Nivea products Pricing Mix and Distribution strategy used by Nivea

1. MARKETING MANAGEMENT
MINI PROJECT REPORT

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SECTOR INFORMATION
Fast moving consumer goods (FMCG) are the fourth largest sector in the Indian economy. There
are three main segments in the sector – food and beverages which accounts for 19 per cent of the
sector, healthcare which accounts for 31 per cent and household and personal care which accounts
for the remaining 50 per cent.
The FMCG sector has grown from Rs 2,20,852.4 crore (US$ 31.6 billion) in 2011 to Rs
3,68,669.75 crore (US$ 52.75 billion) in 2017-18. The sector is further expected to grow at a
Compound Annual Growth Rate (CAGR) of 27.86 per cent to reach Rs 7,24,759.3 crore (US$
103.7 billion) by 2020. FMCG market is expected to grow at 9-10 per cent in 2020. FMCG urban
segment witnessed growth rate of 8 per cent whereas rural segment grew at 5 per cent in quarter
ended in September 2019; supported by moderate inflation, increase in private consumption and
rural income.
Rural consumption has increased, led by a combination of increasing incomes and higher aspiration
levels; there is an increased demand for branded products in rural India. The rural FMCG market in
India is expected to grow to US$ 220 billion by 2025 from US$ 23.6 billion in FY18. In FY18, FMCG’s
rural segment contributed an estimated 10 per cent of the total income and it is forecasted to contribute
15-16 per cent in FY 19.

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On the other hand, with the share of unorganized market in the FMCG sector falling, the
organized sector growth is expected to rise with increased level of brand consciousness, also augmented by the
growth in modern retail.
Another major factor propelling the demand for food services in India is the growing youth population,
primarily in the country’s urban regions.
Online portals are expected to play a key role for companies trying to enter the hinterlands.
The Internet has contributed in a big way, facilitating a cheaper and more convenient means to increase a
company’s reach. It is estimated that 40 per cent of all FMCG consumption in India
will be online by 2020. The online FMCG market is forecasted to reach US$ 45 billion in 2020
from US$ 20 billion in 2017.
COMPANY INFORMATION
Beiersdorf is a German multinational company that manufactures personal-care products and
pressure-sensitive adhesives
Beiersdorf is organized in two separate business segments: consumer business and tesa. The consumer
business segments focuses on skin care, while the tesa business, on self-adhesive products.
In 1974, the company introduced a divisional organization for consumed, medical, pharma and tesa.
In 1989, the divisional organization was changed into skin care, adhesive products and wound care.
The product range of Nivea as well as of tesa was expanded. Especially Nivea products - the typical cream
as well as sun creams, anti age products and baby care. In April 2001, the tesa business segment was
founded as an independent unit within Beiersdorf. tesa focuses on developing solutions for its customers,
offering about 6.500 different self-adhesive products.
Beiersdorf has several Corporate Social Responsibility projects like the global social initiative "Nivea cares
for family". The company works with NGOs and organizations in an attempt to improve the lives of
disadvantaged families.
At Beiersdorf we have been caring about skin since 1882. Throughout our history we have built
trust by staying close to our consumers and developing innovative skin care brands that are
tailored to their needs. We work as one global team, with one focus: making people feel good

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in their skin. Everywhere. Every day. As we head into the future, we want to become the
number one skin care company in the world.
Core Values:
The NIVEA Family Trusted, loved and always reliable – For more than 100 years
Nivea is one of the leading companies in the field of skin care – with more than 130 years of experience
Today, millions of people all over the world, all with different types of skin, rely on the NIVEA brand.
That is why our researchers work extensively with different skin types and the different care requirements
brought about by culture, gender and age. Thanks to this approach, we have developed numerous innovative
skin care products over the past few decades – from deodorants to sunscreen products. We work with
over 50 institutions around the world to ensure that our products are suitable for your skin. We conduct
research specifically aimed at skin types and climate conditions found in these regions. We do this so that one
day everybody in the world can place their trust in NIVEA products.
THREE PILLARS OF NIVEA SUSTAINABILITY
Designed to help all of us protect our planet, this website provides a wealth of information about all aspects of safe,
gentle and effective skincare and the environment

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SKIN CARE INDUSTRY MARKET IN INDIA
India skin care market stood at $ 1.6 billion in 2017 and is projected to grow at a
CAGR of 9% to reach $ 2.7 billion by 2023, on the back of rising disposable
income, increasing demand for skin care products across all age groups, especially
young population, and growing awareness among consumers about various skin
care products. Moreover, rising number of working women is leading to higher
demand for personal care product. Emergence of online brands such as Nykaa and
Purple along with increasing internet users is resulting in growing presence of
online retail in the country’s skin care market. Additionally, rising consumer
demand for skin care products is pushing manufacturers to come up with new
product launches, thereby further propelling growth in India skin care market.
India skin care market is controlled by these major players, namely– Hindustan
Unilever Limited, The Himalaya Drug Company, Emami Limited, Johnson &
Johnson (India) Ltd, Oriflame India Private Limited, Nivea India Pvt. Ltd., Amway
India Enterprises Private Limited, Procter & Gamble Home Products Private
Limited, Lotus Herbals Limited, etc.

