Fast Moving Consumer Goods Company In India Marketing Essay

Published Date: 23 Mar 2015

The following report will be based on full situation analysis of the product and marketing plan for the decline product of an organization and it will also include full SWOT analysis of the product and the different marketing strategies will also include on this report. In order to measure the company performance about the product it will have in depth market analysis for that Ansoff 's Matrix is used while considering 7p's of marketing mix, product positioning, different target market for the current product and it will also consider the different market segmentation for the product line extension and the marketing plan will also include the different marketing strategies for the product itself to re gain market growth in order to survive in this competitive market.

However, for the growth of the product Ansoff Matrix will be consider for their current strategic problems and different aspect of marketing strategies will also be used for the product line extension. Moreover, their impact on the company will also be discussed and reasoned for the product failure and conclusion will be also drawn at the end of report.

Introduction

Hindustan Unilever Limited is a famous and one of the largest Fast moving consumer goods company in India. HUL has been always putting more efforts on refurbish to its product in order to meet changing life style of consumer without any change in their quality of the product. HUL is Subsidiary of Anglo Dutch Giant Unilever which has share of 52%. It was launched in 1933 as a lever Brothers. Currently has main headquarter in Mumbai where it operates all its business and it has touch almost 2 out 3 Consumers in India. It produces different category product like home care, Personal Care which has largest distribution Channel in India

Hindustan Unilever Limited has more than 100 factories in India where it manufactures a product supply it to Different wholesaler. It has market share of 54.3% in India with help of the supplier it has a largest distribution network for providing it s good from factory to retailer.

The Following reports deals with the one of the popular product of HUL is "LUX". LUX falls under the category of Toiletry Soap and it has a market share of 54.3%. LUX itself stands for assurance of the glamour and beauty as it is India's most supported brand for the personal care product. LUX was launched in India on the 1929 and it has different range of fragrances and colour for the soaps. LUX soap is mainly for the women itself and it has further introduced different categories on that like it has introduced LUX almond, rose, Strawberry and so on.

However LUX introduced so many fragrances on their soap but it has fail to survive in this Competitive market. Its Demand was fall mainly due to currency fluctuation in world wide. HUL products are sold to their world wide more than 100 countries as of that it has adversely affected to the fluctuation of Currency which leads to decrease in sales for the product. One of the main reason to come under the decline stage is because due hard economic crisis in India. In the year 08-09 its sales were affected for the LUX Soap due to the recession in India on this year and it also not affected India only but it has also affected to the other countries for the slowdown in the market for all of this reason Customers of LUX Soap was were going to look for the another soap and also finding for low price soap for this reason it has lose its market share not only for LUX soap but also affected the different products of the Hindustan lever limited.

LUX itself facing a huge competition from Life buoy soap and it's also one of the products of HUL by that Consumer switch to cheaper soap and for which Demand for the LUX was falling quickly. It's also facing stiff competition from the other companies also like Godrej Consumer Product, ITC and Wipro.

The Following study will reflect on the conceivable way for the brand to survive in this competitive market.

Situational Analysis of LUX Soap

The Full situational Analysis determines Strengths and weakness, Opportunities and threats it also involves brief study of current market trend of the product within and outside of society and economy and the brief analysis of competitors and company itself.

SWOT Analysis of LUX Soap

Strengths: LUX soap has a good brand image in the minds of the customers. It has many variant in that soap such as orchid extracts, Milk Cream, almond oil, fruit extracts etc. It has very strong sales and channel of distribution network.

LUX soap has a comprehensive consumer base which leads to increase in their sales and profit.

Large Product Line: LUX has the large Network for their channel of distribution it has a wide variety of fragrances in their Soap itself.

High Global Market Share: LUX soap has 54% of the market share according to the report of KPMG, and it is one of the most trusted brands by the consumers which have attracted more of the women.

Weakness: one of major weakness is a mainly target to the women which lacks unisex adjuration. Some of its variants has did not perform well in the market which has great impact on the minds of the customers. As it is most popular in urban areas it has no market share in rural areas because of the price of soap is higher consumers in the rural areas are not interested to buy this soap.

Higher Price: A single pack of soap their range 20 gm of LUX soap costs 20 INR which is relatively higher than the other competitor's soap.

