Considering the lasting impact it has had on the world's leading financial institutions, 'subprime', has perhaps been the most dreaded, as well as the most oft-heard word in financial circles worldwide in the past six months or so. Ask a stock trader and he will have plenty of tales about how the 'subprime' demon took a toll on him as well as hundreds of other investors, big and small.
The root cause, as is the case in most of the market meltdowns, has been wide-scale euphoria. This time it pertained to mortgages. Post 2000, the US markets witnessed an environment of benign interest rates, which encouraged cheap borrowing and fueled housing prices. Things started assuming a bubble-like proportion as the lenders too joined the party with lenient lending covenants and 'innovative' loan products, which basically provided more convenient re-payment options at the start of the mortgage. These conditions prompted borrowers to buy homes far more expensive than their financial situation warranted. The originators re-financed these mortgages by financially re-packaging them into different types of products and selling them to other financial institutions. However, the scenario changed after a series of policy rate hike by the US Federal Reserve led to increased interest rates on floating housing loans and subsequently increasing defaults by borrowers. Some of the major financial conglomerates reported sub-prime related losses running into billions, repercussions of which were felt not only in the US financial markets but across the globe.
It seems that the direct effects of sub prime on the Indian markets are pretty limited. We have to look only at the collateral dimension, if there is any. Collateral damage can come in two forms; one is through a generalized slowdown in the global economy, more specifically in the US. If the US slows down, then the decoupling for emerging markets cannot be too far away. We are already facing a slowdown in the Indian economy as the GDP growth rate has declined to 7.9% by August 2008. The other channel is typically we are getting more financially integrated across the world. Capital market integration means that if there is a liquidity crisis coming out of the subprime crisis, then that can affect us in some fashion. The liquidity crisis has just begun in the foreign market which might reflect out the Indian markets too as the FII's inflows has started drying up all around the globe after 'Black Monday'.
The US will slow down significantly and the US investor is at risk. That is something, which is a serious problem. If you look at market behavior, over the last 10-15 years, whenever the Fed cut rates, it has normally been good for markets, provided that the US does not go into a recession. But at present the situation is quite adverse. The wiping of biggest investment banks in US has led to risk of employment for numerous employees of these companies in US & in other nations in which India also comprises. The employees of these firms are being converted into sales executives by domestic AMC's at half of their net salary.
As the slowdown in the India's Bull Run have its consequences on the FII's investments in India. The chief technical officers (CTO) of US-based companies, having their back-office operations in India, will be compelled to lower their budget, which will further have a cascading impact on Indian companies. The major chunk of FII investments from US would be negative as most of these investors will pull out money from the equity market, with European countries at a risk after the US crisis will restrict their investments in the domestic markets. This would lead to major FII's turning their back from the equity markets of India as on 16th September about $2.2 billion of the investments of FII's came into the debt market of India. Thus we can finally say that the bull run of the Indian equity market is over.
There was a certain amount of FDI investments by Merrill Lynch in various India companies which would have a major effect on their future operations. Among them are two major real estate firms of India- 'DLF' & 'Unitech'. The net investments by Merrill Lynch which was wiped out turned out to be about $400 million.
Major sectors in India that would be affected out to a certain extent due to the current crisis are:
Banking Industry
IT & IT enabled services
Real Estate
Oil & Gas
FMCG
The good part of the story is that unlike China, which had an export oriented economy, the Indian economy was based on the domestic market. The India's trade theory is changing a lot as it is turning out to be more of a manufacturing export oriented country. The net trade of services done by India accounts to about just 22% just reflecting the risk on trade services is tried to be minimized. Also in the current scenario the trade practices of India with US has decreased and on the other hand has relatively increased with China reflecting out that the risk of US recession has been deflected.
A lot of experts being commenting that the India IT sector will have a major impact with effect to these banking crisis in US recently. The major Indian IT majors had all these companies as their major clients. So on a short term it will have its effect on these IT companies and also on its revenues in their future quarter results. Indian IT employees use to be mainly outsourced to US by various companies which would drastically reduce. The growth in the employment in the IT sector in the year 2008 was 44 % up till August 08 which will drop to about 28% net growth for this financial year.
As US economy slowing down the US dollar is suppose to get weaken which it has started when compared to pound & has beaten seven year record but when compared with the Indian Rupee, which has turned up weak would reflect out to the India's GDP. Much more weakening of Indian Rupee beyond Rs 48 would lead RBI to take some monetary measures to support Indian Economy.
The Indian Banking Industry is not well known in the foreign market specially & there are no big players of India among the top world banks where as other developing countries like China has few banks among the top World Bank list. This gives a green signal to Indian banks like ICICI & SBI which are not much affected to the subprime crisis & thus can readily expand their services in the international markets. ICICI bank has faced a net loss of Rs 375 cr. in the current banking crisis.
