Reckitt Benckiser Pakistan

Submitted By:
Arishah Iftikhar
M.Ahmad Arif
M.Saad Amjad
Ruhma Najam
Syeda Mahnum Hussain
Taha Bin Ijaz

Submitted To:
Sir Ali Taimur Baig

Date:
23.9.2019
Company background:
In 1823 Johann A. Benckiser founded “Benckiser”. It started out as an industrial
chemicals business. Later many different products were introduced and the diverse portfolio
helped the company grow and eventually have many different brands under its name. The parent
company is known as “Reckitt Benckiser, plc, UK.
Brands under Reckitt Benckiser are divided in two categories. Health and Hygiene Home.
Under the health category, it offers Dettol, Durex, Strepsils, Veet and Gaviscon. Under the
category of Hygiene Home, it offers Harpic, Airwick, Mortein, Vanish, Finish and Robin Blue.
Reckitt Benckiser is a manufacturing firm which manufactures non-food products and
then distributes it where ever it is required. They manufacture and market fast moving consumer
household goods and pharmaceutical products.
Vision:
RB’s vision is a world where people are healthier and live better.
Purpose:
RB’s purpose is to make a difference by giving people innovative solutions for healthier lives
and happier homes. This means they are expanding their capabilities and investing in innovation
to stay ahead of the game.
 Industry Analysis:
Intensity of industry rivalry:
The number of participants in the industry and their respective market shares are a direct
representation of the competitiveness of the industry. The intensity of competitive rivalry is high
for Reckitt Benckiser. The main competitors include P&G, Colgate Palmolive and Unilever.
These competitors offer variety of different products out of which some products are in direct
competition to Reckitt Benckiser’s products and are considered as substitutes to its products. The
company’s products share shelf space with the competitor’s products and the differentiation is
mainly based on marketing campaigns. For competitive advantage Reckitt Benckiser has patents
and trademarks for its products (Yusuf, 2011).

Bargaining power of buyers:

Bargaining power of buyers is a medium threat for Reckitt Benckiser, no single buyer is
responsible for more than 10% of their sales and the top 10 buyers only contribute to almost
3.3% of RB’s sales, so bargaining power of buyers will be considered as a medium threat to
Reckitt Benckiser as the customer base is small and most of the customers are big stores or
supermarkets for whom individual products are not that important [ CITATION Joe11 \l 1033 ]. The
company can prevent this threat by innovation. As the customers demand discounts and offers, if
Reckitt Benckiser keep on coming with new products then it will limit the bargaining power of
customers (Safdar, 2014).

Bargaining power of suppliers:

The wide range of products offered by Reckitt Benckiser and having a wide range of suppliers
for these offerings made the threat of suppliers low for Reckitt Benckiser. The threat for
bargaining power of suppliers is low for Reckitt Benckiser because they have a wide range of
suppliers both geographically and in terms of materials, because Reckitt Benckiser offers a wide
range of products (Yusuf, 2011).

Threat of new entrants:

This is a fairly low threat for Reckitt Benckiser. The company operates in a large number of
markets where there are opportunities for development[ CITATION Joe11 \l 1033 ]. Reckitt
Benckiser and its competitors enjoy economies of scale and the benefit of experience in
developing product (Safdar, 2014).
Threat of substitutes:
Reckitt Benckiser offers a wide range of products, and because of that there is always a chance
of new products to enter in the market. So, this threat is a medium threat to the company
[ CITATION Joe11 \l 1033 ].

Macro-Environment Factors
Demographic Environment
Environmental:
Reckitt Benckiser is providing environment friendly products and utilizing the renewable
resources efficiently. The products offered by Reckitt Benckiser are considered environmental
friendly because the company follows the international standards of environment strictly. They
initiated a movement towards environment awareness and aimed at reducing the carbon impacts
of their products by 20% (Bahauddin Zakaria University, 2018).
Technological:
Reckitt Benckiser uses different softwares to increase the accuracy of records in inventory, order
booking and check and balance of employee performance. Different softwares are being used for
Finance to keep the accurate records and reduce the percentage of fraud and using latest
technology with R&D and developing technology in chemical engineering. For RB, technology
is important:

 Use of state of art technology to maintain high quality.

