Rvi

Richardson Vicks Inc. (RVI)

Introduction

Richardson-Vicks, Inc. was a leading worldwide marketer of branded consumer products for health care, personal care, home care, and nutritional care. The company's product line could be traced to 1905, when Lunsford Richardson, a North Carolina pharmacist, formed a company to sell Vicks VapoRub, which he had developed "especially for children's croup or colds." The company experienced rapid growth following World War II with the addition of new products and the expansion of overseas operations. In management's view, marketing had been the key to RVI's success.

Two projects of major potential interest to the Richardson Vicks Inc. (RVI) Indian subsidiary were very much on the mind of Gurcharan Das, president of Richardson Hindustan Limited (RHL), as he reviewed his company's strategic plan in early 1984. The first would take the Indian firm into products not included among the parent company's worldwide offerings. The second would set up RHL as a supplier of a key raw material for RVI's global operations. Both propositions went counter to existing corporate policies and practices, which stressed products capable of being of being transferred to markets around the world and which favored investments in marketing over manufacturing.

RVI and RHL

In management's view, marketing had been the key to RVI's success. The 1982 annual report described RVI's corporate strategy as follows: The company seeks leadership positions for each of its brands by developing products that meet distinct consumer needs. It then produces them under high manufacturing standards to ensure high performance and consumer acceptance. Finally it supports them with outstanding advertising, promotion and distribution.

In 1983, RVI had revenues of $1.1 billion based on the sales of such products as Vicks VapoRub (cold product), Oil of Olay (skin care), Clearasil (acne medication), Vidal Sasson (hair care), Vicks Throat Drops (cough drops), Sinex (nasal spray), NyQuil (nighttime cold medication), and Homer Formby (home-care products). According to company records, one out of every four dollars spent in the U.S. on cold remedies went to purchase a Vicks product. Oversea sales had grown even faster than domestic and in 1983 accounted for more than the company's total sales and profits.

RHL was one of more than thirty subsidiaries in the Richardson-Vicks worldwide network. The Indian company was founded in 1964 to oversee the construction of a pharmaceutical plant and to take over the marketing efforts then handled by a small RVI branch operation. Upon completion of the plant in 1966, 45% of RHL's equity was sold to the Indian populace through a public stock offering. RVI retained 55% ownership.

Gurcharan Das at RHL

When Das returned to his native India in January 1981 to head RHL after working in different parts of the world for thirteen years, he found a company in trouble. He, together with RVI management, quickly mapped out a strategy to turn around the situation. He explained the resulting priorities and actions: The top priority was to increase profitability. We raised prices wherever