Learning from Sub Prime Crisis for India are:-
1. Sound banking practices: The root cause of the sub prime mortgage (even prime mortgage loans are in trouble in US; e.g., trouble in Countrywide, America's biggest home loan lender) crisis is the unsound credit practices that emerged in the US market. Fake certification, which helps an ineligible person to raise a home loan, cannot be ruled out in India. Housing loan frauds are not uncommon in the cities of India and the aggressiveness with which housing loans are being sold by banks and financial companies in violation of sound credit practices cannot be ignored. Personal loans and overdue credit cards are the other sectors which the regulators and bankers should handle carefully because they have the potential to plunge the Indian banking sector into a crisis.
2. Controlled Derivatives market: Derivatives are financial instruments, which can spread the default risk attaching to loans. All the same, indiscriminate use of such derivatives can lead to havoc as in US. Derivatives lead to such a chain reaction that it will be nearly impossible to quantify the risk of exposure to bad loans and advances subsequently. RBI and GOI should prohibit indiscriminate use of such derivatives if they intend to introduce such products in India.
3. Limited investment by Indian companies abroad: Prudent investment abroad should be the order of the day. Reckless investment in the derivatives market abroad by banks and financial institutions has to be controlled.
In the recent crisis, BNP Paribas of France and Macquarie Bank of Australia have been affected because of such overseas investments. The exposure of Indian banks to the sub prime crisis of US is minimal.
4. Quality Inward Investment: FDI should be given priority over FIIs as history has shown that flight of capital in case of FDI is low compared to that in respect of FIIs. Due to their stable nature, FDI can help in the growth of the country's infrastructure
The subprime mortgage crisis is an economic problem characterized by contracted liquidity in the global credit markets and banking system. An undervaluation of real risk in the subprime market is cascading, rippling and ultimately adversely affecting the world economy.
The crisis began with the bursting of the US housing bubble and high default rates on "subprime" and adjustable rate mortgages (ARM). Loan incentives, such as easy initial terms, in conjunction with an acceleration in rising housing prices encouraged borrowers to assume difficult mortgages on the belief they would be able to quickly refinance at more favorable terms. However, once housing prices started to drop moderately in 2006–2007 in many parts of the U.S., refinancing became more difficult. Defaults and foreclosure activity increased dramatically, as easy initial terms expired, home prices failed to go up as anticipated, and ARM interest rates reset higher. Foreclosures accelerated in the United States in late 2006 and triggered a global financial crisis through 2007 and 2008. During 2007, nearly 1.3 million U.S. housing properties were subject to foreclosure activity, up 79% from 2006.
The mortgage lenders that retained credit risk (the risk of payment default) were the first to be affected, as borrowers became unable or unwilling to make payments. Major banks and other financial institutions around the world have reported losses of approximately U.S. $435 billion as of 17 July 2008. Owing to a form of financial engineering called securitization, many mortgage lenders had passed the rights to the mortgage payments and related credit/default risk to third-party investors via mortgage-backed securities (MBS) and collateralized debt obligations (CDO). Corporate, individual and institutional investors holding MBS or CDO faced significant losses, as the value of the underlying mortgage assets declined. Stock markets in many countries declined significantly.
The widespread dispersion of credit risk and the unclear effect on financial institutions caused reduced lending activity and increased spreads on higher interest rates. Similarly, the ability of corporations to obtain funds through the issuance of commercial paper was affected. This aspect of the crisis is consistent with a credit crunch. The liquidity concerns drove central banks around the world to take action to provide funds to member banks to encourage lending to worthy borrowers and to restore faith in the commercial paper markets.
The subprime crisis has adversely affected several inputs in the economy, resulting in downward pressure on economic growth. Fewer and more expensive loans tend to result in decreased business investment and consumer spending. The initial leveling off in the housing market has become a downturn in many areas due to a surplus inventory of homes. The reduction and shift in demand versus supply has resulted in a significant decline in new home construction.
With interest rates on a large number of subprime and other ARM due to adjust upward during the 2008 period, U.S. legislators, the U.S. Treasury Department, and financial institutions are taking action. A systematic program to limit or defer interest rate adjustments was implemented to reduce the effect. In addition, lenders and borrowers facing defaults have been encouraged to cooperate to enable borrowers to stay in their homes. Banks have sought and received over $250 billion in additional funds from investors to offset losses. The risks to the broader economy created by the financial market crisis and housing market downturn were primary factors in several decisions by the U.S. Federal Reserve to cut interest rates and the economic stimulus package passed by Congress and signed by President George W. Bush on 13 February 2008. Both actions are designed to stimulate economic growth and inspire confidence in the financial markets.
