Target audience : an investor in the beauty and wellness market looking to learn more

Answer this question:

1. Discuss why the new products launched by Vi-John are not becoming market leaders.

2.Suggest a new product idea for Vi-John along with your decision process.

References:

Introduction :

It was 3 June 2018 and Vimal Pandey, the CEO of the Vi-John group in India, had a crucial meeting scheduled later in the day. Pandey was an old hand from SC Johnson (USA) and had been leading Vi-John for the last eight years. The upcoming meeting was with the group's co-promoters and the agenda was to brainstorm new product ideas, which could fuel future growth. Vi-John was a family-owned brand with a product portfolio mostly in the beauty and personal care (BPC) category. Its shaving cream was the market leader in India. Pandey believed that for the next phase of growth, Vi-John required successful new products (Agarwal, 2016). The dilemma was which categories to focus upon: male grooming, BPC, home care, oral care, or something else. There was also a proposal under consideration to launch a chain of men's salons. However, Pandey was acutely aware of the challenges involved with line and category extensions. The upcoming meeting was important for Vi-John's future strategy to promote growth. In the last meeting, the co-promoters had tasked Pandey to propose a new product ideation process. He in turn wanted the proposed course of action to not only boost growth of Vi-John but also consolidate its current market share. Most of the new products launched by Vi-John were not faring well in the market and Pandey was uncertain about how to launch a successful product (Khosla, 2018). How should he go about the task at hand? Vi-John and Its Product Portfolio The late S. Suchet Singh Kochar had founded Vi-John in 1960 as a desi, an Indian local shaving cream brand with a foreign-sounding name (Vi-John, 2019). In 2018, the Vi-John group's most successful product was its shaving cream, which had a market share of 29.2% in India (Singh, 2015). This share was more than Dettol, Axe, and Gillette's shaving creams by three, four, and seven times respectively. Vi-John's shaving cream brand was selling more than 4.5 million kilogrammes per year, which probably made it the world leader in this category (Cision, 2018). Primary targets of Vi-John's shaving cream were men's salons and Indian rural men. Accessibility and affordability were the brand's major strengths. Vi-John shaving cream was available in more than 0.25 million retail outlets and 1 million-plus trading channels across India. After achieving market share by volume, based on value-for-money strategy, Pandey now wanted to increase its value share. Vi-John had engaged leading actors of the Indian film industry in order to market Vi-John's shaving cream. It had also improved product quality, pricing, and packaging, for retail penetration, but unlike the multi-national corporations (MNC) it continued to target the mass market rather than the premium segment.

Vi-John's Other Brands

Vi-John's product portfolio mostly consisted of BPC category (see Table 1). Other than Vi-John shaving cream, there were two other brands that seemed promising to Pandey: Feather Touch, a female hair removal cream, and Cobra deodorant. He reasoned the rest of the brands in the product portfolio functioned only as line-fillers.

Table 1. Product Portfolio of Vi-John

Category Brand

Cobra Deodorants - Cool

Cobra Deodorants - Sports

Cobra Deodorants - Live

Cobra Deodorants - Daytime

Cobra No Gasa- True Man

Cobra No Gas - Agent

Fragrance

Cobra No Gas - Music

Cobra No Gas - Real

Man Archies Perfumes - Black

Aura Archies Perfumes - Black

Platinum Archies Perfumes -

Privacy Liquid BombbRange - Cool

Liquid Bomb Range - Musk

Liquid Bomb Gold Edition - Crystal

Liquid Bomb Gold Edition - Code

Liquid Bomb Gold Edition - Oud

Vi-John Shaving Foam - All Skin Types

Vi-John Shaving Foam - Hard Skin

Vi-John Shaving Foam - Sensitive Skin

Vi-John Shaving Cream - Classic

Men's grooming

Vi-John Shaving Cream - Icy Mint '

