Ghari’s Success Against HUL and P&G

Ghari detergent, a product of Rohit Surfactants Private Limited (RSPL) has overtaken all the biggest multinational brands to become the second largest selling detergent in the Rs 45000-crore home and personal care (HPC) market in India.

In December 2010 there was only HUL’s Wheel detergent ahead of Ghari as the latter doubled its market share to 13.5% entering the Rs. 12000 crore market segment. The gap between both the detergent’s market shares was narrowing very fast. How could a small company like RSPL have achieved such a success beating all the brands that existed in the Indian market? I have done a small study on the strategies that RSPL implemented to gain the competitive advantage over other its competitors.

Ghari has been positioned at the bottom of the market in the economy segment and its main competitors are Wheel, Nirma and Fena. The market segmentation is shown below.

Ghari detergent has grabbed a market share of 17% which is second to the leading HUL 37% which includes Rin, Surf and Wheel. Third is P&G with 16% through its brands Tide and Ariel and fourth is Nirma with 8% of the market share.

The different strategies used by RSPL for this phenomenal success are:

1.       Achieve higher market penetration in existing markets and simultaneously exploring new markets

Most of the Ghari detergent sales come from Uttar Pradesh, which is also its birth place, Madhya Pradesh and Maharashtra. Recently it has started distribution in 8 more states, thus making its presence in a total of 20 states across the country. Entering new markets doesn’t mean that the existing markets are saturated as far as Ghari detergent is concerned. Even in the existing markets, the market share of the competitors was decreasing while the industry as a whole was growing.

2.       Providing Incentives to the Dealers

Ghari detergent provides a profit margin of 9% to its dealers, which is substantially lower than the standard 12-13% for premium brands, and at the same time, higher than the 6-7% being offered by the competitors in the same segment. Thus the company has been working towards creating a strong dealer base while keeping its prices low.

3.       Advertising Strategy

Ghari detergent has been very innovative in reaching the customers. With only 35 crores allotted for marketing and promotional activities it has used trains for initial campaigns to promote the product. Their hoardings were visible at all the railway crossings in Uttar Pradesh and West Bengal. RSPL has even promoted Ghari in roadside shows and magic shows in smaller towns where people are unlikely to see other brands. Recently it has sponsored a show Rakt Sambandh on NDTV Imagine. Also, instead of going with celebrity endorsement, the brand has left it on the consumers to try the product and decide if they like it, just as it claims in its campaign.

4.       Segmentation Strategy

For any successful marketing plan segmentation is the first key step. The organization must carefully craft its strategy to exploit the market potential. RSPL being a small firm could not afford expensive marketing strategy so it has segmented according to it. Generally market is segmented on the basis of demographic, geographic and psychographic variables but RSPL has mainly concentrated on geographic variable. The geographical split of Ghari detergent is shown below.

5.   

 

5.   Pricing Strategy

Keeping in mind its target market, i.e. the lower end of economy, the company has, as far as possible, avoided passing on the burden of rising raw material costs on to the customers.

6.       Restructuring and Optimization of Resources

Citigroup Venture Capital India (CVCI) approached RSPL in 2006 to buy around 14% stakes but the deal did not succeed due to valuation differences. This proved to be an eye-opener for RSPL as it immediately decided to go for introspection, restructured its business and optimized its resources.

7.       Regional Focus

Due to its financial inability to compete with HUL and P&G in other states, RSPL had launched Ghari detergent in Uttar Pradesh. It focused on developing an intense distribution network to reach the customers effectively. This is evident from the fact that out of 3000 dealers in India Ghari has 900 dealers in UP and 25 of them are in Kanpur alone. It also has 9 out of its 18 manufacturing units in UP.

These effective strategies implemented by RSPL for Ghari has made it to the second largest selling detergent in India. In the last fiscal, it has enjoyed a profit after tax of Rs. 190 Cr, more than many of its MNC peers. Further to overtake Wheel the challenge that RSPL should now be concentrating is on the spread in South and Western parts of India and build a distribution network as strong as HUL’s.