 Sales are high due to innovation

(Bahauddin Zakaria University, 2018).

Economic Environment
The Economic downturn may not have much of an impact on the sales in developed markets.
However, in developing markets the demand in not that stable. Reckitt Benckiser Pakistan faces
the challenges of economy. For Reckitt Benckiser the concerns are:

 Taxation in Pakistan
 Economic downturn in Pakistan affecting sales
 Unstable demand in Pakistan and Bangladesh.

(Bahauddin Zakaria University, 2018).

Social Factors:
Reckitt Benckiser made efforts to improve children’s health, hygiene and social development not
only in Pakistan but all over the world. Reckitt Benckiser is doing so by:
  Their partnership with “Save the Children”.
 Promoting their project “Hope”.
 Reduce the emissions of carbon by 20%.
 Initiating a social movement for environment awareness.

(Bahauddin Zakaria University, 2018).

Cultural:
People in Pakistan have strong cultural ties and therefore they are greatly influenced by their
cultural needs and demands. Reckitt Benckiser has tried to adapt itself according to Pakistani
culture, being an international company, it has made suitable changes to go with the conditions
in Pakistan. In Pakistan, people value cleanliness as it has been declared essential in the religion.
Keeping the factor in mind they have tried to augment it by providing products that help
Pakistani people in cleanliness (Ravi Magazine, 2016).

Price:

Reckitt Benckiser aims at achieving a target level of profitability and building goodwill in the
market by their pricing strategies. The company’s price level is set enough to obtain required
revenue and profit margin to satisfy the company’s operational needs.

In setting the price, Reckitt Benckiser considers cost of manufacturing and sets a required
markup on the price. The price is set considering all relevant costs and the amount of taxes. The
price of competitor’s products does not concern Reckitt Benckiser as the company operates on a
large scale with a market share of around 85%.

Rather than using value-based or competition-based pricing, Reckitt Benckiser is currently using
the cost-based pricing principle in which the company considers the manufacturing cost and sets
the price by putting a markup profit on the cost incurred.
The price for Reckitt Benckiser’s products varies at different stores. For instance, the price of

products at Metro and Carrefour is lower as compared to the price at Al-fatah and other local

stores. The price is low at Metro and Carrefour because Reckitt Benckiser delivers them their

products directly due to which there is no cost of any third party. While if we consider Al-Fatah

and other local stores, the price for products is high because there is an involvement of a third

party which delivers the products due to which there is an increase in cost and hence the price is

kept higher.

Supply Chain:

Hygiene homes of Reckitt Benckiser sell a total of 78 articles in Pakistan out of which 47 articles
are produced locally that is almost 60 percent of total production, the rest of the products are
imported. The first determinant of Reckitt’s supply chain is whether the product is produced
locally or is imported. The majority of market share of locally produced products are Cherry,
Harpic and Robbin. The rest forty percent is imported from different parts of the world (See
Appendix A).
NPD (New product Development) manager is responsible for managing the supply chain of
imported products, which is relatively an easy job because they are not concerned with what raw
materials or production plant is being used, they just place their orders with production plant of
that specific country. An order is placed with that country’s production plant according to the
demand.

Demand planner is responsible for managing the supply chain of that 60 percent of total products
that are produced locally. The process begins with production, and the chain is started with the
vendors supplying the raw materials, then comes the Reckitt Benckiser’s own production plant or
third’s party production plant or supplier, then it goes to warehouse and logistics team and finally
the sales team.

