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Rejoice to expand Shampoo market

15-January-2004
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Rejoice to expand Shampoo market

The launch of ‘Rejoice’ brand of shampoo by Procter & Gamble (P&G) is being viewed as a step in the direction of expanding the shampoo market, which may benefit with the economy growing at 8.5 per cent. Some industry analysts feel that, in the long-term, Rejoice could be a threat to Clinic Plus, but not immediately since the former needs to create a base first. Others opine that there could be some impact on existing shampoo brands initially (possibly even on P&G’s own shampoo brands), but later consumer experience will decide the winner.

Jagdeep Kapoor, chairman and managing director of Samsika Marketing Consultants feels that any market expands with growing competition and thus new product launches are good for all players. Mr Kapoor said that P&G has two tasks on hand. Firstly, they need to expand the market. Secondly, they need to see whether they can bring about a brand switch by offering the ‘value’ sought by the consumers. Clinic Plus, priced at Rs 37.5 per 100 ml bottle, for the mid-segment, is slightly cheaper than Rejoice which is priced at Rs 39. But Mr Kapoor commented that consumers go for value and not just the price. Other analysts added that a slightly lower price has little role to play here. Hindustan Lever, when contacted, was unable to give any information or views on the launch of Rejoice.

Mr Kapoor feels that shampoo in sachet form has been doing well in India, due to many entry-level consumers. Thus the width of the market is currently expanding and the depth will start expanding only at a later date. Only then can one expect a gradual move from sachets to bigger packs by consumers. Sachets have been particularly popular in semi-urban areas due to their one-time use nature and affordability. Sachets form about 70 per cent of the entire shampoo market.

Analysts believe that if the players go in for price cuts, then naturally there will be a pressure on their margins. Mr Kapoor opines that ideally the players should not go for price cutting when there is so much untapped rural potential. However, with competition, some level of pressure on margins is expected because of initial launch expenses.

Rejoice is thus said to have entered a market which has huge potential even though it has slightly stagnated at the moment. P&G should continue to maintain attractive, but competitive pricing and at the same time establish the brand using some unique selling proposition (USP). A ‘value for money’ model is what will help the new brand.

Clinic Plus was launched in India in 1987 and positioned on the ‘healthy hair for the entire family’ plank. It has been targeted at educated mothers. In 1996, HLL launched another variant, Clinic All Clear, as an anti-dandruff shampoo, targetted at the appearance-conscious young adult. Hindustan Lever is the leader in India’s shampoo market of Rs 1,025 crore, with a share of about 54 per cent. P&G has a market share of 15 per cent. According to ACNielsen ORG-Marg figures, over the past one year, the shampoo market has increased by five per cent in volume terms, while it has declined by five per cent in value terms.

Analysts said that the shampoo market is likely to pick up again with some time lag to the economic upswing. First quarter of calendar year 2004 is supposed to bring good results to the segment. This will help in market expansion and the sachets are expected to play a big role. Mr Kapoor sums up that the players should bank on this.

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