The soap industry in India is at the high growth rate and many new entrants are planning to
launch their product in this category. The overall soap industry is worth 60,000 crores. Red
Orange Organic is a startup and targets at entire family with their various herbal soaps. The
market has been segmented according to geographical locations. It further differentiates
these segments into Socio Economic Cluster (SEC) which takes into account the criteria of
education and profession which ultimately measures the financial ability of consumers. This
data is easily available on IMRBINT.com. The cluster is divided into five parts starting from A
to E. The products target the urban and suburban, upper and upper middle class segment of
the population, who fall under A and B section of SEC.
Tactical marketing tools, 4P‘s, are extensively used by the company to market products. The
products are produced in India. There are 4 varieties of soap based on skin type – dry skin,
normal skin, oily skin and for babies. Since the demand for soap market is to a great extent
oligopolistic, variations in price lead to price war which can eventually break down the
company‘s market share. Thus Red Orange cannot provide a better price than its competitors.
But the price is affordable by most of the people. Red Orange will outsource its distribution
channel to third party distributors which allow them to distribute product in massive bulks
amounting to around Twelve thousand pieces. It undertakes one of the largest promotional
activities in the herbal soap industry.
The soap industry has a few major producers of which Hindustan Unilever holds market share
of 70%. Other competing brands like Godrej, P&G and Johnson & Johnson have started to
have a strong consumer base, but Red Orange Organic's product features distribution and
promotional activities will create high brand loyalty for which it will be a strong market share
holder soon after developing its IMC plan. Red Orange Organic, with the aid of its heavy
promotional activities and unique feature of being herbal, will be able to penetrate the
market. But other producers in the industry are posing a threat towards Red Orange Organic‘s
market share as they have moved towards the rural masses of the population. Red Orange
Organic is adopting niche marketing as we aim to target a particular segment and gain their
To assess the current environment of organic industry, specifically the charcoal soap industry,
and to determine the right marketing schemes in order for the business project to be
profitable and successful.
Being the benchmark of excellence in producing high-quality organic soaps.
To produce organic soaps that are well-formulated, checked and tested. The organic
soaps must be really effective relative to what is being said on its label.
The main objective of ROO enterprise is to produce soaps that are not only used for
cleansing the skin but also for absorbing all the impurities embedded in it.
Give the customers a perception of smoothness, calmness and relaxation, which is
what they will feel after they apply the product.
To establish the image of a health and wellness and environment-friendly company.
Presently, Indian organic farming market is estimated at ₹ 2,500 crore. With a steady
annual growth of 40% on rising population, higher disposable incomes and rising
health consciousness, India's organic farming industry is set to grow to ₹ 10,000 crore,
according to Associated Chambers of Commerce and Industry of India (ASSOCHAM)
It has been a part of human nature to prefer healthier products with lesser
preservatives and synthetic materials added.
Organic farming can create millions of jobs in the agricultural sector as it can spur
over 30 per cent of employment per hectare as against non-organic farming and this
ratio can further increase if on-farm processing, value addition, packaging and direct
marketing are considered, says an independent research of ASSOCHAM.
The global organic market currently stands at around 65 billion dollars and is growing
at a robust annual rate of over 5 billion dollars.
Size of the Industry
The Indian Soap Industry includes about 700 companies with combined annual revenue of
about $17 billion. Major companies in this industry include divisions of P&G, Unilever, and Dial.
The Indian Soap Industry is highly concentrated with the top 50 companies holding almost
90% of the market. The market size of global soap and detergent market size was estimated
to be around 31M tonne in 2004, which is estimated to grow to 33M tonne in the coming
years. Toilet soaps account for more than 10% of the total market of soap and detergents. In
Asia, the countries like China and India are showing rapid growth in the toilet soap section.
Market share of body wash was estimated to be around 2% in 2004 and is showing signs of
healthy growth in these markets. India's soap market is ₹ 41.75 billion.
Indian Soap Industry volume is ₹ 4,800-crore. For the purpose of gaining a competitive edge,
Indian companies are now relaunching their brands with value-additions to woo consumers
across India. For instance, Hindustan Unilever Ltd (HUL) has recently launched a host of toilet
soap brands which include Lifebuoy, Lux, Breeze and Liril-with value additions. The aim is to
meet the evolving needs of customers.
Worldwide compound annual growth rate (CAGR) in 2005-2008 was observed as 2%.
The forecast for 2010-2015, the soap production would increase especially in the US
(First Research, 2008).
The growth will also happen in Asia with a total of 50% of the global demand. South
East Asia has a huge potential to grow further.
In South Asian countries, 4.2% CAGR was recorded between 2004 and 2009
Today in the Indian economy the popular segments
are 4/5ths of the entire soaps market. The
penetration level of toilet soaps is 88.6%. Indian per
capita consumption of soap is at 460 Gms per annum,
while in Brazil it is at 1,100 grams per annum. In India,
available stores of soaps are five million retail stores,
out of which, 3.75 million retail stores are in the rural
areas. 70% of India's population resides in the rural
areas and around 50% of the soaps are sold in the
Frequency of purchase
Target Segment: Urban and suburban upper and upper middle class who are health
conscious as well as skin conscious. Diverse products are provided for all skin types.