The person managing the raw materials is called Sourcing Manager in Reckitt Benckiser who is
part of finance team. He is responsible for placing orders with the vendors and reports to another
finance team member known as the Supply Controller. The Supply controller works with
Research and Development and Quality team and managers of respective teams provides Supply
Controller with the list of required materials and the quantity. The Supply Controller then make
sure that the raw materials are purchased at right price, having right quality and are delivered at
the right time. Once the raw materials are procured, they are moved to either Reckitt Benckiser’s
production plant in Karachi or to third party production plant. These third-party plants are Nimal,
Khatoon Soap and Candyland. The production team at Reckitt Benckiser’s production plant
mainly consists of chemical engineers along with quality management and supervisors. And for
third party’s plant, a team of quality management are given the task to supervise and make sure
that the products are being produced at the right quality. These production plants are given a
yearly demand calendar by the demand controller, this calendar contains the expected quantity of
products to be produced during the year.

After the production, a designated area at the factories which is the warehouse is used to store the
products. After 2 days, the products are shifted to Distribution Centre (DC). There are 3 DCs of
Reckitt Benckiser in Pakistan in Lahore, Karachi and Multan and the stocks are shifted to these
DCs according to the demand data provided by the sales team. These 3 Distribution Centers are
not entirely owned by Reckitt Benckiser, they are shared with Unilever, and theses warehouses
are owned by Amirates Logistics. One warehouse manager and two dispatchers are appointed at
each of these warehouses by Reckitt Benckiser. A plan is given by the warehouse manager to the
dispatchers who are responsible for making the delivery on time according to that plan and a
software called JD Edwards is used by the company to manage the logistics.

Outsourcing:

For Reckitt Benckiser, few of their product’s manufacturing is outsourced. RB pays Nimal,
Khatoon Soap and Candyland to manufacture its products. Products that are outsourced include
Harpic, Robin, Dettol soap and Strepsils. All these products are made in Pakistan. RB outsources
these products because these are relatively easier to make, and are cheaper to outsource.

Forecasting:

Reckitt Benckiser with their fast-moving consumer goods uses short range forecast in order to

forecast their sales. Short range forecast ranges from 3 month to 1 year. Companies use either

exponential smoothing or weighted moving average in order to forecast their sales. In case of

Reckitt Benckiser, they don’t use any of these to forecast their sales. During the interview of

regional manager of Reckitt Benckiser, according to him Reckitt Benckiser does not use any

formula to forecast their sales. According to him their forecasting is simply based on predictions.

For instance, if their last year sales were 20 million rupees then their prediction for the next year

sales will be 20.1 or 20.2 million rupees.

Sales to Metro in May: 1524034

Sales to Metro in June: 633187.6
Forecast for July: 833270

Promotions:

In case of Metro, RB gives various promotions which include the Buy 1 Get 1 free packs, Buy 2,

1-liter packs for the price of 1. These promos are given to increase product usage and also to
focus on heavy users. Spaces have to be bought to place consumer promo packs and thus

negotiation with Metro are conducted to get the most appropriate spaces for a long period of time

at a lower cost.

Following are the consumer promotion offered to Metro:

Buy Harpic Original 750 ML, get 2+250 ML free.

Buy Harpic 750ml Toilet cleaner, get bathroom cleaner 500ml free.

Buy Harpic Original 1000ml x2 save 50.

Buy Harpic Original, get 2+Joy free.

Appendix

A) Reckitt Benckiser’s article listing

B) Customer’s Sales Data
C) Interview conducted from: Waqas Ahmad (Regional Manager)

