PROJECT GUIDANCE

YUGANDHAR REDDY

Company profile

0History- turnover, growth rate, brand value0Profile0Business they are into0Product portfolios 0Line and mix decisions0Strategies0Stories of successful businesses and failure ones

INDUSTRYThe people or companies engaged in a particular kind of

commercial enterprise.Commercial production and sale of goods.A specific branch of manufacture and trade: the textile

industry.Eg. AUTOMOBILE INDUSTRY: The manufacturers of

automobiles considered collectivelyThe aggregate of manufacturing or technically productive

enterprises in a particular field, often named after its principal product: the automobile industry; the steel industry.

INDUSTRY Vs SECTOR

0The terms industry and sector are often used interchangeably to describe a group of companies that operate in the same segment of the economy or share a similar business type. 

0Although the terms are commonly used interchangeably, they do, in fact, have slightly different meanings.

0This difference pertains to their scope0A sector refers to a large segment of the economy, while the

term industry describes a much more specific group of companies or businesses.

0A sector is one of a few general segments in the economy0 Industries, on the other hand, are sub-divisions of sectors.

Industry size

0Processed food sales worldwide are approximately US$3.2 trillion.

0 In the U.S., consumers spend approximately US$1 trillion annually on food, or nearly 10 percent of the Gross Domestic Product (GDP).

0Over 16.5 million people are employed in the food industry.

Market share analysis

0Market share analysis is an important part of market analysis and indicates how well a firm is doing in the marketplace compared to its competitors.

0 six factors to help estimate the value of market share (1997):

1. unit or dollar sales

2. user base (since piracy and brand switching effect)

3. market definition(scope of definitions)

4. time frame length

5. product definition (brand, product line, or strategic business unit)

0A market share analysis needs to take into account the following:

0TOTAL MARKET SIZE: This refers to the annual business volume in currency or in number of transactions;

0MARKET GROWTH RATE: This refers to the Compounded Annualized Growth Rate (CAGR) taken over a period of 3 to 5 years;

0MARKET SHARE: The break up of market share in % terms, to help identify the top players, the middle and the "minnows" of the marketplace, based on the volume of business conducted;

0MARKET SEGMENTATION0TARGETING0POSITIONING0KEY PLAYERS: Who are the top players in each identifiable

segment of the market. Are they providing premium quality, or premium service or price advantage. This helps identify possible future target segments;

SWOT ANALYSIS

0 It is critical to identify the main Strengths of top players as well as Weaknesses / Areas of Improvement to combat the onslaught in a marketing warfare and help prepare accordingly. Strength and weakness include

0brand equity 0geographic presence 0strong management / leadership 0 technological edge, 0patent / copyrights, etc.

0 It is equally important to identify emerging Opportunities which could make the market grow faster / larger or acquire business more easily. Similarly, are there Threat factors that could reduce the total market size. These could be due to

0Regulatory guidelines 0Changes in fashion trends 0Consumer preference 0Macro economic events like currency crisis, import / export, war,

natural calamity, demographic shift, etc.;

0BUSINESS CONTINUITY PLAN: While planning for market share analysis, it is important to plan for the worst, i.e. how to ensure continuity of the going concern in the event of a calamity. Companies which have effective Plan B usually sustain shocks better and ensure achievement of targeted market share.

0TARGET MARKET SHARE: Based on the above analysis, it is possible to arrive at the overall market size for the assessment period, and thereby decide on the volume of business any one firm targets to achieve during the period. This helps determine the firm's targeted market share. This also help budget for strategic activities like budgeting for R&D, sales promotion, marketing, training, etc.

Market Analysis

0The goal of a market analysis is to determine the attractiveness of a market and to understand its evolving opportunities and threats as they relate to the strengths and weaknesses of the firm.

0David A. Aaker outlined the following dimensions of a market analysis:

0Market size (current and future)0Market growth rate0Market profitability0 Industry cost structure0Distribution channels0Market trends0Key success factors0Growth prospects

Market Size

The size of the market can be evaluated based on present sales

and on potential sales if the use of the product were expanded.

The following are some information sources for determining

market size:0 government data0 trade associations0 financial data from major players0 customer surveys

Market Growth Rate

0 A simple means of forecasting the market growth rate is to extrapolate historical data into the future.

0 Provides a first-order estimate, but it does not predict important turning points.

0 A better method is to study growth drivers such as demographic information and sales growth in complementary products.

0 Ultimately, the maturity and decline stages of the product life cycle will be reached.

0 Some leading indicators of the decline phase include price pressure caused by competition, a decrease in brand loyalty, the emergence of substitute products, market saturation, and the lack of growth drivers.