Chapter 1 provides a basic introduction to toilet soap industry.
Chapter 2 is divided into two parts where part A provides information about the Godrej consumers products limited and , while part B introduces about- Cinthol the super brand.
Chapter 3 provides the data collected from both primary and secondary sources and analysis of the data.
Chapter 4 analysis of the strategies adopted by Cinthol, external environment of Cinthol and opportunities and threats for Cinthol.
Chapter 5 provides some suggestions and strategic control tactics to be followed and other suggestions to make its strategies successful.
(B)OBJECTIVES
1.To identify and analyse the opportunities and threats for Cinthol soap.
2.To identify existing strategies of Cinthol Soap.
3.To bring a match between the opportunities & threats and the strategies to be adopted by Cinthol soap.
(C)RESEARCH METHODOLOGY
The research methodology in this project is empirical and also involves doctrinal study. Data were collected through field study. Most of the data used in the project are from primary sources and secondary sources like books, websites, etc. are also considered.
Foot note style will be followed as given by NationalLawUniversity, Jodhpur.
CHAPTER – 1
INTRODUCTION
Toilet Soaps- An Introduction
The toilet soaps market is estimated at 530,000 tpa including small imports.The market is littered over with several, leading national and global brands and a large number of small brands, which have limited markets. Hindustan Lever is, of course, the market leader.
The market is littered over with several, leading national and global brands and a large number of small brands, which have limited markets. The popular and premium brands include Lifebuoy, Lux, Cinthol, Liril, Rexona, and Nirma.
Toilet soaps, despite their divergent brands, are not well differentiated by the consumers. It is, therefore, not clear if it is the brand loyalty or experimentation lured by high volume media campaign, which sustain them. A consequence is that the market is fragmented. It is obvious that this must lead to a highly competitive market. Toilet soap, once only an urban phenomenon, has now penetrated practically all areas including remote rural areas. The incremental demand flows from population increase and rise in usage norm impacted as it is by a greater concern for hygiene. Increased sales revenues would also expand from up gradation of quality or per unit value[1].
As the market is constituted now, it can be divided into four price segments: premium, popular, discount and economy soaps. Premium soaps are estimated to have a market volume of about 80,000 tonnes. This translates into a share of about 14 to 15%. However, by value it is as much as 30%.
The personal wash can be segregated into:
Premium- Lux, Dove
Economy- Nirma Bath, Lifebuoy
Popular- Nirma, Cinthol
Market Segmentation
The price of the premium segment products is twice that of economy segment products. Premium soaps are estimated to have a market volume of about 80,000 tonnes. This translates into a share of about 14 to 15%. However, by value it is as much as 30%. The economy and popular segments are 4/5ths of the entire soaps market. The penetration level of toilet soaps is 88.6%. However, the per capita consumption of soap in India is at 460 gms per annum, while in Brazil it is at 1,100 gms per annum.
Soaps are also categorized into men's soaps, ladies' soaps and common soaps. There are a few specialty soaps as transparent Glycerine soaps, sandal soaps, specially flavored soaps, medicated soaps and baby soaps. Specialty soaps are high valued but enjoy only a small share of the market in value terms.
The market is growing at 7% a year. This means that the incremental demand generation is 5% over and above the population growth. With increasing awareness of hygienic standards, the market could grow at a rate higher than 8% annually. Interestingly, 60% of the market is now sourced from the rural sector. This means that the variance between the two segments is not very large. Since upper-end market focus is the urban areas, margins come from the urban sector.
In terms of market share, the data indicates that HLL had a market share of 64 per cent in the soap market, followed by Nirma at 16.8 per cent and Godrej at 4.4 per cent.Hindustan Lever is the largest contributor to the toilet soaps market of India. It enjoys almost a two-thirds share, with the second ranked Nirma Soaps placed at a distantly low share of 16.8%.
Godrej Soaps had a disappointing experience in forging an alliance with Procter & Gamble (P&G). Infact P&G is withdrawing itself from the premium soap segment like Camay.
P & G has now a fully-owned subsidiary in India and now it is concentrating more on personal care products. Godrej retained all soap brands and transferred detergent brands to P&G in 1993. Godrej found it convenient to shed the detergent brands - Ezee, Key, Biz and Trilo - as they represented a losing portfolio.
