marketing plan (Soap)


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Marketing plan of a organic soap

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marketing plan (Soap)

  1. 1. 1 MARKETING PLAN An MBA 631A Project Presented by Group 2 Deeptanshu Singh Raghav(11242) Rishikesh Mishra(11601) Sanyam Madaan(11649) Satyanshu Kumar(11659)
  2. 2. 2 INDEX Sr. No. Content Page no. 1.0 2.0 2.1 2.2 2.3 2.4 2.5 3.0 4.0 4.1 4.2 4.3 4.4 5.0 5.1 5.2 6.0 7.0 Executive summary Current Analysis Size of industry Market Trends Market Capitalization Market Segmentation Competitors SWOT Analysis Marketing Mix Product Place Price Promotion Sales Estimates Expansion Strategy Sales Forecast Appendices References 3 4 5 5 5 6 6 7 8 9 9 10 11 12 12 12 14 15
  3. 3. 3 EXECUTIVE SUMMARY 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 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 loyalty. Objective 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. Vision Being the benchmark of excellence in producing high-quality organic soaps.
  4. 4. 4 Mission  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. CURRENT SCENARIO  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.
  5. 5. 5 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. Market Trends  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 Market Capitalization 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 rural markets.
  6. 6. 6 Market Segmentation According to  Age  Gender  Income levels  Frequency of purchase  Skin type  Geographical location 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 whitening. Competitors: Major Competitors: HUL P&G Godrej India Johnson & Johnson Local competition
  7. 7. 7 SWOT ANALYSIS Strengths Weaknesses Herbal so skin friendly The product is not widely known to all consumers 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 products Opportunities Threats High CAGR of soap market New Entrants Growing consumer market for improved and alluring soaps Local competition Top choice among organic soaps Competition from already existing medication and organic soaps
  8. 8. 8 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). Product Common Elements Saponified Organic Oils of Palm, Coconut, Olive and Palm Kernel Differentiating Elements Aloe Baby Soap Natural Lavender Essential Oil Blend, Organic Lavender Oil, Organic Aloe Vera, Organic Rosemary Extract. Dry Skin Products: Unscented Cocoa Butter Organic Cocoa Butter, Organic Powdered Oatmeal, Organic Aloe Vera, Organic Rosemary Extract. Oatmeal Lavender Natural Lavender Essential Oil Blend, Organic Lavender Oil, Organic Oatmeal, Organic Rosemary Extract. Oily Skin Products: Balsam Pine Balsam Essential Oil Blend, Organic Rosemary Extract, Mineral Pigment. Blue Bar Natural Essential Oil Blend, Organic Rosemary Extract, Mineral Pigment. Natural Skin Products: Woodspice Natural Woodspice Essential Oil Blend, Organic Cinnamon, Organic Rosemary Extract. Rosemary Herb Natural Rosemary Essential Oil Blend, Organic Rosemary Herb, Organic Rosemary Extract.
  9. 9. 9 The Production Process: Each batch of soaps of size 8 will take 4 days to be finished with approximately 3 contact hours involved. Employing two unskilled labours, working 6 hours every day will produce 2*2*30*8 =960 soaps per month Placement 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 stages. 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.
  10. 10. 10 Pricing 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 Competitors’ Pricing For competitive pricing, competing products are placed in descending order of direct competition: 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 soaps.
  11. 11. 11 40.70% 4.70% 37.20% 9.10% 8.30% Quality Package Better quality of… Fragrance Brand Image Why do users prefer sandalwood soap? Promotion 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 with consumers.  Direct marketing: Use of internet to directly contact customers through mails.  Interactive Marketing: online activities and programs designed to create awareness among customers
  12. 12. 12 SALES ESTIMATES Sales and Expansion Strategy Financial Year/Quarters Strategy Expenses FY1/Q1-2 Free Samples, incentives to retailers, travel expenses to build contacts. 3x expenses (total) 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 2x FY2/Q5-8 1.5x FY3/Q9-12 1.5x FY4/Q13-16 1.25x FY5/Q17-20 Focus on consolidation and breaking even over aggressive expansion 1.15x FY6/Q21-24 1.15x FY7/Q25-28 1.15x FY8/Q29-32 Expand into newer markets and organic product lines 1.25x Sales Forecast Volum e(x100 0) Cost (x ₹ 1000) Cum Cost (x ₹ 1000) Revenue (x ₹1000) Cum Rev (x ₹1000) Profit (x ₹1000) Cum Profit (x ₹1000) Investment (x ₹1000) 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
  13. 13. 13 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 = ₹31,35,000
  14. 14. 14 40.70% 4.70% 37.20% 9.10% 8.30% Quality Package Better quality of herbal oil Fragrance Brand Image Why do users prefer sandalwood soap? 0 10 20 30 40 50 Age Group Age Group APPENDICES Males 47% Females 53% Gender of users for Sandalwood Soap 6.7% 48.6% 35.2% 9.5% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% Low Reasonable High Very High Consumer perception about price of Mysore sandal soap Chemical 30% Herbal/A yurvedic 54% Other 16% Kind of soap people prefer to use
  15. 15. 15 REFERENCES