Posted in Marketing & Strategy Articles, Total Reads: 1028
, Published on 17 September 2015
In this article here we will see the dynamic market which India represents, challenge it produces and how various firms and companies survive here. This article shows the various aspects of marketing with the help of major consumer product companies like P&G and HUL. They are the giants in the consumer product sector in India today and are major competitor of each other, having about 60-70% majority market share in each segment in consumer product.
Let’s see the efforts of P&G in order to compete with the present market leader Hindustan Unilever Limited, P&G has 11 categories but is leader in only six of them- healthcare, blades & razors, feminine care, baby care ,anti-ageing skin care and hair care. Despite being leader in all these sections, it has not been able to compete HUL when a total overview is taken, this is because of the reason that, the categories in which P&G leads do not produce that much revenue in present scenario but acc. to P&G in future these categories will play a major role.
We can see here that major share in revenue of P&G is of fabric care and home care, and it is far behind HUL in this segment, and the categories in which P&G is leader do not contribute much to the overall revenue of P&G.
The reason for this is that fabric care segment in India is a Rs.99 billion market and who so ever leads it automatically boosts its revenue. P&G had only 7.6% share of the laundry segment of the market and thus lagged in revenues in 2009, the revenue amounted to 7650.4 million and that of HUL was 43415.29 million. So we can see the difference in the revenues of both the companies.
What is the reason for such a difference in market share in terms of revenue?
The reason could be explained in terms of the difference in marketing done by both the companies and the strategies on which the firms work. In fact along these giants local producers also competed once and still have shares in the market.
Entry of HUL in India-
HUL started its business in India as Lever Brothers who exported “Sunlight” laundry soap to India in 1888. Then started to sell Lifebuoy, Pears, Lux and Vim in Indian markets till 1895,then in they set up three subsidiaries in1930 which merged in 1956 to form Hindustan Lever Limited(HLL).
In 1959 HUL introduced the revolutionary surf which was an immediate success but only a fraction of people could afford it in the beginning, so HUL introduced Rin bar for the rural population n 1969 which was also a great success.
Challenge due to rise of Nirma: In 1969 filling the void the rural people and surf, an entrepreneur of Gujarat introduced yellow coloured powder called Nirma which was priced 1/3rd of HUL’s Surf, because of this it became an instant hit and it managed all this by accepting lot of concessions being a cottage industry. For more than a decade Nirma remained untouched by any other brand including HUL as it offered generous margins and aired catchy ads on TV and radio. By 1985,Nirma commanded a 58% market share(by vol.) and became largest brand in India.
After 19yrs of launch of Nirma HUL finally realised the need for new product in low cost section so they introduced “wheel” in 1988, promising to be without burning and itching caused by Nirma’s high soda ash content. By 1990 it surpassed Nirma and became market leader again, but still it required 20 years to regain their position in the market, So it could be deduced from all of this that it hasn’t been easy for HUL also to be market leaders.
P&G in India-
P&G came to India in 1985 with its Vicks range, after liberalization in 1991 it set up its subsidiary and launched its detergent brand Ariel and then later they launched Tide in 2000.In order to win the market, they kept on launching various variants of Ariel and Tide from time to time but still remained unsuccessful due lack of advertisement technique and failing to reach rural population. Though they invested a lot in advertisement and promotion but failed to connect to people across India, tag lines of various brands were very effective in capturing attention of many people and in sector also they failed.
Distribution Channels of HUL:
The major fraction of consumers of products sold by HUL and P&G were in rural areas, so in order to reach to them it required extensive amount of networking and supply system in rural areas. HUL was successful in doing so and this is where P&G lagged. HUL in 1997 it launched a distribution model “Streamline” for reaching that were inaccessible but had high potential. In the same order it also launched Project “Shakti” in 2000 in which members of Self Help Group (SHG), reached micro credit for selling the HUL products in the rural areas.
These steps produced excellent results for HUL and soon after some time demand increased in rural areas which differentiated HUL from various other companies, these steps though initially were not much profitable but later on provided profits for HUL and helped them to become and remain the market leader till now.
This article has been authored by Shikhar Gautam from IIM Kashipur
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