GROUP 2

Marketing Project
FINAL REPORT ON

Fair & Lovely | Unilever

FOR FAIRNESS WITH EVERY WASH FOR PIMPLE FREE SKIN FOR SPOT FREE SKIN
1|P e FORa gAGELESS, FAIR SKIN

2013 – 2015 XLRI Jamshedpur

Contents
I. II. III. Cosmetics Industry................................................................................................................................ 4 Fair and Lovely : Experiencing Beauty .................................................................................................. 6 Market .................................................................................................................................................. 7

Market Size ............................................................................................................................................... 7 Market Share ............................................................................................................................................ 8 Seasonality ................................................................................................................................................ 8 IV. MICRO ANALYSIS................................................................................................................................... 9 Threat of new entrants ............................................................................................................................. 9 Buyers and their bargaining power........................................................................................................... 9 Suppliers and their bargaining power....................................................................................................... 9 Distribution from Channels ....................................................................................................................... 9 Pressures from substitutes ....................................................................................................................... 9 Category capacity.................................................................................................................................... 10 Current rivalry in category ...................................................................................................................... 10 V. MACROENVIRONMENT ANALYSIS ...................................................................................................... 11 Technology .............................................................................................................................................. 11 Economic ................................................................................................................................................. 11 Social ....................................................................................................................................................... 12 Demographics ......................................................................................................................................... 12 Culture .................................................................................................................................................... 13 Legal ........................................................................................................................................................ 13 VI. CONSUMER BEHAVIOUR TOWARDS FAIRNESS CREAMS .................................................................... 14 Objectives of the study ........................................................................................................................... 14 Consumer Behavior Analysis ................................................................................................................... 19 Conclusion ............................................................................................................................................... 20 2|Page

Suggestions ............................................................................................................................................. 20 Limitations of the study .......................................................................................................................... 20 VII. COMPANY & COMPETITOR ANALYSIS ................................................................................................ 21 Objectives ............................................................................................................................................... 21 Strategy ................................................................................................................................................... 21 Marketing Mix ......................................................................................................................................... 22 Competitive Strategy .............................................................................................................................. 24 Profits ...................................................................................................................................................... 24 VIII. CUSTOMER ANALYSIS ......................................................................................................................... 25 Segmentation .......................................................................................................................................... 25 Targeting ................................................................................................................................................. 26 Value Proposition .................................................................................................................................... 27 Positioning .............................................................................................................................................. 28 IX. MARKET POTENTIAL & STRATEGY SUGGESTIONS .............................................................................. 32

Defining market potential ....................................................................................................................... 32 Market Potential Influencers .................................................................................................................. 32 Market potential estimation ................................................................................................................... 33 Forecast................................................................................................................................................... 35 Size of the Industry ................................................................................................................................. 37 Growth .................................................................................................................................................... 37 X. XI. Conclusion........................................................................................................................................... 38 References .......................................................................................................................................... 39

XII. APPENDIX ............................................................................................................................................ 40
Online Consumer Behavior Survey ............................................................................................................................................ 40 F&L vis-à-vis the Competition .................................................................................................................................................... 42 Customer Lifetime Value............................................................................................................................................................ 43

3|Page

I. Cosmetics Industry
Cosmetics are defined as compounds that are used for cleansing, enhancing beauty and fairness or altering the appearance. The cosmetic industry is currently dominated by a few multinational corporations that started business in the 20th century. The leaders in this domain are L‘Oreal Group, Proctor and Gamble, Hindustan Unilever Limited (HUL), Esteé Lauder Companies, Avon etc. Skin care products occupy about 15% of the total cosmetics industry. The sector has mainly been driven by improving purchasing power and rising fashion consciousness of the Indian population. Moreover, the industry players are readily spending on the promotional activities to increase consumer awareness. The companies are venturing into online retailing and are offering specialized products to boost revenues. Indian cosmetics industry has witnessed strong growth during the past few years and has emerged as one of the industries holding immense future growth potential. There is a large demand for cosmetic products. The market is showing growth between 15-20 percent per year and is projected to reach US $3 billion by 2014. This growth is almost twice as fast as that of USA or Europe. One can easily see that middle and high class Indian people spend a large portion of their money in cosmetic product or service due to increased awareness about brands, fashion and personal care. If properly marketed and advertised, any cosmetic product will be successful within the Indian Market.

HINDUSTAN UNILEVER LIMITED
Established in 1933 and renamed in 2007, HUL is an Indian consumer goods company based out of Mumbai, Maharashtra. It is a part of the €44.3 billion Unilever Group. There are 6.4 million retails outlets with a direct distribution reach to over 2 million retail outlets. Its products range from foods, cleansing agents, beverages and personal care products. As per Nielsen market research data, two out of three Indians use HUL products. Besides increasing penetration in the urban market, HUL has constantly aimed at tapping the rural markets also. It is the market leader in Indian FMCG sector and caters to about 700 million Indian consumers. Its presence spans across 35 brands in 20 consumer categories such as soaps, detergents, shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream and water purifiers.

4|Page

Percentage Share of HUL Consumer Goods
3% 6% 12% Soaps & Detergents

48%
Personal Care

31%

Beverages Packaged foods Others

Exhibit I Among the top 100 most trusted brands of India, about 17 HUL products are present and Fair and Lovely is ranked 11th.

5|Page

II. Fair and Lovely : Experiencing Beauty
The world‘s first fairness cream was developed in 1975. A Hindustan Unilever‘s skin-care product, Fair and Lovely is the leading skin-lightening cream for women in India. In 2003 it was rated as the 12th Most Trusted Brand in India by ACNielsen. In 2004 it was identified as a Super brand. The brand promises to make your complexion fairer over a period of six weeks. Of late, the range of products under the brand include- Ayurvedic Fairness cream, Anti-Marks cream, Oil control Fairness Gel cream, Fairness soap and in men‘s range- Fair and lovely Menz Active. Phase 1 saw the launch of the product in 1976 on the basic premise that younger women wanted to have fairer skin in order to attract a better looking husband. HUL marketed this brand as a beauty cream capable of providing fairness within 8 weeks. During Phase 2 of Fair & Lovely's evolution, the brand talked to a younger college going woman who is self-confident and more modern in her outlook and believes home remedies for facial care to be old fashioned. In Phase 3, this further metamorphosed into a brand offering emotional benefits for achievers who actively seek solutions and do not look at marriage as the ultimate source of personal achievement. Fair & Lovely thus became a brand which communicated a message that Fairness leading to Beauty leading to Good husband to Fairness leading to Self-confidence leading to Good career.