Item No Barcode MOQ Expiry

       
103074 6001106114619 HARPIC TOILET ORIGINAL 250 ML 24
103075 8961101231156 HARPIC BATHROOM CLEANER 250 ML 24
103076 6001106114626 HARPIC ORIGINAL 500 ML 12
103077 6001106114640 HARPIC LIME 500 ML 12
103078 6001106208400 HARPIC ROSE 500 ML 12
103079 8964000954041 HARPIC ORANGE 500 ML 12
103080 8961101230593 HARPIC BATHROOM CLEANER LIME 500ML 12
103081 8961101230586 HARPIC BATHROOM CLEANER FLORAL 500ML 12
103082 6001106114633 HARPIC ORIGINAL 750 ML 12
103083 6001106208417 HARPIC ROSE 750 ML 12
103084 8961101231743 HARPIC TOILET ORIGINAL 1000 ML B2 G250ML FREE 4
103085 8961101231750 HARPIC TOILET LIME 1000 ML B2 G250ML FREE 4
103086 8964000954713 HARPIC ORIGINAL 1000 ML 12
103087 8964000954737 HARPIC LIME 1000 ML 12
103088 8964000954744 HARPIC ORANGE 1000 ML 12
103089 8964000954720 HARPIC TOILET ROSE 1000ML 12
103090 5011417556139 HARPIC JOY 6
103091 8961101232320 HARPIC BATHROOM CLEANER FLORAL 1000 ML 12
103092 8961101232337 HARPIC BATHROOM CLEANER LEMON 1000 ML 12
103093 8966000041301 HARPIC TOILET ORIGINAL 2L 6
103094 8966000041318 HARPIC TOILET ROSE 2L 6
103095 8964000954515 MORTEIN PCN AEROSOL 375ML 24
103096 8964000954522 MORTEIN PCN AEROSOL 550ML 12
103097 8964000954645 MORTEIN INSTA AEROSOL FIK 375ML 24
103098 8964000954669 MORTEIN INSTA AEROSOL AIK 400ML 24
103099 8964000954683 MORTEIN INSTA AEROSOL CIK 400ML 24
103100 8964000954652 MORTEIN INSTA AEROSOL FIK 550ML 12
103101 8964000954676 MORTEIN INSTA AEROSOL AIK 550ML 12
103102 8964000954690 MORTEIN INSTA AEROSOL CIK 550ML 12
103103 8961101231514 MORTEIN INSTA AEROSOL FIK 750ML 18
103104 8964000954928 MORTEIN INSTA AEROSOL FIK 375ML BP SV Rs 50 12
103105 8961101232009 MORTEIN INSTA AEROSOL AIK 375ML BP SV Rs 25 12
103106 8964000954942 MORTEIN INSTA AEROSOL CIK 375ML BP SV Rs 50 12
103107 8964000954959 MORTEIN INSTA AEROSOL FIK 550ML BP SV Rs 25 6
103108 8961101232047 MORTEIN INSTA AEROSOL AIK 550ML BP SV Rs 25 6
103109 6001106114930 MORTEIN LED (COMPLETE SET) 28 ML 24
103110 6001106114947 MORTEIN LED REFILL ODOURLESS 45 ML 48
103111 6001106208424 MORTEIN LED REFILL FRAGRANT 45 ML 48
103112 8961101230494 MORTEIN LED REFILL ODOURLESS X2 S100 CP 45 ML 24
103113 8961101230500 MORTEIN LED REFILL FRAGRANT X2 S100 CP 45 ML 24
103114 8961101231644 MORTEIN LED REFILL ODOURLESS X3 S150 CP 42 ML 16
103115 8961101231798 MORTEIN LED REFILL FRAGRANT X3 S150 CP 42 ML 16
103116 6001106114862 MORTEIN DR COILS 10S 100
103117 6001106114862 MORTEIN XP COILS 10S 100
103118 6001106114886 MORTEIN DR MATS 30S 96
B)
Recommendations

Improve forecasting methods, demand planner must be more efficient in predicting demand, thus

if demand is properly forecasted products may be delivered on time.

References
Yusuf, J. (11 Feb 2011). Reckitt Benckiser (RB.) Company Analysis.
Safdar, Z (8 Jan 2014). Reckitt Benckiser strategies and analysis.
Martin. (2014). Bargaining Power Of Suppliers | Porter’s Five Forces Model.
Bahauddin Zakaria University, (2018) DOC 5475 Reckitt Benckiser.
Ravi Magazine Marketing (2016) Term Reoprt- Reckitt Benckiser
Interview conducted- Key Accounts Manager, Reckitt Benckiser Pakistan.

https://www.rb.com/about-us/
Innovation Labs. (n.d.).

Retrieved from Reckitt Benckiser: https://www.rb.com/innovation/innovation-labs/