Fast moving consumer goods (FMCG) companies have identified this aspiration quite well. The extensive range of hair care products — shampoos and conditioners — that line the shop shelves stand proof to that. In fact, they seem to be trying quite hard to ensure the humble shampoo is no longer considered a plain vanilla cosmetic product — but one that aims to solve a specific problem — be it hair fall, dandruff, dullness, dryness, damaged hair or lack of bounce. You name a problem and there is a variant(s) available in the marketplace to provide the solution.
Such evolution of the category is only natural, say the industry players. The segment, at around Rs 4,000 crore as of January 2012 (as per Nielsen data) is growing by over 18 per cent annually. And competition for a share of this pie is intense. Shampoos also enjoy one of the highest penetration levels (around 80-85 per cent) across product categories in India, making it necessary for brands to keep innovating to stay ahead.
Srinandan Sundaram, general manager, hair care, Hindustan Unilever (HUL) explains why companies are falling over one another to offer a plethora of variants and brands to consumers. “There are major demographic and psychographic differences amongst the consumers in India,” he says. “Keeping that in mind, we have a portfolio which helps us straddle the price pyramid while fulfilling all the needs of the consumer. Thus there is a range of brands differentiated on the basis of consumer needs and aimed at specific target groups.”
Year-on-year growth of the shampoo market over a five-year period in India
Market size (in Rs crore)*
* The market has grown at an estimated rate of 15 per cent year-on-year over the past five years
Source: Market players
Here’s how HUL — that holds the largest share in the market (43 per cent or Rs 1,720 crore) — does it. The company holds four shampoo brands — Dove, Clear, Sunsilk and Clinic Plus. Each of these comes at a different price point and is built on a specific platform. The platform forms the base offering of the product with multiple variants to offer specific solutions. For instance, Dove is positioned as a damage control expert. It offers variants like Dove Colour Rescue (to protect coloured hair), Dove Hair Fall Rescue (an anti hair fall variant), Dove Dandruff (anti-dandruff) and so on. Similarly, Clear is an anti-dandruff solution with variants like Clear Hair Fall Defense (anti-hair fall), Clear Radiant Black (for dark black hair) and others.
Other players like Procter & Gamble (29 per cent or Rs 1,160 crore), CavinKare (9 per cent or Rs 360 crore), Dabur (7 per cent or Rs 280 crore), L’Oreal (4 per cent or Rs 160 crore) and ITC (1.1 per cent or Rs 44 crore) also hold two to three brands across price points, with myriad variants under each.
But are companies worried about cannibalising sales of similar variants under various brands in their stable? Satyaki Ghosh, director, consumer products division, L’Oreal India, which recently launched a Fall Repair variant under L’Oreal Paris range and also has a Garnier Fall Fight variant, doesn’t think so. “If the pie is big enough, in this case hair fall, one doesn’t have to worry. Besides the positioning of the brands — L’Oreal Paris is a premium ‘expert care’ brand and Garnier is more of a ‘beauty’ brand-clearly separates the target audience.”
As for straddling the price pyramid, the shampoo category is split mainly into three segments — economic, popular and premium — based on price. The challenge for marketers here is to identify the requirements at each price point and formulate their offerings accordingly. S Viswanathan, general manager, marketing services, CavinKare, says, “Hair care practices vary across the pyramid. The bottom of the pyramid uses hair oil extensively while the top emphasises more on shampoo usage. Hair problems too will differ accordingly.” Even at the lower end of the price pyramid, consumers do not want to give up on specific benefits — such as defense against hair fall.
The difference lies elsewhere. A bottom of the pyramid consumer may favour products with natural ingredients. Therefore, Chik shampoo from CavinKare is full of ingredients like hena, amla and badam. On her part, a premium shampoo user may prefer technology — driven and scientifically backed products. So L’Oreal’s Fall Repair 3X range of shampoo is bolstered with arginine.
Similarly, the rural-urban divide may throw up different hair care issues and resultant needs. “The urban lifestyle and harsh environmental conditions lead to hair damage. So the demand for a product that restores damaged hair to its former glory has grown a lot among such consumers,” says Nilanjan Mukherjee, head, marketing, personal care products business, ITC, which launched a premium shampoo brand, Fiama Di Wills based on this platform in the year 2007.
