urban market entry strategy

8/12/2019 Urban Market Entry Strategy

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We get on better when we are thinking together

rather than when we are talking together


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Urban Market Entry Strategy

A Market Research Insight 2013-14

we get on better when we are thinking

together rather than when we are talking

together


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Year 2012-13 could be marked as year of

transition

Challenge of Growth

To address this challenge, we have taken some

positive steps for upcoming year(s)

Overview

277,110,087

428,382,196

530,888,043

683,560,112

733,908,012

0 200,000,000 400,000,000 600,000,000 800,000,000

Year 2008-09

Year 2009-10

Year 2010-11

Year 2011-12

Year 2012-13

Netsurf Network Last 5 Years


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Questions

1. Is our present market enough to achieve exponential business growth?

The greatest business successes in history from Standard Oil to Facebookhave stemmed from the companys ability to capture new markets.

Tapping into fresh types of consumptionnew products, customers, or

occasionscan create vibrant, long-term growth for companies in old and

new industries alike. These markets can generate additional sources of

profit, bolster the position of firms related businesses, and keep

competitors always on the defensive.- Stephen Wunker, Ivey Business Journal, 2011


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Questions

2. Are there any new unidentified potential segments in the urban

geographies where we are already present?

3. Can we explore entirely new geographies with potential target segments

identified?


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Questions

Considering the 56% sales that we derive fromBiofit range, emphasize that our presence is

strong enough in the Rural areas.

Are we exploiting the potential of the other two

product ranges?

Which could be the areas that are lucrative for

Herbs & More and Naturamore?

Sales Performance

(Apr 2012- Mar 2013)

Biofit

56%

Naturamore

40%

Herbs and

More4%

4. Are we currently optimizing the sales of all of our products?


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Naturamore (40%) Herbs and More (4%)

5. Are we currently optimizing the sales of all of our products?

Ahmedabad

Mumbai

Thane

Surat

Pune

Top 5 Districts & blocks

Mandal, Bavla, Dhandhuka,

Sanand, Barwala

Dahisar, Malad, Borivali,Kandivali, Goregaon,

Thane, Kalyan, Vasai,

Bhiwandi, Shahapur

Surat, Choryasi, Olpad,

Bardoli, Mandvi

Daund, Bhor, Indapur,

Baramati, Haveli

Top 5 Districts & blocks

Ahmedabad

Mumbai

Thane

Yavatmal

Pune

Mandal, Dascrol, Muli, Bavla,

Barwala

Dahisar, Malad, Borivali,Kandivali, Goregaon,

Thane, Kalyan, Vasai,

Bhiwandi, Shahapur

Babhulgaon. Ralegaon,

Ghatanji, Kalapur, Wani

Daund, Bhor, Indapur,

Baramati, Haveli

Presence in city suburbs about 80%

Are we actively seeking the right people who- consume, advise or retail these products?


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Market Potential Overview

Potential Market for Naturamore

o The Indian Nutraceutical market was valued at $1480 Millions in 2011. Dietary supplements were

the largest category accounting for 64% of the

Nutraceutical market.

o Typical consumers of dietary products-

1. Suffers from some diet related health problems

2. With no scope or time for grandmother remedies

3. Inclined to take scientifically proven healthcare

products

4. Believes in preventive healthcare

5. Is increasingly aware of health related issues

arising out of hectic l ifestyle and food habits

6. Increasingly demands Nature derived products

o The Indian arm of Amway corporation gets over 50

per cent of revenues from Nutrilite brand currently.

In 2012, Amway had a turnover of Rs 2,288 crore.

Potential Market for Herbs and More

o Urban India leads consumption (of personal care products),with about two-thirds of all personal care products by volume,

and more than four-fifths of the cosmetics segment

consumption.

o Meanwhile, urban consumption is evolving, moving from basic

functional to more advanced and specialized products, and

greater expenditure levels.

o Interestingly, the new formats which are emerging as

important purchase points are the local chemist

shops/pharmacies, beauty salons, petrol junctions, nearby

paanwala for sachets and smaller packs etc.

