mm _group 10 _ pricing strategy_final (1)
TRANSCRIPT
8/2/2019 MM _group 10 _ Pricing Strategy_final (1)
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PRESENTATION ON
PRICING STRATEGYFOR CLINIC ALL
CLEAR
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PRESENTED BY
o SAISHANKAR SANABOINA
o RAHUL NAIR
o NAVEEN HEGDE
o KUNAL DHURI
o DHARMENDRA THAKUR
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Shampoos
Did you know, that the word Shampoo is derived from
the Hindi word “Champi”.
Remember Johnny Walker’s famous song - Meri Jaan,Meri Jaan, Sunday Ke Sunday, Teil Maalish - Champi
Teil Maalish.
The British loved the massage so much, they startedcalling Champi as Shampoo
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o Shampoo market is segmented on benefit
platforms• Cosmetic ( shine, health, strength )
• Anti - Dandruff
• Herbal
o Hair Shampoos and Conditioners are
targeted at
• Upper middle class• Now, also middle class and house wives
• Upper class rural consumers
• Teenagers - they are the major segment
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HAIR CARE IN INDIA (FACTS)
o The frequency of shampoo usage is very low. Most consumers use
shampoo only once or twice in a week. In many cases, theseproducts are used on special occasions such as weddings, parties
etc
o Some customers use shampoo only to address a specific problem
such as dandruff or when they need to condition their hair
o Use of conditioners is not common. It is restricted to the super premium segment or those who are very involved with their hair
care
o About 50% of consumers use ordinary toilet soaps to wash their hair
o Major expectations from the product are improvement in texture and
manageability, giving softness and bounce to hair, curing andavoiding damage to the hair
o An Indian needs more shampoo for a proper wash ( average 6 ml )compared to 4 ml needed in Western countries as most Indianwomen have long hair
o Consumers attribute lathering to the act of cleaning
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Major shampoo players
o HUL (Sun silk, clinic plus, clinic all clear….)
o Cavin care ( chik and nyle)
o P&G ( pantene pro V and head and
shoulder)
o Dabur (Vatika)
o RDM Traders ( Ayur).
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MARKET SHARE OF
ANTIDANDRUFF SHAMPOO
INDUSTRY SOURCES ESTIMATE THE URBAN PENETRATION OF
SHAMPOO IS A MODEST 36 PERCENT.
RURAL MARKET IS EVEN MORE INFREQUENT WITH PENETRATION
LEVEL OF 12%.
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Clinic all clear o
Clinic All clear is a leading hair care brand in India. ClinicPlus Health shampoo was launched in India in the year
1987
o The first brand in the anti-dandruff segment was clinic
plus. The line extension of clinic all clear is seen more as
the one of this segment after its emergence.
o It offers five most important hair health benefits,
strengthens weak hair, prevents hair breakage, softens
rough dry hair, shine for thick and healthy hair and
contains anti-dandruff ingredient.
o Clinic Plus has gone through a lot of changes in terms of
product variants, packaging and as well promotion
programs
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Promotional activitieso Clinic all clear has targeted the young youthful
audience.
o To begin with shah rukh khan was the main face
for clinic all clear, with changing times we haveseen shahid kapoor take over as the choice of
brand ambassador.
o Shahid kapur and madhavan as their new brand
ambassador for clinic all clear total since they
personify youth freshness, confidence and fun
which are perfect synergy with brand attributes.
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SWOT ANALYSIS
Strength 1. CLEAR has partnered with the world’s leading dermatologistsfrom the International Academy of Dermatology (IACD) to bring thefirst ever patented scalp nutrient technology –New CLEAR withNutrium 10 to its consumers
2. Available in 5 different variants for different types of hair needs
3. Clear brand available in over 14 countries worldwide
4. Clear is the only brand that offers specially formulated Anti
dandruff shampoo for men
5. Celebrity brand ambassadors and good advertising
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SWOT ANALYSIS
Weakness 1. Dominance only in the anti-dandruff shampoo segment,no variants available for normal shampoo usage
2. Multiple re-brandings over the years – Clinic Special toClinic All Clear to ‘Clear’ at present. Can create confusionabout the brand name among consumers.
3. Low market share even in the anti-dandruff shampoosegment as compared to competitors like Head &Shoulders
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SWOT ANALYSIS
Opportunity 1. To align itself to the international quality
standards this year Clinic All Clear has
been re-launched this year as Clear
2.Introduction of Anti Dandruff Hair Oil that
fights dandruff and strengthens hair fromscalp, as a brand extension
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SWOT ANALYSIS
Threats 1.Highly competitive market having manyplayers with similar offerings and cheaper rates
2. P&G wrote to the Advertising StandardsCouncil of India, which sought a response fromHUL regarding an advertisement of Clear starring Bipasha Basu which had a mutedreference to Head & Shoulders in theadvertisement
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Objectiveso Understand the internal & external factors affecting a
firm’s pricing decisions.
o Be able to contrast the three general approaches tosetting prices.
o Learn the major strategies for pricing initiatives andnew products.
o Understand how companies find a set of prices thatmaximizes the profits from the total product mix.
o Learn how companies adjust their prices to take intoaccount different types of customers and situations.
o Know the key issues related to initiating andresponding to price changes.