Vi-John Shaving Cream - Tropical Lime

Vi-John Premium Shaving Cream

Plash Aftershave Lotion - Classic

Saffron FairnesscCream - Saffron Green

Saffron Fairness Cream - Saffron Red

Facial care

Saffron Fairness Cream - Saffron

Gold Saffron Day Cream

Saffron Night Cream

Body care

Feather Hair Removal Cream - Rose

Feather Hair Removal Cream - Lime

Feather Hair Removal Cream - Sandal

Saffron Body Lotion - Aloe Vera

Saffron Body Lotion - Cocoa

Saffron Body Lotion - Milk & Almond

Saffron Body Lotion - Rose

Saffron Sunscreen

Vi-John Body Butters - Rose

Vi-John Body Butters - Honey

Vi-John Body Butters - Strawberry

Vi-John Body Butters - Cocoa Butter

Vi-John Black Gold Kali Mehendid

Vi-John Almond Oil Hair Drops

Hair care

Vi-John AmlaeHair Oil

22-Degree Hair Gel - Regular

22-Degree Hair Gel - Vertical

22-Degree Cool Talc - Extra Thanda

Talcumfcare

22-Degree Cool Talc - Rose

22-Degree Cool Talc - Sandal

Cobra Fragrance Talc - Jasmine

Cobra Fragrance Talc - Sandalwood

Cobra Fragrance Talc - Lavender

Notes:

a. No gas (deodorant delivery) was a subtype of deodorants that had become a craze among value-conscious Indian consumers.

b. Liquid Bomb and Liquid Bomb Gold edition were perfumes.

c. Fairness Cream were skin-whitening creams which claimed to prevent tanning of skin. Fair skin was a big deal in certain parts of the globe.

d. Kali Mehendi (Black Mehendi) was a natural hair dye.

e. Amla - Indian Gooseberry famed for its benefits.

f. Talcum or Talc - a cosmetic powder, typically perfumed.

Feather Touch

After the success of Vi-John's male shaving cream, Pandey and his team thought they could disrupt the female hair removal market in India. Thus, they launched Feather Touch, targeting women for hair removal needs. The company recruited a leading actress of Indian cinema, Sunny Leon, as its brand ambassador. There were three variants of the Feather Touch: Rose, Lime, and Sandal, and it was the second-largest female hair removal brand in India (Cision, 2018). This achievement often went unnoticed, because India was a non-home beauty services market, meaning most women in India did not buy beauty products for domestic consumption. Rather, they preferred to visit parlours for their beauty care needs; accordingly, retail brands in the market were few and far between. The in-home hair removal market in India was worth USD 0.1 billion, only one-seventh of the male grooming market (MGM). Reckitt Benckiser's Veet, the world leader in hair removal, accounted for 50% of the Indian female hair removal market. In comparison to Vi-John's achievements in the shaving cream market, Feather Touch was not faring very well in comparison to the market leader and competitor Veet. The only positive for Vi-John was that the female hair-removal market in India was enjoying a double-digit growth (PTI, 2019).

Cobra Deodorant

Considering their success in the shaving cream market, Pandey thought venturing into the deodorant market was a suitable bet (Khosla, 2018). The idea was to consolidate group's position in the MGM. Accordingly, the group had launched Cobra deodorant. Cobra was one of the earliest in the market to adopt the market leader FOGG's product innovation of no gas delivery. Additionally, while launching the deodorant brand, Pandey engaged a leading actor of the Indian film industry for the promotion. However, after five years, much to his disappointment, it was evident that Cobra could not garner significant market share (see Table 2). On the contrary, the deodorant brand had managed to generate a fair degree of controversy (Sen, 2014) due to offensive content in one of its advertisements(Vi-John, 2014). Pandey blamed the competition and their aggressive selling techniques for spoiling the deodorant market.