Market Profitability

While different firms in a market will have different levels of

profitability, the average profit potential for a market can be

used as a guideline for knowing how difficult it is to make

money in the market. Michael Porter devised a useful framework for evaluating the

attractiveness of an industry or market. This framework, known

as Porter's five forces, identifies five factors that influence the

market profitability:0Buyer power0 Supplier power0Barriers to entry0 Threat of substitute products0Rivalry among firms in the industry

Distribution Channels

0The following aspects of the distribution system are useful in a market analysis

0Existing distribution channels can be described by how direct they are to the customer.

0Trends and emerging channels, new channels can offer the opportunity to develop a competitive advantage.

0Channel power structure - for example, in the case of a product having little brand equity, retailers have negotiating power over manufacturers and can capture more margin.

Market Trends

0Changes in the market are important because they often are the source of new opportunities and threats.

0The relevant trends are industry-dependent, but some examples include changes in price sensitivity, demand for variety, and level of emphasis on service and support.

0Regional trends also may be relevant.

Key Success Factors

0The key success factors are those elements that are necessary in order for the firm to achieve its marketing objectives. A few examples of such factors include:

0Access to essential unique resources0Ability to achieve economies of scale0Access to distribution channels0Technological progress0 It is important to consider that key success factors may

change over time, especially as the product progresses through its life cycle.

0Conclusions0Recommendations0Bibliography

Supply and Demand0An economic model of price determination in a market. 0 It concludes that in a competitive market, the unit price for a

particular good will vary until it settles at a point where the quantity demanded by consumers (at current price) will equal the quantity supplied by producers (at current price), resulting in an economic equilibrium of price and quantity.

0The four basic laws of supply and demand are:0 If demand increases and supply remains unchanged, then it leads to

higher equilibrium price and quantity.0 If demand decreases and supply remains unchanged, then it leads to

lower equilibrium price and quantity.0 If supply increases and demand remains unchanged, then it leads to

lower equilibrium price and higher quantity.0 If supply decreases and demand remains unchanged, then it leads to

higher price and lower quantity.

Industry Cost Structure

0The cost structure is important for identifying key factors for success. To this end, Porter's value chain model is useful for determining where value is added and for isolating the costs.

0The cost structure also is helpful for formulating strategies to develop a competitive advantage. For example, in some environments the experience curve effect can be used to develop a cost advantage over competitors.

Instructions 0Be specific to one product not the whole company0Focus on statistics0Get the relevant data. Don’t just copy and paste0Follow the table of contents list0April 15th is the last date for submission and viva0Chances are there you will get a zero0What you deserve is what you get0Font size, style, header and footer and good design is

compulsory

Toothpastes

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Product Features

Toothpaste is a low involvement product Grinds away the leftover food and plaque on your

teeth, with the help of your toothbrush Abrasive paste The abrasive in toothpaste is called dicalcium

phosphate dihydrate The other main part of toothpaste is the paste which

is made up of water and things to help it spread through your mouth easily

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The Toothpaste Market Industry size: Rs 25 billion Toothpaste can be considered as a solution to the need

of oral care Types of toothpastes: 0Whites 0Gels0Herbals

Players: MNC dominated market (Colgate, HUL) Market growth: 7-8% CAGR Per capita consumption: 82 gms

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Porter’s Five Forces Analysis

Competition in the sector0 Dominated by large multinational companies such as CP, HUL0 A few Indian companies such as Dabur, Anchor and Babool

Threat from substitute products0 Traditional products like twigs of the neem tree, salt, ash, and other herbal

items0 Toothpowders with 23% market share can act as a threat to the toothpaste

markets Threat of new entrants:

0 Sector is not capital intensive Bargaining power of suppliers

0 Most of the companies in the industry are integrated backwards0 Manufacturing is largely outsourced

Bargaining power of customers0 Very low

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Players

Company Types of toothpaste

Colgate Palmolive Whites, Gels

HLL Gels

Balsara Hygiene Ltd (now Dabur) Herbal

Dabur India Ltd Toothpowders, Gels

Smithkline Beecham Gels

Anchor White

Vicco Labs Herbal

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Market Share

39%

17%

16%

13%

5%

4%3% 2% 1%

Colgate Dental Cream PepsodentClose-up Others Cibaca Top Colgate GelPrudent Colgate herbalColgate Total

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Analyzing Market Opportunities