Category
Equivalent Pricing Mass premium Men’s Fairness Creams

Competitors
Fairever, Fairglow, Emami, Nivea, Vicco, Himalaya Garnier, Revlon Fair and Handsome, Fair and Lovely Menz Active Exhibit II

6|Page

III. Market
Market Size
Fair and Lovely has been a leader in market from 1975 till 1998. In 1999, it faced severe competition from CavinKare which launched Fairever and gained an impressive 15% market share. FAL‘s latest sales report points out a figure of Rs 1300 crore, where overall fairness cream sales are projected to tune of Rs 2570 crore.

Exhibit III - Fairness Cream Brands’ Annual Sales (Rs Crore)

National Brands HUL Fair and Lovely CavinKare Fairever P&G Olay Emami Fair and Handsome Emami Naturally fair Boroplus

2012 1781.2 112 143.2 198.4 9.1 7.9

2013 2019.5 142 168.9 230.1 9.8 10.58

% Change 13 32 18 16 7.6 34

7|Page

Market Share
Market Share
21.10%

Fair and Lovely Fairever
56.60%

5.40%
12.50%

Fair Glow Emami Others

4.40%

Exhibit IV: Market Share of Fair and Lovely and its competitors

Seasonality
Fair and Lovely‘s products except Winter Fairness cream are neutral to seasonal variations. Sales of Fair and Lovely Winter Fairness cream have seasonal fluctuations with maximum sales in winter season and low sales in summers. Hilly areas with low temperatures are target areas for this special product. Any unusual weather pattern could result in huge volatility of cold creams. FAL so far remains unaffected by this whereas Boroplus of Emami has large seasonal fluctuations and the same is also captured in company‘s Quarter 3 results, showing tremendous increase in sales.

8|Page

IV. MICRO ANALYSIS
Threat of new entrants
The brand has maintained a stronghold over the past two decades by introducing variants for men and women across different price segments and by controlling the distribution channel. The target customer in the middle income segment associates every fairness product with Fair and Lovely. However, price sensitivity is high and the introduction of a product with a strong presence may eat into Fair and Lovely‘s market share. Given that its part of the consumer‘s daily grooming regime the threat of new entrant seems to be minimal.

Buyers and their bargaining power
The target customer segment is likely to be price sensitive, however, since this is part of his/her daily skin care regime, a rational increase in price is likely to be absorbed by the market. This is backed by a strong market share (~75%, as of 2010) for Fair and Lovely and strong sense of attachment with the brand.

Suppliers and their bargaining power
The supplier market is consolidated for the majority of raw materials required for production with not more than 3-4 suppliers for any given chemical. This gives suppliers an upper hand on pricing and negotiations. However due to globalization the import market is opening up and the suppliers are facing stiff competitions from global firms especially from China. This in turn reduces the bargaining power. Unilever is known for its credit based business model for managing suppliers across geographies minimizing cash outflows. Generally, a 60 day credit period is used.

Distribution from Channels
The company has brought all markets with populations of below 50,000 under one rural sales organization and the team handling this team focuses on building superior availability of products and comprises of an exclusive sales force and exclusive redistribution stockists. In rural India, the network directly covers about 50,000 villages, reaching 250 million consumers; through 6000 sub-stockists. HUL has set up a full-scale sales organization, for this channel to serve modern retailing outlets.

Pressures from substitutes
The high end fairness creams such as Olay, Neutrogena etc. keep introducing newer products aimed at a high middle and high income target group. This forces Fair and Lovely to come up with variants targeted at the same population. The market hold of HUL ensures minimum pressure from substitutes. However Ayurvedic remedies have been an inherent part of the Indian culture. Moreover, the gaining popularity of yoga for fitness is increasing awareness on home remedies such as Aloe Vera. 9|Page

Category capacity
There is a 2500 crore market for fairness creams (200 crore for men) with Fair & Lovely enjoying 56% of the market share.

Current rivalry in category
Early mover advantage plus heavy spends on television advertising has reaped returns. Its two closest rival competitors, both produced by local Indian firms, CavinKare‘s brand Fairever and Godrej‘s FairGlow, only have a combined market share of 16%. Claiming to possess a customer base of 27 million Indian customers who use its product regularly, Fair & Lovely has successfully launched new product formulations from lotions to gels and soaps.

10 | P a g e

V. MACROENVIRONMENT ANALYSIS
Technology
Greater access to media and internet through Television, newspapers, billboards, magazines etc. both in rural and urban areas has increased familiarity with and awareness about the cosmetic industry products in the general public. Innovative methods to reach out to & interface with the customers using a host of Smartphone applications are being devised by cosmetic brands. This has been possible because of advances in mobile technology. Technologies like oil control, anti-wrinkle, pimple remover, UV protector etc. have come up in the industry through intense research & these are being exploited by almost all the players, launching their own lines of differentiated products.

Economic
India‘s domestic cosmetics industry is set to grow to US$5.5 billion by 2014, according to the Associated Chambers of Commerce and Industry of India (ASSOCHAM). The skin-lightening cream market alone was worth US$432 million in 2010 and growing at 18 percent annually. Despite rising incomes in Asia, many still cannot afford professional skin lightening treatments offered by dermatologists. Over-the-counter creams and lotions are an affordable alternative. Due to the rise in disposable income and enhanced awareness with the help of larger penetration of media, fairness cream in India is experiencing stronger demand. Due to the increase in organized retailing and trends towards tapping untapped potential of men‘s segment, Indian fairness cream market is poised for further growth.

The pricing for different products for Fair & Lovely is shown below:

Product
Fair & Lovely Ayurvedic Care Face Cream 50 gm Fair & Lovely Max Fairness For Men 50 gm Fair and Lovely Face wash 100 gm Fair & Lovely Advanced Multi Vitamin daily fairness expert 25 gm Fair & Lovely Multi Vitamin Face Wash 50 gm Fair & Lovely For Ever Glow For Ageless fair skin 25 gm Fair & Lovely Advanced Multi Vitamin 50 gm Source: http://www.bigbasket.com 90 90 95 45 49 59 85

Price (Rs.)

Exhibit V
11 | P a g e

Social
Fair & Lovely had typical ads for like 20 years which mainly showed that before using the cream the girl is dark looking and is not successful, and when she uses Fair & Lovely she becomes confident and her career starts flourishing. Later when they were sued by the AIDWA in 2002, they changed their strategies. The company started working towards the empowerment of women by ―Fair & Lovely Foundation‖ and they started with various women-oriented projects, like Shikhar, Swayam, Survana and many more. They also assist deserving women in pursuing their educational goals by means of scholarship. Such initiatives have greatly helped in damage building and increasing the goodwill of the company, which was initially accused of perpetrating racial discrimination through advertisements.