Declining Sale: Due to Economic Slowdown it sales were affected and for that reason consumers of the product have chosen to switch brand due high prices and they were searching for cheaper price soap as a result its sales were most affected on the Indian economy.

Opportunities: Now a day's soap industry is emerging at a faster rate in India and it will have better opportunity to take advantage in rural areas by providing them product at a very cheap price so the consumers will forcibly attracted to but the soap. LUX body wash is at growth stage so for that LUX should introduce some additional variant in that product which will have higher growth rate. Since it has large market share it will have better opportunity to introduce some new product which will gain more market share.

Threats: The Major threat from new entrant like Vivel Soap, Pears which will have a greater impact on their sale of the product.

Local Competitor: one of biggest threats is local competitor such as Cinthol, Pears are doing well in the market due to low pricing strategy in order to gain more market share in the market.

Environmental Analysis Using Porter's 5 Forces

Degree of Rivalry: (High)

LUX Soap Faces very huge competition in the Indian economy not only from the regional but also from the local brand such as Vivel Soap, Cinthol and Pears which will have greater impact on their sales which lead to decline in their profit. Even its face stiff competition from the global brand such as pears are emerging day by day

Switching cost is also imperceptible and with that most of consumers are forcing to buy another soap because other competitors also providing same quality of product at a very low price.

LUX Growth is brackish where the industry of soap it's blowing.

Bargaining Power of Buyers: (High)

Who are buyer i.e consumers, consumers are every time very price sensitive because they always go for the cheaper price product and hence their huge competition between soap making industries so for that competitors are producing wide variety of product so their will more chance of consumers to switch other product.

In most of rural areas peoples are not interested to buy because of the higher prices.

Switching cost is relatively very low and for this there is price war among the competitors and consumers are always concentrate on value for money these results in stiff competition among industries to give promotional offer such as 3 for 1.

Bargaining Power of suppliers: (Low)

Unilever has a more than 100 manufacturing units in India so there are number of suppliers are available so there will be lesser bargaining power of suppliers

For Producing Soap companies always looking for the cheap raw material to manufacture the product and there are number of supplier are available in the local market to provide raw material at a low price. Hence the bargaining power of suppliers in low.

Threat of Substitute: (High)

There are mainly two major threat of substitute in the soap category. One of the them is use of product like face wash and body wash. Though there is a growing trend among the urban areas to buy face wash or body wash due to their western culture so it ultimately leads to decrease in their sales from this type of upgraded product.

Secondly there is threat from the downtrend i.e people have different attitude towards their buying for the soap because if the price of premium soap rises consumers are force to buy different category of soap due to their buying behavior for the product.

Threat of New entrant: (High)

The raw material required to produce the soap is palm oil which has to be imported from the countries like Malaysia. Thus palm oil is very expensive in India so it relatively cheaper in Malaysia and china. So there will be more chance of these countries to export soap in this Indian market.

Companies like Kopran, Marico and Anchor to launch personal care products in this industry. So there will be more cost will involve in switching to this market.

The new companies who launched soap is basically target to the small segment of market in order to take competitive advantage from the other industry.

PEST Analysis

Political

There was time when soap industries were under the restriction of raj but after the declaring a new PM Rao government there has been greater competition between the organized sector and unorganized sector. The political environment in India is changing day by day and they were entertaining new entrants by giving concession on sales tax and they were also giving some incentives to open their soap industries in India all this will adversely affected the sales of the LUX soap industry.

Economic

In India soap cost very high as compared to the countries like Indonesia. For E.G. in Indonesia soap cost 5 INR for 100 gms of a pack but in India it cost 15 INR so for that reason consumers are slightly move to buy the cheap soap because consumers always have rational thinking for the buying behavior. The soap producers are also playing lobbying with agencies of government to reduce their production cost.

Social

It is the main factor when since it comes under the premium soap category. With the increase in education and income of the peoples their need for the personal care has also increases. Thus these types of personal care products are targeted to the particular peoples only. However, there has been growing trend in India for adopting western culture of peoples it will very difficult for the LUX soap to survive in this competitive market because new entrants are entering with substitute product like body wash and face wash for all this reason sales of LUX soap has affected sharply. In addition, Change in the consumers habits for buying a particular product will also be affected.

Technological

Though soap industry is not very technology intensive. Some small soaps manufacturing industries are rely upon the other soap this is because to advanced technology for producing the soap (very importantly on finishing stage).

