STRATEGIC MANAGEMENT

PREPARED BY:

Alifiya Sherawala – 3955643 Diviya Tolani – 3749083 Ismail Sorathia – 3946794
Mohammad Abdullah - 3916881

SUBMITTED TO:
Dr. Valerie Lindsay
Mr. Harshit Jain

SUBMITTED ON:

18TH December 2012

Table Of Contents | Page No. | Introduction | 3 | Overview of the toilet soap industry | 4-5 | Primary Survey | 5-7 | Porters Five-Force Model | 8-10 | Product Development | 10-11 | S.W.O.T Analysis | 11-12 | The Media Mix | 13 | Conclusion | 14 | References | 15 |

Introduction
The following report is with respect to proposing a business plan. We, as the General Managers of DITRA would like to show how we plan to launch a new soap to add to the product line and step in to personal care category in the year 2013 and achieve the objective to achieve 10 million sales from soap with 20% gross margin.
Al Batha is one of the largest private business groups in the UAE and is more than 50 years old. They generate a turnover of over US$ 1.5 billion and have businesses spread throughout Middle East and North Africa. The Group consists of more than 20 autonomous companies in the diversified sectors of automobiles, pharmaceuticals, contracting, manufacturing, electronics, FMCG, real estate, education and trading. (Al Batha Group, 2006)
Ditra, home & personal care products was established more than 30 years ago to provide spray dried detergent powders for the local market. Today it has evolved into a company that focuses on developing and distributing brands in the home and personal care markets-including the flagship brand TAJ. As the regions leading contract manufactures of multinational products-it inherits world-class manufacturing expertise in home and personal care products. (Ditra, 2011)
Customer’s perception of satisfaction derives from comparison between expectations before using the product and evaluating the product after its use. Satisfaction is obtained when performance tallies with expectations. When performance surpasses expectations, it leads to greater satisfaction. When the performance is lower than that anticipated, it leads to dissatisfaction. Some of those elements that increase satisfaction are quality, necessity and equity. When a customer is highly satisfied with the product, they are likely to be loyal towards that brand which increases profitability. Hence, it is very crucial to understand and gain full knowledge about the industry we are penetrating into, the target customers and factors that influence buying behavior. The toilet soap sector, falling under the personal care category accounts for about 25% of the FMCG industry. (Sarma, Pratap,2011)

Overview of Toilet Soap Industry
Toilet soap is a daily hygiene requirement for cleaning the body. Soaps carry ingredients that might help in moisturizing the skin, killing or reducing bacteria and preventing body odor. This industry has transformed and evolved over the years and so has the reason for purchasing soaps, since skin care has become an essential part of consumer’s daily routine. Several brands started introducing soaps that would not only cleanse the body but would also leave an impact on the skin by incorporating unique ingredients. (Sarma, Pratap, 2011)
Quality, price, availability of products, economic value and attractive packaging are the major factors influencing the purchasing decision. (Sarma, Pratap,2011)
A reputable brand name and a wide distribution network are essential and appealing to customers in this soap market. (Sarma, Pratap,2011)
Soaps can be classified into three categories namely premium, popular and economy. The Premium category includes brands like Dove, Pears etc. The Popular category includes Lux, Dettol, Lifebuoy etc. Camay, Zest etc. come under economy category.
Due to a rise in disposable income, consumers are shifting from the economy segment to buying premium goods. Premiums brands have therefore witnessed a growth of 15%. (Sarma, Pratap,2011)

Since Al Batha’s major target is 60% of the UAE market, followed by 22% KSA market and 18% African countries, we too have focused mainly of the UAE market.
The market is over flowing with competition between leading national brands, MNC’s, and few small brands. The major players in this market are Unilever (Dove, Lux, Lifebuoy), Reckitt and Benckiser (Dettol) and Godrej Soaps (Cinthol). (Sarma, Pratap,2011)
Primary Survey
To have an in depth understanding of the market and consumers, we conducted a survey. This survey was undertaken with the help of primary data collected from 100 respondents; consumers drawn at random in supermarkets and hypermarkets.
A structured questionnaire reflecting preferences of the sample respondents is used in the investigation to find out which soap is currently consumed the most , how our new product will be accepted in the market and what offers and promotions persuades the public to buy a particular soap. In this backdrop, a positive attitude of consumers was noticed towards our product also, it was observed that middle class consumers were willing to pay a premium for better quality products. (Sarma, Pratap,2011)

Sample Profile

Age group: 20-30, 30-40, 40-50, and 50-60.