Demographics
Beauty and Personal Care industry has shown tremendous growth in terms of volume and value both over the past three-four years. Rise of income for young population and availability of disposable income has fuelled this growth. India‘s per capita income rose to Rs. 5729 per month in February 2013 as per CSO. Though per capita expenditure on cosmetics in India is the lowest (approximately Rs.30/-) as compared to developed markets which is close to Rs. 1600/-, yet the cosmetics industry is expected to grow very fast due to the dominance of mid and lower ranged cosmetic products which capture around 80 per cent of the market. Even the men‘s segment is witnessing rapid and robust growth and emerging as the focus segment. Since Beauty products have a greater penetration in urban market and a typical urban consumer is looking beyond the utility aspect of a product to seek intangibles like brand, present ability, groomed and lifestyle statement associated with the product, the industry has huge potential for growth into premium segments from low cost products.

Exhibit VI

12 | P a g e

Culture
Indian society feels that a lighter skin tone reflects a higher status and is more attractive. Skin colour has been identified with social class. Brahmins, at the top of social hierarchy were traditionally fair, while lower castes has darker complexion. Products like Fair & Lovely were invented to exploit the same cultural tendency. But the move backfired as their advertisements favoring lighter colour tone generated much negative publicity. The company should have done more research into current cultural patterns of perceived beauty and the modern roles of women before executing the campaign. Consumers above a certain age for sure and most, overall believe in a host of traditional approaches that have been developed over the centuries to attain a blemish-free, glowing complexion like applying saffron, milk, curd, and turmeric pastes and packs. Fairness creams today have incorporated this fact into launching herbal and Ayurvedic products, too, with some portion of above ingredients.

Legal
The company faced severe criticism from their ads, stating that their portrayal of women was false, demeaning and discriminative. Activists began to speak out against Fair & Lovely. The women‘s association appealed to the National Human Rights Commission alleging that the ads were offensive in three ways:    The ads were racist against dark-skinned women They were promoting a son preference by parents They were insulting to working Indian women

The Human Rights commission passed AIDWA‘s complaints to the Ministry of Information and Broadcasting. The Ministry of Information ruled that the campaign violated the Cable and Television Network Act of 1995, which strives to ensure no ads promote discrimination on the basis of gender, race, creed, color, caste or nationality. As a result of the backlash, the company discontinued the ads in March 2003.

13 | P a g e

VI. CONSUMER BEHAVIOUR FAIRNESS CREAMS
Objectives of the study
  

TOWARDS

To analyze the relationship between a specific brand and its buying behavior To assess what factors influence the buying behavior of the consumers To understand the decision making process of individuals and groups

The consumer buying process can be illustrated as follows –
  

Weather Beauty Handsomeness Friends

 Disappointed Will not buy again  Delighted Will tell to family/ friends

   

Stores Ads Family/Friends Self

Buys the cream

  

Price Effectiveness Time

Exhibit VII - Consumer buying process
We conducted an online survey to gauge the behavior of consumers in various age groups and received about 35 responses. Besides, we also conducted face-to-face interviews with 6 people – 3 females and 3 males who are currently using Fair and Lovely (Women/Menz) and captured their responses. Most of the consumers did their informtion research either though magazines or recommendations from spouse/friends. Parents were also a major trigger for the decision process. The fariness 14 | P a g e

cream was bought predominantly from retail or grocery stores near home (80%) instead of buying from exclusive outlets or online. The value proposition according to the consumers was spread across the following two major benefits  Fairness - 71%  Pigmentation - 23% According to the theory of Abraham Maslow, we tried to arrange the human needs for a fairness cream in a hierarchy

From the online surveys, we had the following demographic distribution -

15 | P a g e

We also observed the following distribution in terms of the occupation of the consumers, which can be considered as a proxy for income levels -

The distribution of consumers who use Fair and Lovely as opposed to other fairness products is -

16 | P a g e

Also, the attributes which seemed important for their evaluation and hence the final decision process were

The buying behavior of consumers was also analyzed using the time period for which each consumer was using the same product, thus reflecting the frequency of buying alternate products occasionally. Indirectly, it also provides data for customer‘s brand loyalty.

The face to face interviews conducted are summarized below 17 | P a g e

18 | P a g e
CUSTOMER 1 CUSTOMER 2 CUSTOMER 3 CUSTOMER 4 CUSTOMER 5 CUSTOMER 6 CUSTOMER 7 Female Female Female Female Male Male Male 48 21 42 30 32 18 22 Housewife Self Employed Doctor Software professional Vicco Turmeric XLRI Store Manager Olay Moisturizing Cream Peers and advertisement s N.A. TV Ads Fair & Lovely Student Student Fair & Lovely Olay Moisturizing Cream Parents Joy Fairness & vanishing cream Self/ parents Garnier Powerlight Self Self Moisturizing plus fairness for oily skin N.A. Brand Ayur None Lower chemical Level Brand Image & quality Moisturizing plus fairness TV Advertisement s Moisturizing plus fairness Brand image None Pigmentation and acne Natural product /less chemicals None N.A. N.A. Brand Image None Brand Image 2 Ayurvedic N.A. Amway face Cream 4 Olay Himalaya cream 4 4 None Nivea (Menz) 3.5 4 3 4 Maybe No Maybe Maybe Maybe No No Retail store Online store Retail outlet Retail store Retail Received as promotional 12 months 6 months 10 - 12 years 24 months 12 months Retail store 24 months 12 months

QUESTIONS

Please state your gender

Please state your age (years)

Please indicate your occupation

Which fairness cream do you use?

Who influenced your purchase decision?

What problems does it solve?

Which attributes seemed important while buying?

How many alternatives did you evaluate?

Which alternative product would you prefer?

How satisfied are you with your product?

If your product isn't available, would you instantly buy one of the alternatives?

Where do you buy your product from?

How long have you been using the same brand?

Based on the above data, we conclude the following post purchase satisfaction level Brand Loyalty (Fair & Lovely) 52 % Average Satisfaction Level (out of a scale of 5)

Fair & Lovely Garnier Fairever Others

3.375 3.5 3.45 3.24

Consumer Behavior Analysis
 Evaluation of alternatives of 3 or more brands is quite less (13 %) as compared to 1 or 2 alternatives - the behavior tends towards low involvement  Prominent age group of users was found to be 20-35 years  As per our survey, students and employees are major users of fairness creams due to more interactions, exposure and requirements for being presentable and noticed.  Around 66 % users prefer Fair & Lovely. Fairever is at a distant second position (16%)  Fairness is the major value the product provides, while long term treatment solutions like acne removal, pigmentation, age effects reduction etc. are not the immediate concerns of consumers.  More users (42 %) claimed to have been using the product since more than 6 months indicating valued relationship with the product and satisfaction with the brand

Exhibit VIII - Buying behavior matrix

19 | P a g e

Conclusion
Consumers surveyed are not only price-sensitive but are also aware of other product attributes and value propositions while making their essential purchases. They are watching out for brand popularity, easy availability and chemical levels in the product. They are not looking towards fairness creams for treatment to their problems like acne, aging only. They want fairness for its own sake. At the same time, consumers can be perceived as loyal if their expectations are met & thereby lasting relationships can be built. On the other hand, consumers surveyed have expressed low involvement in the purchase process.

