Question of the Report

Identify a Bangladeshi product in toiletries industry which is based on cost leadership strategy and
investigate how different the product is, comparing with its Bangladeshi alternatives. After identifying
the product, you need to do PEST and Five Forces model analysis for the specific industry and have to
identify any strategic gap.

Answer of the Question

Industry: Toiletries
Strategy: Cost Leadership
Product: Body Soap
Company: Keya Cosmetics Limited

Company Profile

Keya Group (KG) is one of the most well known conglomerates in Bangladesh. Boasting 3
spinning mills, KG holds a leading po sition in the manufacturing and exporting of knitted
garments. At present Keya Group operates 6 industries and employs more than 10000
people. For more than 20 years KG has proudly made its presence felt, both in
Bangladesh and abroad in countries like Eur ope, Australia, China, USA and other
countries in the Southeast Asian region. .

Incorporated in the year 1996, Keya Cosmetics Ltd is one of the leading cosmetics
manufacturing companies in Bangladesh, and a popular brand name for superior quality
products available at affordable prices. With an objective to never compromise with
quality, Keya Cosmetics Ltd. has established state -of-the-art facilities, equipped with the
latest European machinery, and also ensures that each stage of production undergoes
rigorous testing and quality assurance.
Products of Keya Cosmetics Limited

 Keya super beauty soap

 Keya glycerin laundry soap
 Keya ball soap
 Keya ice magic powder
 Keya lifeguard soap
 Keya active tooth paste
 Keya prickly heat powder
 Keya saving cream
 Keya petroleum jelly
 Keya glycerin
 Keya lip gel
 Product Introduction
Brand Name:
Keya beauty soap its sister unit Keya Cosmetics Limited. It has strong brand image in urban area.
Quality Level:
The quality of Keya super beauty soap is very standard. Key beauty soap is made through the use of
vegetable fat.
Design:
It is oval shape soap. It uses simple design on the soap. They use their logo on surface of the soap.
Packaging:
Keya did not use any kinds of human picture on their packet. But packet is simply gorgeous. But
few messages are written on packet like a 100% Halal soap and 100% vegetable fat. After all it is
beauty care soap.

Differentiation:

Category Meril Keya Tibet Savlon Cosco

Price Low Moderate Low High Low
Quality High Moderate Moderate Moderate Low
Portfolio 5 types 3 types 4 type 3 types 1 type
Resources High Moderate Moderate Moderate Very low
Distribution Intensive Selective Selective Selective Selective
ATL and BTL High Low Low Moderate Very low
Target Urban, sub Urban, sub Sub urban, Urban, sub Rural, urban
urban, middle urban, middle middle class, urban, middle restaurant
class, rural, class, rural rural class, rural
beauty
conscious
women

Price and Quality:

“Meril” under Square Toiletries Limited that follows cost leadership strategy. Meril has been very
popular among the urban, sub urban, middle income, rural people, beauty conscious women of the
country for ages because of its high quality product in lowest possible cost. Though Meril is the pioneer
of the Bangladeshi toiletries, meril soap was introduced in Bangladesh at October,2007. In a very short
time period this product made a very good identity into the customers’ mind. Meril Milk soap is 6
times more moisture than others and it is helpful for young and fresh looking skin.
 High Savlon

Price Keya

Meril
Tibet
Low Cosco

Low Quality High

Figure: Positioning Map

Portfolio:

Name Weight Price

Meril Milk & Beli Soap 100gm BDT 30
Meril Milk & Blackberry soap 100gm BDT 30
Meril Milk & Kiwi Soap 100gm BDT 30
Meril Milk & Pomegrante Soap 100gm BDT 30
Meril Milk Soap Bar 100gm BDT 30
Resources:

Resources of Meril Soap are given below:

Human Resources: Most qualified and capable human capitals are recruited in Square Toiletries
Limited as it is one of the leading toiletries brands in Bangladesh.

Financial Resources: Square Toiletries is financially solvent as it is a private limited company and its
revenue is higher than any other local toiletries company.

Information Resources: Square toiletries R&D gather huge information about market and bring new
quality product as per customer demand.

Physical Resources: Square toiletries have vast physical resources and updated automated machineries
that create core competencies.

Distribution Channel:

Square toiletries follow intensive distribution strategy .Intensive distribution mainly means distribution
on a large-scale and displaying the product in as many ways and places as possible so that the
customer sells in high volume due to large scale distribution.

ATL and BTL:

Square Toiletries do ATL communication to build the brand and inform the customers about the
product through advertising in TV, radio, social media, printing paper, digital marketing etc.

Square Toiletries do BTL communication through outdoor advertising is usually done in public places
and are constantly on display, have a greater (and more targeted) reach depending on the locations.
They include Flags, Banners, Wraps, Billboards, etc.
Market Share: Market share of local soap industry

Soap Market Share

2%
7%
38% Meril
23%
Keya
Tibet

12% Savlon
18% Cosco
Others

Source: Report on “Competition Scenerio in Bangladesh”.

-Prepared by Bangladesh Enterprise Institute

PEST Analysis:
A PEST (Political, Economic, Social and Technological) analysis is a major part of the environmental
scanning section of strategic management and it is used by companies during market research and
strategic analysis. Using a PEST analysis helps a business to understand various macro environmental
factors that they need to take into consideration when determining the decline or growth of a
particular market.

