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Industry report detttol_hidden_treasure_group
1. Introduction
Toilet soaps account for the largest single share of about 10% in the Rs 480 billion FMCG
market. The toilet market is getting saturated at a high penetration level of 98% and is growing at
a very modest rate. The Indian Soap Industry includes about 700 companies with combined
annual revenue of about $17 billion. Soap manufacturers originally targeted their products to the
lowest income level in urban as well as rural areas, positioning their brands as a way to remove
dirt and clean the body. For some brands, that positioning persists even today with a focus on
removal of body odor and keeping the user healthy. However, soap positioning is moving
towards skin care as a value-added benefit.
People belonging to different income levels use different brands, which fall under different
segments (see table below), but all income levels use soaps, making it the second largest
category in India (detergents are number one). Rural consumers in India constitute 70% of the
population. Rural demand is growing, with more and more soap brands being launched in the
discount segment targeting the lower socio-economic strata of consumers.
Soap Price (per 75 gram cake)
Segment in rupees in US$
Carbolic* 5.00 10 cents
Discount 7.00 15 cents
Popular 11.00 23 cents
Premium 17.00 36 cents
Super Premium 35.00 75 cents
* The carbolic segment consists of soap that has crysellic acid (e.g. carbolic acid) as an active ingredient
to remove body odor. These soaps have a strong medicated/germ killing connotation.
Soap industry in India
Indian Soap Industry has tremendous opportunities in the manufacturing companies of soaps for
Graduates and post graduates in the areas of Marketing, Finance, Administration, Advertising
and even opportunities for the models to act in ads for the soaps.
2. Consumer preferences are varied and are more regionally specific. India is divided into four
regions:
North region
Consumers in the North prefer pink colored soaps, which have floral profiles. Here the fragrance
preference is for more sophisticated profiles reflecting their lifestyles. Freshness soaps with lime
and citrus notes are also popular preferences as the climate in the North is very hot and
citrus/lime scented soaps are seen to be refreshing.
East region
The East is not a big soap market; hence no particular preference skews.
West region
Consumers in the West exhibit preferences for strong, impactful fragrances and somewhat
harsher profiles compared to the North. Preferences are more for the pink soaps with floral
fragrances, primarily rose, which are positioned on the beauty platform.
South region
In the South, the skew is towards specific soap segments like the Herbal/Ayurvedic profiles and
also the Sandal profiles. Consumers here do not exhibit high brand loyalty and are ready to
experiment and try out new brands. Hence, most fast moving consumer goods companies tend to
launch their new brands in these markets, which they call test launch markets.
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, Shikaki, Nirma, Dettol etc.
Dettol in India
Dettol is the trade name for a line of hygiene products manufactured by Reckitt Benckiser. The
brand started its journey in 1933 as antiseptic liquid, but over the years, it has been extended to a
3. number of product categories like toilet soaps, liquid Handwash, liquid Bodywash, shaving Cream
and plaster strips. As a brand, it is ranked the 48th most-trusted one in India by The Brand Trust
Report 2011. Dettol voted as India’s Most Trusted Brand (ORG Marg - Brand Equity Survey).
Soap is primarily targeted towards women, as they are the chief decision-makers in terms of soap
purchase. Medicated positioning like germ killing and anti-bacterial are marketed to families.
About 75% of soap can be bought through different types of outlets like Kirana store, Medical
store, Department store, pan-beedi store etc.
History
The origins of personal cleanliness date back to prehistoric times. Since water is essential for
life, the earliest people lived near water and knew something about its cleansing properties.
Records show that ancient Egyptians bathed regularly. Soap got its name, according to an ancient
Roman legend, from Mount Sapo, where animals were sacrificed.
The following table consists of time duration of use and manufacturing of soap all over
world.
Red dot (.) indicate area of usage of soap
Numbers (1, 2, 3…) below red dot indicates usage of soap accordingly. This is describing in
following table.
4. No Time Duration Country
1 2800 BC production of soap-like materials in ancient Babylon, Iraq
2 1550 BC The Ebers papyrus indicates the ancient Egyptians bathed regularly and
combined animal and vegetable oils with alkaline salts to create a soap
3 175 AD In Athens, Rome
4 150 AD People started use soap in Germany
5 7rd
century AD From the beginning of the seventh century, soap was produced in
Nablus (West Bank, Palestine), Kufa (Iraq) and Basra (Iraq)
6 800 AD Soap making becomes recognized as an art in Italy and Spain
7 1200 AD The English began making soap during the 12th century
8 1725 AD In united state of America
9 1897 AD The first company created was North West Soap Company, the soap
manufacturing plant in India situated in the city of Meerut, Uttar
Pradesh.