However, though survey made by the national council has reported that FMCG industry will be expected to enter in new phase of the growth.

Objective Setting

Corporate Strategy: To increase Profitability of the product by 25% globally by the end of 2011. This is will be done by introducing new Face wash in LUX itself to boost sale in order to increase profit.

Business Strategy: To gain 60% market shares in all major countries in India by the end of 2011.

Marketing Strategy: To become market leader in the toilet soap industry by the end of 2011. This will be implemented by introducing some attractive prices for an upcoming product and also to introduce some low cost operation in order to grab lower income group Consumers.

The above different objectives is to become global leader in soap industry and it will be done to give more brand awareness to the consumers of rural areas this all strategy will be accomplish after giving some schemes like buy one get one free.

Strategy Development

Creating Growth strategy by using Ansoff's Matrix

Existing Products

New Products

Market

Penetration

LUX

Product Development

LUX

Market

Development

Diversification

Existing Markets

New Market

LUX has been operates its business in a country for many years in India where each every person knows brand quality and different product of it and consumers are also aware about the different strategies which are used to attract more consumers to buy the product but still it has lacking to survive in the market.

Hence, in order to extent is line for product to sell in the particular market, LUX should undertake Market penetration and also undertake Product development strategy in order to increase sales in this competitive world.

In order to penetrate the market LUX will not have any problem because it's an existing brand with high reputation in the current market. Following thing should be consider:

Penetrating the brand of LUX means adding some new and attractive features on the product and also taking into consideration the effective communication which will turn into new value proposition for the product.

In order to increase more sales LUX should concentrate on appropriate reduction of cost which will directly lead to gain leadership in price. Once price will be reduce more and more consumers will attracted to buy the particular product. Moreover by reducing the price of the particular soap LUX will again have growth in their product and it will be very helpful to survive in the competitive market.

LUX Will also have to do product development for the product line extension and it will be done through by introducing new body wash soap with an existing name and it will also to launch new products like introducing LUX face wash all this will ultimately lead to increase in their sales and again to grab new target market audience for the product. I am using this strategy not only to increase the profit for the company but also to produce new product in the existing market for brand awareness to the consumers which will have greater impact on the consumer to buy the particular product at very low price and again to boost sale for the personal care product.

Competitive Strategy

Porter's Generic Strategy

Differentiation

Cost-leadership

LUX

FOCUS

LUX being an FMCG industry will have a worldwide strategic scope for the future. However in order to survive in this competitive world LUX should focus on both differentiation and also to practice cost leadership strategy to gain more market share in this industry.

In order to differentiate LUX product with the other competitors by charging low price to the initial customers but it will depend on the competitiveness to attract more customers simply by showing their price difference in the supermarkets which will increase their sales at lesser margins of profit. Another factor LUX should also focus on overall cost leadership from the competitors this because having premium price charge to a particular product will attract more consumers to buy it and it in biggest challenge for LUX to charge attractive pricing strategies to gain overall cost leadership. All this will lead to create more brand awareness of the product.

Tactics

Tactics are the techniques that to measure the strategic objective of the product. Tactics normally include manipulation and use of marketing mix.

Product

Since most of the LUX product are broadly accepted all around the globe. However the pack of all the LUX soap should be the same but the size should be reduce from 100gm to 75gm so it will become more popular not only in the urban areas but also in rural areas because in rural areas level of income is relatively very low as compared to the urban areas this will greater impact on their buying behavior of the people towards the product and this will lead to increase in sales.

One of the important factors should also be noticed for their packaging of the product because LUX packaging is almost the same for long times so there is no change in their packaging so they have to come with new and attractive packaging for the product.

Price

According to Kotler (1998), price means pricing your products and services in the market in such a way which is acceptable by our customers and is worth the product or services. Price of LUX soap is relatively higher than other competitors. Hence there are number of competitors in this soap industry who adjust their prices according to their competitors. Therefore LUX should reduce their current prices for the product like now they are charging 100 gm pack is about 18 INR so they should reduce price from 18 INR to 12 INR for the same value pack.

However in order to penetrate the current product in a particular market LUX should sell more of the product in super market rather than selling in a small stores where the quantity of their sales will relatively very low. Hence it introduce some more value pack for the rural areas like to launch value pack of 50gm for 5 INR so it will better to increase sales at a lower margin of the profit.

