PRICING STRATEGIES FOR HAIR OIL

Varun Jain Nitin Chugh Tanya Srivastava Siddharth Venkataraman Priyanshi Kejriwal

PRODUCT:-HAIR OIL
Hair oiling is an age-old traditional habit of Indians. Benefits of Hair Oil Nourishment, Strengthening hair , Faster & Better growth ,Reducing Hair Fall. Cosmetic Appeal for hair styling ,soft & shining

HAIR CARE INDUSTRY

FMCG Rs.116,100 cr Hair Care Rs. 9,200 cr 8% salience Shampoo Rs. 2,840 cr Perfumed Oil Rs. 2,900cr Coconut Oil Rs.2,100 cr Hair Conditioners Rs.100cr Hair Dyes Rs. 1,200 cr Branded hair oil segment grew 19.8% CAGR in value terms during FY07-12

HAIR OIL MARKET

Coconut based Oils (51%) Heavy Amla based Oils (15%) Light Hair Oils (14%) Cooling Oils (12%) Others (8%) Hair Oil is > 55% of the overall hair care industry in India Unit Price Starting from 5 Rs/20ml and varies according to size of the product. Life of the product Best before15 months from Mfd. Product Life Cycle Stage Growth Phase Overall market Size The Indian hair oil market is estimated to be worth Rs 4,600crore. Market Potential Volume growth for the hair oil category is currently pegged at 12.8 per cent and value growth at 17.7 per cent.

HAIR OIL CATEGORIES

Coconut Hair Oil Dabur Vatika Enriched Coconut Hair oil Parashute Coconut oil Dabur Anmol Coconut Oil Light hair oils(Fastest Growing Segment) Bajaj Almond Drops 46.8 % Keo Karpin 21.5 % Marico's Hair & Care 15.2 % Others 16.5%

Heavy Amla Oil Dabur Amla Marico's Shanti Amla Badam Dabur Sarson Amla Bajaj Brahmi Amla Others

69.5 % 8.3 % 5.8 % 3.4% 13%

Cooling Oil Emami's Navratna 44 % Him Gange 29% Others (Ayurvedic Vasmol Thanda Tel)

27%

LEADER BRAND

Leader Brand Parachute is leader in oil market in India. Market share in India is 53.4%.

12.6% 16% 53.4%

parachute

bajaj
dabur others

Strength18% 100% pure coconut oil Edible oil Market Availability Brand Name Available in different packs (20ml,50ml,100ml,200ml,500ml,1litre) WeaknessMore sticky as compare to other light hair oils Replacement product Hair poition,Hair Cream , and other conditioning and moisturising shampoo(Sunsilk,Vivel etc) Advantage-Non sticky as compare to Hair oil. Disadvantage-Expensive as compare to Hair oil.(35Rs./15ml)

DIFFERENT BRANDS AVAILABLE IN GREATER GHAZIABAD

Parachute (Parachute Coconut oil,parashute jasmine, Parachute Advanced) Dabur ( Dabur Amla Hair Oil , Dabur Amla Flower Magic Hair oil , Dabur Vatika hair oils ,Vatika Enriched Coconut Hair Oil , Vatika Enriched Almond Hair Oil, Dabur Anmol Coconut Oil ) Bajaj ( Bajaj Brahmi Amla hair Oil ,Bajaj Coconut Hair Oil ,Bajaj almond drops hair oil) Emami (Navaratna ,Emami Amla Plus Hair Oil) Clinic plus (Clinic All Clear Dandruff Oil) Godrej (Godrej Anoop Hair Oil)

Himani Navratna

Hair & Care

Dabur Vatika

Bajaj Almon d Drops

Parachut e Advance d Jasmine

Parachut e Hair Oil

Parachu te Advans ed Hair Oil

Parachut e Advanse d Ayurvedi c Hot Oil

Parachut e Advanse d Therapie

Himalaya Anti Hair Fall

Qty. (ml) 50 75 90 100 150 175

Rs. 55 Rs. 44 Rs. 65 Rs. 47 Rs. 61 Rs. 76 Rs. 100 Rs. 80 Rs. 95 Rs. 65 Rs. 64 Rs. 130 Rs. 125 Rs. 94 Rs. 225 Rs. 180 Rs. 50 Rs. 34 Rs. 27 Rs. 30 Rs. 33 Rs. 43 Rs. 125 Rs. 100

190
200 250 300

Available SKUs & Pricing For Different Brands

Brand Comparison
BRAND PRICE/100 ML MARKET SHARE OF THE COMPANY MEDICATE VALUE PROPOSITION D NICHE/MASS MARKET

Himani Navratna

Rs. 55

6%

YES

cooling sensation has multiple benefits of providing relief from headache, tension, sleeplessness, Body ache and other hair related problems nourishment without adding stickiness

MASS MARKET

Hair & Care

Rs. 44

4%

NO

MASS MARKET

Bajaj Almond Drops

Rs. 50

5%

NO

nourishment without adding stickiness to the hair with purity and effectivness lingering fragrance of Jasmine that nourishes hair to keep it healthy and beautiful. While the goodness of Coconut acts as a moisturizer. Nourishment and shiny hair

MASS MARKET

Parachute Advanced Jasmine

Rs. 34

3%

NO

MASS MARKET

Parachute Hair Oil

Rs. 27

10%

NO

MASS MARKET

Parachute Advansed Rs. 125 Therapie

1%

NO

strengthen hair from within leaving it NICHE MARKET looking nourished and healthy. when applied pre-wash, reduces protein loss up to 28% and restores the health of hair
Prevent hair loss NICHE MARKET

Himalaya Anti Hair Fall

Rs. 100

<1%

YES

DIFFERENCE IN PRICING

Cost Structure
Bajaj Almond hiked prices by 8.6% to offset input cost pressures. Key raw materials, Light Liquid Paraffin (LLP) and vegetable oil prices increased over 25% in the last fiscal year, while glass bottles were expensive by around 12%.