Godrej is promoting a number of brands, Cinthol, Ganga, Shikakai, Fairglow, No.1 and Crowning Glory, while it has others to bother about such as Vigil and Fresca. Cinthol ranks third and accounts for 60% of all Godrej Soap's brands. It is an old brand launched about five decades ago in early 1950s. New Cinthol Lime and Cologne gave it a new look in 1985. Two variants were introduced in 1989 placing an added emphasis on their brand of soaps. Its deodorant and complexion soap is styled as Cinthol Spice. Cinthol is perceived largely as a male soap, as Lux is a lady's soap. The company expects a very high growth for Cinthol in 1997-98. Ganga did well and a new version Doodh Ganga has been introduced. Ganga had notched up a 5% market share but declined to 2% later with sales at Rs 350 mn. Godrej wants to revive it. Godrej Soaps was giving a tough competition to Hindustan Lever. Crowning Glory was pitched for hair care.
CHAPTER -2
GODREJ CONSUMER PRODUCTS LIMITED
Godrej Consumer Products has created business value by working on and enhancing the multiple facets of business. Sharpening its core competence to get the cutting edge in the market and polishing its strategies further to radiate brilliant success.[3]
Started in 1897 as locks manufacturing company, the Godrej Group is today one of the most accomplished and diversified business houses in India. Godrej's success has been driven by the company's commitment to delivering innovation and excellence. Through the consistent application of this commitment and a century of ethical business conduct, Godrej has earned an unparalleled reputation for trust and reliability.
In 1930, Godrej became the first company in the world to develop the technology to manufacture soap with vegetable oils; that spirit of innovation has continued throughout the organization's history. Today Godrej is delivering consumers exciting innovations across a spectrum of businesses. The company's pursuit of excellence is equally well established and enduring. In the 1944 Mumbai docks blast, Godrej safes were the only security equipment whose contents were unharmed; an equal level of product quality continues to be expected from every product bearing the Godrej brand name. Godrej management understands that the company's greatest asset is the trust and faith that consumers have reposed in it, and recognizes that the company must continue to earn this trust. This [4]translates to the organization delivering outstanding quality and value in everything it does.
Godrej's ethical and visionary practices have allowed the company to successfully expand into a number of businesses.
Today Godrej is a leading manufacturer of goods and provider of services in a multitude of categories: home appliances, consumer durables, consumer products, industrial products, and agri products to name a few. A recent estimate suggested that 350 million people across India use Godrej products. The group has more recently entered the real estate and information technology sectors, and management views these as avenues for enormous growth.
The Godrej Group stands in a strong position today. With annual sales in excess of $1 billion, a workforce of approximately 18,000, and a strong diversified portfolio, Godrej has proven its ability to deliver strong financial performance. Currently even when the market is declining Godrej is recording a high sale in terms of value of 24% by competing vigorously in the marketplace. A correction in the prices of inputs resulted in better margins in the soaps business as compared to the previous year. Godrej has come out with a number of innovative consumer and trade offers.
The highlight was the launch of Fairglow which is the first innovative breakthrough soap offering in the Indian market for many years. The product meets a stated need of the consumer at no extra cost or effort and has met with universal acceptance by the trade and consumers.[5] Sandal and Natural variants of No.1 soap launched keeping with the rising popularity of ‘natural’ variants in the soap industry. Renewed focus on Institutional sales and sales to Canteen Stores Department led to growth in sales value in this segment.
Godrej has the distinction of being the first company in the world to develop technology to make soap with vegetable oils, way back in 1930. It is also manufacturing for other players in the Industry. Contract manufacturing of toilet soaps registered a 20% volume growth but grew by only 7% in value terms to Rs618mn. Capacity utilization in the industry varies from as low as 50% to 80%.
GCPL continues to be one of the fastest growing companies in the FMCG sector. Company in line with the changing times is focusing on a profile makeover. The Godrej group recently unveiled its new corporate logo with new colours that are more relevant to today’s young India. Your Company relaunched its flagship brand ‘Cinthol’ across the soap, talc and deo segments in trendy new packaging. GCPL also relaunched it’s Powder hair Dye as ‘Godrej Expert Powder Hair Dye’. During the year, the Company acquired Godrej Global Mideast FZE, a 100% subsidiary of Godrej International.
The products manufactured by Godrej Consumers Products [6]
Soaps
Cinthol deo soaps
Cinthol
Godrej No. 1
Evita
Toiletries
Cinthol talc
Cinthol deodorant
Godrej shaving cream
Godrej after shave
Godrej No. 1 talc
Hair Care
Renew Hair Color
Colorsoft Hair Color
Godrej shampoo-based hair-dye
Godrej herbal hair dye
Godrej kali mehendi
Household Care
Godrej Dish Wash
Godrej Glossy
Fabric Care
Ezee
Cinthol- The Super brand
Cinthol, the flagship brand of Godrej Consumer Products Ltd., is now recognised as a Superbrand by the Superbrands Council, U.K. The criteria for winning this prestigious award were:[7]
·Perceived brand image
·Brand mind share
·Consumer goodwill
·Consumer loyalty
·Trust and emotional bonding with the brand
Cinthol, with its rich heritage of more than five decades, has been extremely successful in creating a niche in the consumer’s mind. Superbrands India had identified 101 Indian brands from 700 entries across 98 sectors for inclusion in the first ever "Indian Consumer Superbrands 2004".
