PRESENTATION ON PRICING STRATEGY FOR CLINIC ALL CLEAR

PRESENTED BY
o SAISHANKAR SANABOINA o RAHUL NAIR o NAVEEN HEGDE o KUNAL DHURI o DHARMENDRA THAKUR

Shampoos
Did you know, that the word Shampoo is derived from the Hindi word Champi. Remember Johnny Walkers famous song - Meri Jaan, Meri Jaan, Sunday Ke Sunday, Teil Maalish - Champi Teil Maalish. The British loved the massage so much, they started calling Champi as Shampoo

o Shampoo market is segmented on benefit platforms

Cosmetic ( shine, health, strength ) Anti - Dandruff Herbal

o Hair Shampoos and Conditioners are targeted at

Upper middle class Now, also middle class and house wives Upper class rural consumers Teenagers - they are the major segment

HAIR CARE IN INDIA (FACTS)

o The frequency of shampoo usage is very low. Most consumers use shampoo only once or twice in a week. In many cases, these products are used on special occasions such as weddings, parties etc o Some customers use shampoo only to address a specific problem such as dandruff or when they need to condition their hair o Use of conditioners is not common. It is restricted to the super premium segment or those who are very involved with their hair care o About 50% of consumers use ordinary toilet soaps to wash their hair o Major expectations from the product are improvement in texture and manageability, giving softness and bounce to hair, curing and avoiding damage to the hair o An Indian needs more shampoo for a proper wash ( average 6 ml ) compared to 4 ml needed in Western countries as most Indian women have long hair o Consumers attribute lathering to the act of cleaning

Major shampoo players

o HUL (Sun silk, clinic plus, clinic all clear.) o Cavin care ( chik and nyle) o P&G ( pantene pro V and head and shoulder) o Dabur (Vatika) o RDM Traders ( Ayur).

MARKET SHARE OF ANTIDANDRUFF SHAMPOO

INDUSTRY SOURCES ESTIMATE THE URBAN PENETRATION OF SHAMPOO IS A MODEST 36 PERCENT. RURAL MARKET IS EVEN MORE INFREQUENT WITH PENETRATION LEVEL OF 12%.

Clinic all clear

o Clinic All clear is a leading hair care brand in India. Clinic Plus Health shampoo was launched in India in the year 1987 o The first brand in the anti-dandruff segment was clinic plus. The line extension of clinic all clear is seen more as the one of this segment after its emergence. o It offers five most important hair health benefits, strengthens weak hair, prevents hair breakage, softens rough dry hair, shine for thick and healthy hair and contains anti-dandruff ingredient. o Clinic Plus has gone through a lot of changes in terms of product variants, packaging and as well promotion programs

Promotional activities
o Clinic all clear has targeted the young youthful audience. o To begin with shah rukh khan was the main face for clinic all clear, with changing times we have seen shahid kapoor take over as the choice of brand ambassador. o Shahid kapur and madhavan as their new brand ambassador for clinic all clear total since they personify youth freshness, confidence and fun which are perfect synergy with brand attributes.

SWOT ANALYSIS Strength

1. CLEAR has partnered with the worlds leading dermatologists from the International Academy of Dermatology (IACD) to bring the first ever patented scalp nutrient technology New CLEAR with Nutrium 10 to its consumers 2. Available in 5 different variants for different types of hair needs 3. Clear brand available in over 14 countries worldwide 4. Clear is the only brand that offers specially formulated Anti dandruff shampoo for men 5. Celebrity brand ambassadors and good advertising

SWOT ANALYSIS Weakness

1. Dominance only in the anti-dandruff shampoo segment, no variants available for normal shampoo usage 2. Multiple re-brandings over the years Clinic Special to Clinic All Clear to Clear at present. Can create confusion about the brand name among consumers. 3. Low market share even in the anti-dandruff shampoo segment as compared to competitors like Head & Shoulders

SWOT ANALYSIS Opportunity

1. To align itself to the international quality standards this year Clinic All Clear has been re-launched this year as Clear 2.Introduction of Anti Dandruff Hair Oil that fights dandruff and strengthens hair from scalp, as a brand extension

SWOT ANALYSIS Threats

1.Highly competitive market having many players with similar offerings and cheaper rates 2. P&G wrote to the Advertising Standards Council of India, which sought a response from HUL regarding an advertisement of Clear starring Bipasha Basu which had a muted reference to Head & Shoulders in the advertisement

Objectives
o Understand the internal & external factors affecting a firms pricing decisions. o Be able to contrast the three general approaches to setting prices. o Learn the major strategies for pricing initiatives and new products. o Understand how companies find a set of prices that maximizes the profits from the total product mix. o Learn how companies adjust their prices to take into account different types of customers and situations. o Know the key issues related to initiating and responding to price changes.