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FACTORS THAT INFLUENCE CONSUMER BEHAVIOR
 Cultural Factors-Sub-culture, Social class
 Geographical area & Individual perception.
 Social Factors-Reference groups & Family.
 Personal Factors-Age, Occupation, Lifestyle
 Psychological Factors:Learnings, Perception, Beliefs & Attitude, Motivation
Marketing mix of Nivea
Nivea deals in personal care products and is associated with FMCG sector. This German origin brand
was founded
by its founder Paul Carl Beiersdorf in the year 1882 and was introduced in the commercial market in the
year 1911. With time its ownership has changed several hands and currently, it is a subsidiary of its parent
company Beiersdorf Global AG. Nivea is an established brand name specializing in
beauty products for. It faces fierce competition from several brands like- Lakme, Vaseline, Johnson &
Johnson, Ponds, Edgewell, Amka Products.
Product in the Marketing Mix of Nivea
Nivea has positioned itself as a wellness brand via its skin care products. At its onset, the company offered
products
for women but with time has diversified its product portfolio to include men and women from all age-groups.
Innovative products in beauty and skin care segment have become widely recognized because of its high-
quality. Nivea manufactures and markets products related to the following categories-
 Face care- Face Cleaning, Lip Care
 Body care – Deodorant, Shower, Hand and Body care
 Men – Deodorant, Moisturizer, Shaving
 Sun – After sun, Sun spray, Sun lotion

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TYPES OF PRODUCTS:
BODYCARE
PRODUCTS
FACE CARE
PRODUCTS
MEN
PRODUCTS
SUNSCREE
N
PRODUCTS
-BODY CARE
-BODY CLEANSING
-DEODORANTS
-HAND CREAM
-FACE CLEANSING
-LIP CARE
-DEODORANTS
-FACE CREAM
-SHAVING CREAM
-SHOWER GEL
-SUNSCREENS

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PRICING IN DIFFERENT MARKETS:
PRICES WITH COMPETING BRANDS:
PRODUCTS
PRICES-
Traditional
(Kirana Store)
PRICES-
Retail market
PRICES-
Online market
Rs. 75 Rs. 80 Rs. 99
250ml
Rs.175 Rs.190 Rs.198
Rs.99 Rs.110 Rs.120

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250 ml
Rs.150 Rs.160 Rs.168
500 ml
Rs.130 Rs.135 Rs.339
250 ml
Rs.156 Rs.160 Rs.168

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Rs.312 Rs.330 Rs.339
250 ml
Rs.150 Rs.160 Rs.168
250 ml
Rs.156 Rs.160 Rs.168

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250 ml
Rs.156 Rs.160 Rs.168
250 ml
Rs.156 Rs.160 Rs.168
Rs.156 Rs.160 Rs.168
250 ml
Rs.150 Rs.160 Rs.175

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Vaseline body lotion Ponds Body lotion Nivea body lotion
(200ml) (200ml) (200ml)
Rs-185 Rs-235 Rs-198
Ponds Face wash Nivea face wash
Rs.240 Rs.14

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SWOT ANALYSIS:
Strenght:
-Brand Equity
-Distribution and Global presence
-Cold cream domination
Weakness:
-Competition restricting Nivea sale
in other segment
-Investment needed to change
brand image
-Expansion
Opportunity:
-Innovation with new product line
-Territory expansion
-Targetting mens segment
Threats:
-Competition is taking away its
core strength
-Regular issues in marketing
-Threat to bottom line
NIVEA

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Pricing Strategy:
Nivea is an established brand with good growth opportunities in emerging markets. It has placed a highly
qualified team for market research and the knowledge and understanding gained through it has helped in
formatting a suitable pricing policy.
Day by day it has worked towards increasing its market share by adopting well-defined pricing strategies.
It has targeted the middle-class section of a society to garner maximum customers for its products. The brand
has kept its prices reasonable so as to cater to a larger audience.
Nivea sells its products to retailers at a single set price and has adopted a constant pricing policy. It is then
up to the retailers to adopt a pricing strategy suitable for them. Most retailers have maintained an affordable
pricing structure so as to garner better revenues. In order to lure in new customers and maintain previous
ones, the retailers offer several incentives like discounts, free gifts, free products and minimum pricing
on bulk
The current pricing strategy to set the price level that Nivea follows is a competitive based pricing strategy.
This is because the data on competitors is easily available due to a large number of competitors that exists
within the industry.
It also takes costs into consideration to set prices for a few products for which either information is not
available on competitors, or are costlier to make, Nivea sells its products at a higher price than competitors.
This is because it offers more features, and the high price makes up for these. It currently uses product bundle
pricing as well, where products are bundled together and sold at prices lower than the total of individual items.
It also uses an optional product pricing strategy for certain products, where it offers a price for the base
product and separate prices for the accessories that come along with it. It charges a greater price for the
products it sells online. This is because delivery costs have been included in the price of the product.
Nivea has fixed the prices of the final product. Channel members; retailers and wholesalers, buy the product
at a lower price and earn through their own margins.
Nivea should introduce discounts and allowances, where it lowers prices for a short period of time in order
to attract customers and gain market share. It can do this by reducing a percentage off the price of its
products. Nivea should introduce new products with a price penetration strategy where it offers an initial
lower price than competitors to gain market share. This will ensure that new products that are introduced are
used by and become more popular than that of competition.