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Priceo The amount of money charged for a product, or
the sum of the values that consumersexchange for the benefits of having/using theproduct or service.
o Price and the Marketing Mix• Only element to produce revenues
• Most flexible element
• Can be changed quickly
o Price as a tool of Competition
o Common Pricing Mistakes
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Marketing
Objectives
SurvivalLow Prices to Cover Variable Costs andSome Fixed Costs to Stay in Business.
Current Profit Maximization Choose the Price that Produces the
Maximum Current Profit, Etc.
Market Share Leadership
Low as Possible Prices to Becomethe Market Share Leader.
Product Quality LeadershipHigh Prices to Cover Higher
Performance Quality and R & D.
Internal Factors Affecting Pricing
Decisions: Marketing Objectives
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Price
Product Design
Distribution
Promotion
NonpricePositions
Internal Factors Affecting Pricing
Decisions: Marketing Mix
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Internal Factors Affecting Pricing Decisions:
Cost Organizational considerations
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EXTERNAL FACTORS
Nature of Competitors’ costs Other environmental
market and prices, and offers elementsdemand
,
elements
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Cost-Based Pricing
Certainty AboutCosts
Pricing isSimplified
Price CompetitionIs Minimized
U n e x p e c t e d S i t u a t i o n a l F a c t o r s
Attitudesof
Others
Ethical
IgnoresCurrent
Demand & Competition
Cost-Plus Pricing
is an ApproachThat Adds a
StandardMarkup to the
Cost of theProduct.
Simplest
PricingMethod
Much Fairer to
Buyers & Sellers
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2. Value-Based Pricingo Uses buyers’ perceptions
of value rather than seller’scosts to set price.
o Measuring perceived valuecan be difficult.
o Consumer attitudes towardprice and quality have
shifted during the lastdecade.• Introduction of less expensive
versions of establishedbrands has become common.
General Pricing Approaches (contd.)
o Business-to-businessfirms seek to retain
pricing power • Value-added strategies
can help
o Value pricing at the
retail level• Everyday low pricing
(EDLP) vs. high-lowpricing
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ProductProduct
CostCost
PricePrice
Value Value
CustomersCustomers
CustomerCustomer
Value Value
PricePrice
CostCost
ProductProduct
Cost-Based Pricing Value-Based Pricing
Cost-Based Versus Value-Based
Pricing
CHPT: 14-24
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b) Break-Even Analysis & Target Profit Pricing
o Break-even charts show total cost and total revenues at different levels
of unit volume.
o The intersection of the total revenue and total cost curves is the break-
even point.
o Companies wishing to make a profit must exceed the break-even unitvolume.
General Pricing Approaches (contd.)
Fixed Costs
Total Costs
Revenues
Sales Volume in Thousands of Units
T h o u s a n d s
T a k a
0 10 20 30 40
1000
800
600
400
200
Break-even
point
Target Profit Tk. 200,000
Quantity To Be Sold ToMeet Target Profit
Fixed Costs
Total Costs
Revenues
Sales Volume in Thousands of Units
T h o u s a n d s
T a k a
0 10 20 30 40
1000
800
600
400
200
Break-even
point
Target Profit Tk. 200,000
Quantity To Be Sold ToMeet Target Profit
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3. Competition-Based Pricing
• Also called going-rate pricing
• May price at the same level, above, or below the
competition
• Bidding for jobs is another variation of competition-
based pricing
• Sealed bid pricing
General Pricing Approaches (contd.)
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o Market-Skimming Pricing
• Setting a high price for a new product to skim maximum revenueslayer by layer from segments willing to pay the high price.
o Market-Penetration Pricing
• Setting a low price for a new product in order to attract a large
number of buyers and a large market share.
o Market Rate Pricing • Ceding the initiative to the key competitors to set the price.
• Dangerous for leaving the strategic initiative to competitors
• Potential threat of ‘Sudden Price Shift’ by newer, or ‘Changes indelivery system capability’.
o Relationship Pricing
• Different price for Different class of customers depending on
relationship and the potentiality of cross-selling or future business.
Other Pricing Approaches
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Price Adjustment Strategies
o Discount / allowance
o Segmented
o Psychological
o Promotional
StrategiesStrategies
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Special-Event PricingSpecial-Event Pricing
Cash RebatesCash Rebates
Low-Interest FinancingLow-Interest Financing
Longer WarrantiesLonger Warranties
Free MerchandiseFree Merchandise
DiscountsDiscounts
Loss LeadersLoss Leaders Temporarily PricingProducts Below List
Price to IncreaseShort-Term Sales
Through:
Promotional Pricing
P i Adj t t St t i
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Price-Adjustment StrategiesPrice-Adjustment Strategies
Hold Current Price;Continue to Monitor Competitor’s Price.
Hold Current Price;Continue to Monitor Competitor’s Price.
Reduce PriceReduce Price
Raise Perceived
Quality
Raise Perceived
Quality
Improve Quality& Increase Price
Improve Quality& Increase Price
Launch Low-Price“Fighting Brand”
Launch Low-Price“Fighting Brand”
Has Competitor CutPrice?
