Vizag 1990 Launch of Concentrated Detergent Powders Launch into test market of Ariel Concentrate detergent powder in Vizag, India. July 1991

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

Background Detergent 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

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’).

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

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

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

Research Objective Significance 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

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.

Value Share Jun91/Nov90 (% powders) Ariel (P&G) Triple Power Rin (Unilever) Surf (Unilever) Discount Powders (including Unilever’s Wheel) Nov-90 Jun-91

Volume Share Jun91/Nov90 (% powders) 3.2 6.2 Ariel (P&G) Triple Power Rin (Unilever) Surf (Unilever) Discount Powders (including Unilever’s Wheel) Nov-90 Jun-91

Price Index – (Surf:100) Surf: 100 (Apr...June ‘91) Ariel Triple Power Rin Surf Discount Powders Price indexed to Surf = 100. Ariel is 2.1 times more expensive than Surf. Discount powders are 67% cheaper.

Source of Growth of Ariel Gain loss Jun91/Nov90 (in powders) % Volume Gained from % Volume Share (Nov) Triple Power Rin (Unilever) Surf (Unilever) Gain Loss analysis examines household purchases over two time periods to determine the amount of business each brand has gained from each other brand. This analysis reveals the source of growth of Ariel i.e. which brands are being cannibalised by Ariel and to what extent. The data tells us that 18% of the growth of Ariel over Jun 91 / Nov 90 emanates from Triple Power Rin (TPR), and that TPR’s share in the market is 4%. Discount Powders (including Unilever’s Wheel) Refer notes pane for explanation Jun-91/Nov-90 Nov-90

Source of Growth of Ariel Gain Loss: Jun91/Nov90

Penetration (% Buyers) (Apr to June ‘91) Ariel 35%: % buyers of Concentrates Triple Power Rin Surf 25% of Vizag households bought Ariel during the period Apr to Jun 91, compared to 12% who bought Triple Power Rin. Discount Powders Refer notes pane for explanation

Market Structure Refer notes pane for explanation Detergent Powder and Bar: Volume Index Index (Nov = 100) In November, soon after concentrates were launched, the average household bought 1,116 gm of detergent powder. Later in Mar when concentrates achieved relatively high penetration, the average quantity of detergent powder bought per household per month dropped to about 1,000 gm. ("Detergent power" refers to all detergent powders, including concentrates). June is seasonally high month for Detergent Sales. Note: Consumption refers to purchases measured as gm / month Refer notes pane for explanation

Wash Habits: Product Usage Use Patterns: (Jun 91) % Users who use only Powder, Powder + Bar and only Bar Powder Only Powder 6% 94% All Vizag homes purchase detergent powder and 94% of them also purchase detergent bar. There are no homes that purchased only detergent bar during Jun 91. Only Bar 0% Bar Refer notes pane for explanation

Wash Habits: Product Usage Concentrate User Before they started to use concentrates Concentrate User After switching (Jun) Any Brand User (Jun) Powder Only Powder 10% Only Powder 6% Only Powder 18% 82% 90% 94% 82% Bar Only Bar 0% Only Bar 0% Only Bar 0%

Wash Habit Product Usership (use only one powder brand, no bar) According to this exhibit, for Ariel Buyers: 12% of Ariel buyers bought Ariel and no other product. (Solus) 5% bought Ariel along with some other powder(s) and did not buy any detergent bars 55% bought Ariel along with detergent bar(s) 28% bought Ariel with detergent bar(s) and some other detergent powder(s) Refer notes pane for explanation

Wash Basket Analysis Consumption (Purchases) gm/household June 91 Wash basket: A wash basket or purchase basket analysis lists out the purchases on average of fabric wash products, by a specified buyer group, for a specified period. According to this exhibit, the average Ariel buyer, in the month of June ’91, bought 740 gm of detergent power of which 380 gm is Ariel. She also bought 700 gm of detergent bar, and her total wash basket is 1,440 gm, costing Rs 49. Loyalty: is the share of brand purchases to total category purchases by brand buyers. According to this exhibit 51% of total powder purchased (in weight terms) by Ariel buyers is Ariel Powder. While comparing loyalty, one needs to be mindful of the fact that a kg of concentrate has greater throughput than an equivalent weight of normal detergent powder. Refer notes pane for explanation

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.