Demystifying Market for Navratna Oil Contents
ABSTRACT To describe and analyse the existing STP strategy of Emami Navratna oil, proceed with an Environmental Analysis and draw the Porter’s 5 forces which will help to figure out a growth path for the brand.
MEMBERS: TEAM 2
Himani Navratna HAIR OIL Thanda Thanda Cool Cool
1. Abhilash ChakrabortyP152002 2. Akshay JainP152008 3. Tony Vijay XavierP152068 4. Vineet SinhaP152073 5. Poomalai S PravinP152037
Contents Table of Contents Introduction ............................................................................................................................................ 2 STP for Navratna Cool Oil ....................................................................................................................... 3 Environmental Analysis (PESTLE)……………………………………………………………………………………………………5 Porter’s 5 Forces Model Analysis……………………………………………………………………………………………………7 Challenges faced by Company/Brand…………………………………………………………………………………………….9 SWOT Analysis…………………………………………………………………………………………………………………………….10 Issues that need to be resolved……………………………………………………………………………………………………11 Growth Plan………………………………………………………………………………………………………………………………..13 Conclusion…………………………………………………………………………………………………………………………………..14 References…………………………………………………………………………………………………………………………………..15
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Introduction Indian hair care market is mainly dominated by the hair oil segment, which constitutes over half of the overall hair oil market. Purchasers of hair oil have a wide array of options to select ranging from light, heavy, cooling types. Hair oil purchase is a decision which purchasers evaluate carefully. In a country like India where the hair care market is growing at a rapid pace and various types of hair oils are being launched, it becomes extremely important for both the store and the company to understand shopper preferences. The market type of hair oil can be described as perfect competition i.e. many buyers and sellers. The movement of products are dominated by organised and unorganised retail segments. In recent years beauty salons are also emerging as an important destination for reaching customers. Sub Categories of Hair Oil:
Light Hair Oil Heavy Hair Oil Cooling Oil
'Thanda Thanda Cool Cool' brand Navratna has been the most trusted and preferred brand in the therapeutic cooling oil segment for a very long time. It is the undisputed leader in its category – providing multi-purpose benefits to its set of satisfied and ever growing consumer base. It has been meticulously prepared from a combination of nine unique ayurvedic herbs. It’s everyday massage gives enjoyable cooling which provides relief from daily mental and physical stress- and its related symptoms like headache, fatigue, tension, insomnia etc. It not only solves specific hair and body related ailments, but delivers superlatively on all desired benefits, like beauty & nourishment, traditionally sought from hair oils.
Emami Navratna Oil Product Profile Consumer Products Navratna Cool Oil Navratna Extra Thanda Navratna Cool Talc Emami and cool hair oil segment (Navratna brand) Branded hair oil business – over Rs 5,500 crores. Cool hair oil – 10% of branded hair oil & growing at over 15 % annually. Navratna, (Rs 300-cr brand) which is known nationally for its ‘Thanda-Thanda, Cool-Cool’ campaign, has 57% market share in the cool hair oil category, has had a free run so far. And it has been doubling its sales for the last three years even though it is among the costliest hair oils (Rs 25 for 50 ml and Rs 47 for 100 ml) in the therapeutic segment in India. (Emami – an Rs 700 crores company) FMCG major Marico has a dominant 50 %-plus market share in the branded hair oil segment with two best-sellers: Parachute and Nihar.
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STP for Navratna Cool Oil 1. Segmentation: Segmentation means to divide the marketplace into parts, or segments, which are definable accessible, actionable and profitable and have a growth potential. A market segment consists of a group of customers who share a similar set of needs and wants. The major segmentation variables are: 1. 2. 3. 4.
Geographic Demographics Psychographics Behavioural segmentation
Navratna oil being a cool and ayurvedic oil has the following segments:
Demographics: 1. Based on the age of the people who can use Navratna oil, it would be safe to say that people in the age group from early 20s to late 50s generally use this product. 2. Since the product is available in a sachet of Rs. 1.5, there is no income problem that would hinder its sales. 3. There is not much segmentation in terms of gender. Men and women both use this product. 4. Based on occupation, people in an occupation which involves a lot of stress, which has late working hours or which has irregular timing schedules.
Behavioural: Navratna oil is usually used at night, for its overnight application. It is generally not used as on daily oil and is used 2 to 3 times a week.
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Geographic: 1. It is mostly sold in urban market, especially targeting the working population. 2. Although it can be used in both winters and summers, the usage in summers is more pronounced as it is a cool oil.