Data Analysis:
It is observed that attributes like unique ingredients, brand name, price, advertisement, availability, fragrance and freshness in soap are major influences in making a purchase decision. Dove is the most popular brand with 40 percent users, followed by Lux with 33 percent users. Another 8 percent are using Dettol. Lifebuoy and Cinthol are used by 5 percent respondents, while Camay and Palmolive are used by 3-4 percent. (Sarma, Pratap, 2011)

Consumers' satisfaction and brand loyalty can be measured by the number of times buyers purchase the product. However, sometimes consumers change their regular brands and switch to new brands due to several reasons. From the data collected by the survey, it was cited that 45% percent of the respondents were loyal towards their brand and 55% were not loyal and would switch to another brand easily. The reasons for switching over to a new brand were better quality, better value or simply wanting a change. (Sarma, Pratap, 2011)

Findings:
The following are the findings that have emerged from the survey.

* When making a soap purchase decision, respondents gave more importance to unique ingredients of a soap followed by impact on skin and price. (Sarma, Pratap,2011)

* People preferred bundle offers, like a pack of 8-10 soaps, instead of buying one at a time.

* When we mentioned the unique characteristics like the use of natural moisturizing agents etc., that our soap will carry, most respondents (about 65%) showed interest in buying it.

* 45% percent showed loyalty towards their current brand and voiced that they will not switch even if the price of their current soap increases.

* The 35% that did not show much inclination towards our product was because they mentioned the need to personally see the product on the shelf rather than just being proposed about it.

*After seeing the final product, we believe that 35% will also decline.

Porters Five-Force Model
Rivalry
Rivalry is the extent to which firms within the industry pressurize each other and limit each other’s profit potential. Fierce rivalry gives rise to many potential costs such as targeting each other’s market and aggressive product pricing; these costs are incurred by competitors
The FMCG sector being mildly affected by global economic conditions increases the industry attractiveness and draws in many competitors leading to high intensity of rivalry. However, what also matters is the competitors’ size, market share against one another and if the companies are at par. The Industry growth and the wide variety of undifferentiated products as well cause the level of rivalry to be high. Companies sometimes face high exit barriers further intensifying the rivalry. (Porters, 2010)
Substitutes
Threat of substitutes is when the market offers a good that can be purchased by the consumer from another industry offering similar benefits as the product produced by the firms within the industry.
The consumers’ education and awareness level comes to their advantage in times of price hikes as they are capable of hunting for substitutes in a short span and can switch to another good since switching costs are low. This suggests a high threat of substitutes. Substitutes try and offer quality at par or equal to that of their competitor. This causes consumers to hunt for better bargains; again causing a high threat of substitutes. (Porters, 2010)
Products like soap sometimes make the consumer choosy and loyal to their current brand as consumers do not like compromising on quality and do not perceive other brands to offer the same function that their current product does. This makes them hesitant to switch. If they choose to switch they feel they might have to pay a higher price for getting the same or better quality which consumers are usually not keen on. The substitutes’ performance is almost equal to one another so there is a high threat of substitutes’. (Porters, 2010)
Buyer Power The bargaining power of buyers affects the sellers’ actions. The seller is pressurized when high buyer power exists causing them to lower prices, improve product quality and offer a wider and better variety of services. All these are costs incurred by the seller.
Buyer power within this industry is weak as customers are fragmented and have less influence on price and product. The competitive pricing of soaps, consumers’ level of education and speedy dispersal of information makes switching costs low and makes consumers price sensitive. Both together indicate a high bargaining power of buyers. Another factor is that buyers cannot easily backward integrate, as their ability to go ahead and produce a product like soap is low this suggests a low buyer power.
This industry is competitive and offers a wide range of substitutes putting a downward pressure on price. However, many choose to be loyal irrespective of a price hike suggesting a low buyer power, but mostly it is high within this industry. (Porters, 2010)
Supplier Power
Supplier power refers to the pressure that suppliers can exert on a business by reducing product availability, raising prices or lowering quality. Industry firms are the buyers in this case.
Since soap is a necessity, the demand for it will never fall short. Markets for such goods attract many suppliers. The numerous suppliers and high substitute availability drives down the supplier power. The ability for firms to switch from one supplier to another is low which determines supplier power is high in this industry. Price sensitivity tends to be high in the market as firms track new developments, bringing the supplier power down. (Porters, 2010)

