PROJECT REPORT ON A STUDY ON SOAP INDUSTRY w.r.

t HUL

BY GROUP 3

Submitted in Partial Fulfillment of Master of Business Administration (MBA) Programme : 2010 -12 Of

Department of Management Shri Ram Murti Smarak College of Engineering & Technology, Bareilly

Guided by:Respected Priyanka mam Respected Indu gupta maam Submitted by:- Group 3

Contents

I. II. III. IV. V. VI. VII. VIII. IX. X. XI. XII.

Introduction Market Share of Soap companies Company Profile HUL Distribution Channel - HUL Product Mix HUL Overview Lux Soap Marketing Mix SWOT Analysis Competitor Analysis Market Segmentation Recommendation conclusion

Toilet Soaps- An Introduction

The toilet soaps market is estimated at 530,000 tpa including small imports. Hindustan Unilever is, of course, the market leader. The market is littered over with several, leading national and global brands and a large number of small brands, which have limited markets. The popular and premium brands include Lifebuoy, Lux, Cinthol, Liril, Rexona, and Nirma. Toilet soaps, despite their divergent brands, are not well differentiated by the consumers. It is, therefore, not clear if it is the brand loyalty or experimentation lured by high volume media campaign, which sustain them. A consequence is that the market is fragmented. It is obvious that this must lead to a highly competitive market. Toilet soap, once only an urban phenomenon, has now penetrated practically all areas including remote rural areas. The incremental demand flows from population increase and rise in usage norm impacted as it is by a greater concern for hygiene. Increased sales revenues would also expand from up gradation of quality or per unit value. As the market is constituted now, it can be divided into four price segments: premium, popular, discount and economy soaps. Premium soaps are estimated to have a market volume of about 80,000 tonnes. This translates into a share of about 14 to 15%. However, by value it is as much as 30%.

Market Share of Soap manufacturing companies in India

Market Share

Players

Others

14.8

4.4

16.8

hul 0 10 20 30 % Share 40 50 60

64 70

In terms of market share, the data indicates that HLL had a market share of 64 per cent in the soap market, followed by Nirma at 16.8 per cent and Godrej at 4.4 per cent. However, when contacted by ET, Nirma officials said their market share was in the region of 21 per cent.

Hindustan Unilever is the largest contributor to the toilet soaps market of India. It enjoys almost a two-thirds share, with the second ranked Nirma Soaps placed at a distantly low share of 16.8%. Lux and Lifebuoy have held the sway of the market

for almost fifty years. While the former brand remained the preserve of the highend rich consumers, Lifebuoy ruled the roost with health-conscious users as a hygienic soap. The products underwent up-gradations with the introduction of versions like International Lux and Lifebuoy Personal. In between came brands like Nirma Rose, Nirma Beauty Soap, Breeze, Caress, and LeSancy. In 1993 came Dove. Earlier, Liril made waves with its lemon touch and bathing acrobatics. At the medium and lower rungs, brands like Hamam, Moti, Jai, Rexona (third largest brand) were well supported by OK and later by OK NSD Bar. The brands have undergone a full foray of launches and relaunches, making each occasion to give a more vigorous thrust to the marketing effort. Quite a few of the brands have been acquired: Hamam from TOMCO and Baby Toilet soap from Johnson & Johnson, for example. To provide a sound base to its toilet soaps operations, HUL has also branched out into other toiletries like shampoos and related products like glycerine, fatty acids. Godrej Soaps had a disappointing experience in forging an alliance with Procter & Gamble (P&G). Infact P&G is withdrawing itself from the premium soap segment like Camay. P & G has now a fully-owned subsidiary in India and now it is concentrating more on personal care products. Godrej retained all soap brands and transferred detergent brands to P&G in 1993. Godrej found it convenient to shed the detergent brands - Ezee, Key, Biz and Trilo - as they represented a losing portfolio. Capacity utilization in the industry varies from as low as 50% to 80%. Godrej Soaps Limited (GSL) has been using its capacity by working for other producers. GSL makes Rexona and Dettol for Reckitt & Colman of India and Johnson's Baby Soap for Hindustan Lever (Johnson & Johnson). And yet only half of its capacity of 71,000 tonnes is being used. Also companies like VVF Ltd. has state of the art technology oriented plants, which they mostly use for producing brands like Dettol, Nivea Creame soap and also internationally well know brands like Fa for other marketers. It seems Indians have sacrificed hygiene at the altar of thrift. If numbers are anything to go by, Indians do seem to be washing themselves, as well as their