Psychographics: People believing in the age old tradition that oil helps relief in headache, stress, body ache would probably choose Navratna oil.
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2. Targeting: As evident from the various advertisements, we can say that Navratna oil targets that segment of people who are mostly prone to stress, headache, body aches or have irregular work timings and are suffering from insomnia. The first commercial featuring Amitabh Bachchan, shows a working professional who has a lot of paper work and is under stress because of that. After applying Navratna oil, he has relief from stress and is shown to enjoy his work. In another commercial featuring Shahrukh Khan, a common man is shown to have a lot of problem in his busy life, because of which he is suffering from stress, but when he applies Navratna oil, it is shown that his life becomes easy going. From the above example we can conclude that Navratna oil wants to target the working professionals, common man, and people doing daily routine jobs, housewives and youngsters.
3. Positioning: Product position is the way the product is defined by consumers on important attributes—the place the product occupies in consumers’ minds relative to competing products. Navratna oil has positioned itself as a therapeutic oil that helps rejuvenate an individual. It has marketed itself as a cool oil and has been successful in doing so, as it has 57% of market share in cool hair oil market. People in general ask for a Navratna oil whenever they want to buy a cool ayurvedic oil. It has been doubling sales for the last three years even though it is among the costliest hair oil in the therapeutic segment oil.
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Environmental Analysis (PESTLE) Factors Political
Issues Stable political government Corporate tax rates
Economic
Reduction in individual disposable income. GDP per capita Economic growth Inflation Rate Consumer and Investor confidence
Social/Culture
Health Consciousness, Welfare Lifestyle Changes Trends, Fashion
Technological
New info and Communication technologies Customized advertising Research and development intensity New manufacturing processes New products and services of supply chain Any new technology that impacts company.
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Impact on Business Aggressively expand operations and market the product. Lowers Raw Material Costs
A slowdown could impact revenues from rural areas. No effect as the available SKUs are very affordable Increase opportunities for exporting. Demand may reduce as it not daily/ necessary requirement. Sales and Market Share could get affected. Strong Cultural bias towards Ayurvedic products Stressful lifestyle increases the demand for Cool oil. Celebrity Endorsements improves awareness and urge the masses to use the product. Social Media and prevalence Smartphones helps the brand to create connect to the Target Market in both urban and rural region. Helps to engage with the right Target Market. Helps to improve Product yield and quality which would improve acceptance in the Market. Increase Automation from production to packing which 5
Legislation
Changes to advertising laws Increased litigation Minimum Wage Laws Environmental Protection Laws Union Laws
Environmental
Growing environmental agenda. Growing community awareness
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increases efficiency and output levels. Increase Market Share by catering to niche segments. Improved Extraction of ingredients can improve profit margins. Negative publicity created by local brands could lower revenues. Hamper the image of the brand Discrepancies in the wages across various regions affect profit margins. Not abiding by Union Laws could production levels. Increases cross over from Cream based Hair Care products to natural Ayurvedic products. Increases awareness and interest of the product.
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Porter’s Five Force model Analysis of Emami Navratna Hair Oil Ltd Porter's 5 Force analysis represents the competitive environment of the firm. It provides strategic foresight which enables the company to anticipate threats and ensure the profitability of the product in the long run. A change in any of the forces normally requires a company to re-assess the marketplace. 1) The threat of substitute products: Low The existence of close substitute products increases the propensity of customers to switch to alternatives in response to price increases (high elasticity of demand). However the following parameters work in favour of Navratna Oil.
Brand loyalty of customers: The pricing of the Navratna Oil products is very competitive without compromising on the quality hence the relative price performance of substitutes is as low as compared to Emami. For instance Emami Navratna Hair oil has the largest Market Share of 65% in ₹ 800 Crore ‘Cool Oil’ Category in India.(Business Standard-NOV 2014)
Perceived level of Product Differentiation: Emami products generally have strong Herbal and Natural profile. In addition the Navratna Brand enjoys a strong association with Cooling. Its Tagline ‘Thanda Thanda Cool Cool’ has found a place for itself in Popular Indian Parlance.
2) The threat of the entry of new competitors: Moderate Profitable markets that yield high returns will draw firms. This results in many new entrants, which will effectively decrease profitability. Unless the entry of new firms can be blocked by incumbents, the profit rate will fall towards a competitive level (perfect competition).
Ayush, the Ayurvedic Association of India has declared strict adherence to ayurvedic norms; any new company claiming to sell Ayurvedic product need to comply with the norms of Ayush.
Brand equity of Navratna Oil is very high as it is a well-established brand and scores very high in terms of Brand recall.
