Market Structure & Competition

HUL has succeeded to break through the clutter with their "Dirt is good" campaign, and they've done it good. As mentioned in my previous post, the advertising has come a long way for them, and so have the enormous revenues. Where all the other 'premium' and 'popular' detergent powders are quarreling to have the smallest piece of the the market pie, Unilever is leading unanimously with the help of 'Surf Excel' and 'Rin' under their belt in both the sectors respectively.

Analyzing the market-pie above, HUL leads the way with 38% share in the market. The chunk has to give credit to 'Surf Excel', 'Rin' and 'Active Wheel' for such huge share. 'Ghadi' provides a tough competition to every product in the segment with a 13% share alone, while the skirt-twirling girl makes sure that 'Nirma' is not left behind with 12% of the pie in its pocket. Procter & Gamble has gambled big since arriving in the Indian market with their 8% share in it, all thanks to the super-popular 'Ariel' and 'Tide'. 'Henkel' et al round off the 'Others' section.

Major competitors in the market, in a nutshell:

1. Nirma: This product, when released in the Indian market in 1969, created a wonder. Then, when the detergent powder was considered a luxury item, 'Nirma' came up with a product that costed one-fifth of what was being paid for a normal washing powder. It opened up a tremendous market potential in the segment. The consumers became loyal to 'Nirma' almost instantly due to its unique environment-friendly, phosphate-free solution, and of course the legendary jingle "Sabki pasand Nirma!"

2. Wheel: It is the single-most dominant market leader in the detergent segment today. 'Wheel' is known for its great cleaning ability with minimal effort due to a superior formulation of lemon, which not only removes the tough stains off the clothes, but also leaves it with a pleasant lemon-fresh aroma afterwards. The convenience provided by 'Wheel' has helped a lot of housewives switch to powder from the cumbersome bar soaps.

3. Ariel: Being a Procter & Gamble product, it was a given that the product would have something unique in store. Hence, 'Ariel' claimed to be the first washing powder with stain-removing enzymes. Then, it was a product designed for twin-tub and top-loading washing machines, but with the popularity of the front-load machines, 'Ariel' churned out a suitable low-variant in the early 1970s. It also brought out the quick-wash action in its products which allowed consumers to wash clothes in a quick wash cycle.

4. Tide: 'Tide' had been a very popular detergent powder in the US and Canada, including a lot many other countries. Another Procter & Gamble product, it is the world's oldest and the most-trusted detergent brand, being a market leader in 23 countries across the globe. 'Tide' was launched in India in the middle of the year 2000. Its anti-deposition technology gives outstanding whiteness to the clothes, and the anti-agents prevent the dust from resettling on clothes once washed.

5. Ghadi: When 'Ghadi' was founded in 1987 by Kanpur based Rohit Surfactants Private Limited, the market was already dominated by huge brands like 'Surf' and 'Nirma'. And since then, the market has been filled in with more biggies, but today, 'Ghadi' sits proudly at the very top of the heap. It took 25 years for the brand to emerge as the market leader in the segment. 'Ghari' is cheap and very effective, hence the victory has come as no surprise to the market analysts.

Detergent Market in India:

The Indian detergent market is one of the biggest in the world, and is estimated to be worth around Rs. 4000cr. It comprises the bars, synthetic detergent powders and laundry soaps. 

The market is segmented according to three price categories here:

1. Premium

2. Popular

3. Economy

While 'Nirma' and 'Ghadi' dominate in the Economy section of the market, the Popular and Premium sections are hugely eaten up by HUL and P&G. 

The demand for detergents has been growing at an annual growth rate of 10 to 11 per cent during the past five years. Where an urban consumer prefers washing powder and detergents, a rural consumer is more inclined towards washing cakes and bars. But, over the last few years, we have seen that rural consumers are gradually shifting their preferences from detergent bar to detergent powders. 

SWOT Analysis:

• Strengths: Low operational costs. Strong research and development. Presence of established distribution network in both rural & urban areas. Presence of well-known brands in the sector.

• Weaknesses: Not well-diversified product portfolio. Low export levels. Weak advertising. Less scope of investing in technology and achieving economies of scale, particularly in small sectors.

•  Opportunities: Available rural market. Increase in purchasing power of customers due to rise in economic level. Export potentials. Large domestic market with population of over 120 crore. High spending on consumer goods.

• Threats: Can lose market share to rivals very quickly if distribution channel does not work well. Hostile tax and regulatory structure. Removal of import restrictions so as to replace domestic brands. Need to come out with more umbrella brands.

Four P's Analysis:

• Product: A product consists of tangible and intangible attributes which satisfy the need, want and desire of a consumer. The product includes the following variables:

1. Brand name
2. Product innovation & range
3. Quality, safety and functionality
4. Packaging and labeling of the product
5. Style, shape and design
6. Warranty and services

          Similarly, detergents fall under the category of fast moving consumer goods that are needed on daily               basis. Consumer preference on the detergent products generally depends on the product's quality,                 safety, functionality and packaging of the product.

• Price: A study on various data, regarding the market operations, is needed in order to fix a product's selling price.The selling price of a product depends on the cost of production, brand position, evaluation of the competitors, and the price perceived by the consumers. The price influences the choice and image of the product in a consumer's mind. Price includes the following variables:

1. Use of pricing policies and strategies
2. Discounts offered in order to attract costumers
3. Terms of debit or credit sale

          Sometimes, price of the detergent and some other schemes related to price proves to be a deciding               factor for which consumers go for an alternative brand.

• Promotion: The main target of the organisation along with its specialist group of employees is to set up promotional campaigns, provide innovative ideas for advertisements, and come up with lucrative schemes for the promotion of the product in the market to attract a large number of consumers in the market. Promotion includes matching up with new trends and technology. Promotions also decide the segmentation targeting and positioning of the product. The right kinds of promotions affect all the other three variables: the product, price and place. It deals with advertising, sales promotion, including promotional education, publicity, and individual setting of a particular product. Promotional activities are extremely necessary for the companies in this industry as it helps build a good rapport with the consumers. Along with advertisements, personal selling is also significant and helpful for motivating the costumers to buy a specific product. Certain sales promotion techniques have a favourable impact on consumer psychology.

• Place: It involves physical distribution, which means delivery of goods at the right time and at the right place for the consumers. For large-scale distribution of detergents, the services of wholesalers, retailers, and various other market intermediaries are required. Distribution of goods comprises certain variables that are given below:

1. Types of intermediaries available for distribution.
2. Transportation, warehousing and inventory control for making the product available to consumers easily.
3. Distribution centers along with order-processing.

Competition Mapping:

Eating up on each other's business and ultimately dominating the market segment with the largest share is what is every company's eventual aim. Competition Mapping is to try and find out competitors in your business area and most things associated with that. We find out competencies that the competitors and market are having and then devise plans and strategies for our own company to come up and move ahead in the market. 

The mapping helps a company identify its own strengths and weaknesses as well as of its competitors, hence it can be used to improve the company's efforts to make sure its market share and profit is on the brighter side of the fence.