Contribution to overall Consumption growth:

Urban Consumer: 68%

Rural Consumer: 32%


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Business models are changing and little understood or conveniently stereotyped by

some stakeholders. Direct selling is increasingly becoming multi channel.

-John Holloway, Executive Director,

Direct Selling Association of Australia


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Direct Selling Organisation

Direct Seller

CONSUMER

Door-to-Door


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Direct Selling Organisation

Direct Seller

CONSUMER

Door-to-Door

Distance Selling

Store Selling


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So may be it is time for us to-

Identify our potential market segments again

Identify and tap multiple channels to make our business

Identify the activities of our business that can engage the target markets


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Project- Urban Market Entry Strategy Identification

Aim:

To understand the urban market and suggest some of the strategies that will help

Netsurf to get entry into urban markets.

Objectives:

Identify the target group(s)

Identify multiple channels in the urban market

Identify the current competition

Captivate the identified target groups through activities suitable for them


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We need to target those areas/groups where

o Either product advise is given OR

o Business advise is given

Target Influencers= New Segments


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Target Groups Identification

Beauticians

Yoga Centers

HR Consultants

Dieticians

Sport coach/trainers

Housewives


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Selected urban

cities

Pune

Delhi

Mumbai

Geographical Areas Covered


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Selected TGs

BeautyParlours

Yoga Centers

HRconsultants

Dieticians

Sports

Coaches

Potential- H&M, Naturamore retailing

Retail mindset

Influencer for skin/hair related products

Consults & recommends

Decent footfall

Potential- Naturamore, H&M retailing

Act as Health gurus

Influencers

Decent footfall

Retail mindset (optional)

Potential- Networking

Connect with unemployed people

Searching for second income options

Potential- Naturamore retailing

Influencers

Recommend health products

Decent footfall

Potential- Naturamore retailing

Influencers

May recommend health products

Re-purchase assurance


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Selected TGs

BeautyParlours

Yoga Centers

HRconsultants

Dieticians

Sports

Coaches

A Category: where basic facial charges start from Rs. 1000/-

B Category: where basic facial charges start from Rs. 600/-

C Category: where basic facial charges start from Rs. 300/- or less.

Non-branded, commercial/home based parlours.

Daily footfall5 to 25

Category A: home based & conservative

Category B: commercial set up

Daily footfall 10 to 100

Medium to small scale HR consultants

Commercial set up

Connects with mid-level employers

Around 20-50 people enrolled for jobIndependent practice / association with a

health club

Provide counseling at other commercial set ups

Dietetics course completed

Coaches for any outdoor sports

Associated with sports clubs

Train children & adults


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Selected TGs

BeautyParlours

Yoga Centers

HRconsultants

Dieticians

SportsCoaches

Housewives

A Category: where basic facial charges start from Rs. 1000/-

B Category: where basic facial charges start from Rs. 600/-

C Category: where basic facial charges start from Rs. 300/- or less.

Non-branded, commercial/home based parlours.

Daily footfall5 to 25

Category A: home based & conservative

Category B: commercial set up

Daily footfall 10 to 100

Challenges identified



Phase II


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Something we should know about

Beauty Parlours:

Beauty Parlours are the places where customers (male/female) pay for personal grooming services.

Beauty Parlours typically offer services like hair cut, facial massages, body massages, pedicure &

manicure, threading, waxing, etc. along with bridal make-up and grooming.

A Spa, as oppose to a beauty parlour, offers specialized services related to relaxation (massages)

and various health treatments. They may also be using aroma therapy for the same. A regular beauty

parlour may not offer these services.

Yoga Centers:

The conservative yoga consultants, mainly home based, are more conscious about their personal

relationships with their customers.