The writer of this article, T V Dheeraj Vishnu is a PGP student of Indian Institute of Management, Raipur. He has done his B.Tech in Electrical and Electronics Engineering from Nalla Malla Reddy Engineering College, Hyderabad and can be reached at pgp11039.dheeraj@iimraipur.ac.in or at +91-7587208639.

Prof. O.S. Vaidya of IIM Raipur adjudged the Best Teacher in Operations Management

Pro. O.S. Vaidya at the launch of Strive

 Prof. O.S. Vaidya on 18 February, 2012 was conferred the Award for “Best Teacher in Operations Management” by Bloomberg UTV B-School Excellence Awards at Taj Lands End, Mumbai. The award recognizes institutions that are innovative, modern and have Industry-related curriculum.

The awards are chosen by an independent jury and a panel of professionals who believe in nurturing talent and recognizing Best of the Best. The award is in recognition of leadership, development, marketing an institute and Industry Interface of a Business School.

Prof. Omkarprasad Vaidya is a faculty in the area of Operations Management and Quantitative Techniques. He obtained his doctoral degree from National Institute of Industrial Engineering (NITIE), Mumbai.

He has published articles in Journals of International repute like European Journal of Operational Research (EJOR), International Journal of Quality and Reliability Management, International Journal of Reliability and Safety, and others. The article published in EJOR “Analytic Hierarchy Process: An Overview of its applications” is currently rated at top slot among the most cited articles. It has 233 citations (Scopus) and 321 citations (Google Scholar) so far (accessed on May 24, 2011).

He has also presented a number of papers at national and international conferences like Society of Operations Management (SOM). He is also involved in reviewing research articles for reputed International Journals. He is a supervisor to research scholars from Symbiosis International University (SIU), Pune.

His teaching and research interests include Operations Management, Six Sigma, Quantitative Techniques and Supply Chain Modeling. As guest faculty, he has taught courses at IIM Lucknow, and NITIE, Mumbai.

He has completed a couple of consultancy projects. Since 2009, he is a panel member for the corporate competition on Lean and Six Sigma organized by Symbiosis Pune.

IIM Raipur Faculty and Students contribute Articles for Pan IIM Operations Magazine

The second edition of the Pan IIM Operations Magazine, “Opsworld” was released by Prof. Janat Shah, Director, IIM Udaipur during the International Operations Conference organized by Society of Operations Management at IIM Calcutta on 18th December 2011. The theme of the magazine is Sustainable Operations Management. The magazine would be hosted on SOM website alongside the prestigious operations management journals.

The magazine contains two corporate articles – one from Flipkart and the other from Ernst & Young. The magazine contains faculty as well as student opinion on Sustainability through two different sections. Also included are the general operations management articles in the General section.

The magazine can be downloaded from the following address as well. (http://paniimoperations.com/magazine/)

In the Editorial, The Editor in Chief has thanked IIM Raipur for their valuable support throughout the process.

In his article, “Jack of All Trades, Master of… Two”, Prof. Omkarprasad S Vaidya, Faculty in Operations Management and Quantitative Techniques Group at IIM Raipur has discussed some of the Management Problems and their possible solutions as a result of an interface of other streams with ‘Operations’ Management.    

Rohit Bhagat, a PGP 2010-12 Student of IIM Raipur has written an article on “Unique Challenges in Humanitarian Logistics”. The article starts with a description of the Disaster Profile of India and emphasises the need for research in the field of Humanitarian Logistics keeping in mind India’s risk profile. The article brings out the challenges that need to be addressed while undertaking humanitarian logistics.

Aditya Kumar Konathala and Amit Sharan Singh, PGP 2010-12 Students of IIM Raipur have discussed the positive impact of Information and Communication Technology (ICT) on Paddy Procurement and Public Distribution System (PDS) in Chhattisgarh in their article “ICT and Supply Chain Practices in PDS (Chhattisgarh)” .