Suggestions
 Companies should focus on magazine advertisements and word-of-mouth promotions  People also preferred products based on retailer suggestions. Hence retailers should be given more credit time and credit facility. They should be given incentives, gifts on large sale volumes.

Limitations of the study
 Limited sample size - As per the Central Limit theory, more the samples, better the inferences.  Efforts were made to make the sample representative of the consumer population, but the sampling may not be truly representative  Non co-operation of some respondents  Interviewer‘s interpretation maybe skewed towards his/her own beliefs The survey floated online is attached in the annexure.

20 | P a g e

VII. COMPANY & COMPETITOR ANALYSIS
Objectives
 Comparison of HUL‘s Fair and Lovely (FAL) vis-à-vis the competition.  Analysis of strategies employed by HUL which has helped it reach the no. I position in terms of market share and comparing them with respect to the competitors.  Overview of the marketing mix which tends to set FAL apart as a brand.  A look at the profits of Fair and Lovely (FAL) vis-à-vis the competition. The BCG matrix is given below.

Strategy
Sales – FAL extensively uses a mixture of both push and pull strategies to increase its market share and sales. This is evident in the TV campaigns, where FAL uses a push strategy to reinforce the belief that ―fair is beautiful‖ to create a demand for fairness products. Since FAL is the market leader in this segment, any increase in the total demand directly benefits their market share and revenues.

21 | P a g e

Marketing Mix
PRODUCT
Multiple product categories – FAL has been a pioneer in identifying the latent needs of the Indian consumer. With FAL Advanced multivitamins, FAL Ayurvedic care, FAL Antimarks, FAL Forever glow, FAL Winter fairness and Menz active(M), FAL offers the customer a wide portfolio of products, and thus caters to the need of various segments over all capturing 53% of the total market share. In contrast to this, the market follower, CavinKare has only Fairever to offer as competition but still manages 15% of the market share. The challenger, Emami has been successful in capturing 6 % of the market with naturally fair, Boroplus, Fair & Teen, Fair & Ageless and Fair & Handsome (M). The Market Niche, P&G Olay caters only to higher income groups, and is targeted at woman over 30, with 4 high end products, namely, Natural White, White radiance, Total effects and Regenerist.

PRICE
Comparable prices – FAL products are on an average priced very closely to the closest competition i.e. Fairever, at INR 85 (for 50 gms). Emami is priced marginally lower at INR 76 (for 50 Gms). However Olay is priced INR 325 for the same quantity. It can be easily be justified since Olay is serving to a different customer segment. Availability of affordable sachets – FAL sells their products in sachets of Rs. 5, Rs. 10 etc. which allows lower income group to purchase the product. While Fairever, Naturally fair, Boroplus etc. also follow a similar strategy, it has not been replicated by Olay, which caters primarily to the upper middle and high income groups. Discounts and offers – With the increase in competition, FAL has time and again come up with promotional offers like BOGOF. They also gave discounts on the products, or increased the quantities while keeping the price at the same level. This is one of the many ways of HUL has tried to address the market through pricing strategies. All income levels – FAL does not have a fixed strategy for different income groups. They look to target the entire fairness cream market through their product portfolio and pricing. On the other hand, competitors like P&G‘s Olay targets only the higher income consumer group.

PLACE
Distribution network – FAL has the advantage of HUL‘s wide spread distribution network, comprising of 2900 stockists, 1 million direct outlets and 6.3 million outlets totally. The age of three and a half decades gives FAL an inherent advantage from the distribution and outreach point of view which is a strong reach to challenge. Emami has also been building a strong reach since 1984 and has a network of 2500+ distributors and 4 lac outlets. Though not comparable to HUL, but it still has a lead over CavinKare, which entered market only in 1999. Olay entered the 22 | P a g e

Indian market in 2007. Even though it is meant for select customers, it enjoys the robust distribution channel of P&G.

PROMOTION (PROMOTED AS WORLD’S NO.1 FAIRNESS CREAM)
FAL promotes itself as the world‘s no. 1 fairness cream. The key concept is ―Fair is beautiful‖. CavinKare‘s Fairever has picked a very similar ―Fair is successful‖ theme for its promotions. Emami and Olay on the other hand rely hugely on celebrity endorsements for branding. Apart from this FAL does not miss any opportunity to meet its target customer at fashion and beauty events. A strong rural outreach as a part of its CSR initiative has helped establish a strong company image. Some of the promotion activities of HUL are discussed below. Media campaigns  TV advertisements – FAL‘s TV campaigns have evolved with the changing times and are strategically aired at the prime TV viewing hours.  Newspaper – Constant promotions in newspaper ensured FAL outreach and connect with people.  Hoardings – This was another attempt to reach the masses in every possible way.  Radio – Initially meant for the population who used radio as the major source of entertainment, FAL now employees radio promotions even in tier I and tier II cities where FM channels area gaining popularity. Fashion events Sponsoring fashion shows and events to reach the target customer who are primarily in the upper middle class group or aspiring to be there. Fairness meter Fairness meter, which accompanied every pack of FAL sold, helped the customer judge their fairness progress and thus the effectiveness of the cream. This display of confidence went a 0long way in establishing rapport with the customer. No brand ambassador FAL, strategically always used new emerging faces for its advertisements. The idea was to make the average Indian feel that each of them had a shot at accomplishing their dreams, just like the models in the ads. Thus they stayed away from brand ambassadors. Rural marketing FAL launched a rural marketing initiative which recognized opinion leaders in the targeted villages and promoted the brand through them. The opinion leaders in this case were educated women in their mid 20‘s seen as trend setters and role models. They were christened ‗FAL didis‘ and they educated the women in vocational skills like cooking, embroidery etc. which enabled them to become ―sarva gun sampan‖ (i.e. replete with all qualities). This initiative bore fruit, and helped HUL increase its presence in rural markets. 23 | P a g e

FAL fairness challenge FAL fairness challenge was an open challenge to all its competitors to showcase that FAL is more effective than any other product in similar price ranges. The challenge stated that if any consumer could find a fairness cream within Rs. 300 which was more effective than FAL, HUL would pay the consumer Rs 5 crore. The tagline for the challenge ―Lagi 5 crore ki shart?‖ became famous through extensive advertisement.

Competitive Strategy
As the market leader, HUL has adopted the strategy of expanding the total demand and protecting the current market share. The competitors are playing as per their position in the market. The market follower, Fairever, is challenging HUL by playing along the competition. However, we do not see it rolling out variety of products to serve different markets. Market challenger, Emami is targeting the firms of its own size and protecting its own market share. Olay, as the nicher, is playing on product differentiation.

