PRICE WAR - DETERGENTS

HLL entered India in 1957 and was the undisputed leader in detergent space. Surf was the most selling detergent in India. However in 1980's Surf suffered huge losses at the hands of a new and small firm, Nirma Chemicals. Nirma was launched in 1969 and its primary focus was to create a good, branded product at affordable prices. The product was priced far lower than the market leader - Surf. Nirma caught the attention of the middle-class and lower middle class customers and had such great sales that it evicted HUL's Surf from the No. 1 position in 1985. HLL then had a look at the situation and found that there was a large market segmentation in detergent space and then came up with lower priced Wheel (green) and Rin (blue) detergent powders targeted at different market segments. This segmentation helped HLL regain part of its lost market. This post deals with price wars which are becoming an essential part of business. But a cut in price is the last resort in a price war. We will discuss more on various tactics to fight a price war. I will primarily focus on price wars in the detergent space, will also chip in with more examples as and when suitable. Before i delve into more theories and strategies, lets have a look at some stats and series of events: The detergent market in India can be divided into premium (Surf, Ariel), mid-price (Rin, Henko, Tide) and popular segments (Ghari, Wheel, Nirma, Mr. White). They account for 15%, 40% and 45% of the market share, which is 60% of the total market. Regional and small unorganized players still account for the 40% market. Per-capita consumption of detergent in India at 2.7 kg is the lowest in the world.

HLL entered India in 1957, Surf was the market leader for a long time. Nirma Chemicals was started in 1969, in 1985 Nirma became the leading detergent in India. In 1987, Ghari was launched by RSPL (Rohit Surfactancts Pvt. Ltd.), the product was also less priced and targeted at the rural customers, middle class and lower-middle class customers. It also had more or less the same positioning strategy as Nirma. In 1988, HUL launched Wheel to take on Nirma. In early 2000's Wheel beats Nirma and takes the No.1 spot. In late 2011 and early 2012, Ghari beats Wheel and takes the numero-uno spot in Indian detergent industry.

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By Ashish Chodankar

PRICE WAR - DETERGENTS

Currently, Ghari is the market leader with a market share of 17.3%, Wheel is at number 2 with a share of 16.9%, Tide is 3rd with a market share of 13.5%. Nirma has market share of less than 6% now. Interesting facts. HUL is still the overall market giant with Wheel, Rin and Surf (one product for each segment) doing well. But Ghari is now the overall market leader. Ghari has grown from strength to strength with its target market segment and affordable pricing. Ghari has spread its distribution network to more states now and directly reaches rural markets, which is its biggest audience. The company has entered 10 more states in the last three years and now peddles its ware in 19 states, through more than 3,500 dealers. It has 21 manufacturing units, 15 of which were added since 2006. The company continues to target cheaper and unbranded local products to create more market for Ghari detergent powder. Villagers are persuaded to move to a branded detergent like Ghari which is well within their reach and has far better cleansing power than slabs of cheap local soaps. Combined with its great distribution network and a good product, the sales of the Ghari detergent have risen admirably. A one kg pack of Ghari detergent is priced at Rs 35 and a 2.5 kg pack is priced Rs 85 only. Ghari ad with its classical logo - "pehle istemaal karein phir vishvaas karein" which means "First use and then trust." The detergent episode mentioned over here is a classic example of how new products can be introduced in a market to thwart off price wars. HUL after losing out to Nirma, analyzed the situation carefully and instead of reducing the price of Surf, introduced flanking brands of the likes of Wheel, Rin and Sunlight to compete in customer segments that were being challenged by competitors like Nirma.

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By Ashish Chodankar