Has Competitor Cut
Price?
Will Lower PriceNegatively Affect Our Market Share & Profits?
Will Lower PriceNegatively Affect Our
Market Share & Profits?
Can/ Should EffectiveAction be Taken?
Can/ Should EffectiveAction be Taken? Yes
No
No
No
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o Initiating Price Cuts is Desirable When a Firm
• Has excess capacity
• Faces falling market share due to price competition
• Desires to be a market share leader
o Price Increases are Desirable
• If a firm can increase profit, faces cost inflation, or faces
greater demand than can be supplied.
o Methods of Increasing Price
o Alternatives to Increasing Price
• Reducing product size, using less expensive materials,
unbundling the product.
Price Changes
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o Buyer reactions to price changes must be considered.o Competitors are more likely to react to price changes
under certain conditions.• Number of firms is small
• Product is uniform• Buyers are well informed
o Respond to Price Changes only if:
• Market share / profits will be negatively affected if nothing ischanged.• Effective action can be taken:
• Reducing price• Raising perceived quality•
Improving quality and increasing price• Launching low-price “fighting brand”
Price Changes (contd.)
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Price war triggered by the cavin kare
attacked the market share of HUL.
o Cavin Kare introduced smaller 50 paise sachet of Chik, whenmost of other sachets retailed at Rs 2'.
Due this Chik Brand Expanded By 40%.
o A new 50 ml bottle of Chik priced at Rs 6 (when most other
brands were available in 100 ml bottles and above)
o HUL responded with its own 50 paise version of Lux shampoo'
o The company launched 30 ml bubble pack for Clinic Plus (Rs 8)
which was an innovative and cost-effective alternative for sachet
users.
o While sachets are difficult to store and re-use, the bubble pack
allows the user to extract just the right quantity for a single
wash.
o HUL had taken a bigger price cut in shampoo realization by
offering8 ml clinic Plus sachets at Re 1, a 50% mark down. This
had brought it on par with low priced brands such as chik by
cavinKare.( Ref : analysts at research house ICICI)'
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Price war triggered by the cavin kare (contd)
o Anti-dandruff shampoos represent this attempt Clinic Plus'
one of the first anti dandruff brands, is the largestshampoo brand today, with a market share of 31 Per cent.
o clinic All clear, the anti-dandruff extension that targeted
at the youth has also managed to garner a 13 per cent
share' Due to its low pricing( Rs 71 for a 160 ml bott|e
against Rs68 for a l00ml bottle of Head & Shou|ders
antidandruff shampoo) the brand also has a significant
rural market share of 44 per cent
o Pantene Pro-V and Head & Shoulders P&G discontinued
its shampoo manufacturing operations in India in 2000 toother Asian countries Thailand, Taiwan etc
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Further steps taken by HUL to increase the
market share (since may 2004)
o The re launch of Clinic Plus Health Shampoo, with its five-in-one
benefit formulation and the new reduced price points, was HUL's
second major initiative to offer outstanding consumer value in
this category
o The re launched clinic Plus bottles come at reduced price points.
The new prices were Rs30, Rs55 and Rs90 for100ml, 200ml and
300ml bottles, down from Rs37.50,Rs.70 and Rs90 respectively.
o Clinic Plus also had a25-ml bottle priced at Rs5, which was
aggressively distributed across the country and in Sachets of 50Paise,Re1 and Rs2.
o Improved packing and buy one get one free initiative on clinic plus
shampoo,sunsilk helped it increase the sales by 10 percent.
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Further steps taken by HUL to increase the
market share (since may 2004)o HUL recently upped its ante in the shampoo war..
o It launched Clinic All Clear at a higher price to narrow the
price differential between All Clear and Procter &
Gamble's Head & Shoulders in the anti-dandruff segment.
It decided to increase the price of its 100 ml bottle by
Rs 5 to Rs 55 and 200 ml by Rs 10 to
Rs 105. On All Clear sachets and 40 ml bottles, the
company decided to maintain status quo.o HUL dared to hike prices of Clinic All Clear as it saw
an opportunity which can add to its top line and bottom-
line growth, without jeopardizing its current market
share.
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Further steps taken by HUL to increase the
market share (since may 2004)
o Head & Shoulders, despite its premium pricing, is the
leader in the anti-dandruff segment. The 100 ml bottle
carries a price tag of Rs 62 and 200 ml of Rs 120.
Despite the Rs 7-15 price difference, it commands a35-36% market share as against HUL's 32-33%.
o Results of this battle are yet to be out. But then this is just
a battle and not the war. HUL is on the path of recovery,this may just be an indicator of what things
are to come.
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Barriers to shampoo use
o The company has identified three major
barriers to shampoos use in India
• The perception that shampoos contain harshchemicals that could damage the hair
• High price
• The view that the shampoo is more of glamour product rather than a hygiene
product.
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G 10
Marketing Debate
Is the right price a fair price?
Take a position:
1. Prices should reflect the value thatconsumers are willing to pay.
or
2. Prices should primarily just reflect the costinvolved in making a product.