The commercial consultants usually give trainings in their own commercial set ups, and also visit other

health clubs, sports complexes and corporate clients.


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Market Potential Overview

The Indian beauty Parlour Segment

o India currently comprises 25 percent of organized salon market, which will increase its share to 30 percent by 2015.

o The Indian salon franchise ecosystem has a support of over 5,000 salon franchisees.

o Close to 61 percent of men and 54 percent of women visit salons on a monthly basis.

o More than 60 percent of the respondents say they spend between Rs 500-2,500 on beauty services

o Today every lane in the city (Gurgaon) has a beauty parlour and while it is difficult to put a number to them, it can be said

that there would be over 500 of them in the city at present. As per the report, industry estimates peg the beauty salon

market at Rs 6,900 crore in the country, which includes both services and the value of professional care products retailed

through salons. Eight per cent of the total salon market (Rs 552 crore) is contributed by the Delhi-NCR region.

-Beauty business glowing in Gurgaon, TOI, Apr 15 2012

o Unorganized sector

Indian Yoga Industry

The Indian Yoga Industry is unorganized sector


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Database

Generation

Free search

engines like

justdial.com,

grotal.com, yellow

pages etc.

Cold Calling

Brief but clear

information about

direct selling

company, products

and business

shared.

Fix Appointments

Asked for their

feedback about

product and

business plan.

Hence, it called for

a meet.

Visit 1: Product

Sampling

Products given

Leaflets & visiting

cards shared

Business brief

fixed next

appointment

Follow up call

Called before the

next appointment

to ensure that theyhave used all the

products and they

are ready to share

their feedback

Visit 2: Feedback

collection

Meet again and

collect detailed

feedback aboutproducts and

business

understand their

inclination to join

Lead Generation

Those who are

found positive

about products/&business, their

contact details to

be forwarded to

sales team.

Sales Conversion

They are

informed about

the procedure tojoin the business

or acquire

products and the

sale is closed.

Process


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I am calling from Netsurf Communications Pvt. Ltd. company, which is basically a

direct selling company. My name is _______ & I work here as a ___________. We

have FMCG products range & one of them is into personal care. We need to talk to

you regarding this range, which is called as Herbs& more. We have plans to launch

this range across the metro cities like Pune, Mumbai, Ahmedabad, Bangalore and

Delhi etc. We would like to know your feedback as beauticians over herbs & more as

well as our business plan associated with that (we being a direct selling company.). If

you are interested we would like to come and meet you and also give you the

samples of our products for you to test them. We would like to know how do you find

the products & our business opportunity.

Cold calling script


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Youcan become a Netsurf franchisee by making an initial products purchase of Rs.

6,000/-. In return you get products of your choice worth (MRP) Rs. 8,000/-. I.e. 25%

discount initially and post that every repurchase of the products can be made at 30%

flat discount on MRP for lifetime. If you make additional products repurchase of

products of Rs. 5,000 in the first month of becoming a franchisee, you get 40%

discount on products MRP for a year & you would be called a premiumfranchisee.

This business plan gives you the liberty to engage yourself in multiple ways. If you

are interested you can also become a master franchisee by doing networking and

earn networking commission. However, it is not mandatory for you to do

networking to remain in this business and to earn the product discounts.

Visit 1: Business introduction script


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Sampling


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Place Cold Calls Appointments Product Sampling Areas Covered

Target group: Beauty Parlours

Pune 70 15 13Aundh, Baner, Camp, Hadapsar, D.Gymkhana, Kothrud,

Market Yard, Swargate, Wakad

Mumbai 50 10 10 Borivali, Colaba, Dadar, Fort, Matunga, Thane

Delhi 40 15 12

Anand Niketan, Chandani Chowk, Dwarka, Lajpat Nagar,

Munirka, Pitampura, Rajori Garden, Tilak Nagar, Safdarjang

enclave.