Price
o The amount of money charged for a product, or the sum of the values that consumers exchange for the benefits of having/using the product or service. o Price and the Marketing Mix
Only element to produce revenues Most flexible element Can be changed quickly

o Price as a tool of Competition o Common Pricing Mistakes

Internal Factors Affecting Pricing Decisions: Marketing Objectives

Survival Low Prices to Cover Variable Costs and Some Fixed Costs to Stay in Business. Current Profit Maximization Choose the Price that Produces the Maximum Current Profit, Etc. Market Share Leadership Low as Possible Prices to Become the Market Share Leader. Product Quality Leadership High Prices to Cover Higher Performance Quality and R & D.

Marketing Objectives

Internal Factors Affecting Pricing Decisions: Marketing Mix

Product Design

Nonprice Positions

Price

Distribution

Promotion

Internal Factors Affecting Pricing Decisions:

Cost Organizational considerations

EXTERNAL FACTORS
Nature of market and demand , elements Competitors costs prices, and offers Other environmental elements

Cost-Based Pricing
Certainty About Costs

Price Competition Is Minimized

Others

Much Fairer to Buyers & Sellers

d e t c e p x e n U l a n o i t a u t i S

Pricing is Simplified

Cost-Plus Pricing Ethical is an Approach That Adds a Standard Markup to the Cost of the Attitudes Product. of
s r o t c a F

Simplest Pricing Method

Ignores Current Demand & Competition

General Pricing Approaches (contd.)

2. Value-Based Pricing
o Uses buyers perceptions of value rather than sellers costs to set price. o Measuring perceived value can be difficult. o Consumer attitudes toward price and quality have shifted during the last decade.
Introduction of less expensive versions of established brands has become common.

o Business-to-business firms seek to retain pricing power

Value-added strategies can help

o Value pricing at the retail level

Everyday low pricing (EDLP) vs. high-low pricing

Cost-Based Versus Value-Based Pricing

Cost-Based Pricing Product Product Cost Cost Price Price Value Value Customers Customers

Value-Based Pricing
Customer Customer Value Value Price Price Cost Cost Product Product CHPT: 14-24

General Pricing Approaches (contd.)

b) Break-Even Analysis & Target Profit Pricing
o Break-even charts show total cost and total revenues at different levels of unit volume. o The intersection of the total revenue and total cost curves is the breakeven point. o Companies wishing to make a profit must exceed the break-even unit volume. Revenues
1000 Thousands Taka 800 600 400 200 0 10 20 30 40 Quantity To Be Sold To M eet Target Profit Break-even point Target ProfitTk. 200,000 Total Costs

Fixed Costs

Sales Volume in Thousands of Units

General Pricing Approaches (contd.)

3. Competition-Based Pricing
Also called going-rate pricing May price at the same level, above, or below the competition Bidding for jobs is another variation of competitionbased pricing
Sealed bid pricing

Other Pricing Approaches

o Market-Skimming Pricing
Setting a high price for a new product to skim maximum revenues layer by layer from segments willing to pay the high price.

o Market-Penetration Pricing
Setting a low price for a new product in order to attract a large number of buyers and a large market share.

o Market Rate Pricing

Ceding the initiative to the key competitors to set the price. Dangerous for leaving the strategic initiative to competitors Potential threat of Sudden Price Shift by newer, or Changes in delivery system capability.

o Relationship Pricing
Different price for Different class of customers depending on relationship and the potentiality of cross-selling or future business.

Price Adjustment Strategies

Strategies
o o o o Discount / allowance Segmented Psychological Promotional

Promotional Pricing
Loss Leaders Loss Leaders Special-Event Pricing Special-Event Pricing Cash Rebates Cash Rebates Low-Interest Financing Low-Interest Financing Longer Warranties Longer Warranties Free Merchandise Free Merchandise Discounts Discounts

Temporarily Pricing Products Below List Price to Increase Short-Term Sales Through:

Price-Adjustment Strategies Price-Adjustment Strategies

Has Competitor Cut Has Competitor Cut Price? Price?
No

Hold Current Price; Hold Current Price; Continue to Monitor Continue to Monitor Competitors Price. Competitors Price.

Will Lower Price Will Lower Price Negatively Affect Our Negatively Affect Our Market Share & Profits? Market Share & Profits?

No

Reduce Price Reduce Price

No

Can/ Should Effective Can/ Should Effective Action be Taken? Action be Taken?