Profits
 FAL has a market share close to 56% in terms of value in the fairness cream category.  It is the third largest brand in the HUL portfolio after wheel and lux in terms of valuation.  FAL‘s latest sales report points out a figure of Rs 1300 crore, where overall fairness cream sales are projected to tune of Rs 2570 crore.  FAL has successfully increased its annual sales by 13% in FY 2012-13. However this is much less when compared to the 32% increase in CavinKare Fairever. Emami perceived an average growth of 19.2% on its three products, Fair and Handsome, Naturally fair and Boroplus while Olay too registered an 18% increase in the annual sales. For more details refer annexure.

24 | P a g e

VIII.

CUSTOMER ANALYSIS

Segmentation
The market for the fairness creams can be divided both demographic parameters, such as income, age and occupation of the customers as well as along the benefits sought from the product. As substantiated in the following table, a low to middle income customer would prefer using a brand targeted at the middle class, like Fair & Lovely, whilst the better endowed users aspire for premium products such as Perfect Radiance, by Fair & Lovely.

DEMOGRAPHIC
Age The main target customers are segmented as the age group 15-35 years. The user group is 15-50 years. Gender Female: Fair & Lovely, Anti-marks, Ayurvedic, Multi-vitamin, Winter Fairness, etc. Male: Fair & Lovely Max fairness for men, Menz Active Cream. Income Low up to Rs. 90,000 p.a. (Deprived), Lower middle Rs. 90,000-200,000 (Aspirers), Middle Rs. 200,000-500,000 (Middle class)

BENEFIT SEGMENTATION
The following table charts out those brands that a customer seeking different benefits are likely to favour. It divides the market into six distinct segments based on the behavioral patterns exhibited by the consumers. Some users aspire for a brand for emotional and self-expressive benefits. These customers have been surreptitiously termed as Vanity buyers. Similarly, the Price sensitive buyer is likely to rate affordability higher than other parameters while the Inquiring buyer is likely to be the early adopter of product innovations, such as the Ayurvedic or multi-vitamin skin creams.

25 | P a g e

Segment Name Main benefits Sought Behavioral Characteristics Personality Characteristics Life Style Characteristics

Vanity Buyer

Attribute Buyer

Price Sensitive Buyer

Finicky Buyer Suitability to Skin type

Lazy Buyer General Purpose fairness cream Heavy Users Casual choice Laid-back

Inquiring buyer Special ingredients for fairness Look for search abilities Analytical Conservative

Brand Users of high-end brand Highly Social Image conscious

Benefits like anti-blemish, Affordability spot eraser Resultoriented Utilitarian Active Heavy users Seeking value for money ValueOriented

Trial users

Narcissist Perfectionist

Exhibit IX Benefit Segmentation

Targeting
The target segment for Fair & Lovely is the Women in the age group of 18-35 years. Also the lower income groups say the aspirers & the deprived are the target market price-wise; HUL also has been known to market the product in affordable small sizes in pouches to facilitate purchase by the poor. Men‘s fairness segment in 2010 totaled Rs. 186 crore (Rs 1.86 billion) out of the total Rs 2,200 crore (Rs. 22 billion) plus fairness cream market, according to Nielsen - but one that is growing at a fast clip of 31 per cent. Hence, as a target group, men who take to grooming are very attractive these days. The product-wise target segments for F&L according to the benefit segmentation are shown in the following table. Product Target Fair & Lovely Ayurvedic Care Face Cream Inquiring buyer Fair & Lovely Advanced Multi Vitamin daily Attribute fairness expert Fair & Lovely Multi Vitamin Face Wash Attribute buyer Fair & Lovely For Ever Glow For Ageless fair Attribute/Inquiring skin buyer Fair & Lovely Antimarks cream Attribute buyer Fair & Lovely Winter Fairness cream Inquiring buyer Max Fairness for Men Finicky buyer Exhibit X Product Target segments

26 | P a g e

RECOMMENDATIONS
Fair & Lovely has not exploited the potential presented by some of the segments of the market, most notably the ageing women population and the teen market. Depth interviews with respondents from each of these segments revealed the need for women between 30 and 50 of age to stay "wrinklefree and young". An anti-ageing cream with wrinkle lift properties would satiate the needs of these women. Similarly, the usage of the product in the teen‘s market was surprisingly low. Specific problems like pimples could be cured, by providing a skin cream with anti-bacterial and antiinflammatory protection. Our survey regarding Consumer Behavior pattern revealed that most women in the age group 12-35 years perceive moisturizing as one of the desired attributes of a cream. Tapping this market in India by launching a fairness cream with moisturizing cream will benefit F&L because since it already has a user base in this segment (using General purpose fairness cream). F&L moisture plus has already been released in UAE. Pricing it competitively in India is a must. Fairness creams have a tendency to leave residue on the skin. Hence a fairness lotion would be beneficial for target customers who perceive the above tendency as a barrier to using face cream. Total body solution in the form of body lotion can also be launched.
The Ansoff‘s matrix for F&L is depicted below:



 Existing market 

Existing product Convert non-users in rural  by reducing price, increase circulation of smaller SKUs Increase frequency of  usage by changing directions of use & through commercials Urban – Improve packaging  of Menz range and Spot Eraser Pen Expand geographically Exhibit XI Ansoff’s Matrix 

New market



New Product Product reformulation strategy like Ayurvedic cream Product feature addition strategy like wrinkle-free, antibacterial for teen market, etc. New product development like men‘s fairness cream, moisturizing fairness cream, body lotion, etc. Related products like soap, showering gel, etc.

Value Proposition
After extensive research, it was proven that Vitamin B3 could indeed lighten the skin. And thus, Fair & Lovely, the world‘s first safe and effective skin lightening product, was born and launched in 1975. Today, at the heart of this technology is Unilever‘s synergistic combination of Niacinamide and triple UVA+UVB sunscreens (which give broad spectrum UV protection).

27 | P a g e

The key player in our active mix is Niacinamide (Vitamin B3), which has been proven time and again to be a safe, reversible cosmetic skin and spot lightening agent. A unique blend of Vitamin B3 along with Vitamin C, Vitamin E and Vitamin B6 boosts the core efficacy of the product by providing potent antioxidants, added spot lightening and healthy skin benefits. Other actives, such as glycerin (the world‘s best known moisturizer), allantoin (a skin benefit agent) and skin identical fatty acids (e.g. stearic acid) also help contribute to delivering overall great skin appearance. These multiple ingredients work on different steps in pathways that are known to regulate and affect pigmentation and general skin appearance, and thus have a gentle yet perceivable effect on darkened skin, spots and overall skin tone, thereby delivering expert treatment like fairness.

