HLL to revise Surf Excel pricing

HLL to revise Surf Excel pricing

Author | exchange4media News Service | Friday, Dec 03,2004 8:09 AM

HLL to revise Surf Excel pricing

A change in the pricing strategy for Hindustan Lever Ltd’s (HLL) Surf Excel brand, which dominates the Rs 5,000 crore detergent powder market, seems to be on the cards.

The FMCG major on Thursday conceded that its price reduction strategy had not yielded any value gains for the brand and had, in fact, led to its ‘commoditisation’.

“Price cuts have given us incremental volumes but not profits. The problem is that brands are getting commoditised after price cuts,” senior product manager — Surf Excel Sudhir Sitapati told FE.

Striving for value growth, HLL is now reworking the Surf Excel strategy by moving away from positioning the brand on functional benefits, to building an emotional connect.

“We want to move the brand into emotional territory and not just commoditise it by cutting prices,” Mr Sitapati said.

To start with, HLL has signed up South African cricketer Jonty Rhodes to be the Surf Excel endorser and has lined up a Rs 10 crore promotion over a three month period.

Mr Sitapati also indicated that the company might increase the price of the brand in the coming days, given that the inflationary environment was pushing up costs.

“Petrol prices have gone up considerably and it is impacting us as well. At an appropriate time we may have to hike prices of our detergents,” Mr Sitapati added.

The company has already increased the price of its 20 gm Surf Excel sachets from Rs 1.50 to Rs 2 last month.

Sachets contribute about 35% to Surf Excel’s total sales. Surf Excel’s prices have been on a roller coaster since January 2003 when HLL reduced the price of Surf Excel from Rs 150 per kg to Rs 135 per kg, and subsequently to Rs 99 per kg in March 2004.

According to HLL, the volume market share of its washing powder portfolio increased from 27.8% in the March ended quarter to 29.5% in the September ended quarter this year, following the price cuts. However, the value market share in September quarter was only marginally higher at 38% compared to 37.3% in the March quarter.

Earlier in the year, HLL had relaunched Surf as Surf Excel Blue because it felt the Surf brand was becoming generic.

At present, the Surf Excel franchise comprises Surf Excel Easy Wash, Surf Excel Blue, and Surf Excel Automatic.

According to Mr Sitapati, since the price drop in March 2004, Surf Excel has improved its market share by 40% and holds about 3.6% volume share of the detergent powder market as against Procter & Gamble’s Ariel which has about 1.5% market share.

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