Target group: Yoga Centers

Pune 30 9 6Koregaon Park, Chinchwad, Ambegaon, Balewadi,

Dhakawadi

Delhi 40 8 7Dwarka, Chandni Chowk, Lajpat Nagar, Pitampura, rajori &

Vasant Vihar

Sampling

RespondentsGender distribution: Beauty Parlours77% females of which 75% falling in the age group of

30-40 years; Yoga Centers 31% females & 69% males falling in age group of 35-50 years.

Out of 34 beauty parlours visited, 3 were home based while rest of them had a commercial set up.

While the products were being distributed, the beauticians were told clearly that the H&M products are for

Home care purpose only.


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Findings & Observations


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Beauty Parlour:

Most (29/32, Pune-8, Mumbai-8, Delhi 13) of the commercial beauty parlours display and retail some

personal care & make up products to earn discounts. These products may not be only the direct selling

products.

The beauty parlours (11, Pune-2, Mumbai-5, Delhi-4) are/were already involved in one or more direct

selling business at the same time. All the beauty parlour holding beauticians are qualified through some beauty institute.

Yoga Centers:

Very few (2 from Delhi) of the commercial yoga centers display and/or retail any health care & personal

care products to earn discounts. These products may not be only the direct selling products.

The yoga centers (Delhi-3, Pune-1) are/were already involved in some direct selling business.


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City Total samples

Initial investment of

Rs. 6000/- was found

to be reasonable

Consideration for

Retailing

Consideration

for Networking

Target Group: Beauty Parlours

Pune 13 7 7 1

Mumbai 10 6 7 1

Delhi 12 8 6 3

Target Group: Yoga Centers

Pune 6 1 1 1

Delhi 7 4 5 2


Initial investment of Rs. 6000/- was found to be reasonable by48% respondents.

Consideration to use products by self- 19% respondents (only for H&M products)

Consideration for Retailing by 48% respondents.

Consideration for Networking by 17% respondents.


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Products observed at the retail display of Beauty Parlours

Direct Selling Brands

Brand Name Category Specific Products observed, if any

Nutrilite Vitamins & supplements Protein powder & calcium tablets

Herbalife

Weight Management &

Targeted Nutrition for

women

Formula 1, XtraCal

Oriflame Skin and Body care

Day Creams, Toners, cleansers, night

creams, Body Lotion & creams, body wash,

etc.

Avon Skin Care

Other Brands

Biotique Body & Skin Care Toner, Sunscreen, Lotions, Scrubs

VLCCFacial Kits, Body Care,

foot care

Natures Facial KitsSunscreens, Body lotions Hand and foot

Lotions and body scrubs

Shehnaz

Hussain

Ayurvedic Facial

products

Gold , silver facial Crme, Scrubs, and

sunscreens

WellasProfessional Hair Care

rangeSmoothen shampoo & conditioner

LorealProfessional Hair Care

rangeSmoothen shampoo & conditioner

Matrix Professional Hair Carerange Hair care products

Apart from the above mentioned

common products, we also observed

some region specific products as below-

Mumbai: Direct Selling brands like

Forever living, Modicare (personal &

home care) & other brands like Richfeel

(hair care), Forest Essentials, Cheryls

(hair care), Blossom Kocher, Brillaire

(hair care), Himalaya, O3+, Argan Dulux,

R K Aroma & Garnier.

Delhi: Direct Selling brands like Forever

living, Modicare (personal & home care)

& Glister, Sarah Wilson, Tamarind,

Lemon Tree, Blossom Kocher, Ayurveda

Tannend, Rain Again, O3+, Jawed

Habibs, Akeya Seth, Yuvalin & Herbia.

Pune: Direct Selling brands like Glister,

Cheryls,Rahul Phates, Lotus Herbals &

Richfeel.


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Responses Received

We received following positive responses through this activity across the cities-

25% of the respondents (from all the 34 TG respondents) showed positive feedback to be engaged with Netsurf either as a products retailer

or a product user.

