest segment that fast moving consumer goods players operated in
- Potential to drive P&Gs growth

- The repositioning of Tide in 2004 and the launch of Tide Natural in 2009
generated positive consumer response and led to increase in P&G’s sales (

- Hand-wash detergents used by the economy segment were more than


thrice the size of the concentrated powder detergents. Moreover, hand-
wash detergent market was growing at a faster rate than concentrated
powder detergent
- Time to fill the void at the bottom of the pyramid
- Two brands: Ariel (premium segment) and Tide (mid-price segment)

HUL entry in India


- Exported sunlight laundry soap to India in 1888
- In the 1930s Unilever set up three subsidiaries in India which were
merged in 1956 to form Hindustan Lever Limited (HLL)
- Made the Surf washing powder in 1959 – used a bucket instead of bar
of soap and club
- Immediate success
- Only a fraction of consumers could afford Surf
- Most of the rural poor continued to use soap bars
- Then HUL launched RIn bar in 1969 which also became a cussed to to
meet the needs or the rural poor

Rise of Nirma
- A yellow colored detergent powder at a price one-third of HUL’s Surf
- Became an instant hit
- Was granted several concessions in taxes and wage rules for being a
cottage industry

2
- For more than a decade it was virtually unchallenged as it tapped rural
markets
- Offered generous margins to trade and aired catchy ads on TV and
radio
- To counter the threat, HLL extended Sunlight from bars to powders
and matched its price with Nirma

- HLL launched the memorable “Lalitaji” ad campaign to position Surf as a


rational purchase. However, all these efforts remained unsuccessful in
curbing Nirma’s march. In 1988, “Wheel” was launched as a low-cost
detergent that promised cleaning without the burning and itching caused
by Nirma’s high soda ash content. By 1990, it surpassed Nirma to become
the market leader. One of the reasons for success of HUL had been its
intensive distribution network

Distribution at HUL
- Highly efficient distribution system in urban India
- Goods sent to a depot or a carrying and forwarding agent (CFA) who
stocked and dispatched HUL’s products for a service fee
- In each town, a redistribution stockiest was appointed who ordered
and received stocks for CFA and sold them to wholesale and retail
outlets in that area
- Organized into 4 profit centers
o Detergents
o Personal products
o Beverages
o Food
- Could not replicate this in rural India because the population and
potential business was too small for each profit center to appointed a
stockiest exclusively
- HUL leveraged its scale and appointed one stockiest common to all
business in rural markets that were accessible

3
- Launched a distribution model in 1997 “Streamline” for reaching rural
markets that were inaccessible but had high potential
- Appointed rural distributors who in turn appointed star sellers among
the wholesalers in neighboring villages
- Star sellers would purchase stocks from the RD and then distribute
those to retailers in smaller villages using local means of transport
such as motorcycles
- This enhanced HUL’s reach into rural markets enabling it to reach an
additional 220 million in 100,000 villages
- Then launched project “Shakti” in 200 to reach the over 500 million
inaccessible customers
o Partnered with members of the self-help groups
o Shakti entrepreneurs bought HLL products and sold them to
retailers and end-consumers in nearby villages

P&G’s Entry in India


- Entered in 1985
- 1991 set up a subsidiary in India and launched Ariel
o provided better cleaning performance
o reduced the amount of detergent needed per wash
- HUL then launched Surf Ultra to compete and then Rin detergent
powder
- P&G had a joint venture with Godrej
o Procured Key and Trilo detergent from Godrej
o Terminated the venture in 1996
o P&G retained Trilo, Key, and Ezee which they sold in 1998 to
focus on their flagship brand Ariel
- 1999 launched Ariel Power Compact and New Ariel Front-o-mat
o to bolster presence in the premium segment

Launch of Tide in India

4
- launched in 2000
- positioned on the platform “outstanding whiteness”
- claimed to improve the washing experience through its pleasant
lemon fragrance that lingered on the clothes hours after washing
- launched in the premium segment and found little consumer
acceptance
- turnaround came in 2004 when P&G slashed its prices drastically and
repositioned it in the mid-price segment where it competed with RIn
and gained market share steadily

Aggressive Marketing by Ghari


- low cost player
- priced products aggressively and offered higher trade discounts and
consumer promotions
- advertising budget was less than 5%
- focused on Uttar Pradesh

Launch of Surf Excel Blue and Surf Excel Quick Wash


- reduced water consumption and time taken for rinsing by 50%

Price Wars – the Clash of Giants


- P&G made price cuts and then HUL followed
- Lowered profitability for both
- HUL discontinued RIn Supreme powder
- The rebranded to Rin Advanced the brand improved its market share

Changing Market Dynamics


- Surf Excel
- Dirt should not be an obstacle toward the learning experience
- Dirt is good positioning

5
- HUL recognized the importance of burgeoning mid-price segment and
acknowledge that its future strategies would aim to tap into this
segment
- Moving from strivers to aspirers

Re-Examining the Product Mix of P&G?


- Made successful inroads into the mid-segment with Tide and Tide
Naturals
- Fragrance is an important factor
- Wondered if they should have a product for the bottom of the
pyramid
- Or have ore variants of their products
-

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