Today, despite the presence of global corporations, the Cinthol brand has carved out a consumer base of more than 17 million users. The soap market in India is determined to be of the order of Rs. 41.75 billion and Cinthol commands a turnover of Rs 1.05 billion with a market share of 2.5% by value.
When needs change, brands need to change as well, to remain contemporary and desirable. Cinthol has kept pace with evolving markets. It has reinvented and rejigged its portfolio without compromising on its core values.
Today in the market, Cinthol has three distinct variants, borne out of market needs and consumer studies. Cinthol Deodorant & Complexion soap continues to operate in the 'healthy skin' category.
The soap offers numerous 'do-good' benefits such as total and complete skin protection.
Cinthol Fresh is a strong player in the 'freshness' category. The lime extract provides deep cleansing properties and the excellent long-lasting lime fragrance keeps one feeling fresh. [8]
Cinthol Deo Soap is the latest offering from the Godrej stables. This new soap-on-the-block is aimed at satisfying a latent problem: hesitation to get close because of body odour. It has a unique long lasting deo formula that prevents body odour all day long. It comes in fourexciting fragrances:[9]
1. Deo Cologne,
2. Deo Sport
3. Deo Classic
4. Fresh
Each of these sub-brands has helped extend the durability and youthfulness of the mother brand.
CHAPTER-3
DATA TABULATION
For the data collection the researcher went to Mr. Summit Bagaithe regional sale and marketing head of Rajasthan foe Godrej Consumers Product Limited. The researcher was welcomed by Mr. Bagai. All questions were asked in the form of interview the main questions are:-
Q.1. Good morning sir, can u please tell me what is the Cinthol all about for Godrej Consumers Products Limited?
Answer : Cinthol, the flagship soap brand of Godrej Consumer Products Ltd. (GCPL), has come a long way since the early 1950s when it was launched. Ever since its launch in 1952, Cinthol has been the perfect embodiment of the expression 'confidence personified'. It addresses the need for effective body odour removal through the unique proposition of deodorant in soap.
Q.2. Sir, Can you please elaborate on recent developments of Cinthol?
Answer: The company has relaunched its entire range of soaps, in three fragrances — Classic, Cologne and Sport. To send one cohesive brand message across price points and variants a “24-hour confidence” stamp is also affixed on all products carrying the Cinthol nameplate. The New Cinthol range will be available across the country at modern retail and other outlets and will be supported by high-impact advertising on television, print, out-door, on-line and radio. The key recent development for Cinthol are:
1.Re-launch of Cinthol soap.
2.An interactive website for Cinthol soap -www. Cinthol.com
3.Hritik Roshan as the brand ambassador for Cinthol soap.
Q.3 In present competitive market of bathing soap, relaunch of a soap which is already completed its life-cycle how can Godrej rely on its old aged product rather than launching a new product?
Answer:Good question asked, a brand valuation exercise undertaken by international brand valuation consultants, Brand Finance for the group. The report card showed that there was immense scope for improvement. While the potential value of its top five brands — Cinthol, Fairglow, Godrej No 1, Ezee and Godrej Powder Hair Dye — was Rs 3,900 crore, their realised value was at only Rs 2,600 crore. What explained the Rs 1,300-crore gap? Brands like Cinthol. The brand had a huge equity, but that was hardly being reflected in sales. For instance, in 2007, retail audits pegged the market share of Cinthol at less than 3 per cent in the Rs 6,000-crore toilet soap category. Godrej is now taking another shot at reinvigorating the brand. Cinthol is the flagship brand of Godrej. But we haven’t given it due attention. We stretched it too much without a unified platform. We now intend to bring it under one umbrella while making it more relevant to the young male audience.
Q.4. What is the strategy behind taking Hritik Roshan as brand ambassador?
Answer: Hrithik Roshan with his boundless energy and passion to excel was our obvious and most appropriate choice for Brand Ambassador. He exudes Confidence and doesn’t stop till he meets the high benchmarks he sets for himself.
Cinthol has always stood for confidence. We, therefore, needed to decode what confidence meant to youngsters, which helped us develop a clearer position. This position needs to be attitudinal, therefore, the new 24-hour confidence and the ‘don’t stop’ concept,” adds Dubash.
The new ad represents just that. The racy campaign features Roshan pulling off dare-devil stunts. The ad starts off with the actor running through the wilderness and across roof tops. This is followed by the actor indulging in incredible feats of bungee jumping, rafting, and horse riding.