Place

With effect of internet most of the FMCG products are sold very quickly. In urban areas consumers are easily get their product by ordering their product to through online but this is the common practice to increase sales. However in order to increase their sales again for the same product LUX should open their own stores in a rural areas where the consumers will have direct access to buy the product and also the distribution cost will also be minimized through direct selling to the consumers this is because having direct selling strategy will reduce the cost for the consumers.

Promotion

This is the most important tool of marketing mix of LUX Soap is the promotional mix. Because most of the sale of the product will be base on attractive promotional activity of the product by which choosing different media such as sales promotion, personal selling, direct selling etc.

For expanding its sales again we should follow Mobile media to increase sales of the product with usage of this peoples will have an closer look for the introduction of new product such as by introducing LUX face wash so peoples were get aware of new product of the LUX by introducing some new product in the same market consumers will have more awareness of the brand.

I am using this media because most of the peoples have closer look for the same product by adding some attractive features on the current product.

However, in order to promote new product in the market i.e LUX face wash so to create more awareness of the new product will be provided free face wash for the small number of peoples to create brand awareness and by also giving free samples of the product.

Sales promotion should also be considered a major part of the promotional mix it should be done during the whole year. This will all lead to increase in sales.

Process

Once process of manufacturing is completed there should be an appropriate action for the channel of distribution. It is the most important marketing tool for distribution of the product. Therefore channel of distribution should control from different hub. There has to be at least five distribution centres on the different part of zones to supply the product in the local market to the supermarkets.

Action and Implementation

Once the objective has determine for the product line extension of the LUX there should be next to follow up strategy criteria and tactics have been set it should take an appropriate action and implement them to achieve its objective.

Usage of Objective and task Method: I have selected this method for setting up budget because LUX is universal brand which will not have any problem to invest on this marketing plan with the usage of this method objective will be set and task will be allocated to the different marketing activity.

Total budget is allocated for successful to achieve its objective towards the marketing activities is 100 million dollar and the amount will be allocated to five division of marketing activities are sales promotion, Packaging, TV Advertising, sponsorship, and the product launch.

GANNT CHART

Marketing s

Activity

Time

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Staff

Amount in mi($)

sales promotion

ƒŸ----------ƒ 

Marketing

Assistant

$35

TV Advertising

<---------------------------------------->

Advertising

Executive

$25

sponsorship

ƒŸ-------ƒ 

Project

Manager

$10

Product launch

ƒŸ--ƒ 

External

Agency

$20

Packaging

ƒŸ-------ƒ 

Marketing

Manager

$10

Total

$100

From the above chart it can be clearly seen that TV advertising will be done throughout the year which is a necessary for the product line extension to regain its market share.

Monitoring and Control

For all above activities to be control and monitored there has to be an board of director or a chief operation manager to look in to it and put an appropriate control over the all marketing activities that has to be follow in order to take positive approach towards the marketing activity. However in order to gain proper action for the implementation of plans board of directors should take and appropriate decision if the plan is not going according to the systematic manner so therefore a marketing manager or a BOD must follow the further approaches to gain control over its plan.

Benchmarking: It is the most important and process to take control over the plans by comparing its performances of business to the other competitor's performance which will have a greater impact on the improvement of the companies' process if they are lacking in some areas.

Periodic Control: It is also an important factor to be considered while exercising on plan for their marketing audit timely. Company should not always depend upon outside auditor they should gain control over their plan from internal auditor of the company.

Conclusion

From the above marketing analysis it's been conclude that Hindustan Unilever Limited facing a stiff competition from the other companies. Thus to regain its market share for the growth in their business it should use various marketing tools to achieve its objective. However LUX soap should penetrate the market in order to survive in this competitive world and also introduce some new product with the same range in order to increase its sale and which will have greater impact on their sale. However marketing activity should also be consider throughout the whole year which will result in gaining competitive advantage from its competitors.

Reflection on learning Outcomes

From all of the above market analysis of is been done by using various models and concept of the marketing management it's been seen that Hindustan Unilever Ltd is always providing quality of product to its consumers. Consumers are not loyal to a brand because they have different buying behavior attitudes towards the product. Hindustan Unilever limited is a multination brand and it provides home care and personal care products.

