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Vizag 1990Launch of Concentrated Detergent Powders

Launch into test market of Ariel Concentrate detergent powder in Vizag, India. July 1991

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Background

Indian Fabric Wash (1990)

• Size well over US$ 1,000,000,000• Traditional: NSD Bars & Powders, Laundry soap

No Concentrates or liquid detergents.

• Key players• Unilever 40%• Nirma 30%

• Key Brands• Powders: Surf, Nirma, Wheel– Bars: Rin, Nirma, Wheel

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BackgroundDetergent War

• Unilever and P&G ... global giants in Fabric Wash and Personal Wash markets

• P&G enters Indian Market in mid-80

• P&G confronts Unilever with launch of Ariel Concentrate into test market, in Vizag

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Surf

• Dominated the premium segment in detergent powders• Key brand messages centred on

– performance (‘washes whitest’) – It makes better sense to buy Surf

• Surf was perceived as the most powerful and best quality detergent, a position that concentrate powders were likely to challenge in the future

This was the era of Lalitaji in advertising, a hard-headed bargain-hunting housewife who demanded value for money and not just cheap price. (‘Sasti cheez or achchi cheez me farak hota hai, bhai saab' ... ‘there’s difference between cheap and good quality’).

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Rin

• Dominated the premium detergent bar market

• Contributed more to HLL’s bottom line than any other brand

• In that concentrates possessed greater stain and grime removal properties than conventional powders, there was concern that the use of bars would decrease with the growth and development of concentrate powders

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Ariel Microsystem

• First concentrate or compact detergent powder to be launched into India

• Key message centred on performance and a good bargain– “removes stains as well as tough and stubborn dirt” Initial ads

communicated the wisdom of selecting a superior product that was cost effective.

• Technologically superior– first among concentrates– first product to use enzymes as active ingredient

for superior detection and removal of stains

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Background

Unilever’s Initial Response

• Developed and launched Triple Power Rin (TPR)… a competing, less expensive concentrate NSD Powder

• Intensified R&D efforts to develop a new concentrate powder

• Intensified Marketing Research. Set up a consumer panel in Vizag soon after Ariel’s test launch

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Research Objective

To assess likely impact of concentrates on the Indian market, based on the Vizag research findings

Significance• The wash market is huge• Need to protect cash cows like Surf, Rin and Wheel.• Advent of concentrates posed new challenges / Opportunities• First battle between P&G and Unilever in India

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Case Analysis

• Based on the research findings provided in this case, address the following questions that were uppermost on the minds of the detergent brand managers at HLL:– How significant is the demand for concentrates?– What’s the impact of concentrates on market Structure?

(Detergent powder & detergent bar) – To what extent would it change wash habits?– How cost effective are concentrate powders?– What’s the impact on Unilever, other players?

• Recommend what course of action HLL should take to confront the challenges posed by the concentrates.

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Value Share Jun91/Nov90 (% powders)

43 41

33.226

10.3

9.7

13.523.3

Triple Power Rin (Unilever)

Surf (Unilever)

Discount Powders(including Unilever’s Wheel)

Nov-90 Jun-91

Ariel (P&G)

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72.6 74.5

20.1 14.9

4.0 4.4

Volume Share Jun91/Nov90 (% powders)

Nov-90 Jun-91

6.23.2

Triple Power Rin (Unilever)

Surf (Unilever)

Discount Powders(including Unilever’s Wheel)

Ariel (P&G)

12

33

100

140

210

Price Index – (Surf:100)

Surf: 100(Apr...June ‘91)

Price indexed to Surf = 100. Ariel is 2.1 times more expensive than Surf. Discount powders are 67% cheaper.

Triple Power Rin

Surf

Discount Powders

Ariel

13

38

73

44

20

184

Source of Growth of ArielGain loss Jun91/Nov90 (in powders)

% Volume Gained from

% Volume Share (Nov)

Jun-91/Nov-90 Nov-90

Triple Power Rin (Unilever)

Surf (Unilever)

Discount Powders(including Unilever’s Wheel)

Refer notes pane for explanation

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Source of Growth of ArielGain Loss: Jun91/Nov90

(Nov..Jun) % Vol Share Growth

Gains From % Gain (Nov 90) (Jun 91) Jun/Nov

Ariel 3.2 6.2 78.3%

Triple Power Rin 18 4.0 4.4 1.1%Surf 44 20.1 14.9 -31.4%Other Powders 38 72.6 74.5 -4.8%Total Powders 100 100 100

Powders 90 52Bars 10 48

15

68

27

12

25

% Buyers(Apr to June ‘91)

35%: % buyers of Concentrates

Penetration (% Buyers)

Triple Power Rin

Surf

Discount Powders

Ariel

Refer notes pane for explanation

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Market Structure

Note: Consumption refers to purchases measured as gm / month

Nov 90 Mar 91 Jun 91

100

90

93

100

98

101

Powder Bar

Detergent Powder and Bar: Volume Index

Index (Nov = 100)

Nov 90 Mar 91 Jun 91

Volume (tons) 292 273 282Powder (%) 56 54 54Bar (%) 44 46 46

Index (Nov=100) 100 93 96Powder (%) 100 90 93Bar (%) 100 98 101

Consumption (gm/HHLD)Powder + Bar 1,989 1,859 1,917Powder 1,116 1,007 1,035

Refer notes pane for explanation

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Wash Habits: Product Usage

Powder

Bar

Only Powder 6%

94%

Only Bar 0%

Use Patterns: (Jun 91)% Users who use only Powder, Powder + Bar and only Bar

Refer notes pane for explanation

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Concentrate UserBefore they started to

use concentrates

Concentrate UserAfter switching (Jun)

82%

Any Brand User(Jun)

Powder

Bar

Wash Habits: Product Usage

Only Powder 10%

90%

Only Bar 0%

Only Powder 18%

82%

Only Bar 0%

Only Powder 6%

94%

Only Bar 0%

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Wash HabitProduct Usership

% Buyers Ariel TPR AllBuyers Buyers Buyers

Solus 12 14 4

Combine with other powder only 5 4 2

Combine with bar only 55 63 77

Combine bar+other powder 28 19 17

100 100 100

(use only one powder brand, no bar)

Refer notes pane for explanation

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Wash Basket Analysis

Refer notes pane for explanation

Ariel Buyer Surf Buyer

Brand 380 700

Powder 740 1,000Bar 700 750

Wash Basket (gm) 1,440 1,750Wash Basket (Rs) 49.00 49.50

Loyalty %Brand/Powder 51 70Brand/Basket 26 40

Consumption (Purchases) gm/householdJune 91

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Case Analysis (repeated)

• Based on the research findings provided in this case, address the following questions that were uppermost on the minds of the detergent brand managers at HLL:– How significant is the demand for concentrates?– What’s the impact of concentrates on market Structure?

(Detergent powder & detergent bar) – To what extent would it change wash habits?– How cost effective are concentrate powders?– What’s the impact on Unilever, other players?

• Recommend what course of action HLL should take to confront the challenges posed by the concentrates.

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