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LEVERAGING GOODWILL: MARICO’S KAYA
 

LEVERAGING GOODWILL: MARICO’S KAYA

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Brand diversification is a curial decision as it can lead to make or kill a brand. Brand dilution is often hazardous for the entire spectrum of products but it seems Marico knows the formula to lead. ...

Brand diversification is a curial decision as it can lead to make or kill a brand. Brand dilution is often hazardous for the entire spectrum of products but it seems Marico knows the formula to lead. Marico’s “uncommon sense” shaped into a skin care centre, not into mundane beauty parlours. ‘Kaya Skin Clinic’ aided Marico to diversify from products to services.

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    LEVERAGING GOODWILL: MARICO’S KAYA LEVERAGING GOODWILL: MARICO’S KAYA Document Transcript

    • LEVERAGING GOODWILL: MARICO‟S KAYA By Bhawna Sajwani, Welingkar Institute of Management Research and Development Brand diversification is a curial decision as it can lead to make or kill a brand. Brand dilution is often hazardous for the entire spectrum of products but it seems Marico knows the formula to lead. Marico‟s “uncommon sense” shaped into a skin care centre, not into mundane beauty parlours. „Kaya Skin Clinic‟ aided Marico to diversify from products to services.Marico markets well-known brands such as Jasmine etc. But for their organic growth, theyParachute, Saffola, Hair & Care, Shanti, Mediker needed to look out of the fish pot .The annual auditand Revive. This completely product oriented report by Ernst & Young (2007 reports), Indian Spacompany has leveraged its product-led consumer & Wellness, estimated 110,000 Mn INR and growthinsight into consumer insight for services. In 2002, at 25-30 per cent per annum. Indian markets wereMarico Industries ventured into skin care services. flooded with unorganized beauty parlours and few organized players like Lakme and L‟Oreal. But,Kaya Skin Clinic services provided were well-worn methods likeFor years, Harsh Mariwala, the Chairman and painful waxing, threading etc. Sensing the hiddenManaging director of Marico Industries, wanted to patterns of trends, Marico grabbed the opportunityhave a presence in the skincare business where and got the advantage of being the first movers inseveral other FMCG companies were already the market.present. But he was looking for the right product toenter the high-margin skincare segment. In late Winning Strategies2002, a New York-based company asked Mariwala Marico just didn‟t stop at the concept, but alsoif he would be interested in selling laser hair wanted to make sure that their brand delivers. Theremoval machines. Initially, Mariwala was not very biggest challenge for Kaya was to not only ensurekeen because he felt the product could be customer satisfaction but also provide state of thecommoditised easily. But what surfaced was the art services as well as safety.idea of a service offered around such machines.That was how the skincare business got identified; Kaya embarked on a massive training exercise.finally they scaled this idea into a chain of skin care So, while the clinics skin practitioners were trainedclinics. From incubating the idea till execution, all for about 60 days, the 250-odd dermatologists hadwas done within a year. undergone at least 30 days of training. In fact, "skin practitioners" were required to be trained forWidening the Horizons a mandatory 500 hours before they were allowed toSelling a product is like selling a hope but service face a customer.gives the experience. Marico opted for blue oceanstrategy , they took a decision to enter in the novel The next step then was to establish a standardizedarea of skin care service distinguishing from the way of working, which is where the relevance ofoverly crowed product market (Red ocean) .Kaya training, audit, timely solutions all comes in.was designed to endow with holistic and customizedresult-oriented skincare solutions/treatments to its What followed later was customer awarenessclients. Important facet was that their brand campaign, as a significant number of people wereextension from products to skin care services was still unaware of cosmetic dermatology. Moreover,relevant to their core business. The move marked there was a taboo associated with using machinesthe FMCG majors foray into the branded services on skin.category, entering a nascent market untapped byother players. Kaya came out with a 360 degree advertisement approach; where it heavily emphasised on digitalTapping the Trends media. It also introduced a digital campaign whereMarico had 50% of market share in hair oil key words could be linked from Google to the Kayasegment, which made it a market leader in the website. Moreover, dermatologists in the companycategory. Marico was trying to capture more responded to Tweets, Yahoo Q&A‟s and live chatsmarket share by providing innovative products like on the companys website (popularly known asParachute Therapy, Parachute Lite, and Parachute Bhawna Sajwani Welingkar Institute of Management Development and Research Strategic Analysis
    • Kaya Interactive). It had also launched a clinic The graph below shows that Kaya contributesgroup on social networking site Facebook. significantly to Marico‟s Revenue mix. This tells theNot just advertisements, Marico created awareness success story of Kaya!through celebrity endorsements and publicity inhealth and wellness magazine.CompetitionIn India, Kaya faces competition from smallerneighbourhood beauty parlours and smaller chainslike VLCC. The small parlours have a better reachto local market in tier-1 as well tier-2 cities; whichensure a larger coverage but Kaya has its definedtargets. Considering the fact that population theycould not access is not their target; Kaya is muchahead of its competition. Revenue mix MaricoExpansion PlansGiven the discretionary nature of consumer Renovations and Innovationsspending at Kaya, most of the growth during the Marico is incrementally evolving the Kaya withquarter has come from new clinic expansion. interesting concepts like “KAYA FOR MEN”. Men hadStarted as a prototype clinic in Mumbai in become appearance-conscious and „Metro-Sexual‟September 2003, Kaya has grown at an men make the trends. KAYA FOR MEN hasunprecedented pace. Today, Kaya has 85 clinics presented the concept that men need “what womenacross 26 cities in India and 13 clinics in the Middle want”!!East. To capture the various occasions where appearance matters, Kaya has introduced packagesDiversifying and expanding at such a fast pace is like bridal package, hair care package, summermaking the roads for rivals difficult to enter into the package and many more customized solutions.same segment. During the year, Kaya clockedrevenues of 1000 Mn INR. But more than its Further enjoying the brand Kaya Marico hasincreasing contribution to group revenues, Kaya launched KAYA PRODUCTS in skin care segment.holds the promise of boosting the company‟s Kaya includes contribution from product sales,bottom lines, thanks to its distinct service model. which accounts for ~13% of its revenues. Marico has further en-cashed the brand with KAYA LIFE,Rest is History... which provides weight To boost its product revenue stream, Kaya began management services.prototyping its “shop-in-shop” model throughkiosks at malls. They are now also present in To renovate itself, Kayalocations like Shoppers‟ Stop, Hypercity and keeps on adding newLifestyle. Typically, kick-starting a Kaya a clinic machines and technology totakes 10-13 Mn INR (including technology provide complete solutions to its clients.investments and interiors) in a metro city. Future aheadThe clinic breaks even in about nine months in a Kaya is at right place, in the right time. Marico‟smetro and takes a little bit longer in smaller cities. strategy has been shaped into a perfect solution,Kaya attributes the success of the brand to two key which is working for well for the brand. But Kayafactors. The first is its approach of offering still has to penetrate in the market. Competitorssolutions to consumers through the best technology are far behind but extraordinary customer service isavailable. It claims to possess over 20 new the key as today‟s customers are aware andtechnologies in the Indian market. The second is its negative „word of mouth‟ can ruin the brand.unique selling proposition of the real skin expert However, this market is growing and Kaya hasworking towards making women look their beautiful potential to become the cash cow for Marico!best every day. Bhawna Sajwani Welingkar Institute of Management Development and Research Strategic Analysis