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Date Submitted: 03/19/2016 09:37 PM
MKTA - 007
Detergent Wars in India
We recognise the challenge of intensified competition from both low-priced players as well as
international companies. Most recently, P&G has reduced prices and increased aggression in
laundry. Our response, when faced with such challenges, will be to face them ‘unblinkingly,’ with
the level of investment required to both, protect and grow our market positions.
-M. S. Banga, Non-Executive Chairman, HLL.1
Introduction
C
op
y
On the 10th of March 2004, FMCG major Hindustan Lever Ltd. (HLL), the Indian subsidiary of
Unilever, convened an urgent meeting of its dealers. HLL wanted to discuss how to retain the
volumes and market shares in its fabric wash business in view of the price war, which Procter &
Gamble (P&G) had unleashed. In the first week of March 2004, P&G India had drastically
slashed the prices of its detergents - Ariel and Tide. P&G had reduced the price of a 500 gram
pack of Ariel from Rs 70 to Rs 50 - a drop of 28 % and the price of a 500 gram pack of Tide from
Rs 43 to Rs 23 - a fall of 45 %. P&G’s detergents were expected to reach customers across India
within a week of announcement of the price cuts. Within two days, in swift retaliation, HLL
slashed the price of its premium brand Surf Excel from Rs 70 to Rs 50 and the price of Surf Excel
Blue from Rs 50 to Rs 38 for 500 grams. HLL tried to ensure that the products reached the retail
shelves within a day or two of HLL’s announcement, thus countering P&G’s first mover
advantage.
Background Note
N
ot
P&G and HLL were not the only major players in the Indian detergent market. Henkel and Nirma
were also becoming very aggressive. With a shakeout looking imminent, analysts wondered who
would emerge the winner in the long run.
o
The Indian Detergent Market
D
The Indian fabric wash products market was a highly fragmented one. There was a sizeable
unorganized sector. Of the 23 lakh-tonne market, laundry soaps and...