It provides value to its customers by introducing some attractive features on product like they launch different fragrance on their LUX Soap such as Almond oil, Rose, Strawberry. It also put more emphasis for the customer satisfaction by giving them discount on some product or also by introducing some gold coins in the soap by which consumers get more attracted towards the product and also showing winners of the gold coins inside the LUX Soap by using television media by which consumers get satisfied and they being loyal to its brand. Hindustan Unilever are adopting so many marketing strategies to regain its market share for the product but it still lacking in this industry such as they advertise their product by using top star of the BollyWood industries to advertise their product by which consumers get more attracted towards the product but Hindustan Unilever this using strategies for long time but they have not make any change to advertise their product it is the main problem where industry is lacking to sale its product.

Reasons for Choosing LUX as my product

One of the main reasons for LUX soap to enter in decline stage is their price of the product because there are number of competitors in this industry who charge a very low price for the same fragrance of soap so for that customers get attracted towards the product. However companies like ITC, Godrej who manufacture soap such as Cinthol, Nirma have attracted more of the middles class peoples because of their low price of the product and its one of the main practice is done by these is industry by charging price according to their competitors price this is one of the main reason where consumers get attracted towards the brand.

Most important reason of LUX soap failure in the market is because of hard economic crisis in India and economy of the country was also affected for this reason at that time consumers were switching their brand to some another for cheapest quality product this lead to decrease in their sales for which has result in huge losses for the company.

Learning Outcomes for the Marketing Management

First of all I would like to thanks my college to for giving me an opportunity to make assignment for the marketing management to write a marketing plan for the product failure. While writing the marketing plan i have learnt different marketing activities which are perform by a company to survive in the market. Prior to start of the module my understanding for the marketing management was only about 4p's of marketing mix but after the end of this module I have been also taught the whole 7p's of marketing mix which has developed my thinking skills much better for the current understanding of market I have learnt so different models, marketing strategy and the main concept of marketing which has given me a proper idea about the market and also very useful strategies to overcome any problem associated with the company. The marketing plan is an overcome solution for the company which has decided by the marketing manager to overcome its problem related with the product and by adopting the perfect marketing plan for the company to regain its market position in this competitive market which leads to increase in brand awareness of the product to the consumers. So now the concept of marketing is very clear for me to understand the act of selling a product is a very important part of marketing.

With the help of the actual examples and different marketing concept such "situation analysis", product positioning, branding, tools of marketing mix and many of these concept has clear my understanding towards the marketing management which has increased my thinking process for an organization.

The model which I have been taught i.e SOSTAC has increased my perception towards the marketing plan for the product failure or to rejuvenate the brand. This model is specifically used for rejuvenation the brand to survive in the market. However module learning which I have been taught in the class has helped lot to understand the different models and concept of the theory which has developed my thinking skills for writing the marketing plan.

In addition, the first step for writing marketing plan was situational analysis of the product in that I have analyzed SWOT, Pestle and Porter five Forces. But in all of them first concept was SWOT analysis it includes the current strategic situation of the company which will have idea towards the company strengths, weakness, Opportunities and threats and Porter five forces models have helped for the better understanding of the companies scenario and its operation for the industry. Porter five forces framework is an important analysis for the company's performance and its operation of the industry.

When it comes to strategy development I have chosen Ansoff's matrix because it's very simple and easy to implement for the product rejuvenation. However, for line extension of the product I have applied market penetration and product development for the growth of the product. Market penetration strategy is very important and mostly is followed by all the companies to create more brand awareness of the product and also include some additional features for their increase in sales. This type of strategy is simple to implement on the product because it's mostly followed by all the companies for better sales and also show the customers that they are on the market to be a unique from the other competitors which ultimately leads to increase in perception of the customers towards the product.

Finally, this module has helped me a lot to learn different analytical tool of marketing management for writing a marketing plan for the product. It has also enhance my knowledge for the assignment by working on certain case studies which I have been given in class to make presentation for the case studies such as we have given case studies on Motorola in that case study we have to make presentation for the brand rejuvenation with all this learning my technical skills are also increased to make an presentation and it will be very helpful for the future. This type of practical knowledge will also increase my understanding for the practice as a manager in company rather than having a theoretical knowledge for the subject it's better to have a practical knowledge in a life.