Table 2. Deodorant Market Share in Urban India (%)

Deodorant brands 2018 2017 2016 MAT 18 MAT 17

FOGG - Indian 14.7 16.5 17.3 15.7 16.8

Nivea 11.5 10.2 9.2 10.5 9.9

Engage - Indian 10.3 9.9 9.0 10.7 9.3

Park Avenue 9.7 9.0 7.5 8.2 7.2

Axe Total 7.0 7.4 8.1 7.1 7.7

Wild Stone - Indian 6.6 7.5 5.9 6.8 6.3

Denver - Indian 4.3 3.4 3.2 3.9 3.3

MAT: Moving annual total till August

Source: Khosla (2018)

Prior to FOGG, all deodorant brands in India, including Cobra, emulated the former market leader, Axe's positioning, i.e. 'catalyst for irresistible masculinity' with a gas delivery system. FOGG, however, implemented a no gas delivery platform and positioned the product as a 'smarter choice and higher value for money' (Gopalan, 2017). FOGG's strategy reflected an in-depth understanding of the Indian psyche with respect to value. It was evident with the benefit of hindsight that FOGG had succeeded in beating Axe by establishing a stronger alternative narrative rather than emulating the latter. As Pandey read Gopalan's report, he was pained to realise that there was virtually nothing unique and compelling about Cobra. Pandey considered this to be an important lesson, which should be a pointer for guiding the ideation process in the upcoming meeting. However, he wondered if was possible to make Feather Touch or Cobra unique, otherwise the Vi-John group must seek a successful new product idea. In preparation for the meeting, Pandey had prepared two reports, the first on 'India's Fast-Moving Consumer Goods (FMCG) and BPC sector' and the other on 'Characteristics of MGM in India'. He thought it would be wise to revisit these two reports before the meeting.

India's FMCG and BPC Sector

In 2018 Q2, the FMCG sector in India was estimated to be USD 52.75 billion (IBEF, 2018). The sector consisted of three major segments: household and personal care, healthcare, and food and beverage; whose respective shares were 50%, 31%, and 19%. Industry watchers believed this sector would grow to USD 103.70 billion by year 2020. The value of beauty and personal care (BPC), a sub-segment of household and personal care, was approximately USD 9 billion (Bajaj, 2017). However, BPC products' per capital consumption in the country was a mere USD 7. The comparative figures for China and World at large were respectively USD 33 and USD 54. Generally, experts classified the BPC market into categories such as Body, Hair, Face, Hand Care, and Colour Cosmetics. Each of these categories was further subdivided into different product lines and product subtypes. Table 3illustrates estimated market sizes and growth trends.

Table 3. Indian BPC Market Size and Growth Trends

Categories and major product lines (Growth rate, %) Market share (%)

2014 2016 2021

Body care (4): soaps (4), deodorants (4), sunscreen (4), 40 38 36

body lotions (4), body wash (4), derma (4)

Hair care (5): oil (4), shampoo (4), conditioners (4) 31 31 30

Face care (9): foundation (4), lip care (4), male shaving (4), 18 19 21

fairness (4), cleansing creams (4)

Colour cosmetics (12) 10 11 12

Hand care (16) 1 1 1

Source: Bajaj (2017)

Trends and Factors Affecting BPC Sector Consumer preference (Agarwal, 2018) for BPC products with labels like organic, herbal, Ayurvedic (named as natural, by experts) had doubled between 2008 and 2018. The natural segment was 41% of the BPC and it was growing at 1.7 times higher than the rest (Chatterjee, 2018). More and more Indian consumers wanted their brands to be both safe and environmentally friendly. Local brands such as Patanjali, Dabur, and Himalaya dominated the natural segment. So emphatic had been this phenomenon that Hindustan Unilever Limited, an MNC, had resurrected Ayush, its natural brand.

Online channels were making their presence felt in the distribution ecosystem of India. The consumers who bought BPC products online were looking for best price, free shipping, and secure sites (Tng and Ben-Shabat, 2017). Online beauty shoppers fell into three broad categories: online enthusiasts, information seekers, and showroomers. Online enthusiasts preferred browsing and buying online. Information seekers searched online, but preferred shopping in store. Finally, showroomers preferred browsing in store but buying online. The consumers' decision-making process for BPC products had recently undergone huge changes (see Table 4).

Table 4. Factors Affecting Choice of Skincare Regimen (%) .