It has a well-established distribution channels network across India in both urban and semi-urban areas. Supply Chain and Logistics dictates New Brands ability to penetrate and gain Market Share.
All the advantages of first mover, learning curve, brand loyalty, patents and economies of scale exist with Emami.
Emami is in business for more than 40 years. It made its beginnings with a small factory, but has continued to learn and grow to a commanding status in the industry. The Company has gone a long way in popularizing and making easily available a whole range of products based on the traditional science of Ayurveda. And it has set very high standards in developing products and processes that meet stringent quality norms.
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3) The intensity of competitive rivalry: High For most industries, this is the major determinant of the competitiveness of the industry. Sometimes rivals compete aggressively and sometimes rivals compete in non-price dimensions such as innovation, marketing, etc.
‘Cool Oil’ Category has high growth rate and the Major Competition for Navratna Oil is from much smaller brands like Himgange and Rahat Rooh. (Business Standard- SEPT 2010)
The competitors of Navratna Oil are mostly prominent in the Rural Market and have well established distribution network within their respective Target Market.
Emami has a strong dependency on its existing distribution channels and is prevalent in urban areas and rural areas, which makes it vulnerable to competitors eyeing for their Market Share in the rural market.
Low Cost of Switching to competitors but Brand association with perceived benefits of the product is very high.
In FY13 Emami spends around to 16% (390.03cr in FY10) of its sales in advertising. The company believes in higher celebrity endorsements, like Amitabh Bachchan and Shah Rukh Khan as it is easy for them to maintain a National presence. (First Post JUN 2013)
Since the industry is growing at a very rapid pace and so is the number of players. So Emami India has to constantly relook at its strategy in order to increase its global dominance. 4) The bargaining power of customers: Low The ability of customers to put the firm under pressure and it also affects the customer's sensitivity to price changes.
Due to high consciousness of consumers in for health, the Ayurvedic and Natural products have gained more prominence.
Since Market share of Navratna Oil is high in hair care, it has strong bargaining power. Also, Customers are scattered and not concentrated which leads to low bargaining power of buyers.
Customers have moderate incentive to buy Navratna oil to have an association with the Brand.
5) The bargaining power of suppliers: Low Suppliers of raw materials, components, labour, and services (such as expertise) to the firm can be a source of power over the firm. Suppliers may refuse to work with the firm, or e.g. charge excessively high prices for unique resources.
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Raw Material Cost relative to the Final Price of the End Product. Company insulate itself from volatile commodity prices through hedging. Due to their long Business presence, Emami has strong relationships with its suppliers. They constantly gear themselves to challenges by replacing select inputs which improve product yield and quality.
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Challenges facing the company/brand The Indian domestic markets have become very competitive with many international brands and products making inroads into the market. In such a competitive scenario, it is very difficult to maintain the brand name and also to keep on maintaining the same kind of market share. So, it becomes one of the main challenges for Emami Navratna oil to maintain it. Market penetration in rural areas is a challenge as mustard oil and home-made Ayurveda oil is still considered as a more popular product. The Navratna oil is a thick oil so to meet the requirements of a light coconut oil they have already launched a product the Navratna coconut oil but it poses a challenge to capture the market due to its numerous competitors. Navratna oil being an Ayurveda product needs its raw materials from farm forestry. In India the concept of farm forestry is still not so prevalent. Innovation is a major factor to keep growing in the market but due to its USP there is not much scope for innovation left. So, Navratna oil definitely faces a challenge to inculcate innovation in its product. Although available in Rs. 1.5 sachets, still the rate of its main component which is the 300ml bottle is more expensive than its counterparts. (Rs. 135 for 300ml and Rs.210 for 500 ml). Competitors of Navratna Hair Oil
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Parachute coconut oil Himgange Marico Maha Thanda Dabur Super Thanda Banphool Rahat Rooh Bajaj Almond Drops Clear Dabur Amla Dabur Sarson Amla Hair and Care Himalaya Herbals Keo Karpin Parachute jasmine Nihar Shanti Amla Cantharidine
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SWOT Analysis
1. Navratna hair oil is the Market leader in its category of cool hair oils. 2. Endorsements by Amitabh Bacchan, Shahrukh Khan throughout India and by Chiranjeevi, Surya and Upendra in South India have helped establish a high brand recall.
