GHARI DETERGENT

The Brand is a perfect example of how you don’t always need big celebrity endorsements to build a brand. Its really interesting to see how Ghari Detergent, a Kanpur based brand with low advertising and promotional activities managed to defeat brands such as Tide and Nirma.

The Background

There’s only Hindustan Unilever Ltd’s (HUL’s) Wheel detergent that’s ahead of Ghari, with estimated sales of Rs 2,500 crore. As of December 2010, Ghari had almost doubled its market share, taking it up to 13.5% in the Rs 12,000-crore detergents segment. Wheel still leads with over 17%, but the gap is slowly but surely narrowing.To better understand Ghari’s position here are some numbers: Lifebuoy soap had an estimated sales of Rs 1,400 crore in the last fiscal year, Lux (Rs 1,400 crore), Surf (Rs 1,400 crore) and Colgate (Rs 1,250 crore). (Source: ET, May6, 2011).

What Ghari Did (The Strategy): Select a Profitable and Force Concentration: In military terminology Force concentration is the practice of concentrating a military force, so as to bring to bear such overwhelming force against a portion of an enemy force that the disparity between the two forces alone acts as a force multiplier, in favour of the concentrated forces. Ghari also realized that it can not beat Giants like HU and P&G due to their financial muscle. So it selected Uttar Pradesh, with a population of 167 million (highest in India) and accounts for over 12% of the country’s FMCG sales. Ghari also implemented extensive dealer network throughout the state. Thus, of the 3,000 Ghari dealers in the country, 900 are in Uttar Pradesh — 25 of them in Kanpur alone. Furthermore, nine of the company’s 18 manufacturing units are in Uttar Pradesh Know your consum

er and reason to people consumer your product: Ghari focused on housewives in small town and villages which are extremely value conscious buyer and willing to switch brands. Ghari realized that the only differentiating factor it can offer is the value of money. To offer value for money Ghari management settles the net profit margin of 9% against the industry standard of 12 to 13% for the premium brands. What may work in Ghari’s favour is the higher profit margin of 9% the company offers its dealers; rivals seldom offer better than 6% or 7% Be innovative in reaching the consumers: With only 35 crores of budget allotted to Marketing and promotional activities. Ghari detergent goes to train. The first campaign was the Ghari Detergent Express (a summer special) in 2008 that ran between Lucknow and Guwahati for two monthsTaking the cue from there, Ghari has now advertised in Pushpak Express that runs between Lucknow and Mumbai. The brand can also be seen on railway crossings in

West Bengal and Uttar Pradesh. Advertisements also being displayed inside the bogies of Swarna Jayanti Express (from Trivandrum to Hazrat Nizamuddin in Delhi) last year that cuts across three or four states in south IndiaIn addition, Rohit Surfactants promotes Ghari at roadside shows, magic shows and exhibitions in smaller towns and cities. Customers are unlikely to see other brands at these places — an innovative idea to break the clutter. The magic shows have given Ghari good visibility in cities like Jaipur, Indore, Kota, Alwar and Kanpur. About 30 company-owned vehicles are used for out-of-home advertising. Of late, the company has taken some tentative steps towards the popular media. It has sponsored a show, Rakt Sambandh, on NDTV Imagine.

Ghari's expansion

RSPL attributes its growth to a variety of factors, including expansion to more states. 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.

"We will be setting up plants in Bihar, Raipur and Karnataka soon to catch up with our sales growth of over 25% in the last nine months. Even in volume terms, we have been growing more than 10%," said Sushil Kumar Bajpai, president (corporate affairs) & company secretary, RSPL.

Also, what's helped Ghari is the sheer size of its home market Uttar Pradesh, which contributes 17% to total FMCG revenues, according to The Nielsen Company. Judging by its past, HUL is likely to respond fiercely.

"Hindustan Unilever has a tremendous capability to fight back and they will do it soon," says Amin Babwani, an independent consultant who has spent three decades with HUL.

It clearly has the marketing muscle to do so. The company's existing distribution footprint in rural India, where a brand such as Wheel would sell, reaches nearly 200,000 villages, which is nearly double the industry average.

CONCLUSION

Case of Ghari detergent highlights that how a mediocre brand can compete successfully with big brands with a clear strategy and vision.

But in the same time sacrificing your margin and competing on the basis of price alone are not the part of sustainable competitive advantage and journey ahead is not going to be a cakewalk for Ghari Detergent.