Soap products are specialized into cleansing, moisturizing, scenting, antibacterial and
Johnson & Johnson
Herbal so skin friendly The product is not widely known to all
Available for all skin types A lot of substitute products
No age restriction Limited penetration in rural market
Absence of harmful chemicals like Triclosan Resistance by those who fear using organic
High CAGR of soap market New Entrants
Growing consumer market for improved and
Top choice among organic soaps Competition from already existing medication
and organic soaps
MARKETING MIX AND STRATEGY (4P)
OUR MANTRA: "If it's good for the consumer, it's most likely good for business."
The real buzzword is organic.
‚Consumers--especially the Generation Y crowd--are happy to do away with added
hormones, antibiotics and genetic modifications‛ (Wilson, 2006).
Saponified Organic Oils of Palm, Coconut, Olive and Palm Kernel
Aloe Baby Soap
Natural Lavender Essential Oil Blend, Organic Lavender Oil, Organic Aloe Vera, Organic
Dry Skin Products:
Unscented Cocoa Butter
Organic Cocoa Butter, Organic Powdered Oatmeal, Organic Aloe Vera, Organic Rosemary
Natural Lavender Essential Oil Blend, Organic Lavender Oil, Organic Oatmeal, Organic
Oily Skin Products:
Balsam Essential Oil Blend, Organic Rosemary Extract, Mineral Pigment.
Natural Essential Oil Blend, Organic Rosemary Extract, Mineral Pigment.
Natural Skin Products:
Natural Woodspice Essential Oil Blend, Organic Cinnamon, Organic Rosemary Extract.
Natural Rosemary Essential Oil Blend, Organic Rosemary Herb, Organic Rosemary Extract.
The Production Process:
Each batch of soaps of size 8 will take 4 days to be finished with approximately 3 contact
Employing two unskilled labours, working 6 hours every day will produce 2*2*30*8
=960 soaps per month
The main target market would be customers who value attributes like natural constituents,
healthy lifestyle etc.
Trying to access every geographical market simultaneously would lead to unbearable logistics
costs. Hence, business development will be done in stages, targeting regions offering better
connectivity with accessible markets first, and then moving out into other territories in later
It can be observed that there isn’t a huge bias in terms of gender based preferences in usage
pattern. However the major user group is in the age group of 20-30 years, with substantial
chunk aged 40 years or less. However, Organic soaps have qualities which are not necessarily
changed based on age, and hence the market is consumer of varying ages, but as the major
self-sufficient user, 20-40 age group should be the prime target segment.
Product Cost Analysis
Component Quantity Price
Distilled Water 6 ounce ₹ 10
Lye 2.25 ounce ₹ 60
Olive Oil 10 ounce ₹ 60
Coconut Oil 6 ounce ₹ 7
Castor Oil 0.45 ounce ₹ 40
₹ 178/ 8 soaps(75 gm) = ₹ 22.25 per soap + packaging Rs 0.75
=₹ 23 per soap. + Unit Fixed Cost
Fixed Costs Approximation
FY 1 ₹ 4/bar
FY 2 ₹ 3/bar
FY 3 onwards ₹ 2/bar
For competitive pricing, competing products are placed in descending order of direct
Dove -₹ 35 (75gm)
Pears -₹ 30-35 (80 gm)
Mysore Sandal -₹ 30 (75gm)
Beauty soaps: LUX, Breeze -₹ 25
Lifebuoy, Dettol - ₹ 10-15
According to survey conducted for Mysore Sandal soap -
Consumers willing to buy Mysore Sandal at ₹ 30-35 : 55.3%
People buying Sandalwood soaps for fragrance and Natural oils : 46.3%
It is safe to set a price in the range of ₹ 30-37 range to compete directly with moisturizing
Better quality of…
Why do users prefer sandalwood soap?
It shows that a lot of consumers using other
regional herbal brands are doing it for perceived
benefits of natural elements, which is strength
of our products.
Marketing communication mix:
Advertising: Through print media(newspaper/Magazine), Broadcast
media(Television/Movie Halls), Display media(Billboards)
Events: Company sponsored activities and events to create brand related interactions
Direct marketing: Use of internet to directly contact customers through mails.
Interactive Marketing: online activities and programs designed to create awareness
Sales and Expansion Strategy
FY1/Q1-2 Free Samples, incentives to retailers, travel
expenses to build contacts.
FY1/Q3-4 Substantial but lesser overhead cost of promotion
for existing channels.
Expansion into newer territories, with similar tactics
for new channels as FY1 channels
FY5/Q17-20 Focus on consolidation and breaking even over
FY8/Q29-32 Expand into newer markets and organic product
Cost (x ₹ 1000) Cum
FY1 12 972 972 420 420 -552 -552 972
FY2 24 1248 2220 840 1260 -408 -960 828
FY3 40 1500 3720 1400 2660 -100 -1060 660
FY4 60 1875 5595 2100 4760 +225 -835 475
FY5 80 2300 7895 2800 7560 +500 -335 200
FY6 90 2587.5 10482.5 3150 10710 +562.5 +227.5
FY7 100 2875 13357.5 3500 14210 +625 +177.5
FY8 100 3125 17217.5 3500 17710 +375 +552.5
*Assumption of double sales volumes is approximation of intra-year sales expansions.
Calculating minimum investments needed to sustain until break even at FY6 using
investments needed in each FY
Better quality of herbal oil
Why do users prefer sandalwood soap?
Gender of users for Sandalwood Soap
Low Reasonable High Very High
Consumer perception about price of Mysore sandal
Kind of soap people prefer to use