CUSTOMER PERCEIVED VALUE:
The Customer Perceived value of a product is the difference between the prospective customer's evaluation of all the benefits and all the costs of an offering, in comparison to the perceived alternatives. To actually set a final price to a product, an organization's costs would only serve to set a floor price. For entrants, a reference floor is provided by competitor's prices and the prices of substitute like products. Price ceiling is set by customer's assessment of the product's unique features. So, in order to come upon the final price, customer's perceived value fixes a base to pricing strategy. For a 50 ml package, competitive advantage could be sustained if priced at INR68, as explained in following exhibit.
Specifications Price Equivalent to the competitor – Emami Fairever (50 mg) Price Premium for Lucent Proteins –Extra Radiance Price Premium for Multivitamins and Bio-proteins Price Premium for Superior Packaging Price Premium for stripe presented with package Discount value for Emami’s Ayurvedic proposition Final Price (50 mg) Price Increments (INR) 63 4 3 1 1 -4 68

Exhibit XII Customer Perceived Value

Positioning
Fair and Lovely – “Kaale ko Gora Bana De” The cosmetic industry uses the mystery of scientific formulae to capture the minds of the consumers. Fair & Lovely as a branded product of HUL is positioned as a cosmetic cream that lightens skin colour. The cream is technically called a "skin lightening cream" and promises making the complexion fairer in four to six weeks. As the fair and lovely website points out ―Our fairness products are based on Unilever's Patented Skin Lightening technology that comprises of a synergistic combination of Vitamin B3 (Niacin amide) with UVA and UVB sunscreens which work together to protect the skin from darkening and gently, safely lightening the skin‖. Surprisingly, all

28 | P a g e

these terms matter to consumers when they buy products, although they might not be completely aware of the meaning of these jargons. In a country like India, people are obsessed with fair skin. Beauty and a high caste status are associated with being fair. Everyone believes that the fairer you are, the more eligible you are deemed for marriage. It‘s these consumer perceptions that HUL leverages and promotes Fair and Lovely as a fairness cream, not only for women but also men. The positioning remains the same, except males are asked the question "Aap ladkiyon ki fairness cream kyun istemaal karte hain?" (Why do you use female fairness creams?) A very interesting point to be noted is on the Fair and Lovely website which says that "The effect is reversible. The skin will return to its original tone in a few weeks, once you discontinue to use the product. In fact this is one of the key safety attributes in all our products." The picture it is trying to portray is that if you want to continue to be fair, please keep using our products, Fair and Lovely. The ad campaigns over a period of few years have been centered on the following themes –  In the early years – Back in 1970s, it was launched as a woman‘s accomplice as there were no products to enhance fairness and hence beauty.  Getting the perfect boy - In 2000s, HUL had launched an advertisement showing a dark-skinned woman who was neither getting a job nor a boyfriend until she started using Fair and Lovely. This ad became the talk of the town soon after its launch and had to be withdrawn soon after.  Better job prospects - HUL then tried to change its positioning by showing that all those who use Fair and Lovely are achievers in life. The ad that so followed showed a girl achieving her dreams of becoming a cricket commentator. However, this ad was also withdrawn as many could not relate to it.  Changing her destiny - One commercial featured a father struggling financially and constantly wishing for a son, while his dark skinned daughter looks on helplessly and demoralized because she cannot help in supporting her family. The ad then moves on to a clip of the daughter after using Fair & Lovely, now dressed in a mini-skirt working as a flight attendant and taking her father to a 5-star restaurant. All these ads faced a lot of criticism and had some had to be rolled back. The major concerns raised werea) The ads were racist against dark-skinned women b) They were promoting a son preference by parents c) They were insulting to working Indian women Shortly after HUL pulled the ads off the air; it launched a new charitable cause called the Fair & Lovely Foundation, which vowed to encourage economic empowerment of women across India. The foundation now provides resources in education and business to millions of women who use or support Fair & Lovely. 29 | P a g e

Some takeaways from this earlier positioning strategy are  Understand the culture of the target markets thoroughly  Keep up with the changing patterns  Live up to the ethical standards set in each society After all, many American women prefer self-tanning lotions to make their skin darker and would find it amusing to use fairness creams at all! In order to determine the ideal positioning of the brand, we conducted thorough surveys and one on one interviews. The generic customer profile using Fair and Lovely is as follows –

Current customer profile with respect to positioning of FAL In general, consumers have good and bad things to say about fairness creams. They believe that fairness can be associated with confidence. But the survey results also revealed that such creams do not fulfill their claims and that fairness is not the only functional benefit that consumers are looking for in a face cream. There are many perceptions about Fair and Lovely as a brand, some of which are positive. For example, since it is the oldest fairness cream, it has become a household name particularly in the southern part of the country. But Fair and Lovely is believed to be a product for the middle class by and large and its promotion strategies are dismissed as regressive in nature. The positioning strategy of the brand becomes apparent from this exercise and it clearly equates fairness with beauty and success.

30 | P a g e

The perceptual map for FAL & some of its competitors is given below.

31 | P a g e

IX. MARKET POTENTIAL SUGGESTIONS
Defining market potential

&

STRATEGY

Market potential analysis is a strategic tool to identify market opportunities and invest resources where they will have the greatest return in the long run. Market potential analysis can help to target markets with high growth potential in the future. Market potential analysis enables companies to: • Categorize countries as lead markets, break-out markets or emerging markets. • Quantify market potential for a given product by country, region or globally, now and in the future. • Identify growth drivers and barriers in those markets. • Understand how to exploit growth markets by tailoring marketing, product development and production strategies to meet customer demands and overcome market barriers. With growing consciousness about self looks and more disposable income, sale of fairness products is on increasing trajectory. Products like Fair and Lovely are looking for tapping so called Big Emerging markets as new product markets to launch their product.

Market Potential Influencers
There are lot of drivers affecting market potential of any product. As far as this study is concerned, we are keeping our focus on two key factors: a. Demand drivers b. Demand inhibitors Demand drivers i) ii) iii) iv) Utility of fairness creams Disposable income Rise in organised retail Increase in male grooming

Utility of fairness creams This is foremost important demand driver for FAL or any other fairness product as potential customer‘s value for a product will only trigger the demand. 32 | P a g e

Disposable Income As demand is there, but being exposed to a number of substitutes, final purchase will be triggered by consumer‘s level of disposable income. A product will be finally purchased if value delivered by the product lie in range of disposable income of target segment. Demand Inhibitors  Presence of harmful steroids  Availability of substitute products Factors such as cultural, lifestyle, social can play negative role also as far as demand generation is concerned.

Market potential estimation
a. Top down estimation of market potential size b. Elaboration of market types c. Analysis of market segments Top down estimation of market potential size Through studying sector growth vis-a-vis nation wealth, geographies are broken down in three broad categories: lead markets, likely break out markets, longer term emerging markets. For FAL, lead markets can be India, Sri Lanka, and Pakistan where money spent on fairness creams share a large portion of consumer‘s budget. Long term emerging markets can be South Africa, Nigeria, and other continental countries where awareness about cosmetics is increasing and such markets can be tapped. Such breakdown of geographies is important as far as introduction of new product is concerned. For FAL, it will help where its new variant to be introduced. E.g. People in South African countries and Indian sub-continent countries have obsession towards fair skin. Market potential analysis offers a way of quantifying the potential of widely diverse markets without having to conduct costly primary research on each market.

