Looking to `consolidate leadership' in categories it exists
Ad spends rise 34% in first nine months to Rs 988 cr
Investments, apart from protecting its turf, will go into new product lines, brand extensions
Rival FMCG companies are busy acquiring rival brands and businesses, some of them beyond Indian shores, in a bid for growth. But market leader Hindustan Lever Ltd (HLL) is convinced that a significant opportunity for consolidation and long-term growth lies within its existing portfolio of brands.
The company has pumped up its marketing investments in the current year, with ad spends expanding by 34 per cent in the first nine months of 2006, to Rs 988 crore, in its effort to draw more consumers to its established brands. An ad budget of that size wields enough muscle to fund promos for a slew of new product lines, brand extensions and re-launches in the domestic market. The September quarter, for instance, saw HLL unveiling 23 new variants of Sunsilk shampoos (including a new range of hair colourants), five new variants of Pond's face-wash and two new variants of Lakme colour cosmetics and skin care products.
What's behind the expanding marketing spends? One key reason for the aggressive spending could be intensifying competition in categories such as soaps and skin care, where HLL's market shares have slipped in the six months from March to September.
By investing big bucks in advertising its brands, HLL hopes to "maintain and grow" its market share and "consolidate market leadership" in categories where it operates, according to a company spokesman. Apart from protecting its turf, investments are also going into expanding presence through new product lines and brand extensions. In response to a questionnaire, a HLL spokesman explains that recent new launches are motivated by one of three factors.
One, leveraging new opportunities in categories where it already has a presence — products such as Surf Excel Gentle Wash, Sunsilk Hair Expert and Bru Cappucino explore new niches in existing segments.
Two, offering new benefits on existing brands — for instance, Lux Uplifting Firm, Axe Click, Close Up Milk Calcium add new variants to popular HLL brands. Third, re-launches, such as those of Lifebuoy Handwash and Wheel Active, which are designed to keep the company's older brands relevant and contemporary to consumers.
The company appears quite alive to the marketing opportunity created by the increasingly affluent urban workforce. New launches such as the Pond's International range, HLL says, are aimed at tapping into the "emerging top-end opportunity" (read, the affluent urban young).
Though the company wouldn't comment on whether the sharp increase in ad-spends this year is one-off or will be sustained, HLL is clear about its intention to be present across categories and price points in the Indian markets.
As a HLL spokesperson explains, the company hopes to expand its already substantial presence by "straddling the pyramid" — offering premium brands to the affluent, value-for-money brands to middle-income consumers and affordable quality products to low-income consumers.