RB HARPIC CASE STUDY ANALYSIS

Tarun Agrawal

U108058@stu.ximb.ac.in, +91 9437327411

Sujit Kumar Sahoo

U108111@stu.ximb.ac.in, +91 9777578075

XAVIER INSTITUTE OF MANAGEMENT, BHUBANESWAR

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Reckitt Benckiser Case Analysis

 Executive Summary

Harpic has been the market leader in the lav care market for decades. However Harpic is recent times is
facing the following problems

1) Stiff competition from national and international players which are eating away Harpic’s market share

2) Challenges of product penetration and creating a more robust distribution network specially in the rural
market

3) To spend the marketing budget either for branding or mass media campaigning or rather invest the
same in reaching out to more and more retailers

4) New competitive activity from private labels

The analysis has presented the situation analysis of the product market Harpic operates in. It also
presents an analysis on the nature and extend of demand. Further it explores the key problems and
oppurtunities of product market in general and the brand “Harpic” in particular with the help of various
tools such as the BCG matrix, GE matrix, Porters Five Forces Model and Swot Analysis.

The analysis also infers that distribution and price are the two chief drivers of this product market in
recent times and hence Harpic would do well to focus on these parameters more than branding efforts.
There is a huge untapped potential in terms of institutional selling. With the introduction os eco-friendly
toilet cleaners ( Harpic- green), institutional selling can be given a push to widen as corporate and
governments across the country are looking to contribute towards the nature.

The packaging of Harpic sachets has been suggested a change, and distribution models have been
described in the analysis to reach huge untapped rural market and increase product penetration. The
positioning of the flushmatic has been suggested in a subtle manner to fight the private labels in modern
trade and increase usage of the same.

Reckitt Benckiser Case Analysis

INTRODUCTION:

Harpic, a brand owned by Reckitt Benckiser, was launched in England and has been
extended to more than 47 countries. It was launched in India 25 years back and was the
first brand to offer lavatory cleaning products. The concept was pretty new then and hence
it didn’t take off. But the product category has become more attractive in the recent past
and more players are coming in to get a slice in this market. Harpic is still leading the
market by far and has become synonymous to the toilet cleaner category. The awareness
and relevance level of the brand is pretty high.

Inspire of such a strong market presence and history of creating the product category itself,
Harpic is lately facing many problems in terms of the market share, fall in sales (relative)
and increase in competition from national and international players.

SITUATION ANALYSIS:

Nature of Demand:

How do buyers currently go about buying Toilet Cleaner Products?

As we understand from the case, the product is a Low involvement product. This is because
customer does not seek much overt information for such products. They are usually aware of the
benefits offered and about the top brands in the market. We see that only 2 players Harpic and
Domex are major players in the market and hence the consumer has to make an easy choice.

The buyer would usually go to specific shops such as general stores to buy the product. We feel this
is because it is a low involvement product and availability of the particular brand is the key, as the
buyer can easily switch to the competitor brands. Brand Loyalty is also low. We can infer this from
the case as we see that all the competitor brand have been able to eat the market share of Harpic
with sales promotional offers. Domex did this with reduction in their price, Sanifresh and other
private labels offered similar promotional offers to attract consumer.

The purchase decision for such products is mostly planned and hence mass media communications
are important to a certain extent. The other sources are the door to door campaigns. However the
purchase decision for a particular brand can be made both at home or at the point of sale (which
justifies the rise in sales of private label brands). This implies the distribution and availability and
point of sale promotions of the product is critical. In the Indian household usually the housewife or
the maid is primary purchase decision maker for this product category.
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Reckitt Benckiser Case Analysis

 ROSSITER PERCY GRID

Positive Reinforcement

LOW
LOI HIGH LOI

Negative Reinforcement
Product placement on Rossiter Percy Grid, which explains the current buying behavior of
consumers and defines the current advertising strategies by the brands

Indian customers are price sensitive towards toilet cleaners segment. Harpic is priced at Rs. 52 for
500 ml which is the highest in the entire category which leaves an entry point for a smaller player.
We can say that Harpic which is the market leader, it is not only because of its brand but because of
its presence/availability in more than 90% of the stores (from Exhibit 10), also we can infer that
66% stores do not have Domex (the nearest competitor) but have Harpic.