10 1930 AD The Tata Oil Mills Company and its first branded soaps appeared on the
market in the early 1930's at Kerala, india
Overview if industry in market
Wipro
According to market researcher Nielsen's data, Reckitt was the third-largest soap maker in the
country with a 9.1% share in the market in value terms in June this 2011, ahead of Azim Premji-
promoted Wipro, which had 8.1% share with brands such as Santoor and Chandrika.
5. Hindustan Unilever, with brands such as Lifebuoy and Lux continues to be a clear leader in the
segment with 45% share, followed by Godrej Consumers, according to Nielsen data.
P&G
Nirma Consumer Care Ltd (NCCL), a wholly-owned subsidiary of Nirma Ltd, has announced its
exclusive marketing and manufacturing arrangement by which Nirma will bring Camay, a
leading global beauty soap brand to the Indian consumer.
As part of the strategy, NCCL has obtained the license for manufacturing and marketing Camay,
from Procter & Gamble Home Products Ltd for an undisclosed licensee fee with effect from
October 8, 2002, according to Nirma Consumer Care Ltd. chairman and managing director Hiren
Patel.
HUL
With over seven brands — LUX, LIFEBUOY, HAMAM, REXONA, BREEZE, DOVE and
PEARS — has 54.3% share of the overall soap market.
However, underlying volume sales growth of 11% helped boost its revenue 7.1% on year to
Rs4,794 crore.
Godrej Consumer Products
GCPL, India‘s second largest soap maker after Hindustan Unilever Ltd, has nearly 9.2% market
share. With 11% market share in value terms.
Nirma
Nirma had a 1.5% share in the toilet soap segment. The Investment of Rs 200 Crores, 3000000
soap pieces sold per day. Annual sales of Rs 500 crore 20% market share. Second largest soap
manufacturer in India Four lines of 500 soaps per minute.
Gross Sales Rs in crore (2011)
Godrej 3643
Nirma 3241
HUL 22800
Dettol 30604
P&G 26300
6. Wipro 83680
Porter’s five force analysis
1) Threat of new competition:-
a. High R&D cost – The competitor need high R&D cost to compete with Dettol soap.
Since Dettol is dominant player in toilet soap.
b. Less access to distribution – The distribution for new entrant will be difficult. Since
Dettol has major distribution.
c. Difficult to differentiate the product – The Dettol has many variant while competitor has
to bring many variants to compete with Dettol toilet soaps.
2) Threat of substitute products or services
a. The only one substitute which can be threat is liquid soap.
b. Less buyer tendency to substitute – The most of buyer is unaware of substitute. Therefore
there is less inclination towards substitute.
3) Bargaining power of customers (buyers)
a. High buyer profits – The customer has higher profit to buy a Dettol soap compare to
other brands. Since they provide quality with their price.
b. High switching cost – The other brands are costlier compare to Dettol toilet soap. The
buyer has to pay higher price to change the brand.
c. Less number of substitutes – The substitute is also less for customer to switch their
choice.
4) Bargaining power of suppliers
a. Low bargaining power – The supplier has less option to vary their products price. Hence
they have low bargaining power.
b. Low impact of inputs on differentiation – The supplier has long term relations with
Dettol. So they have low impact of inputs on differentiation.
7. 5) Intensity of competitive rivalry
a. The closest competitor in this category is Lifebuoy Soaps from Hindustan Unilever Ltd.
Other competitor is Lux.
b. Lifebuoy has higher market share compared to Dettol soaps. The Dettol consider as a
premium brand while Lifebuoy is a cost effective brand.
Reference
http://www.indianmirror.com/indian-industries/soap.html
COMPETITORS
Lifebuoy
Lux
SUPPLIERS
Low bargaining
power
Low impact of inputs
on differentiation
BUYERS
High buyer profits
High switching costs
Less number of
substitutes
NEW ENTRANTS
High R&D cost
Less access to
distribution
Difficult to penetrate
the product
SUBSTITUTES
Only one: Liquid Soap
Less buyer tendency to
substitute