The campaign ends with Hrithik playing football. He looks into the camera and says “Don’t stop.” We saw a complete fit between what Cinthol stands for and Hrithik’s values. He exemplifies energy, passion, and the ‘don’t stop’ attitude to achieve what he wants to. That is exactly what our brand represents, as well. Hrithik has sex appeal and Cinthol has always used celebrities with that kind of appeal. Be it Imran Khan or Vinod Khanna. Moreover, after Jodhaa Akbar, Hrithik’s appeal has only widened. He is a great fit with the brand.
Q.5. What is motive behind the website for a soap?
Answer: Godrej wanted us to create a platform where the youth could find out about Cinthol’s brand values and which they would find entertaining enough to continue their interaction with the brand. In simple words, ‘take the real life freshness and energetic Cinthol experience online.
The site will be modified in phases. Currently, what you see on it is part of Phase 1. In the second phase, we will be tying up with portals such as Yahoo!, Rediff, Google and Zapak in order to direct traffic to our site. For instance, a game will be launched on Zapak.com, which will divert consumers to our site. More games will be added later to the site.
Q.6.Future development for Cinthol soap?
Answer: We believe the shower gel category will grow handsomely in the near future. Today, the category is just about 1% of the total personal wash segment. The potential to grow is very high so Godrej is actively considering to get into the category with brand name Cinthol. We are conducting consumer research right now.
CHAPTER -4
ANALYSIS
The opportunities & threats for Cinthol soap
ISSUE PRIORITY MATRIX
ISSUES
1.Demographic environment of India –
The total population of India is above 1.3 billion and out of this near about 33% are of youth people age between 16 -30 . The sex ratio in this category is 59: 31 of male and female. This shows we are on right path to identify our target segment and this is good opportunity for Cinthol.
2.Social practice of purchase of soap-(Female purchase)
In India it is our social practice that female member of family is responsible for purchasing especially in rural of suburban market. The Cinthol is targeting youth and especially male consumers so this is a threat for Cinthol.
3.Males are getting more conscious about their look and appearance-
Looking good or attractive is area which now a days just not belongs to females only. Now males are also getting more concerned about their look and appearance. This shift in thinking pattern of Indian youth male is a opportunity for Cinthol.
4.Brand switching or easily substitutable
Soap industry or rather to say all FMCG categories have this brand switching phenomenon. The consumers doesn’twait for the product because substitutes are available easily.
Indian economy is going through the inflation phase and basic raw material for soap is soap noodle and prices are increasing very drastically. To maintain the price of soap it is challenge for soap producer.
6.Oraganised Retail sector
Booming retail sector and mentality of peoples of India is now changing. Now peoples are ready to pay for good quality and in these modern retail stores the youth is also coming for purchasing all this is the great opportunity for Cinthol.
7.Animal fat cannot be used in soaps
Initially fatty acids used for soap manufacturing were of animal fats but due to legal obligation no organisation can use the animal fats in their soaps. The option left in front of manufacturers is natural fats like Pam oil. This Pam oil is imported from Malaysia and other countries increases the coat of production; fluctuating exchange rates of dollars are also a problem.
8.Less direct competition-
In popular segment of soaps their not much competitors’ for anti body-odor. The main competitor is liril and that is targeting female consumer so this niche segment is totally open for Cinthol.
OPPRORTUNITIES
1.Demographic environment of India –
2.Males are getting more conscious about their look and appearance-
3.Oraganised Retail sector
4.Less direct competition
THREATS
5.Social practice of purchase of soap-(Female purchase)
CintholHAVE GOOD STANDING IN RESPECT TO ENVIRONMENTAL CHANGES
4
.3
5
1.5
2
.2
5
1.0
1
.1
4
.4
3
.1
3
.3
THREATS
5
.1
2
.2
6
.1
4
.8
7
.05
2
.1
8
.05
3
.1
EW=1
4.4
Current Strategies of Cinthol soap
Brand Rejuvenation or Revitalization-
Brand Rejuvenation or Revitalization is a major overhaul of a brand, starting with its positioning and proceeding through creative regeneration of the brand identity.
Brands like Cinthol pursue an ideal whereby they simply peel off their old skin and relaunch themselves as a new brand. Considering the fact that product life cycle and brand life cycle are related, we can understand the requirement of brand rejuvenation by the following figure. Here we see that the rejuvenation strategies are named as injections of new life. These help the company increase the sales and thus improve the brand image of the product.