Factors 2008 2018

Advertisement 61 37

Friends and relatives 58 67

New/high-tech product 32 30

Price 29 29

Publications/websites 16 34

Dermatologists recommendation 3 27

Preference for ingredients - natural/organic 39 77

Preference for ingredients - modern cosmetics 61 23

Source: Agarwal (2018)

In summary, the BPC sector in India was in flux (Gerstle, 2016). Organised retail was on the rise. There was a large young urban affluent population (see Data 1 and 2) with increasing disposable income (see Data 2a and 2b). The population of working women with enhanced affordability was increasing. Similarly, the changing demographics of the male population in India had resulted in emergence of a male grooming market (MGM). The above points coupled with India's large consumer base had resulted in increasing numbers of imported BPC brands in the country, the presence of which had led to increased competition in the sector. Next, the number of beauty parlours in the country was doubling every three years. In addition to regular services, these parlours' bridal makeups had become a profitable segment. A typical bridal makeup package was costing around USD 800-8,000. The spa segment, too, was growing and over the next five years, it was forecast to reach USD 750-800 million. At this point, Pandey turned his attention to the second note.

Data 1. Projected Female Population in India, 1990-2050 Click hereto view the online version of this case for optimal experience of interactive data embeds.

Data 2. Projected Male Population in India, 1990-2050 Click hereto view the online version of this case for optimal experience of interactive data embeds.

Data 3. Male and Female Labour Force Participation Rates in India Click hereto view the online version of this case for optimal experience of interactive data embeds.

Data 4. GDP Per Person Employed in India (Constant 2011 PPP USD) Trends Click hereto view the online version of this case for optimal experience of interactive data embeds.

Characteristics of MGM in India

In 2018, Indian males had increased their usage of deodorants, perfumes, toiletries, fairness creams, etc. Therefore, the Indian BPC market is no longer female-dominated. Some believed the MGM in India was growing at a compound annual growth rate (CAGR) of 15% while others estimated it to be as high as 45% (PTI, 2018). The market was worth USD 0.7 billion a year and it was growing rapidly (Agarwal, 2018). Vi-John's market share (Agarwal, 2016) in India's MGM was just 1%, while Gillette, the market leader, had 20.4%. Due to consumer demand, the Indian MGM in had grown far beyond razors, shaving gels, and deodorants (Franchise, 2018). Brands had started offering customised products, e.g. fairness creams and shampoos for men. The category had also started showing proliferation of specialised products for beard and moustache, such as oil, shampoo, and balm.

Between 2009 and 2016, the male face-cleansing market had grown by a factor of 60 and the male face cream market had doubled. In selected categories, e.g. moisturisers and face wash, younger men were spending more than their female counterparts (Agarwal, 2016). The average Indian man spent about 42 minutes on personal grooming, which broke down into 16, 14, and 12 minutes for body, hair, and face (Shashidhar, 2019). The male grooming category was organised into product lines such as bath, shower and shaving toiletries, skin, hair and beard care products, deodorants and fragrance. Pandey noted that within the MGM there were potential gaps, which Vi-John could possibly target.

Start-ups in Men's Grooming

In spite of the presence of big players like Gillette (Procter and Gamble) and Hindustan Unilever Limited, the MGM in India had seen a mushrooming of start-ups (Panchal, 2018) such as Bombay Shaving Company, Beardo, Indian Grooming Club, and Ustraa (Singh, 2016). These start-ups were trying to make their mark by launching innovative products and new practices such as a subscription model for pricing. Most of these new players were online initially, but they were sufficiently flexible to adopt hybrid distribution models. The aggressive nature of the start-ups and the growth potential of the MGM was prompting traditional big players to dig in further. Overall, the MGM market in India was too good to be ignored.

Conclusion

Dynamics of the MGM and BPC segments in India are changing. However, Pandey did not know if this was due to social media's influence, growing affluence, professional needs, or a growing desire to impress the opposite sex. Nevertheless, he needed to decide where the company should launch its next product: the MGM, BPC, or something beyond. Additionally, irrespective of the category selection, Pandey also had to decide between a new or augmented product.