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Consumer Needs

Clean teeth

Prevention of tooth decay

Fresh breath

Prevention of plaque, tartar and other diseases

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Customer Segments

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Competitors

MNC dominated markets

Two largest players constituting 84% of the market share

Brand-wise share:0Colgate 51%

0HLL 33%

0Dabur 9%

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Colgate

51% market share Flagship brand is largest selling toothpaste brand

Product Share

Colgate Dental Cream 39%

Cibaca Top 5%

Colgate Gel 4%

Colgate Herbal 2%

Colgate Total 1%

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HLL

India’s leading FMCG company

Late entrant

33% market share0Pepsodent 17.6%

0Closeup 15.3%

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Dabur

Acquired Balsara Presence in all segments 30% share in toothpowders 9% share in toothpastes0Babool 5%0Promise + Meswak 4%

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Developing Marketing Strategy

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Positioning Colgate

0 Diversified portfolio0 Market leader0 Quality products, catering to all needs of customers0 Colgate gel positioned as lifestyle product0 Colgate Total for tartar control0 Cibaca Top for low income groups

HLL0 Closeup: Targeted towards youth. Fresh breath, confidence

inducing0 Pepsodent: Providing extended protection from germs and tooth

decay Dabur

0 Herbal oral care for all segments

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Product-Service Innovations Colgate

0 Continuous line extention and upgradation0 Increased R&D spending0 40% sales (2004) came from new product launches0 Variants like Colgate Total, Fresh Energy Gel, Colgate Herbal to fill all

gaps HLL

0 3-way convergence of product availability, brand communication and brand experience

0 Creating new touch points0 Using the HLL distribution network0 Aggressively entering the out-of-home consumption category

Dabur0 New campaign (Subah babool ki to din tumhara)0 New packaging

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Delivering Marketing Programs

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Promotional Strategies

Low involvement products

Mostly habitual purchases, low brand loyalty

Differentiation through marketing communications required

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Colgate

Freebies galore0One of the first to introduce BOGOF0 ‘Below-the-line’ promotion strategy0Large discounts on offer (upto 25%)

Coverage by higher realizations0 Sustained promotional offers possible because of high

manufacturer margins0 30-35% price hike during 2000-03 on almost all brands

Ad-spend/Sales ratio 18.2% (2001) ® 19.9% (2002) Operating profit margins 8.2% ® 9.2%

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HLL (Closeup and Pepsodent)

Rural:Urban mix = 30:70 Target is to achieve a 50:50 mix Removing weak brands and strengthening strong brands

0 Aim, green variant of Closeup, Closeup oxyfresh withdrawn from the market

0 Strong brands like Pepsodent Germicheck flanked by brands like 2-in-1 and Pepsodent G

Looking at brand extentions with a ‘whitening’ proposition Free dental insurance (Rs 10,000) scheme launched in

2002 for Pepsodent

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HLL

Strategic advertising0Tie-up with the movie ‘Kyon, Ho Gaya Na’ (2004)

0 ‘Kya aap closeup karte hain’ jingle, designed by Lintas

0Pepsodent-Shaktiman contest (2005)

0 ‘Dhishoom-dhishoom’ campaign for Pepsodent

Market expansion by using the tagline ‘twice-a-day brushing’ for Pepsodent

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Dabur

New packaging with logo and celebrity endorsement

Harping on natural strength of teeth by strengthening the roots

‘Live life big bite’ campaign

Media spend: Rs 5 crore in 2005-06

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Gearing Up for the Future

Huge opportunities because of low per-capita consumption

Reaching rural consumers key to growth

Consumer education also necessary to increase toothpaste use

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Gearing Up for the Future (Cont.)

Colgate0 Competencies in analysis, microbiology, packaging and consumer

research0 Target

Faster project implementation Better supply chain management

HLL0 Segmentation of general trade0 Self-service stores and supermarkets0 Project Shakti

Dabur0 Plans to restructure its sales and distribution structure in line with

the recommendations of Accenture Increase direct coverage to gap outlets and gap towns where Dabur is

not present

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Launching P&G’s Crest in India

History0 First-ever toothpaste to use clinically proven fluoride to prevent tooth

decay 0 Endorsed by the American Dental Association

Current status0 Colgate knocked Crest off its throne as the No. 1 toothpaste in 1997 with

the launch of Colgate Total 0 In late 2000, after five years of research and development Crest

Whitestrips was introduced Rationale for entering the Indian market

0 Penetration of modern oral care products and average per capita consumption of toothpaste very low

0 Industry sources expect penetration of oral care products to increase around 65-70% from current levels of around 49% in the next three to four years time