33 | P a g e

Market Sector Household (Male and Female )

Wealth Household income distribution adjusted for PPP

Utility Fairness, Anti-ageing, Confidence, Employability

Barriers Anti-effects, Varying skin, language.

Exhibit XIII Framework for sector analysis of market potential Income distribution in India as per NCAER-CMCR estimation is as:

A qualitative research in this regard can help determining market potential for any product. A brief and crisp data about FAL and cosmetics industry is tabulated as: Size of the Industry The size of Indian Cosmetics Industry globally is $ 274 billion, while that of the Indian cosmetic industry is $ 4.6 billion. According to analysis and figures given by the Confederation of Indian Industries (CII), the total Indian beauty and cosmetic market size currently stands at US$950 million and showing growth between 15-20% per annum. Industry sources estimate a rapid growth rate of 20% per annum The overall beauty and wellness market that includes beauty services stands at about US$2,680 million, according to CII estimates.

Market Capitalization

Output per annum Percentage in World market

34 | P a g e

Industry is growing in leaps and bounds. With foreign entries and growing awareness, market has huge degree of potential. To tap that, a right mix of marketing strategy needs to be adopted. Value creation and value communication is important in this regard. Seeing huge potential in men‘s category, FAL should use its value delivery chain to capture more share of the sector.

Forecast
New Markets Fair & Lovely will now extend into big new geographies with a mix that leverages its strengths but also adapts itself for these new geographies and cultures. This is a huge play for the brand and will also have a significant impact on the countries that it enters – on their P&L and on their market positions in Personal Care. FAL White Spaces is one of the Big Bets for the Skin care category globally.

Planning & Future Strategy For 38 years HLL has depicted Fair & Lovely (F&L) as a girl's best recourse to better her prospects in life and career. Adding that touch of glow to her face, it would boost her confidence. As a result, the fairness cream has lorded over the Rs 2,700-crore fairness market. But Fair & Lovely's charm may be fading, as the Rs 1,500-crore brand, (with a market share of close to 55 per cent), has been struggling for the last few quarters One of its blockbuster products in its portfolio, which until a few seasons ago, consistently delivered double-digit growth, was responsible for pulling down the performance of personal care - a segment that gives the Rs 25,810-crore company nearly 30 per cent of its overall revenues.

Current brand status
For long, the brand has catered to the Indian pre-occupation with fair skin. However, its customers in urban centres have since moved on to other forms of skincare such as multi-purpose moisturisers, antiageing creams etc. The re-launch saw the core variant being positioned as a multi-purpose product that not only lightened skin colour, but also helped minimise dark spots, remove suntan and dead cells and reduce dark circles. HUL also increased the price of Fair & Lovely by about 14 per cent. That is when its relevance with rural audience who are sensitive to a price hike of INR 1-2 also got affected. Coming at a time when consumers were cutting back on discretionary spends, the price hike, pushed users to the extreme of spurning the product. When a household has to choose between essentials and those products whose purchases can be deferred, a fairness cream will certainly fall in the latter category. The colour of the cream had been changed from white to pink and the packaging was recast during the re-launch. As a result, there has been a lack of consumer acceptance of the advertised makeover, especially in areas that do not have wide-ranging media access. Consumers there were unable to see the communication around this. As a result of which in large places, which are media-dark and small rural markets, (making up) large parts of India that still don't get 35 | P a g e

enough media, there were concerns about this not being the original, but a spurious product. Fair & Lovely, which till now had triggered a thriving market of knock-offs, was at the receiving end. While the men's fairness-cream market, which had resorted to Fair & Lovely for decades, is growing in double digits, the market for use by women, which is the bigger of the two, is growing at about 7-8 per cent. In the last few years, consumers, especially in urban India, have evolved in their preference for skin lightening solutions, moving to products that appear to have an international appeal and edge to them. Everyone from Nivea to Procter & Gamble, L'Oreal, Garnier, Emami and Dabur have addressed this with products that boast of either new technology (such as Olay Regenerist or Nivea's Skin Whitening Solutions) or natural ingredients (such as those from Dabur and Emami). HUL's diversified skincare has fared well too. It has innovated across brands such as Dove, Ponds and Vaseline with skincare for ageing, skin-lightening etc. Moreover, the paradigm of the daily skincare cream has changed from fairness and antiseptic creams of yore. New categories such as beauty-benefit creams are being positioned as multi-benefit products that have moved away from the notion of good skin being synonymous with fairness. Fair & Lovely's recent re-launch had tried to address the demands of a changing audience. Only, urban areas no longer offer Fair & Lovely traction as earlier. That means the rural and semi-urban areas offer the only hope for the brand. Hence, a setback in these markets has been so pronounced on the brand. The company will now try to revive the magic of Fair & Lovely in these markets.

Men’s grooming- need for aggressive marketing A fairness cream for men represented a completely unexplored opportunity for the following reasons:

36 | P a g e

 The male skin in India was three times more exposed to the sun‘s UV rays, five times more exposed to pollution, twice more exposed to stress and considerably more abused by abrasive shaving blade action than women‘s skin; and few cosmetic products addressed this reality.  The Indian men spent more time on grooming than ever before; an average 20 minutes in front of the mirror each morning compared to 18 minutes by Indian women (Gillette India study).  There was an increasing incidence of the fact that active earners linked present-ability with career success. For instance, the high earning 21-40 age group across men accounted for 71%of the customers visiting Kaya Skin Care Clinic. Emami in collaboration with Activor Corp, USA had created a unique fairness cream for men with a breakthrough Peptide complex patented in the USA. This wonder molecule peptide works on the collagen structure of male skin and dramatically improves skin texture and fairness in just 4 weeks. Active ingredients regulate production of melanin. Natural sunscreen protects against UV rays. Peptide in combination with Vetiver and Rose Water makes skin fair and fresh with a pleasant cooling sensation. The following benefits are emphasized in the promotional campaign for Fair and Handsome.  Improves fairness in 4 weeks.  Protects against sun‘s UV rays.  Moisturises skin even after shaving.  Relieves stress and fatigue signs. In response to Fair and Handsome‘s entry in November 2005 Unilever introduced Menz Active, a breakthrough fairness cream especially tailored for men in 2006.Menz active is priced little lower than fair and handsome.

Size of the Industry
The Indian FMCG market is valued at USD 1 billion (Rs.45,000 crore), growing at 7-8 per cent per annum. The fairness cream market was estimated at Rs. 600 crore in 2000. According to one HLL spokesperson, about 20 percent consumers of Fair & Lovely — one of HLL‘s power brands — were men. Given that sales of Fair and Lovely were estimated at Rs.500 crore in 2005, men contributed Rs. 100 crore.

