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Product innovation will spell success - Views on News from Equitymaster
 
 
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  • Jul 14, 2001

    Product innovation will spell success

    There was time when as little kids we used to watch our dad get up and get ready to go for office. He would brush, go through his normal routine and then get down to shave. After massaging the lather with his wooden shave brush, he would finally take out a Topaz blade, adjust it to his old style razor and start shaving. While shaving, he used to keep the ice handy, because he nicked himself more often than not. When done, you would see him wash off the remaining lather with plain water. If you checked out his bath accessories you would probably find a plain soap bar.

    How things change! Today a youth of 18 takes as much time as the fairer sex at the super market to pick up his favourite cologne, deodorant, aftershave lotion, shaving cream, body talc, face wash, shampoo, conditioner…. The list goes on and on.

    In the past, there was of course, the fact that the Indian middle class was still struggling to get up the social ladder. The need was to get education and work towards achieving financial stability. In short, even if the past generations could afford all these things, there was a voluntary abstinence. There was also a natural mind block in terms of looking at toiletries as a ‘ladies’ thing.

    That was the demand side. On the supply side too, not many companies looked at men as toiletry consumers. They concentrated on women to be their key target consumers. As a result, though there were a lot of choices and brands for women toiletries in those days, for men the choice was very limited.

    The advent of liberalisation post 1992 changed all that. The Indian economy became more open. The global marketers saw 1 billion target consumers and India saw a slew of international brands hitting the market. The private sector, especially the services sector, has seen significant growth in the last decade. Salaries in the private sector started shooting up and the living standards started improving. Government salaries too, have tried to keep pace with the private sector.

    It is not only that the working class improved their living standards, but the past decade has also been good for rural India. Indian farmers have been blessed with 11 good monsoons in a row. Agricultural output has improved and Indian farmer has also had the backing of the government in the form of ‘support’ prices for their output. Lower taxes meant more disposable income.

    The consumer product companies saw this and India started looking good on their global chart. They introduced new brands and products and upped the advertisement expenditure in an effort to woo the consumers. The advent of cable TV and satellite channels helped fast moving consumer goods companies reach out to the Indian masses. Satellite channels brought about a sea change in the Indian consumer psyche. For Indian men it was no more a shame to be adventurous and demanding. It was not considered ‘feminine’ anymore. It was more of ‘having arrived’.

    It is not as if that only multinational companies catered to the men’s demands, Indian companies like Godrej too upped their ante and fought for their share of the pie. The competition has grown hotter not only in the premium range, but also at the entry level. You can probably buy a shaving cream ranging from Rs 10, to Rs 30-35, a shaving gel (Rs 45-60) or shaving foam (Rs 70 upwards).

      (Rs bn) Growth (%)
    FMCG market 430 7.80%
    Total personal care market 86 5.90%
    Personal care (Men) 8.6 6.30%

    * growth in 2000

    Companies like Gillette, JK Helene Curtis, Park Avenue, Colgate Palmolive, Godrej, Hindustan Lever and Henkel Spic are some of the leading companies catering to men’s toiletries. The market is still in a nascent stage. Indian men still rank way behind in terms of per capita usage. Currently, the personal product segment for men is around 2 percent of Rs 430 bn Indian FMCG market. So there is a significant growth potential in the sector.

    But in this market only those companies would survive who continuously innovate on products, packaging and distribution channels to satisfy the consumer needs. Gillette for example, has introduced its flagship brand, Mach III, to the world market after spending US$1 billion on product innovation and enhancement. But product innovation is the companies’ worry. The Indian men can look forward to better products at competitive prices in the years to come.

     

     

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