Market Segmentation:

The market can be segmented into two broad segments:

1. Households ( B2C Market)

2. Institutional Buyers (B2B Market)

The B2C Market can be further segmented as:

a. Age of the buyers ( Women in the age group 25 – 50 years)

b. Family life cycle – Married with or without children
c. Light Users (Average usage – 1 later per year)

From the case we understand the much of the marketing efforts have been focused towards
household consumers and not towards the B2B segment. Marketing efforts must be channelized
towards promoting institutional selling as well.
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Reckitt Benckiser Case Analysis

 Extend of Demand

The total size of the market by value has been given in the table below and the market
shares of the various players of the product category has been given in percentage terms

Market Share by Value 2008 2009 2010 2011 2012 CAGR

Total Toilet Cleaning
Market (In Million Rs) 1804 2164.8 2597.76 3117.312 3740.7744 20.00%
Harpic
79.40% 74.13% 68.75% 63.27% 57.79% -7.63%
Domex
10.50% 12.98% 14.56% 16.28% 18.00% 14.42%
Sanifresh
6.30% 6.62% 6.91% 7.15% 7.39% 4.07%
Kiwi Kleen
1.70% 1.84% 2.06% 2.30% 2.54% 10.56%
Others
1.60% 2.45% 3.98% 5.50% 7.02% 44.73%
Bref
0.50% 1.09% 1.64% 2.20% 2.76% 53.28%
Mr. Muscle
0.00% 0.90% 2.10% 3.30% 4.50%
Note: 2009-2012 data shown above are forecasted values based on annexure 9 of the case. Also assuming the product
category growth rate to be constant at 20% for the next four years.

The above table clearly indicates that if the recent trends of the past few quarters continue, then
the forecasted future of Harpic looks gloomy. Harpic has been forecasted to degrow at rate of
7.63% (CAGR). All the competitors will be eating away the market share of the Market Leader.

The options available for the Market Leader (Harpic) are

1) Product Innovation (that is continuously attacking itself to develop better product or product
formats)
2) Widen the size of the cake and not the slice.
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Reckitt Benckiser Case Analysis

Value/Volume % Change in Market % Change In No of stores % Change in
Ratio 2008 2007 Share stocking the Brand price
Total Toilet
Cleaning Market ( 19.9
Rs/Litre) 99.4 96.6 11.69% 2.87%
Harpic
(Rs/Litre) -0.6
104.1 100.0 2.76% 4.12%
Sanifresh
(Rs/Litre) -0.4
83.5 92.5 -19.71% -9.72%
Kiwi Kleen
(Rs/Litre) -0.7
120.7 110.4 NA 9.30%
Domex
(Rs/Litre) 2.3
80.9 74.7 18.99% 8.24%
Note: The above table has been calculated from annexure 2, annexure 3 and annexure 10 of the case.

We note from the table above that tough Domes has increased the price of the product, it still
gains market share, as the brand is available at greater number of stores. On the contrary
Sanifresh has reduced its prices but has reached out to lower number of stores (relatively)
and hence its market share has decreased.

The above table shows that the product category is dependent chiefly on two parameters

a) Distribution and availability ( no of stores stocking the brand)

b) Price of the Brand

So the strategy for Harpic is to make the brand available at more and more number of stores
by probably cutting on mass media promotion. Also the point of sale promotions should be
used at purchase decisions are affected by it. The Brand is already an established brand, so
the focus should on making the distribution more robust rather than spending money on
branding. Harpic can also look for giving higher margins to the retailers to enable and ask
them to push Harpic over Domex and other competitor products. Since it enjoys a higher
value/volume ratio, and it would cut down on the advertising budget, it is always a good
option in the short run to give higher margin to retailers.
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Reckitt Benckiser Case Analysis

Problems and Opportunities

BCG MATRIX

Harpic is a STAR according to the BCG matrix as the market growth rate is very high(>10%) and
the market share for Harpic is high.