clothes, rather less. Data collated by industry certainly points to this rather unpleasant conclusion. The consumption of soaps and detergents has shrunk substantially with volumes declining by 11.5 per cent and consumption of detergents declining by 4.1 per cent in the year. The evidence of this decline in consumption is somewhat perplexing in a country with a growing population as the consumption of soap and detergents should logically be directly proportional to population growth. "Soaps and detergents are at the back of the house and are not status products like TVs or refrigerators. Its possible that consumers may be economizing on their use or buying cheaper brands during a downturn," explains an official at a leading FMCG firm. One possible reason could be increased production in the small-scale sector. For instance, besides detergents sold as powders and bars, which is produced by organized players, a large quantum of detergents are sold in the form of laundry soaps, which are used for washing clothes. Production of laundry soaps are reserved for the small-scale sector and data is not readily available. There is also a large cottage industry producing cheap soap, used for personal wash, for which reliable numbers are not available. Another possible reason for the apparent decline in consumption could be the free samples of soap which have been handed out as part of incentive schemes, say industry sources. The quantum of such samples may not be picked up in the data, said the official. There is another whacky hypothesis. Many households earlier used soaps for twin purposes: for body wash as well as shampoo substitutes. However, successful sachet marketing in shampoo seems to have now penetrated this market, which has directly impacted the sales of soaps. A detailed analysis of the data shows that sale of premium soaps, the likes of HLLs Lux or Godrejs Cinthol, declined by 13.1 per cent. But even the carbolic or discount soaps the likes of HLLs Lifebuoy or Nirma saw volumes decline by 9.9 per cent. Even though the market has shown de-growth in toilet soaps segment, analyst say that it will grow at a meager rate of 3 to 4 per cent especially in the premium category, which was previously looking attractive. This can be

attributed to factors like excessive dependent of Indian rural sector on monsoon, which can be uncertain. Also due to high excise duty prices have remained high enough to keep the huge middle class chunk away from this market. Thirdly 80% of the raw materials used in premium soap are imports, which attract high import duty. All this factors lead to increase in cost, which deters the players to provide value for money product to the middle class consumer.

Company Profile HUL A 52% owned subsidiary of Anglo Dutch giant Unilever. India 1888 India largest FMCG company Touching 3 out of 5 Indian consumer ,around 60% consumers. 20 distinct categories Home and personal care products, food and beverages. HLL is now known as HUL 100 factories India Manufacturing its diverse product range Headquarter: Mumbai Market share Toilet soap category 54.3%

Distribution channel of HUL 2000+ Suppliers and associates 4000 Redistribution stockiest Covering 1 million retail outlets Reaching 250 million rural consumers

Product Mix- HUL The width of the HUL Product mix: The width of the product mix refers to the number of different product line the company carries that are given below, Personal wash Laundry Skin care Oral care Deodorants Color cosmetics Ayurvedic personal and health care Shampoo Tea Coffee Foods Ice cream Width = 12 categories

The lenght of the HUL Product mix:

The Lenght of the product mix refers to the total number of items in the product mix. E.g: Personal wash: Lux, Lifebuoy, Liril, Hamam, Breeze, Dove, Pears, Rexona Laundry: Surf excel, Rin, Wheel Skin care: Fair & Lovely, Ponds, Vaseline, Aviance Oral care: Pepsodent, Close up Deodorants: Axe, Rexona Colour cosmetics: Lakme Ayurvedic personal and health care: Ayush Shampoo: Sunsilk, Clinic Tea: Broke bond, Lipton. Coffee: Bru Foods: Kissan, Annapurna, Knorr Ice cream: Kwality walls Width = 30

The Depth of the HUL Product mix: The depth of the product mix refers to the number of variants of each product offered in the line E.g: If close up toothpaste comes in three formulation and in three sizes, close up has a depth of 9 (3*3)

The Consistency of the HUL Product mix:

The consistency of the product mix refers to how closely related the various product lines are in the use, production requirement, distribution channel or in any other manner. HUL Product line are not consistent because of its large width.