Name of the

Respondent

Target

GroupArea Name of Business Business Set up Comments

Josphine

Beauty

Parlour

Kothrud,

Pune

vogue beauty

parlour

Two room, commercial

set up & another set up

near Goregaon film city,Mumbai

Showed interest in Anti pimple cream

and wanted to buy more of the same

after a month after we approachedher.

Pushpa BhosleBeauty

ParlourAundh, Pune

Kimaya Beauty

Parlour

Single room, home based

set up

The sampled H&M products were

displayed and tested on her clients.

She showed interest in face cleanser

as her clients demanded more.

Ajita Surve

Beauty

Parlour

Market Yard,

Pune

Sejal Beauty Hair

& Spa

A beauty, hair & spa

services and advanced

treatment at a

commercial set up

She has liked all the products.


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Responses Received (cont.)

We received following positive responses through this activity across the cities-

25% of the respondents (from all the 34 TG respondents) showed positive feedback to be engaged with Netsurf either as a products retailer

or a product user.

Name of the

Respondent

Target

GroupArea Name of Business Business Set up Comments

Mr Shukla Yoga Trainer Vasant ViharShree Yoga

Academy

Taking Personal classes all

over the city and have

around 100 trainers

below him

He wants someone senior to address

him before giving initial amount of Rs

6000

Mr Avinash Yoga Trainer PitamPuraAvinash Yoga

Academy

Have a commercial setup

and taking personal

classes

He wants someone senior to address

him before giving initial amount of Rs

6000

Mrs. PraveenBeauty

ParlourTilak Nagar

Dreamz Beauty

parlour

Comercial Set Up , Is

currently doing Amway,

Avon and Modicare into

direct selling past 10 years

After the trial she might start

retailing and networking as well

because of the margin level.

Mrs. SheetalBeauty

parlourTilak Nagar

Paul Beauty

PARLOUR

Commercial set up ,

Currently doing Avon ,

Oriflame also not just

the owner but the other

beauty helpers ae

engaged into proactive

selling.

After the trial she might start

retailing and networking as well

because of the margin level


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Discussion


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Our approach

1. Our entry to the target groups was made with the

approach of sampling the products and knowing

their valuable feedback over products & business

plan. However, we made sure that they know that

we are a direct selling company.

a. The first entry was smooth as everyone likes to

try free samples.

b. Any respondent having negative opinion about

retailing or getting into direct selling was

eliminated at the cold calling stage only.

2. Feedback mechanism was implemented

completely. They were given enough time to test

the products and were not followed up rigorously

until then.

a. This strategy made them comfortable and

positive in cooperating with us.

b. They felt important because we asked for their

expert feedback/opinions about the products

being launched in their city.


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Pune & Mumbai: product oriented, skeptical & conservative about new brands, result conscious

Delhi: Business oriented, emphasize more on margins/profits, competitor comparison is important

Target Groups Approach


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Regarding Products

1. Beauty Parlors a. At present, Hair care cream received maximum (5) likes from Pune &Mumbai region.

b. Anti pimple cream was sought by many parlors.

c. Face Scrub and Face Cleanser also has potential as these services are

commonly sought by many parlor going customers.

d. A very common problem of hair loss can be addressed by hair care cream

and nourishing shampoo.

e. Anti-septic cream and dental paste have little room.

2. Yoga Centers a. Naturamore contains soy protein isolate that contains an important

female hormone called estrogen that is essential in womensmenopausal

symptoms.

b. Along with Naturamore, Dental Paste and other H&M products were

sought by more that 50% of the respondents.

c. Naturamore Jr. has little room through this Target groups.