New Entrants
When an industry seems to be profitable it attracts new competitors. The extent to which new competitors can threat existing competitors within an industry is referred to as threat of new entrants.
The volume of soaps produced is high this gives the firms an economies of scale advantage. This becomes a barrier to new or smaller firms entering the industry. Starting a successful business requires significant upfront capital and an effective product. Since the market is dominated by multinational brands, the barrier to entry continues to increase. In addition to this having proprietary technology, advantageous locations or exclusive production material inputs increases the barrier, further causing the threat of new entrants to go down. (Porters, 2010)
Product Development
Industry trends keep changing over time, the same way the beauty industry also has experienced a lot of change in the past couple of years. There has been a growing trend towards going all natural. Earlier a niche market existed for goods made out of natural components but now it has become a mainstream trend as consumers have become more cautious of using harsh chemicals in their daily personal care routine.
On carrying out a supermarket analysis, each brand was observed in terms of weight, flavors, pricing, packaging and design. Based on the market research and surveys we decided to enter the premium soaps market and target middle and high income people. Consumers constantly voiced the need to feel fresh and free of germs and so a scope for certain flavors was realized. Flavors like Papaya, Coconut milk with roses, Strawberry, Aloe Vera, Mint & Lemon, Apricot & Walnut and Yoghurt & Cucumber. Another major component of the soap will be Triclosan and/or Chloroxylenon which are anti-bacterial chemicals.
The very crucial reasons behind choosing each of these distinct and exotic flavors are that they are natural skin care agents. Papaya has skin firming properties. Coconut milk is a natural cleanser leaving the skin clean plus fresh and rose gives aromatherapy that helps relieve stress. Strawberry has salicylic acid that aids in getting rid of dead skin cells. As well as help lighten and rejuvenate the skin. Aloe Vera helps to moisturize and hydrate skin. Yogurt and cucumber together are soothing and cleansing, provide anti-bacterial properties and a glowing skin. Apricot is very good for sensitive skin, moisturizes it and walnut plays the role of a natural exfoliant. Mint cleanses and revitalizes the skin and lemon has a refreshing fragrance along with a cooling effect due to the citrus.
We gave the name ‘Vital’ to the soap because it is very essential for everyone today to embrace nature. This soap provides a complete blend of natural essentials, hence the caption – ‘Touch of nature’.
The shape of our product is similar to that of a computer mouse with a deeper cavity on the base in order to make it easier to hold on to it while taking a shower.
The package design has a cardboard cutout for consumers to be able to see through the package and have a look at the soap. This was specially done since our product is new and this way the buyer can view the product before purchasing it. The packaging also exhibits the benefits of each flavor for customers’ convenience and for them to know what to expect out of our product.

S.W.O.T Analysis
Strength
* Cost can be reduced as the company has got its own soap noodles manufacturing for the production. * Al Batha is involved in keen research and development along with world class manufacturing expertise in home and personal care products * A special characteristic - The mouse shape of the soap provides a good grip on the soap. * Ditra has its own distribution channel. * Company has its own printing and packaging service (Medad) as well as transportation for delivery purposes. * Variety in flavours and colors with natural ingredients (Papaya, Coconut milk with roses, Strawberry, Aloe Vera, Mint & Lemon, Apricot & Walnut and Yoghurt & Cucumber) * Incorporation of anti-bacterial chemicals.
Weakness
* Will be more attractive to women than to men. * Less chances for a few flavours to be accepted * High competition with Unilever products (Lux, Dove etc.) * Since it’s a new launch, will have to spend a lot on promotion and advertisement.
Opportunities
* Make good use of the company name to position itself in the market. * Export opportunities. * Target men as well as youngsters. * Maintain standard of quality. * Advertisements throughout GCC. * Having bundle product offers. * Can make use of supermarkets and hypermarkets for distributing samples.
Threats
* Other competitors with the strong brand image like (Lux, Dove, Pears etc.) * New entrants. * Competitors copying our idea. * Risk of declining. * Targeting only middle and high income group * Different ideas and innovation required for the market position * Substitutes products