Overview : Of Lux Soap 1916 Laundry soap 1925 Bathroom soap India 1929 First brand ambassador: LeelaChitnis (1929) Market share is almost equal to Lifebuoy

1-Product: Product Classification: Tangible Non durable good Lux and other soaps fall into the category of convenience good.

Prominent Variants: Lux almond Lux orchid Lux fruit Lux saffron Lux sandalwood Lux rose Lux international Lux chocolate Lux aromatic extracts Lux oil and honey glow etc.

Labeling: Lux trade character or logo is present prominently in the package Female model Displayed graphically Key ingredients Packaging: Different colors Different variants( Saffron Saffron variants & Pink Rose extracts etc. ) Package size 100gm, 120gm, 150 gm

Launched Mini Lux 45gm - Rs 5

2 Price : Competitive prices: Neither high nor low

3 Place HUL distribution network key strength (Which helps reach out its product across the length and width of the vast country) 2000+ Suppliers & Associates 7000 Stockists Direct coverage in over 1 million retail outlets Factory Company warehouses Distributor Market Factory Wholesaler & Big retailers (Bulk orders) 30% Sales Lux gold star offer: 22 Carat Gold coin in the Soap First 10 caller (Extra 30 gm gold) Lux star bano, Aishkaro contest: A special promotional pack of lux soap Scratch card -50 lucky winner got the chance to meet Aishwaryarai.

4 Sales Promotion: Lux gold star offer: 22 Carat Gold coin in the Soap First 10 caller (Extra 30 gm gold) Lux star bano, Aishkaro contest: A special promotional pack of lux soap Scratch card -50 lucky winner got the chance to meet Aishwaryarai.

SWOT Analysis Strengths: Strong market research (Door to door sampling once in a year Rural and Urban area.) Many variants (Sales Promotion: Almond oil, Orchid extracts, Milk cream, Fruit extracts, Saffron sandalwood oil and Honey) Strong sales and distribution network backed by HUL Strong brand image Dynamically continuous innovations New variants and innovative promotions (22 carat gold coin promotion Chance Hai) Strong brand promotion but relatively lower prices Winning combination. Mass appeal/Market presence across all segments ( 15% of soap market) Weakness: Mainly positioned as beauty soap targeted towards women, lack unisex appeal Some variation like the sunscreen, international variant did not do well in the market Not much popular in rural areas Opportunities: Soap industry is growing by 10% in India Beauty segments compounded annual growth rate (CAGR) is very high Liquid body wash is currently in growth stage Lux should come out with more variants in this segment Large market share Strong hold over the market

Threats: High internal competition (Pears Beauty segment) New entrants (Vivel) Maturity stage threat of slipping down to decline stage if constant reinvention is not carried out

Competitor Analysis Internal Competitor:Lifebuoy: 1895, 18% Market shares External Competitor: Godrej consumers products limited (GCPL): 2nd Largest soap maker after HUL 9.2% Market share Brands: Cinthol, Fairglow, Nikhar Wipro: Brand: Santoor (No 1 in AP) and Chandrika ITC: 1.75% growth in initial five months Brand: Superia, Fiama di wills and Vivel Sold in six states

Market segmentation Market segmentation of Lux Gender: Female Age: 16-35 Income: Middle income group (Rs. 15 to 20) Highest selling beauty soap in urban area (Rural area: Lifebuoy) Expensive Affordable, Target Area: Urban and Sub urban Upper middle and middle class people Product Positioning of Lux Created Good Position Buyers mind Better product attributes, price and quality Offering product in a different way Offering improved quality of the product affordable price with high branding to position the product as a best quality beauty soap in buyers mind. Market share of HUL: 54.3% Market share of LUX: 15% Better Positioning Market leader of beauty soap

Conclusion :-

The most preferred category of soap in HUL is LUX. Various variants were introduced during its life cycle. Continuous improvements are being done in the soap to maintain competiveness.

Recommendation: Ayurvedic variant Lux kids special soap Target rural area Target male customers

References: www.capitaline.com www.hul.com www.google.com www.wikipedia.com www.mbaparadise.com www.fmcg.com