1.
2.

1.

Market Segments Targeted

HUL has launched Dove hair-oil at a price point ranging Rs 180-200 for 100 ml bottle," said one of them. This would make it a super-premium brand. Specialty hair oils, which are growing faster in modern trade and earn better margins for retailer and brands. Targeting urban youth by introducing it in super premium category Dove will be super premium at Rs 180-200 for 100 ml. The same quantity of Bajaj Almond Drops and Parachute Scalp Therapie will cost Rs 125, while Marico's Hair & Care is priced just Rs 44 for 100 ml.

2.

3.

URBAN MARKET

Channel Management

Greater Ghaziabad market is mostly having semi-urban markets and urban markets is mostly consisting of some supermarkets, hypermarkets Major brands
Dabur amla Bajaj Almond Parachute/Parachute Jasmine Clear oil Few Luxury brands like Loreal, Garnier etc

Target Consumers Females of all ages ,mainly with age 1430 years & Males of age group 25-40
years

SKUs size

Most prevalent SKU size was 50 ml and 100ml though the size got even smaller as we went into the interior and smaller localities

Brand awareness was mainly through Television commercials and few billboards,
newspapers,magazine

Margins Dependent on the service level in distribution channels;

a) b) c) Distributer : 2-4% Retailers : 7-9 % Whole seller 8-10 %

RURAL MARKET

Channel management

Major brands Dabur amla Bajaj brahmi amla Parachute Navratan Local brand/commodity
Target Consumers Mainly young females with age 14 30 yrs. Males either do not use hair oil at all or use locally available mustard oil. SKUs size - Prevalent SKU size was 50 ml though the size got even smaller as we went into the interior and smaller sized villages. In villages like sekhaira where population size was less than 4000 only 1 re pack (2.7 3.5 ml) were available. Brand awareness was mainly through Television commercials.TV was available in almost every household even in small villages with population less than 4000. However people were not very aware and particular about a brand, they only recall product feature. Margins Dependent on the service level in distribution channels; In case of HUL in town Pilkhuwa where there were no whole sellers in the channels margins were as under :a) Distributer 4.75 % b) Retailers 10 % While in case of Dabur margins were as under:a) Distributer 2.75 % b) Whole seller 3 % c) Retailers 10 %

AREA WISE SALES OF BRAND

Area Navyug Market Syani Gate Choupla mandir Ghantaghar Patel Nagar Kirana Mandi Maliwada Chowk Mohun Nagar Vaishali Indirapuram RDC Max. sales Dabur Amla Parachute Coconut Oil Dabur Amla Dabur Amla Dabur Amla Dabur Amla Parachute Coconut Oil Dabur Amla Dabur Amla Parachute Coconut Oil Parachute Coconut Oil

Sector-10
Sanjay Nagar

Dabur Amla
Parachute Coconut Oil

PRICING STRATEGY FOR PARACHUTE LEADER BRAND

Analysis of 100ml Parachute hair oil MRP Retailer Profit Distributor selling price or Retailer cost price Distributor profit margin Distributor cost price Company profit Company Cost price 28 13% 24.77876 4% 23.82573 12% 21.27297

MRP Retailer Profit Distributor selling price or Retailer cost price Distributor profit margin Distributor cost price Wholeseller profit margin Wholeseller cost price Company profit Company Cost price

28 8% 25.92593 3% 25.17081 8% 23.3063 12% 20.8092

PRICING STRATEGIES USED BY BRANDS OF VARIOUS CATEGORIES :

As in coconut oil category, parachute is the market leader and hence all the new brands coming in generally follow their pricing and thus this follows the Going Rate Pricing Policy

Different Schemes that are offered by brands like navratna and bajaj almond tends to destroy the leader and thus follow the predator pricing strategy. Some luxury brands like Loreal and Garnier give value to customers and thus follow the value pricing strategy.

PRICING STRATEGIES BY DIFFERENT RETAILERS:

Easy Day(SuperMarket)
Buyers decide on pricing strategies depending on locality and nearby retailers.Selling at a discount of Rs1 or 0.50 paise for most hair oils.

Big Bazaar (Hyper Market)

Sell in packs of three and reduces the total mrp by Rs5-8

Smaller SKUs are also sometimes free with shampoo and other hair care products

WholeSaler

Sell at a margin of 8-10%.Sell it local kirana stores incase stock is leftover.

Kirana Stores/Medical Stores

Sold at MRP and earned a margin fixed by the distributor of the company

FIELD EXPERIENCES:1. 2.

Difficulties In Comparison of prices Shopkeepers in supermarkets/hypermarkets were not willing to let us note down their pricing strategy. Wholesalers were not willing to explain their pricing strategy or talk about the margin earned. Harder to compare the pricing since they sold in boxes of 12 or 10 (min) Some brands sold their products in different skus such as 190 ml or 50 ml.Doubling the qty did not give accurate results. Parachute even though the market leader brand some of its product lines were very expensive targeting niche segments which we observed only during this experience.

3.

4.

5.

6.

eg Parachute Advanced Therapie Hair oil(Rs125) 100ml was costlier than Himalaya Anti Dandruff Shampoo(Rs100).

CONCLUSION

Pricing based on their target profits Various products targeting Various customers.

Channel for distribution decides the amount at which the product reaches the consumer
More the number of middlemen, more is the price Better inventory management & better channel management effectively reduces the operational costs and thus can reduce the price further.

THANK YOU