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CHANNEL DISTRIBUTION:
The major components in the Indian distribution channel include – retail network, wholesale network and
logistics infrastructure.
The consumer majorly interacts with retail outlets. India has over 9 million retail outlets in the distribution
channel. These include grocery stores, supermarkets etc.
India has only 8% of the organized retail distribution penetration.
Traditional retail in India offers consumers a number of advantages like convenience, home delivery, credit,
and personalized service.
On the other hand, modern retail offers periodic promotional offers, lower prices, wider assortment, a better
ambience, and higher quality brands.
The reason for such widespread existence of the traditional market is due to the availability of lower rentals,
cheap labor cost, credit from suppliers, fewer tax duties and a legal framework which prevented the Foreign
Direct Investment (FDI) until recently.

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WAREHOUSE LOCATION OF COMPANY:
Our Warehouse and Distribution staff ensure our UK warehouse in Helford operates smoothly and effectively,
so that our customers can get the products they love, when they need them. As a high-risk site, each and every
one of our Warehouse Distribution team members work hard to ensure the continuing level of safety of
everyone around them. From identifying hazards and controlling risk, to reacting to the unpredictable, our
close-knit team of 150 UK staff make sure we always deliver what we promise.
Germany-based FMCG company Beiersdorf AG recently opened its first Indian manufacturing
facility at Sanand in Gujarat for personal care brand Nivea. This Rs 850 cr facility with an annual
capacity of 100 mn units per annum will address the needs of the domestic and SAARC markets.
INVENTORY TURNOVER RATIO OF COMPANY:
Inventory Turnover measures how fast the company turns over its inventory within a year. A higher
Inventory Turnover means the company has light inventory. Therefore, the company spends less money on
storage, write downs, and obsolete inventory. If the inventory is too light, it may affect sales because the
company may not have enough to meet demand.
1. Days Inventory indicates the number of days of goods in sales that a company has in the inventory.
Beiersdorf AG's Days Inventory for the six months ended in Dec. 2019 is calculated as:
Days Inventory = Total Inventories (Q: Dec. 2019 ) / Cost of Goods Sold (Q: Dec. 2019 ) * Days in Period
= 1124.3596986817 / 1821.1111111111 * 365 / 2
= 112.68
2. Total Inventories can be measured by Days Sales of Inventory (DSI).
Beiersdorf AG's Days Sales of Inventory for the six months ended in Dec. 2019 is calculated as:
Days Sales of Inventory (DSI) Total Inventories (Q: Dec. 2019 ) / Revenue (Q: Dec. 2019 ) * Days in Period
= 1124.3596986817 / 4240 * 365 / 2
= 48.40
3. Inventory-to-Revenue determines the ability of a company to manage their inventory levels. It measures
the percentage of Inventories the company currently has on hand to support the current amount of Revenue.

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Beiersdorf AG's Inventory to Revenue for the quarter that ended in Dec. 2019 is calculated as
Inventory-to-Revenue = Total Inventories (Q: Dec. 2019 ) / Revenue (Q: Dec. 2019 )
= 1124.3596986817 / 4240
= 0.27
How will you calculate desired service output level? Link same with price of
product?
Nivea company is on top compared to other competitors in skin care products.
It has wide range of products in market having best quality and available anywhere in shops.
The marketing strategy ATL and BTL activities makes people aware of the products they are using
and have good advertising plans.
It is active from long years and still it is in growing stage and has not at all made consumers
unsatisfied and any degradation in products quality and sizes.
The prices of Nivea are comparatively bit higher then its competitors. It can be because of its brand
image in market and the quality which it provides
 Available: Can I get the product at or near the location where I want it?
 Timing: Do I need the product immediately or am I willing to wait?
 Quantity: Am I willing to buy in bulk or buy multiple items?
 Varieties: Do I have a very particular need or a flexible need? Am I looking for one or many options?
 Service: Do I require assistance or support through the purchase process?
 Information: Do I need information to make a purchase, or do I enter the buying process having
already made a decision?

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