PRODUCT LIFE CYCLE

The product is in growth phase now even after 25 years of presence in the market. The initial
introduction phase was very long because the market was not ready to graduate to the next level.
But now in last 5-6 years we have seen significant rise in the sales volume and hence it’s in the
middle of its growth phase offering huge untapped potential.

Reckitt Benckiser Case Analysis

 PORTER’S FIVE FORCES:

Supplier Power •The product as mentioned is easy to manufacture and as not many
players the supplier power is LOW

Threat of substitutes •Is very high because of products like phenyl, detergent, acid which are
relatively cheaper.

Buyer’s Power •Is medium as they can have many options available but for some buyers
the product has become a necessity.

Barrier’s to entry •LOW and we see rise in number of small players

Competitive Rivalry •HIGH and we have seen in the case many methods adopted by the
companies (like price cuts, promotions etc) to gain market share.

GE MATRIX:

Based on the porter’s 5 forces we can see that the industry attractiveness is medium in this case.
The industry has tremendous growth potential but also has lots of new players coming in. Harpic as
a company has very high competitive strength and has dominated the market since the beginning.
Hence it’s worth growth/investing.

Reckitt Benckiser Case Analysis

 Strengths:
Weakness:
- Product category creator (Watsonian First)
- Relatively high price
-Market Leader
-Less Usage levels
-Good distribution and stores covered

SWOT
Opputunities: Threats:
-Still major portion of the market not tapped
- Increase in local players
-Venture into newer offerings
-Increase in low cost private labels
-Covering the rural and less developed
towns -Strong marketing by competitors

Reckitt Benckiser Case Analysis

Evaluation of Alternative Marketing Programs

A) Objectives for Harpic

1) To maintain or increase market share of Harpic

2) To increase penetration in the rural market.
3) To increase institutional selling

ALTERNATIVES:

Increasing usage levels:

The usage level of 3-4 times a month is very low. But considering the Indian market where Harpic is
still used along with traditional cleaning agents (phenyl, acid) the number is not a surprise. All the
marketing campaigns till now are mostly highlighting the various benefits of toilet cleaners. Harpic
as per the consumer research is offering cleaner looking toilets, germ fighting and bad odour
removal. This has been done for the past 6-7 years after the door to door campaign. Also as per
Annexure-4, 60 % of the people using Squat and 67% of the people using Western, clean their
toilets on a daily basis.

We feel that this is the right time when along with this the media campaign should speak about the
usage pattern. Toilet cleaning of 4 times a month on average is pretty low and the company should
try and educate the customers to increase it to 6-8 times a month. The campaign should talk about
the benefits and telling the customers that the product should be used in 3-4 days for better
protection. This will increase the sales level to 1.5 -2 times per year.

The problem could be that directly telling the consumers might CREATE wrong impressions about
the quality and hence the company can convey the same in the packaging (describing way to use).

Use of Sachets:

We see that around 90% of the consumption of toilet cleaners is in the urban area (rural areas
100,000 out of 1 million). This is a very big untapped market in India. Also the price of the product
and its availability in packs of 200 ml and 500 ml are hindrance to trial. The customers who have
relatively less usage levels, avoid going for a specialized cleaner and hence stick to phenyl,
detergents etc. Also if we see the stores which stock Harpic currently, are either large or medium
sized general stores. But the small sized stores do not have the working capital to invest in a whole
pack of Harpic.