Raise Perceived Raise Perceived Quality Quality Improve Quality Improve Quality & Increase Price & Increase Price Launch Low-Price Launch Low-Price Fighting Brand Fighting Brand

Yes

Price Changes
o Initiating Price Cuts is Desirable When a Firm
Has excess capacity Faces falling market share due to price competition Desires to be a market share leader

o Price Increases are Desirable

If a firm can increase profit, faces cost inflation, or faces greater demand than can be supplied.

o Methods of Increasing Price o Alternatives to Increasing Price

Reducing product size, using less expensive materials, unbundling the product.

Price Changes (contd.)

o Buyer reactions to price changes must be considered. o Competitors are more likely to react to price changes under certain conditions.
Number of firms is small Product is uniform Buyers are well informed

o Respond to Price Changes only if:

Market share / profits will be negatively affected if nothing is changed. Effective action can be taken:

Reducing price Raising perceived quality Improving quality and increasing price Launching low-price fighting brand

Price war triggered by the cavin kare attacked the market share of HUL.
o Cavin Kare introduced smaller 50 paise sachet of Chik, when most of other sachets retailed at Rs 2'. Due this Chik Brand Expanded By 40%. o A new 50 ml bottle of Chik priced at Rs 6 (when most other brands were available in 100 ml bottles and above) o HUL responded with its own 50 paise version of Lux shampoo' o The company launched 30 ml bubble pack for Clinic Plus (Rs 8) which was an innovative and cost-effective alternative for sachet users. o While sachets are difficult to store and re-use, the bubble pack allows the user to extract just the right quantity for a single wash. o HUL had taken a bigger price cut in shampoo realization by offering8 ml clinic Plus sachets at Re 1, a 50% mark down. This had brought it on par with low priced brands such as chik by cavinKare.( Ref : analysts at research house ICICI)'

Price war triggered by the cavin kare (contd)

o Anti-dandruff shampoos represent this attempt Clinic Plus' one of the first anti dandruff brands, is the largest shampoo brand today, with a market share of 31 Per cent. o clinic All clear, the anti-dandruff extension that targeted at the youth has also managed to garner a 13 per cent share' Due to its low pricing( Rs 71 for a 160 ml bott|e against Rs68 for a l00ml bottle of Head & Shou|ders antidandruff shampoo) the brand also has a significant rural market share of 44 per cent o Pantene Pro-V and Head & Shoulders P&G discontinued its shampoo manufacturing operations in India in 2000 to other Asian countries Thailand, Taiwan etc

Further steps taken by HUL to increase the market share (since may 2004)
o The re launch of Clinic Plus Health Shampoo, with its five-in-one benefit formulation and the new reduced price points, was HUL's second major initiative to offer outstanding consumer value in this category o The re launched clinic Plus bottles come at reduced price points. The new prices were Rs30, Rs55 and Rs90 for100ml, 200ml and 300ml bottles, down from Rs37.50,Rs.70 and Rs90 respectively. o Clinic Plus also had a25-ml bottle priced at Rs5, which was aggressively distributed across the country and in Sachets of 50 Paise,Re1 and Rs2. o Improved packing and buy one get one free initiative on clinic plus shampoo,sunsilk helped it increase the sales by 10 percent.

Further steps taken by HUL to increase the market share (since may 2004)
o HUL recently upped its ante in the shampoo war.. o It launched Clinic All Clear at a higher price to narrow the price differential between All Clear and Procter & Gamble's Head & Shoulders in the anti-dandruff segment. It decided to increase the price of its 100 ml bottle by Rs 5 to Rs 55 and 200 ml by Rs 10 to Rs 105. On All Clear sachets and 40 ml bottles, the company decided to maintain status quo. o HUL dared to hike prices of Clinic All Clear as it saw an opportunity which can add to its top line and bottomline growth, without jeopardizing its current market share.

Further steps taken by HUL to increase the market share (since may 2004)
o Head & Shoulders, despite its premium pricing, is the leader in the anti-dandruff segment. The 100 ml bottle carries a price tag of Rs 62 and 200 ml of Rs 120. Despite the Rs 7-15 price difference, it commands a 35-36% market share as against HUL's 32-33%. o Results of this battle are yet to be out. But then this is just a battle and not the war. HUL is on the path of recovery, this may just be an indicator of what things are to come.

Barriers to shampoo use

o The company has identified three major barriers to shampoos use in India
The perception that shampoos contain harsh chemicals that could damage the hair High price The view that the shampoo is more of glamour product rather than a hygiene product.

Marketing Debate
Is the right price a fair price? Take a position: 1. Prices should reflect the value that consumers are willing to pay. or 2. Prices should primarily just reflect the cost involved in making a product.
Group 10