Growth
The fairness cream market has been galloping at 25 percent p.a. as compared to the overall cosmetic market growth of 15 per cent p.a. From Rs. 384 crore in 1997-98, the fairness product market in India leapfrogged to Rs. 558 crore in 1999-2000.

37 | P a g e

Conclusion
Today Fair & Lovely is the market leader with about 57% market share but in the era of increasing competition, erosion of market share is more a reality than mere speculation. With products like Emami's Fair and Handsome and CavinKare‘s Fairever hitting out unexpectedly, Fair & Lovely should be proactive and increase the points of difference with its competitors. Moving beyond the message of fairness as beauty must be the centre of its marketing communication. The recommendations provided by us would do just that, extending the core message of the brand through to the product and communicating it by various promotional strategies. In fact, this is where the growth path of the band, in the coming few decades, lies.

38 | P a g e

X. References
Benefit Segmentation- By Russel Hale Positioning: Al Ries and Jack Trout http://www.dnaindia.com/blogs/1581513/post-fair-and-lovely-kaale-ko-gora-bana-de http://www.fairandlovely.in/ http://www.hul.co.in/brands-in-action/detail/Fair---Lovely/296510/ http://www.unileverme.com/our-brands/detail/Fair-and-lovely/333481/ http://www.pearsoned.co.in/philipkotler/ http://www.digitalimpulse.in/insights/fair-and-lovely/#.UicaadJHKYE

39 | P a g e

XI. APPENDIX
Online Consumer Behavior Survey
Consumer Behavior Analysis * Required 1. Please indicate your gender * Mark only one oval. Female Male 2. Please indicate your age group * In years Mark only one oval. 15 - 20 20 - 35 35 + 3. Please indicate your occupation * Mark only one oval. Student Employee Housewife 4. Which fairness cream do you use? * Mark only one oval. Fair and Lovely Fair and Lovely Max Fairness (Menz) Other: 5. Who influenced your purchase decision? * Mark only one oval. Parents Spouse/Friends Online resources Magazines/Newspaper Self 6. What problems does it solve? * Check all that apply. Fairness Pigmentation Acne Age effects 7. Which attributes seemed important while buying? Check all that apply. Price Availability Portability Chemical levels Fragrance Brand Image Other:

40 | P a g e

8. How many alternatives did you evaluate? * Mark only one oval. 1 2 3 or more 9. Which alternative product would you prefer? * Check all that apply. Emami Fair and Handsome Cavinkare's Fairever Godrej FairGlow Nivea (Men) Nivea (Women) Garnier Men PowerLight Garnier Women Light 10. How satisfied are you with your product? * 5 being the highest Mark only one oval. 1 2 3 4 5 10. 11. If your product isn't available, would you instantly buy one of the alternatives? * Mark only one oval. Yes No 12. Where do you buy your product from? Check all that apply. Retail store Online Exclusive outlets 13. How long have you been using the same brand? Mark only one oval. Last 6 months 6 months - 1 year 1 - 2 years More than 2 years

41 | P a g e

F&L vis-à-vis the Competition
Parameters Fair & Lovely FAL Advanced multivitamins FAL Ayurvedic care FAL Antimarks FAL Forever glow FAL Winter fairness Menz active (M) 53% 1978 INR 85 Largest distribution network, 2900 distributors & over 6.3 million outlets Competition # 1 : CavinKare Fairever Competition # 2 : Emami Naturally fair Boroplus Fair & Teen Fair & Ageless Fair & Handsome (M) 6% 1984 INR 76 2500+ distributors, 4 lac outlets Middle of the road 2007 INR 325 Robust distribution network due to parent company (P&G) backing Focus Competition # 3 : P&G Olay Natural White White radiance Total effects Regenerist

Product

Fairever

Current Market share growth Entry into Indian Market Price (50 gms) Place (distribution)

15% 1999 INR 44 (25 grams) Direct distribution network Middle of the road 1. "Fair is successful" concept. Usage leads to higher self-esteem. "Na mumkin kuch bhi nahin"

Positioning strategy Differentiation 1. "Fair is beautiful" concept. 2. Fashion events to gain mass appeal 3. Rural outreach programs

Promotion

1. Celebrity endorsement 1. Celebrity endorsement through stars in their for Fair & Handsome (Shah middle ages. Claim that Rukh Khan) the secret to their beauty is Olay. 1. Challenge firms its own 1. Product differentiation size Market challenger Market Nicher

1. Challenge the leader Competitive strategy 1. Expand total demand 2. Play along with followed 2. Protect current market share competition Position in market Market leader Market follower

Strengths

1. Second largest market 1. World's largest fairness cream share, growing faster than brand the leader 2. Strong brand recall 2. Strong brand recall 3. Top of the mind name 3. Strong presence in 4. Robust distribution channel South-India

1. First mover advantage in 1. Effective marketing & men’s segment promotion 2. Good distribution 2. P&G backing network thanks to parent 3. Effective in preventing company ageing 3. Market leader in Men’s 4. Robust distribution fairness cream channel 1. High Price 2. Less established brand image 1. Growing skincare market 2. Product development & innovation 1. Presence of established brands 2. Difficult to change customer loyalty

Weaknesses

1. Stronger, established 1. Lack of investment 1. Legal issues hampering brand brands with deeper capacity image pockets 2. Limited market share 2. Lack of product portfolio 3. Established brands 1. FAL foundation & scholarship 2. Growing skincare market 3. Introduction of Menz active fairness cream 1. Several competitors 2. Issues with activists due to colour bias 3. Threat of new entrants 1. Growing skincare market 1. Growing skincare 2. Product development & market innovation 1. Threat of new entrants 1. Market leader in men’s fairness cream aggressively defending its market territory 2. Stiff competition from 2. Growing challenger base established brands

Opportunities

Threats

42 | P a g e

Customer Lifetime Value
Customer Lifetime Value, or CLV, is a prediction of the net profit that can be attributed to the entire future relationship with a customer. It is a very important concept in marketing, since it measures the total cash flow associated with a customer, and losing a customer to competition reduces this value for the firm, while at the same time increasing it for the competition. While crude heuristics to complex predictive analysis are used to compute the value, we have used a simple Net Present Value of money concept to compute the value for a single customer for the Fair & Lovely product portfolio. Assumptions  Margin on the product is taken as 20% on the retail price of Rs. 85 per 50 grams tube, which remains constant.  Interest rates as 6% p.a., remaining constant over the duration  Customer uses the product from the age of 18 to 50 years  Customer buys 1 tube per month, so total of 384 tubes in 32 years  Customer does not change the brand preference through the period CLV = 17 + 17/1.005 + 17/ (1.005) ^2 . . . . . . . . . . 17/ (1.005) ^383 = 17 * (1-((1/1.005)^384))/(1-(1/1.005)) = 2914 The above calculations showcase the fact that each customer is worth Rs. 19681 to HUL over their lifetime.

43 | P a g e