Revitalizing a once-popular dormant brand can be a highly profitable strategy under the right circumstances. Over time, brands build up awareness and name recognition among consumers. People connect emotionally with a brand that reminds them of a specific time, place or experience, and old brands often have a reputation of reliability that new brands cannot match. Bringing back a dormant brand that consumers already recognize and are loyal to can save a lot of money. These savings are in the development, marketing and advertising expenditures that are required to launch a new brand. Making use of pre-existing awareness can also increase a product’s success rate by helping to cut through the clutter of products in the media.
In this strategy they followed three steps.
The first step (“Brand Discovery”)
This is a very drastic audit of the company and the different levels of management, to understand, what the company stands for, and what their core competence is. From here, they look at their marketplace, the distribution, everything, how it works across the country. In the case of Cinthol the godrej’s called a international brand audit firm and ask them to evaluate their brands.
NEXT(“Brand Practices”)
Then, they make an in house Perceived and Potential (P&P) values research, which is very important. Customers’ perceptual mapping in relation to the competition throughout the country has to be brought. The real sale was much less than what it should be according to the brand value calculated. Thenthe godrej decided the target or potential sale.
The Last step ( Brand Maintenance)
This is the finished artwork and the strategic orientation: how it should be communicated. All advertising, all communication strategy, whatever it is in the share market, everything should include the core benefit of the product. At this stage, they interact with the marketing team of the client for the training programme, telling them how to implement, which is very important.
1.Back to basics
2.Associate the Brand with New Usage
3.Strategy of offensive war fair by a challenger.
4.Some things are not for everybody
5.Youth icon Hritik
6.Interactive website
7.Pricing & promotional strategy
8.Attractivepackaging
9.Advertisement
·Don’t Stop.
·24 hours
Cinthol is all about 24- Hour confidence, energy and a 'Don’t Stop' attitude it was very natural for me to associate with this brand. Its in perfect sync with my lifestyle & attitude”
The new Cinthol range brings 24-Hour Confidence through Active Deo Formula, which controls body odor, Powerful DryShield that absorbs sweat, UltraScent Technology for long lasting fragrance and Freshness that revitalizes you 24x7.
1.Back to basics
Godrej took shot at reinvigorating the brand. Cinthol is the flagship brand of Godrej. The company haven’t given it due attention. They stretched it too much without a unified platform. They now intend to bring it under one umbrella while making it more relevant to the young male audience. Earlier cintol was know for its masculine image then the company give it the the full family make-over but it doesn’t work and market share was diluted so the best option is to get back to basics.
2.Associate the Brand with New Usage
By expanding the perceived usage situations for a mature product, product sales can rise, or at least be protected. Cinthol sales increased when it was marketed as toilet soap with deodorizer for the body. This repositioning was vital for Cinthol since the competition was increasing and the market share was shrinking every year.
3.Strategy of offensive war fair by a challenger
Cinthol is the brand of godrej and godrej is having second position in toilet soap industry basically the organisation is challenger and according to offensive warfare strategy the challenger must look in the weakness of the leader and try to convert that in its opportunity. Likewise HUL is having leader position but is not very good in the particular segment for male product so Cinthol is utilizing this weakness to create the niche market for saling the product.
4.Some things are not for everybody
Cinthol is now using the new strategy that is some things are not for every body. There are few important peoples to whom Cinthol is catering. This gave the feel to the consumer of Cinthol that they are special and not ordinary one. The masculine feel for people who want to be confidant for 24 hours.
5.Youth icon Hritik
Hritik is well known and most successful actor of this generation. His image is masculine and have sporting image as well. The youth want to be like Hritik so this the strategy to attract youth more and more towards the Cinthol brand.
6.Interactive website
The pace of technological change, which is shortening product life spans, can act as an issue during rejuvenation. From product innovation to parity to obsolescence is a much faster route, making effective brand rebuilding at the product level more difficult. Ever-increasing channels of communications, the Internet and new global markets, provide an opportunity and a threat to the brand builders. They create new opportunities to create truly global brands, but they need a lot of contemplation, as they are not stable.
Website is to create a platform where the youth could find out about Cinthol’s brand values and which they would find entertaining enough to continue their interaction with the brand.
7.Pricing & promotional strategy-
Although there is high inflation rate is going on and raw material prices are increasing but still the prices are kept in control. The 125gm of Cinthol costs 22 INR and it is coming in combo pack with money saving offers.
8.Attractivepackaging-
Cinthol is now coming with its new packaging that is more attractive, when a person open the packet he can feel the fragrance of the soap. the material used in this is of good quality and can assure the buyer that product will also be of good quality.“24-hour confidence” stamp is also affixed on all products carrying the Cinthol.