*Note: more feedback is awaited


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1. Beauty Parlorsa. Understand the skin/hair types and their requirement

b. Understand the ingredients, their effects and expected result

c. Understand difference between herbal and Ayurvedic

d. Having idea about competitor products and their positioning before visiting will help in

meaningful conversation

e. Should be able to show product demos appropriately (taking sample on the back-side of

the hand)

f. One should recommend using the products for multiple times to test the results (theybeing Ayurvedic products)

g. One can portray aloe turmeric cream as a multipurpose product that can be used as a

sun screen (SPF15), night repair cream, day cream, moisturizer, etc

h. Get an idea about services provided by them & their client base

i. Products should be recommended for home care/home use/home treatment.

2. Yoga Centers a. Indian origin of product and the companyb. Vegetarian

c. Not for muscle building

d. Complete internal nourishment

e. Herbs and more is also equally potential as Naturamore for this target group.

Suggested approach with respect to products


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1. Beauty Parlors a. All the commercial beauty parlors had a display shelf to retail products.

b. They are used to suggesting home treatment for hair and skin to their clients.

c. Well aware about the direct selling business and directly can discuss on retail margin

earnings.

d. Brands like LOreal or Matrix giving less retail margins- about 16-20%.

e. Not very open for networking

2. Yoga Centers a. Response differed category-wise

b. Conservatives (20%)- not open to business at all.

c. Respondents with commercial set-up are business minded

i. Recommend products- Patanjali, Nutrilite, Vaidyanath etcii. 40% had already tried other direct selling like Amway and Modicare

*Note: more feedback is awaited

Suggested approach with respect to business


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1. Beauty Parlors Talk about retail margins, networking being optional & easy/ hassle

free dispatch process

Payback policy

Dont hurry to make them franchisee

Initially they may go for just buying the products at MRP to testing

them on their customers. One can always look at them as a consumer to our products

2. Yoga Centers Trainers which are kind of conservative in nature may not be willing

to recommend products to their clients as they are more conscious

about personal relationship they share. However one can look atthem as a consumer for Naturamore and H&M.

Try and conduct a session/product display at the place where they

are conducting their regular yoga classes.

Suggested approach with respect to business


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Which H&M products can be used & how at the beauty parlours?

How to chose H&M products as per the skin / hair types?

How can Netsurf offer exclusivityof H&M products franchisee to any beauty parlour?

Do you have any professional range products for H&M/ is it a professional range of H&M?

Are the products available on consignment basis to beauty parlours?

What results should be expected from H&M or Naturamore products?

What is the USP of Naturamore & H&M?

Does Naturamore help in weight management?

How is Naturamore better than Nutrilite by Amway?

Companysbackground & manufacturing facility

Where to avail these products?

Ingredients quality & purity?

What is the support provided by company?

This company & products are not known, what promotional support would the company offer?

Is it a chain marketing or a MLM company?

Can I sell your products through my retail outlet?

FAQs


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Respondents said

As such I wanted to promote some product. I hadtaken Jafra's distributorship but then I didnt do any

business. Why not promote our (Indian made)

product then?"

"Today most of the customers ask for herbal

products and I also try to use them whenever

possible."

Inmy opinion you should think about exclusivity i.e.

they should be available in very select parlors so that

product value remains intact. See now Amwayproducts are available everywhere. People ask me

which product to use but they do not take it from me

as I always sell them on MRP. So they go to somebody

else and get it on discount. But because of this,

products has gone in wrong hands. they don't know

which product should be given to whom and when

people don't get result they blame that product is not

good"

If your products are good & worth for daily usage, then

probably I can start retailing it.

40% Discount will leverage my savings more, as

currently I retail a lot of products like L'Oreal, Wella's,

Lotus & Shehnaz Hussain but the margin is too less. Like

16-17%.

Currently I am using Amway Nutrilite, which cost around Rs. 2000, along with that they are also offering

Calcium capsules for joint pains etc. if your product has the same ingredient and benefits then apart from

retailing I will start using it for my own use and start recommending it to my friends and family.


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Thank you

urban market entry strategy

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