Either way, to be successful, companies must have a play in all three segments and be available at all price points. So the premium category is represented by brands like HUL’s Dove (200 ml bottle for Rs 123-Rs 130), L’Oreal Paris (200 ml for Rs 130-Rs 135), P&G’s Pantene (180 ml for Rs 120) and ITC’s Fiama Di Wills (200 ml for Rs 129).
Anti-dandruff shampoos like Clear and Head & Shoulders from arch rivals HUL and P&G respectively also fall in the premium category. And since anti-dandruff shampoos are traditionally considered more male-oriented, these brands have had to segment the market with special ‘for-men’ variants. The two FMCG majors seem to be on the brink of a price war. Both brands have a Rs 139 pack-Clear is available at that price point for a 200 ml bottle and Head & Shoulders for a 170 ml one. The latter has recently slashed prices by Rs 10. “The company (P&G) can argue that the price cut is warranted as it is offering less in terms of volume. But given the history of the two companies, this seems more like the onset of a new price war,” says an industry observer.
Next, comes the popular segment. Pricing is quite varied in this segment with HUL's Sunsilk at Rs 105, L’Oreal’s Garnier at Rs 117, ITC’s Vivel at Rs 89 and CavinKare’s Nyle at Rs 82 (all prices for 200 ml bottles). The last segment, economic, constitutes of brands like Superia (ITC), Rejoice (P&G), Chik, and Clinic Plus.
“The economy segment contributes a little over half to the category in terms of sales. However, the growth has been flat in this segment with the popular category gaining more traction. Over the next few years we expect the contribution of the economy segment to be under pressure as consumers are likely to trade up into the popular segment,” says Roosevelt D’souza, executive director, Nielsen India. The logic being that with rising disposable incomes and increased acceptance of the product, over a period of time, consumers transition from one segment to a higher one.
Small is beautiful
The shampoo market is split between bottles and sachets. While both the segments are on par in terms of their contribution in value, the scales are tipped in favour of sachets with regard to volumes. Bottles contributed 54 per cent in value terms (Rs 2,160 crore) as compared to 46 per cent by sachets (Rs 1,840 crore) in January 2012 as per Nielsen data. Sachets contributed 74 per cent to the volumes vis-a-vis bottles at around 26 per cent.
According to D’souza, the growth in the urban markets has flattened, with the rural markets driving the category. Given that rural markets are price sensitive and consumers prefer sachets to bottles, managing sachet offerings is key to any brand’s success. Something that even a premium brand like L’Oreal Paris acknowledges. About four months back it introduced some of its brands in sachets. The sachets are available in close to 2,000 towns currently and are available at Rs 4, the highest in the sachet segment. A necessary move many would say as lower unit packs are necessary to build trials, especially for premium brands that come with hefty price tags.
The sachet market can however be a great leveller for the segment. Even premium brands like Dove and Pantene are available at Rs 1-Rs 1.50, on par with economy and popular brands. Commenting on L’Oreal’s pricing, an industry player says, “The price point pyramid in sachets cannot be stretched beyond Rs 3. Even heavyweights like Dove and Pantene entered at Rs 3 levels but had to soon succumb to market pressure and bring their prices down. At Rs 4, L’Oreal’s pricing seems a little out of reach.” In sachets, Rs 1 is the most popular price point followed by 50 paise and then Rs 2.
Communicating with consumers
Shampoo commercials are counted among the most glamorous ones on air. And for good measure. In a multi-brand, multi-variant segment, it is critical to establish a brand’s proposition in the consumer's mind to avoid confusion.
Overall, there are two approaches — to pick the ‘star’ offerings and advertise just those, which will have a rub-off effect on the entire range. Or, go for generic advertising. That is, highlight the core proposition of a brand — anti-dandruff, anti-hair fall and so on. Nabankur Gupta, founder CEO, Nobby Brand Architects & Strategic Marketing Consultants, says such a strategy is not sustainable. “Shampoos have overdone the whole anti-hair fall/anti-dandruff routine. The category needs a strong value proposition. Like soaps stand for beauty, maybe shampoos could take on a grooming positioning, making them indispensable.”
Most of the communication for shampoos is done keeping in mind urban consumers. However, there is a definite rub-off on the rural markets as well. “It’s a matter of aspiration. The rural woman may see a beautiful woman on the screen and aspire to get the look. In that second, you’ve cinched a new customer,” says Gupta. With shampoo in almost every Indian home, marketers will need to focus more on styling and looks, rather than the functionality of cleaning and scrubbing.