PEST factors of MERIL:

Political factors:
Politically MERIL is facing a problem on the import of raw materials. Government has banned the
import of tallow which is one of the basic requirements for soap. Also there is not so much problem
for the ALFRESHSOAP so that it does not create any impact that can affect the product. There has been
more competition between organized and unorganized sector. The political scenario is changing day by
day and new entrants are posing on threat by giving concession on tax.
Economic Factors:
The cost of soaps in Bangladesh is very high as compared to other countries like India Indonesia. This is
mainly accompanied by the rise in cost of import duties. The import duty rates have increased from
20% to 35% and the excise rates have also increased at a speed of 16% that forms a major portion of
the cost. MERIL has been the number one soap in Bangladesh with the highest market share and
strong equity among consumers, Meril is the market leader with a share of around 38% among the
local company.

Social Factors:
The need for hygiene and personal skin care is very important nowadays with the increasing disposable
income levels and rise in education. Being a member of the World Trade Organization it is very
important to maintain the necessity of skin care and personal affection towards health. Therefore
MERIL targets the audience to go for Premium Soaps by enhancing the aspiration levels. NGOs towards
inefficient PHC- primary health center and fragmented approach of government alleviate the problem.
The rate at which advertising medias like cable TV and satellite are growing to give a emphasis to the
market penetration initiatives of other competitors in the market.

Technological Factors:
The industry should focus on technology intensive opportunities rather being a capital intensive
industry. The company should focus on manufacturing premium soap comparing with other soaps. The
company should also focus in logistics management where distribution and marketing plays a pivotal
role. Also the company emphasizes on Electronic Customer Relationship Management (E-CRM) and
Supply Chain Management. The company is also trying to cope up with small stores and small retailers.
This company should cater to high income group as it is expected to rise by more 100 percent.

Porter’s 5 Forces for toiletries industry (MERIL SOAP):

Threat of new entrants

There are many companies right now that are entering the cosmetics and toiletries industry. There are
new competitors constantly entering in this industry for this reason they gain market share and
existing company louse their market share. Because this is not an industry considered to have high
barriers, it is not seen difficult for a new firm to step into the industry, therefore, it makes the threat
of new entrants high. it makes it easier for new firms to enter the industry which lead to increased
competition.
Bargaining power of buyers
Consumers always want to buy quality products at a cheaper rate. Since the price level of MERIL is low,
consumers feel interested in buying MERIL and other brands also offer moderate quality product in
soap category at a cheaper rate. So buyers have high bargaining power which somehow causes Meril
to lose some market share.

Bargaining power of suppliers

There are plenty of suppliers in the market to supply raw materials to soap producing companies and
they compete among each other. As a result of which MERIL enjoys the facility to get suppliers
providing good quality raw materials at a cheaper rate. So the analysis of this situation says that
bargaining power of suppliers is very low.

Threat of substitute products

The fourth force is the threat of substitute products which is extremely high in this industry. There are
direct and indirect substitutes for MERIL available in the market. Among them Face wash and Body
wash are two major threats for MERIL as substitutes. As people are getting more conscious of their skin
and health, they are focusing on most appropriate things that they should be using and this is posing
MERIL a huge threat in terms of revenue and also compromising its market share. Another threat is the
adoption of soaps from other brands due to premium price that MERIL charges on its consumers.

Rivalry among existing competitors

The brand MERIL has got huge market share in and Bangladesh. If we focus on the other brands in
soap category in Bangladesh,we can see that there are lots of strong brands present in the market.
Keya, Savlon, Tibet, Cosco and others soap so that is how it’s competition level becomes even tougher.
Needless to say that MERIL is the market leader in Bangladesh, though Keya,Savlon and other
competitors lead to a little bit decline in MERIL’s profit level. However, MERIL is earning revenue and
doing business in a lot of countries around the world. So if we simplify it from every aspect, MERIL’s
degree of rivalry is really high

Strategic Gap:

Though Meril is a local brand but still they focus only girls. So, it’s like gender discrimination. MERIL is
known as a perfumed soap or beauty soap and that’s why they prefer girls rather than boys. But the
true fact is boys and girls everyone wants to look beautiful.
As an example we can say about Savlon soap. It is a soap which kills bacteria. But Savlon use male,
female & children in their advertisement. They don’t emphasis on only one group. So, I think this is the
strategic gap of MERIL soap.
There is another strategic gap. In Bangladesh most of the people are Muslim who wants to use halal
soap. But MERIL never says that it is a halal soap.On the other hand Aeromatic was a local brand but
still they always say that it is a halal soap.

Another strategic gap is liquid body soap which segment is still untouched by local soap company that
may help to create competitive advantages if they can bring it.

Strategic gap is that there is untouched area of ayurvedic variant or kid’s special soap. Meril can
produce these unseen products in the market.

References:

www.wikipedia.org

http://squaretoiletries.com/meril-splash-persona-inspiring-freshness/

http://squaretoiletries.com/product/meril-milk/

http://www.mintel.com/blog/personal-care-market-news/soap-innovation-4-innovative-ways-bar-
soap-is-revolutionising-bath-time

http://jbbc.co.jp/wp-content/uploads/2014/08/A-Report-on-Cosmetics-Toiletries-Industry-of-
bangladesh.pdf

http://www.assignmentpoint.com/business/marketing-business/a-report-on-marketing-strategy-of-
square.html

http://squaretoiletries.com/meril-splash-persona-inspiring-freshness/

http://www.assignmentpoint.com/business/marketing-business/market-analysis-lux.html
www.unilever.com/ourbrands/personalcare/.lux.asp

www.unilever.com.bd

Report on “Competition Scenerio in Bangladesh”.

-Prepared by Bangladesh Enterprise Institute