FMCG major Hindustan Lever Ltd (HLL) is going to take one more crack at the languishing toothpaste segment to crank up sales. And, this move calls for a change in strategies for its two toothpaste brands. The 34-year-old Close Up, its first toothpaste brand in the country, will restrict the variants it appears in, while Pepsodent will continue with its varied offerings in the Rs 1,469-crore toothpaste market.
That it means business shows in its recent re-launch of Close Up where it reinforced this strategy as it incorporated more oral care benefits into the brand. Sanjiv Kakkar, Vice-President (Oral Care), HLL, has realised that creating more variants in a sensorial brand such as Close Up is not going to work any longer. Says he: "We have decided to clean out the Close Up variants and continue with only the last variant which we created - Lemon Mint. Our experience with Close Up variants has been flavour-based and shown us that the variants have not been sustainable with disproportionate shares compared to the huge media spends required to support them."
Besides, HLL has also realised that Close Up as a brand needs to have more of oral heath benefits than simply `fresh breath and white teeth' kind of cosmetic positioning. In fact, from the '90s, when Pepsodent came into the market and was fighting the market leader, Colgate, on the oral health platform, consumers have been shifting their preferences to a functional toothpaste brand rather than a sensorial one with freshness connotations. Realising this changing need in consumers, HLL has been slowly trying to re-position Close Up and its recent re-launch is an attempt to change the perception of the brand.
Explains Kakkar, "If you see the oral care market in the '90s, the battle between Colgate and Pepsodent led to raised consumer awareness levels on oral health. The consumer since then has begun to look at attributes other than fresh breath and white teeth due to the excessive communication by these two brands. There was thus an inadvertent re-positioning exercise started for Close Up to make it more of a benefit brand.''
The task was not an easy one considering Close Up's size and history. Creating variants with added benefits such as that of Ultra Whitening and Oxy Fresh could not help the mother brand and were subsequently discarded. Another re-launch with just two flavours, Tingly Red and Eucalyptus Blue, was tried out a couple of years ago, but did not make a significant impact. Its last variant, Lemon Mint, possibly led to some significant share enhancement and has led HLL to continue with its latest variant. To bolster its new positioning, HLL also re-launched the original red gel mother brand with a vitamin fluoride system offering a three-in-one benefit recently.
Offering the additional benefit of making strong teeth apart from just ensuring fresh breath and whiter teeth, Close Up is moving closer to the oral health positioning. Adds Kakkar, "After all consumers are no longer looking for fresh breath and the whole context of oral health has changed. There has to be a new direction to the brand."
The decision to restrict Close Up's variants was also based on the experience of other sensorial brands across the world. Says Kakkar, "Although in the past we experimented with Close Up variants more strongly than Pepsodent, experience with other brands has shown that it is more difficult to create variants for a sensorial brand than one based on the family health platform such as Pepsodent, which is anchored strongly on the core benefit of oral health." Family health brands have always been more successful with their variants and HLL wants to follow the same example instead of trying to create too many flavours for its sensorial brand Close Up.
In spite of the conflicts in positioning between the two existing brands, HLL believes in continuing with both. "Both the brands are large today and there is no question of having just one brand. After all there are many ways to skin a cat and we will continue to look at different consumer-driven needs," says Kakkar. So while Close Up would continue to address the youth with new benefits and value-driven propositions, Pepsodent would be firmly entrenched on the family health platform with variants catering to oral health.
In the past HLL had also gotten adventurous in the category and introduced a lower-priced brand, Aim, to drive rural volumes. However, the brand did not meet consumer expectations. Being a challenger company, HLL believes that it is the market leader which should show the way to grow the category in the lower segment.
"We have to be clear about which battles we want to fight and clearly, fighting at the lower end of the market is best left to the market leader," says Kakkar. According to Harrish Zaveri, Vice-President (Research) at Eldelweisss Capital, "The toothpaste category in general has been stagnant and there has not been too much change in toothpaste shares in the past year. Colgate did gain in volumes after the price cuts it took last year for Colgate Dental Cream. There was an increase in sales turnover and it continues to lead with a 50 per cent odd share. HLL has settled at its 32 per cent share and does not want to take the battle forward. It did lose some share when it withdrew Aim from the market though."
But there is a bigger issue at hand with the oral care category declining in recent times as reported by the AC Nielsen Retail audit for 2003. Toothpaste sales have slumped by 12.5 per cent to Rs 1,469 crore with toothpowder sales also recording an eight per cent drop. Explaining the reasons behind the sharp drop in growth rates, Kakkar says, "There is fair degree of dual usership of powder and toothpaste in both rural and urban households. Besides, with the market pricing structure moving downwards, there has been a declining value realisation for the category."
Introducing more stock-keeping units and price points is the way to grow the category, claim industry observers. HLL has been steadily doing so and its latest SKU is at a Rs 10 for 40 gm pack of Close Up in a new flow-wrap packaging. Last year it had introduced a Rs 5 Pepsodent (20 gm).
HLL is also hoping that the success of its advertising campaign for the Close Up brand after the change in its agency from JWT to Ogilvy & Mather would further help the brand. It has released a new commercial for the Close Up relaunch, continuing with the popular jingle, Kya aap Close Up karte hain?
Explaining the strategy behind Close Up's latest commercial, Pushpinder Singh, Senior Creative Director, O&M, says, "Unlike the previous commercial, with the addition of the vitamin fluoride system, there has been greater weight given to stronger whiter teeth instead of the usual freshness which the brand has been associated with."
Claiming that both its toothpaste brands have been registering growth, HLL is hoping its latest relaunch exercise for Close Up should freshen up both the category and its own brands.