Should Horlicks Extend To New Categories?

Posted in Marketing & Strategy Articles, Total Reads: 3961 , Published on 11 October 2012
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GlaxoSmithKline is trying to introduce newer product categories under the brand umbrella of Horlicks. The reason and vision behind this move is not to be perceived as only a health drink provider. Hence Horlicks is trying very hard to enter in the allied health food and beverage categories. In spite of having more than 70% market share in malted health drinks segments, Horlicks is trying to diverse the product portfolio because, to be alive in the market, they have to be innovative and keep updating their offerings as per consumer needs.(Khicha, 2011) Now this can be happened in two ways: product line extension and brand extension.

They are constantly and successfully doing product line extension by innovating different kinds of Horlicks drinks to tap all the potential segments. Now to expand the product offerings or brand extension, Horlicks is trying to introduce more diversified product under the brand umbrella. Now from the brand personality point of view, Horlicks has been perceived as health conscious brand. Hence, they are trying to defend the same perception for all the new product entry under the brand name. Hence, difficulty is arising while they are introducing a very diverge product like Foodles. Some of their new products are not very successful also.   Hence the big question arises: Should Horlicks extend to new categories or not.


Stretching the Core

Horlicks was planning to launch 8-10 new products and expecting 30% growth from that.To ensure growth of the brand of Horlicks, ShubhajitSen, GSKCH executive vice president (marketing) talked about three levels of strategies: (DR.LEENA KAUSHAL, Oct, 2011)

  • Invest more in research and development in the main product i.e. original Horlicks to keep the standard improving.
  • Second, product line extension into new health drink sectors to tap all the uncovered consumer segments that may not be using the category. For example, Junior Horlicks, Women‘s Horlicks, Mother‘s Horlicks, Asha, Horlicks Lite etc.
  • Third, brand extension to new product categories like Noodles (Foodles), cereal bars (Horlicks NutriBar), ChillDoodh, Horlicks biscuits etc.

Horlicks expands its product line of health drinks to cater all the segments of potential customer.

  • Junior Horlicks: To target children for the age group of 2-3 years.
  • Women’s Horlicks: To fulfil the nutritional need for the mothers or to be mothers.
  • Horlicks Lite: For the aged people and diabetic people as it contains all the needed ingredients but with low sugar and low cholesterol. It is positioned as “With zero added sugar and zero cholesterol‖”.
  • Asha: To cater the need for the lower end segments.
  • Horlicks Gold: This is the latest and premium version of its portfolio to attract premium classes with better test and aroma.

Apart from the ingredient contain differentiation, Horlicks also launched its Honey, chocolate and vanilla flavour to provide pleasurable nourishment.

Now brand extension to new product categories is newer concept for Horlicks. They have already launched Nutribur, Horlicks biscuits and Foodles. It positioned each of its product line extension based on health consciousness concept. Horlicks biscuits are positioned as calcium content which is good for bone. Nutribur is positioned as multi-nutrient bar which contains 11 vital nutrients. They position Foodles also on the same lime of concept of health having a good nutrition value. They came up with the “health maker” packet whicg contains nine essential vitamins with the goodness of rice, wheat, ragi and corn.

Challenges

Analysts are suspecting that in the name of product line extension and brand extension, Horlicks is trying to over leverage the mother-brand.

  • Some market analyst apprehended that expanding into new category especially into noodle segment may create a negative perception about the brand, because normally noodles are perceived as junk food. This perception is in dissonance with the brand personality of Horlicks; hence this diversification is completely unrelated.
  • Horlicks does not have enough efficient supply chain and distribution model for their flagship product. Hence they could not leverage the distribution system for other products. This is a major cause for the struggling of Nutribur and Chil-doodh. So at first they have to develop the distribution system for other products also.
  • Deviation from the core competency may result in brand dilution. Like when Ponds introduced toothpaste, it was a major failure. So before any new product development, they have to think about strategic fitness.
  • Towards the bottom of the pyramid, perception of the brand Horlicks is “urban” or “premium”. Hence, Horlicks failed to penetrate the bottom of the pyramid to that extend. Here lies the scope or opportunity to develop a very cheap and simple product. They tried with “Asha” but it was not a great success.

Future opportunities

Horlicks has currently launched oats products for the breakfast food section. For this type of products, market is quite emerging and attractive. Horlicks is trying to position this product also on the other health aspect like blood pressure and weight management for the age group of 25-45. Analyst also claims that unlike product category extension for Foodles and biscuits, which were not the kind of products for breakfast item, the entry into oats segment are more of a strategic fit with Horlicks core brand. This product is more in synergy with the brand personality as oats is also a breakfast item to be consumed at breakfast table.

Also as a recommendation, I am suggesting a product similar to Cerelac or ready to eat materials for baby. May be the product based on milk and will be applicable for the baby for less than 1-2 age groups. In that case they can also leverage the existing supply chain system.

Another product that I can think of is protein supplement for mass gaining. The potential customer segment will be body concern middle age people or teenagers.

Conclusion

For the sustainability purpose, every company has to be innovative in terms of product line extension and brand extension. For this purpose they have to be updated with the latent needs of the consumers while keeping in mind the brand perception. The brand personality should not be diluted due to some arbitrary product development. Product also has to be strategic fit under the offerings of the particular brand. As of now Horlicks is not ignoring its core business rather they are trying to renovate in that section too. The malt-food drink section is under constant innovation to cater all the segments or potential customer. So as an obvious next step, Horlicks implemented the concept of brand line extension. May be all the innovations are not that much success. One of the major causes for failure is lack of distribution system.So with proper distribution system and right product choice, Horlicks should extend to new categories.

This article has been authored by Saikat Mandal from IIM Ranchi.


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