Tarang Singhal, a PGP 2011-13 Student of IIM Raipur was a part of the Layout and Design Team.

Why Operations ?

Let’s start with some of the myths regarding a career in Operations Management. Many people wrongly associate it with years of toiling in a manufacturing plant in a remote location. Though this perception cannot be completely denied, the picture really isn’t as gloomy as it seems. First, there are various career choices (other than manufacturing) in Operations Management, which we will discuss shortly. Second, an experience of working on the shop-floor for just a few years in the beginning adds a lot of value to the manager, thus enabling a more comfortable work environment and steeper career growth for rest of the life.

Another very famous belief is that operations managers are paid less as compared to their marketing or finance counterparts. Again, it might be true for some of the career choices, but it cannot be generalized. Also, once a person rises above a certain level on the corporate ladder, the aforementioned disparities between the compensations tend to disappear.

On a positive note, a career in Operations Management is considered to be the most fulfilling, i.e. high on job satisfaction. It has also been observed that opportunities and growth in this field are less affected by recessions.

Some of the major subjects taught in Operations Management are:

·         Operations Management – This course focuses on understanding of different ways to create an efficient and effective production and service operations.

·         Manufacturing System Design - This course focuses on concepts and techniques relating to manufacturing systems design eg. JIT and TOC.

·         Total Quality Management / Six Sigma – The aim of this course is to emphasise the importance of quality in the competitive world and make the participants aware of the standards available.

·         Enterprise Solutions – This course aims to understand the functionality that ERP systems deliver, and to harness this functionality for the benefit of the organization and the managers who are the users of the system.

·         Supply Chain Management – According to APICS, SCM is “design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally”. This course aims to understand the basics and develop different strategies of SCM and logistics management.

·         Project management - This course provides the skills in executing various projects, starting from project identification till project termination.

·         Operations Strategy – This course is on evaluation of manufacturing decisions from their strategic fit to the firm’s products and market.

·         Operations Research – This course aims to provide a formal quantitative approach to problem solving and an intuition about situations where such an approach is appropriate e.g. Linear Programming.

·         Management of Technology - The main objective of this course is to present the concepts, techniques and applications that will be needed to understand, anticipate, acquire, and use technology for attaining a competitive edge at the market place.

Broadly speaking, the various career options for an operations student are

1.      Manufacturing/Production Management – The key responsibilities include manufacturing process optimization, product development and re-design, production planning, inventory planning and control, forecasting, quality control, standardization, and process analysis.

2.      Service Operations – Most of the responsibilities remain same as mentioned above, but in the services sector.

3.      Consulting – Many students are hired by consultancy firms which cater to the manufacturing and/or services organizations. A sound knowledge of the relevant subject and experience are usually required.

4.      Supply Chain Management – In the recent times, this channel has gained a lot of prominence owing to its vast applications and potential. Supply chain management has a very wide scope as it encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. It also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies.

What to do before joining a B-school?

A prior and basic knowledge of MS Excel can be very helpful while attending the Operations Management courses. To get better clarity on some popular concepts, a bestselling management books can be read. The two most recommended are “The Goal” by Dr. E. M. Goldratt and “The Toyota Way” by Dr. Jeffrey Liker.

It is found that to excel in this field, one needs to have good problem- solving skills, quantitative and logical thinking. Graduates in Engineering, Mathematics / Statistics and Science are expected to do well in this field. Graduates from other streams also do well provided they have good logical reasoning skills and passion for Ops.

The writer of this article, Akshay Agarwal is a PGP student of Indian Institute of Management, Raipur and has done his B.Tech from Indian Institute of Technology, Guwahati. Akshay holds a Green Belt Certification in Six Sigma. Prior to joining IIM Raipur, Akshay has worked on various Value Engineering / Cost Cutting projects at Surya Roshni.