Decision Sheet: Household Products Limited

Decision Sheet: Household Products Limited

John Joy, Section A

SITUATION ANALYSIS: Household Products Limited (HPL) is a public limited company setup in 1940, engaged in manufacturing and marketing of all kinds of consumer products of household use. The Toilet Soaps Group is one of the most important divisions of the company. The product portfolio of the company comprises of two soaps priced at Rs. 5 and the third at Rs.10. The company launched a new toilet soap ‘Sehra’ in test markets of Indore and Hyderabad in October 1995.

90% of toilet soaps are priced at Rs. 5 a cake, and belongs to the lower price band. The rest of the market is priced between Rs. 6 to Rs. 25 a cake. Low price range is growing at 4% pa whereas the high price range is growing at 15 % pa.

The high price segment of customers have multiple needs catered to by soaps offering differentiated customer value. The broad classification of this are: Medical, Perfume based, Beauty.

KEY ISSUE IDENTIFIED: The results from test markets Indore and Hyderabad is not encouraging, with market share achieved after nine months less than half that of Jaimala, their primary competitor. In this context, Rahul, the new marketing manager is contemplating whether to launch Sehra in a nationwide scale or not.

EVALUATION:

1. The core value proposition of Sehra is the Jasmine perfume, with additional quality that it is entirely made of Vegetable Oil as opposed to Animal fat
2. At the product test phase statistical significance of the quality of perfume could not be established. Also the impact of Vegetable Oil on customer was not tested
3. By offering discount coupons of Rs. 2.50, HPL made Sehra accessible to the Low Price band customers, whereas the positioning was that of a premium soap.
4. The stabilization of additional purchases indicates that the market share has stabilized at 5% as opposed to the 14% market share of Jaimala. Thus the marketing objective has not been met.
5. The advertisement did not stress on the key Point of Difference that is the purity of the product
6. The customers for Sehra have come primarily from the low price range customers, which indicate a need for re-positioning

RECOMMENDATIONS

I recommend that HPL follow the strategy:

• Improve the Product in terms of the quality of the perfume
• Improve advertisements, with more stress on the key PoD that is the purity. The difference can be stressed by using “Contains No Animal Fat” to create contrast
• Study the customer perceived value for Purity and test whether it is really required
• Reposition the product with more emphasis on the high end customers