The Media Mix
Magazines: Magazines are one of the most wanted cultural print media. They usually provide to a particular type of people who are searching for information relating to their specific interests. Magazines mainly cover a wide array of topics like business, consumers, luxury, beauty, fashion, entertainment, finance, travel, etc. The recurrent time of the magazines can be weekly, monthly, half-yearly or yearly. These magazines are mostly the best forum for advertisers as it has a niche readership. Also the keeping life and brand recall of magazines is better than newspapers that are disposed off daily. So to advertise our new soap we will focus on 2 leading weekly magazines in the GCC region which come along free with the purchase of newspapers. Our advertisement will be in the Friday and Weekend magazines. We will advertise on one side of the page and will have a sample of our soap attached on the lower corner of the page. This will help creating brand awareness. (Manohar, 2012)
Television: TV attracts both the hearing and photographic senses, and therefore is a strong platform for advertising as it catches the attention of the audience. TV has become the advertisement focal point where advertisers are ready to spend a lot of money for an ad of just a few seconds. As we see how TV has become a part of human life. We are going to use the channels MBC and Zee TV as MBC is telecasted throughout the Mena region and Zee TV is popular amongst South Asians who comprise of a big section of the population of the UAE. (Manohar, 2012)
To launch the product it is imperative to begin with test marketing which is a small scale production of our product along with promotional sampling done by Al Batha promoters who will be providing information and details about our soap. This will help us get customers’ feedback. The promotional sample distribution will be carried out in major supermarkets and hypermarkets like Union cooperative, Carrefour and Lulu hypermarket by setting up a small kiosk. After evaluating the test results, large scale production will begin. The soap will weigh 75g soap at a price similar to lux soap bars. Also we will be participating in Ramadan fairs and FMCG exhibitions in the UAE to promote the product.

Conclusion
This strategic route guarantees Ditra achieving its financial objectives of 10 million sales and 20% gross profit. There is tremendous potential in the premium category of beauty soaps based on the current market conditions, primary surveys and research conducted. Ditras competitive edge is its immense industry experience combined with their cutting-edge manufacturing technology which allows it to be as good as the leading brands and provide a better value. The company background, exhibited projections and favorable market conditions all together promises Ditras growth in the coming years and Ditra realizing its estimated financial goals.

References

2006, Al Batha Group, Viewed on 2nd December 2012, Available at http://www.albathagroup.com/
2011, Ditra, Viewed on 2nd December 2012, Available at http://www.ditra.ae/
Sarma, M.S, Pratap, V., 2011, ‘Brand loyalty and satisfaction towards toilet soaps: a study of urban consumers in Warangal District (A. P.)’, Foundation for Organisational Research & Education, vol. 29, no.3 shakoor,u. (2010). Project on Dettol Soap Reckitt and Benckiser.Available: http://www.docstoc.com/docs/24777916/Project-on-Dettol-Soap-Reckitt-and-Benckiser . Last accessed 8th Dec 2012. ganpaa,A. (2009). Lux project. Available: http://www.slideshare.net/anandganpaa/lux-soap#btnNext. Last accessed 8th Dec 2012.
(2010). Liril Soap SWOT ANALYSIS. Available: http://www.managementparadise.com/forums/marketing-management/200482-liril-soap-swot-analysis.html.Lat accessed 8th Dec 2012
Manohar, A. (7/17/2012). Different Types of Mass Media. Available: http://www.buzzle.com/articles/different-types-of-mass-media.html#television.accessed 12th Dec 2012.
Media, L. (Mar. 19, 2010). 5 Best Ways To Advertise A New Business.Available: http://www.mademan.com/mm/5-best-ways-advertise-new-business.html.accessed 14th Dec.