Strength
3. Company has invested on product innovations and launched Navratna Oil Lite, Navratna Extra thanda oil, Navratna coconut cool oil. This has benefited the brand immensely. 4. Company has been strong both in ATL as well as BTL activities. Activation programs conducted through rural vans, participation in rural festivals, congregations, wet sampling initiatives at railway stations, BPOs, religious places, factories, bus terminals, ghats etc to demonstrate efficacy have increased product trials and awareness
Weakness
The celebrity presence seems to overshadow the brand proposition, thus the brand message gets lost and only celebrity recall is there.
1. Low penetration levels in rural market offers room for growth
Opportunity
2. India represents a nation with one of the largest proportion of young income earners. 3. The brand can look for additional promotion through extensive wallpaintings, dealer boards, hoardings and shop presence especially in the rural markets.
1. The modern day youth prefer taking medicines for headaches and such other ailments and shy away from using oils.
Threat
2. With almost all the competitors offering similar benefits, celebrityendorsements alone might not provide competitive edge over a longterm. 3. Many players are entering the market
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Issues that need to be resolved
Generating awareness among customers for therapeutic oil products
Where issue lies: Before new extensions of Navratna oil products are to be introduced in market, one has to actually get the attention of consumers and their immediate needs. Emami may face the issue of not having a large enough volume of interested prospective customers, while there is uncertainty to which channels they should focus for the highest return. Solution: In order to attract a higher volume of prospective customers, company needs to generate more awareness through the various channels available to consumers. Positioning of Navratna extensions in market is achieved by inclusive marketing. It is one of tools to spread awareness about Navratna oil.
Targeting Effectively
Where issue lies: Targeting is one of the most important components of marketing. To be more effective at targeting one needs to identify the needs and the requirements of the customers. The targeted market should be such that the product alleviates the problems of the consumers. Solution: Initially a detailed picture of target customers is to be determined. The best way to understand consumer’s behaviour is to build buyer personas with 3 steps: segmentation by demographics, consumer needs to be identified and behaviour-based profiles be developed. Segmenting customers appropriately will allow Emami to target correct set of customers.
Keep Yourself Updated With Marketing Trends and Strategies
Where issue lies: Emami’s marketing strategy has gone through many transitions, especially in the last decade. Their marketing focus has shifted from print media to online media, and they have witnessed the decline of direct mails and one to one calls. Technology has introduced new tools that make their communication with potential customers more efficient and effective. Navratna oil was prone to these marketing changes so issue was how to cope with new trends and stay current. Solution: Emami kept up with new transformations with its innovative approach. Company invested heavily on these latest developments in marketing of Navratna oil. These steps strengthened customer satisfaction and marketing productivity.
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Increasing and Proving ROI
Where issue lies: Emami’s marketing model is constituted where it is able to measure and understand the value of each of its efforts in terms of leads, customers, and revenue. But it needs to prove that Navratna Oil segmentation would provide return on investment that is high enough to generate effort, time, and money. Solution: Navratna Oil was able to tie customer, and revenue back to the marketing initiative that Emami had created. This is how company was able to prove its worth, and understand how to efficiently reach their consumer base. Through the widespread marketing analysis and assumptions, Emami was able to reveal real data about success of their marketing efforts. Company used advanced marketing analytics to track which marketing activities are generating consumers, and revenue
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Growth Path We propose integrative growth as a growth path for Navratna oil. The reason to choose this strategy is because, Navratna oil being a cool oil, doesn’t has much scope for innovation. The other way that is left is to acquire other companies, which are having similar products, so that they can enhance their product base and have a greater control over the market. The recent takeover of the Kesh King oil depicts their growth strategy. The Kesh King oil was brought by Emami in 300 Crores Rupees.
(Rupees)
By acquiring new companies (product) it can develop a market in which it can create it niche. It can then bring out products that can be used on daily basis.
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Conclusion Our study on Navratna Oil shows how the product had done its segmentation, targeting and positioning to reach to a market share of 57% of the cool hair oil market. It shows that it had targeted mostly the people who are prone to stress, body aches or headaches. They had segmented the people from early 20’s to the late 40’s. This surely helped them to reach such a staggering market share but further analysis such as the Porter’s five forces, PESTEL analysis and the SWOT analysis also shows the challenges, hindrances and the opportunities that the product faces. There is a moderate threat from new entrants but definitely a high threat from its competitive rivals. To keep up with the market share Navratna Cool Oil definitely has to devise an innovative growth strategy or rather come up with a product that would cater to the needs of the people from diverse segments.
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References 1. http://articles.economictimes.indiatimes.com/2014-02-15/news/47358885_1_hair-oilcoconut-oil-market-leader-marico 2. http://www.emamiltd.in/brands/71/161/navratna-cool-oil.php 3. http://www.emamigroup.com/Navratna-Oil
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