9.Advertisement
The communication had to be relevant to the target audience — the confident achiever who wants to live an active lifestyle.Yet because of the varying price points, the company needed to ensure that it delivered a single message to consumers of brand Cinthol, rather than design variant specific communication, he adds. Cinthol has always stood for confidence, therefore, needed to decode what confidence meant to youngsters, which helped us develop a clearer position. This position needs to be attitudinal, therefore, the new 24-hour confidence and the ‘don’t stop’ concept. The new ad represents just that. The racy campaign features Roshan pulling off dare-devil stunts. The campaign ends with Hrithik playing football. He looks into the camera and says “Don’t stop. This exemplifies energy, passion, and the ‘don’t stop’ attitude to achieve what he wants to. That is exactly what Cinthol represents as well.
Apart from the conventional TV, print, and cinema promotions, the company’s 360-degree campaign includes outdoor visibility, modern retail activation, digital marketing initiatives and communication through short messaging service (SMS). It also plans to beef up its rural distribution.
CHAPTER-5
Conclusion
Cinthol, with its rich heritage of more than five decades, has been extremely successful in creating a niche in the consumer’s mind. Superbrands India had identified 101 Indian brands from 700 entries across 98 sectors for inclusion in the first ever "Indian Consumer Superbrands".
The Cinthol is more than 50 years brand but the sales were declining. This has led to the re-launch of Cinthol targeted for the entire family unit but this policy worked not properly now Cinthol is take back or u-turn for its alpha male. It was initially positioned as a “soap for men.” Later it was repositioned as a “family soap.” Now it seems that the company wants to again reposition it as a “soap for the youth.”
Major Cinthol Activities 1. Understand changed consumer needs
'Cinthol has always been associated with the alpha male personality. They have revived it, but in a more contemporary manner'
2. Reflect the change in product communication
'The new communication has a masculine tonality, but it is targeted at young adults who aspire to an active lifestyle.'
3. Have a distinctive celebrity endorsement (which according to me was the right thing to do)
4. Reflect the change in packaging (view).
5. Run a planned campaign for 12-18 months bringing together all the above elements
6. Have a website for interacting with customers and creating tribes of like minded users.
CHAPTER-6
RECOMMENDATION
“U-turn to alpha youth personality” this is the basic strategy of Cinthol right now in this the Godrej have considered the youth as their target market segment this is right to some extent but there are always chance of improvement and after studying about the opportunities and threats and recent strategy undertaken by Cinthol. There are some suggestions of mine-
1.Consideration to Rural Area
2.BigRetail outlets
3.Local or state level sponsorship,
4.Backward Integration
5.Purchase in Futures or Derivatives
6.“Cinthol Partner” contest
1.Consideration to Rural Area
the whole advertisement and promotion is designed by taking urban youth in focus but there is large no of youthsin rural sector as well and they can be their future consumers. Taking Hritik Roshan as brand ambassador is good decision. But godrej can further use recent bronze medalist Boxer Vijendra kumar as there endorsement. Vijendra is having good lookin personality and he belongs to rural area so in this way rural people will start associating themselves with Cinthol.
2.BigRetail outlets retail sector is booming and Cinthol is using these resource in good manner but these should be used optimally like, Cinthol should be placed in the right rakes of the store. The promotion should not only be restricted in the personal care zone but it can be extended to sports zone because the Cinthol can be used by these youth players which face the problem of body-odor.
3.Local or state level sponsorship
The godrej do have option of sponsoring local or state level sport tournaments according to the popularity in particular zone like hockey or boxing in Punjab cricket in Maharashtra or tennis in Andhra-Pradesh etc. this strategy will increase the craze and awareness of Cinthol in rural and urban areas in very little amount of expenses.
4.Backward Integration
The Pam oil prices are increasing very drastically. So company can think to take over any middle size Pam oil producing firm in Malaysia this back-ward integration will help in the frequent and economic supply of raw material. Organisation can earn profit by supplying the Pam oil to other companies as well.
5.Purchase in Futures or Derivatives
The prices are also fluctuating in international market so company can use the futures and derivatives for reducing the risk.
6.“Cinthol Partner” contest
As the problem in Indian families is the femail partner purchase soaps. So we can run a Cinthol partner contest for user. In this the Cinthol soap can contain a female ring that is a gift from cinthol to a lady whose partner is using Cinthol. In this way we can motivate ladies to purchase our product more and more.
Bibliography:
Books:
Wheelan Thomas L & Hunger David J, Strategic Management & Business Policy: Entering 21 Century Global Society, Sixth Edition, Addison- Wesley, 1998.
Kzmi Azhar, Business Policy, Tata McGraw Hill, 2000.
Prasad LM, Business Policy: Strategic Management, Sultan Chand & Sons, 2001.
Mamoria & Mamoria, Business Planning & Policy, First Edition, Himalaya Publishing House, 1987.