Harpic had introduced sachets of 35ml each at Rs.4 few years back. But it was not distributed and
marketed as well. The sachets concept was not tried in many smaller markets and hence did not
boost the sales. Rural markets where penetration levels are very low are the best market for sachet.
The sales can be made through the small traditional stores.
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Reckitt Benckiser Case Analysis

The requisite calculations have been shown below. The margin per sachet comes to be Rs. 0.42,
which is ~ 15%. The product can be distributed using the large network of RB easily across all
regions. In rural regions this sachets can be sold through the small kirana stores, the local bazaars
and other tea/snack stalls which are widely distributed.

It is still better than the Rs. 4 pack and the consumer will not have to more than what he wants for a
single use.

Cost-Benefit for Sachets

Average number of consumptions per
month 4
Average total consumption per year 1 litre
Total number of uses per year 48
Avg total consumption in one use 20.83333 ml
Selling Price of 500 ml(taking as Cost) 52 Rs
Cost per ml 0.104 Rs
Cost for 20 ml 2.08
Packaging and other cost (assumption) 0.5 Rs
Selling price per sachet (suggested) 3 Rs
Margin (apart from cost taken as Rs.52) 0.42(15%) Rs. for 20 ml

Institutional Selling:

As discussed earlier one of the other major segment which has been overlooked is the Institutional
Selling. We are suggesting that along with Harpic which is sold to households, they can also target
organizations and corporate with more customized products.

Organizations as big as Indian Railways which requires toilet cleaning in such a huge scale on a
daily basis can be primary targets. They use cleaning agents which are low costs and yet very
effective. Harpic can come out with a similar product, we call it HARPIC-C, which will be customized
according to the needs and requirements of railways. Same can be done by entering into strategic
partnership with local rural Panchayati and municipalities. For further details about institutional
selling products please refer to Table A below.
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Reckitt Benckiser Case Analysis

 CONCLUSION:

Table A

Marketing mix/Program
Product Decisions Strategy Reasoning
Though slightly more costly than the conventional product
but can be sold to institutions like corporate offices,
New eco friendly toilet cleaner which government offices and airports which are more and more
uses safer plant based ingredients concerned about environment and would like to follow the
a) Develop New including natural oils of citrus, green way and sustainable living mantra. Brand name -
Product sassafras and pine etc "Harpic Green"
b) Change current The current sachet size should be To facilitate one time use and improve usage in Rural
products changed Markets in particular
The consumer should be convinced that the flushmatic
after being put in the cistern will work for a large number
Positioning of flushmatic should be of usages/flushes which gives him better or equivalent
c) Product Positioning changed slightly value for money than traditional toilet cleaner bottles
It’s already an established brand leader and more ROI in
d) Branding Go Slow other initiatives as mentioned above

Distribution Decisions Strategy Reasoning

a) Intensity of
distribution More intensive than exclusive As explained above
To cater to the urban household markets, rural household
b) Multiple Channels Yes, multiple channels should be tried and institutions
More in case of institutional selling
c) Degree of Channel and has to be less in cases of B2C
Directness consumers

Promotion decisions Strategy Reasoning

a) Mass Media Go Slow/ Spend Less Established Brand. Mass media is more costly
Urban households are increasingly aware of the toilet
b) Door to Door cleaning products. The challenges and opportunities exist
campaign will work more now in rural areas in the rural arena
c) Point of
sale/purchase
promotion Should be more Has been inferred above
Tie up with rural Panchayati and tier With the usage of affordable packs by the school
c) New Channels III and tier IV town municipalities to authorities, the villagers will get aware of this products
of Distribution distribute Harpic sachets in primary and this is expected to induce trial and usage
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Reckitt Benckiser Case Analysis

 and secondary schools
Price Decisions Strategy
a) Price level Maintain or reduce slightly
Can be tried in some geographical
regions based on purchasing power of
b) Price variation the state/geographic region
More margins to retailers can be an
c) Margins option in the short run
Reasoning
As the product category is price sensitive, prices can be
slashed for rural or low income per capita regions to
enhance usage and product penetration
To increase retailer push and thus maintain your market
share for the time being
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Reckitt Benckiser Case Analysis