While the price hike comes as a relief for beleaguered soaps and detergents business, competition will negate

any
positive impact.

After competing neck to neck with Procter and Gamble’s (P&G’s) rival brand – Tide – for several months, Hindustan
Unilever (HUL) has initiated price hikes in detergents category while raising prices of Rin by 8% (new stocks are yet
to reach many markets). The company is expected to follow suit even for its other detergent brands (including mass
market brand Wheel) and cakes.

Analysts do not fear any major impact on its volumes as even P&G has indirectly hiked prices by 12% of Tide
(reduced grammage) and is expected to extend this to its mass market brand (Tide Naturals). Recently, HUL had
raised prices (first time in 20 months) of Lifebuoy (Re 1) and Lux (reduced grammage) soaps by 7-10% followed by
other non-core soap brands such as Liril, Dove and Pears.

HUL’s soaps and detergents (S&D) business, contributing about 47% of total revenues but only 35% to profitability,
has had a tough year in FY10 wherein sales inched up by 1.5% to Rs 8266 crore, but profit before interest and tax
(PBIT) margin declining by 100 basis points (bps) to 14.3%. The pain continued even in June 2010 quarter wherein
margins in the segment dropped further. While S&D witnessed a marginal sales growth of 2.4% year-on-year (helped
partly due to a double digit volume growth), PBIT margin had a free fall of 624 bps to 11 %.

According to reports, prices of linear alkyl benzene, a key raw material used in detergents, following by palm oil and
HDPE are showing an upward trend and threaten to erode margins further. Thus, this price hike will partly help to
protect margins but analysts continue to fear about the impact of competition, which will lead to limited price hikes
going ahead but higher advertising expenditure.

Recently, Jyothy Laboratories has launched its washing power Techno Bright with cricket ace Sachin Tendulkar as its
brand ambassador. Plus there are other players like Henkel India, Nirma, Fena and other regional brands besides
P&G.

However, there should be some comfort from the fact that HUL is diversified and its other relatively smaller
businesses such as personal products, ice creams, beverages and water purifier are doing relatively well with lesser
hits on margins. They should support any deterioration in bread and butter business—S&D. The outlook for the
company continues to be cautious for few more quarters and investors need to see the impact (benefits if any) of the
price hikes.

HUL’s stock is up over 1% at Rs 277.5 in trade today. The outlook for the company continues to be cautious for few
more quarters and investors need to see the impact (benefits if any) of the price hikes, analysts say.
 The Definition of a Product Portfolio Analysis
By KathleenO, eHow Contributor
updated: September 3, 2010

Product portfolio management, product lifestyle management, and product portfolio analysis all
describe the process that allows the integration of strategic analysis in regards to market
opportunities of new products.

Definition of Product Portfolio Analysis

1. The definition of product portfolio analysis is the study of each of a company's products in an
attempt to improve market performance.
Purpose of Product Portfolio Analysis
2. The benefits of product portfolios include pointing out growths in the market and
improvements made; analyzing failures and successes; setting goals and targets, as well as sales
strategies; and looking for lapses in profit which could possibly be closed.
Three Main Components
3. The three main components that comprise a product portfolio analysis include the market
share multiplier, the physical volume multiplier and volume dollar multiplier. These all aid in the
analysis of the portfolio and relate to market share.

Read more: The Definition of a Product Portfolio Analysis |

eHow.com http://www.ehow.com/facts_6924036_definition-product-portfolio-analysis.html#ixzz11PJFJOTX

Portfolio (BCG) Matrix

Marketing

In the early 1970's, BCG Matrix first propounded by Bruce Henderson of the Boston Consulting
Group.  It is also known as BCG matrix ,Boston Consulting Group Matrix, BCG Growth-Share
Matrix or Matrix Quadrants.

Using the Product Portfolio Matrix approach, a company classified all its SBUs or Products/Markets
according to Growth-Share Matrix. Therefore, it is best describe as Portfolio planning model.

 
 BCG Matrix

In this Matrix Quadrants, the plate is divided 4 categories named

 A. Star
 B. Cash Cow
 C. Question Mark
 D. Dog

The division is based on Market Share and Growth rate. A brief discussion comes follow:

A. Star: Leader [i.e. high market share] of high growth market is called star.
These SBUs are net user of cash, because they always require heavy investment to finance rapid growth and
to sustain market share. When the product comes to mature stage, then the growth slow down and they turn
to cash cow.

B. Cash Cow: Cash cows are low growth but high market share (Market leader) businesses or products.
Their high earnings, coupled with their depreciation, represent high cash inflows and they need very little in
the way of reinvestment. And thus, they are the net provider of cash. Surplus cash are used for Research and
Development and to support other SBUs that need investment.

C. Question mark: Products in a growth market with low market share are categorized as Question Mark.
Because of growth, these SBUs require a lot of cash to hold their market share and let alone to increase it. If
nothing is done to increase the market share, a Question mark will simply absorb large amount of cash in the
short run and later, as growth slow down, become a dog. Thus, unless something is done to change its
perspective, it becomes a cash trap.

Management has to decide which question marks should try to build into stars and which should be phased
out.

D. Dog: Dog are low growths, low market share SBUs. They may generate enough cash to maintain
themselves, but do not promise to be large source of cash.
Most often case, it should be liquidate and try with Question mark SBUs for investment.
Market Growth Rate and Relative Market Share play important roll in BCG Matrix. Market Growth Rate is the
measure of industry attractiveness and Relative Market Share is the measure of Competitive advantage.
Therefore, these two are most important factors to consider organizations profitability and strategic plan.

Limitations:

Though the Product Portfolio Matrix is well known to ease the way of portfolio analysis,
It has several limitations also. Here some of limitations are narrate briefly:

A. High Market Share is not the only factor to measure competitive advantage. Similarly, Market growth rate
is not the only factor to measure industry attractiveness.

B. Sometime a dog SBU used as synergy to other SBUs. i.e. a dog may help other SBUs to gain a competitive
advantage.

C. Sometimes Dogs [of a huge market] can earn even more cash as Cash Cows.

Though it has some limitations, BCG matrix is a very effective tool to viewing a corporation’s business
portfolio at a glance. And also helpful to the decision making process for allocating corporate resources.