Question 1: Analyze the reasons that impelled Dabur to refine its Ayurvedic image to that of a herbal FMCG company?

Answer: Dabur India Limited started as a medicine manufacturer in 1884 by Dr S K Burman in West Bengal. It was started as a proprietary firm for the manufacture of Ayurvedic drugs. Daburinitially used to send medicines to villages in Bengal by mail.The company marketed an allopathic drug, Plagin, to combat the then prevalent epidemic of plague. In 1896, Dr. Burman set up a small manufacturing plant at Garhia near Calcutta for mass production of chemicals and Ayurvedic drugs.In the early 1900s, the next generation of Burmans took a conscious decision to focus more on the Ayurvedic medicines market, as they believed that it was only through Ayurveda that the healthcare needs of poor Indians could be met. In 1919, Dabur set up a Research & Development laboratory to conduct research on Ayurvedic medicines. Their manufacturing processes used to be as described in ancient Indian scriptures and developed the process of utilizing modern equipment to manufacture these medicines without reducing their efficacy. The following year, Dabur set up manufacturing facilities for Ayurvedic Medicines at Narendrapur, West Bengal and Daburgram, Bihar in India.Dabur also expanded its distribution network in Bihar and the North Eastern regions. In 1936, the company was incorporated under the name Dabur India Pvt. Ltd. In 1940, Dabur launched Dabur Amla Hair Oil, and later in 1949, the company launched Chyawanprash in a tin pack making it the first branded Chyawanprash in the country.The company expanded its portfolio by adding oral care products in 1970. Dabur LalDantManjan was the first product to be launched under its oral care portfolio. In 1972, Dabur shifted base from Kolkata to New Delhi and started production from a hired manufacturing facility at Faridabad, U.P. In 1978, Dabur launched the Hajmola tablet. Dabur set up 'The Dabur Research Foundation (DRF),' an independent company, in 1979 to spearhead its research needs. In the same year Sahibabad factory became operational and this unit was one of the largest and most modern production facilities for Ayurvedic medicines in India at that time.The company became a public limited company in 1986 and launched its first public issue in 1994. In 2004, Dabur had three strategic business units: Family Products Division (FPD), Health Care Products Division (HCPD) and Dabur Ayurvedic Specialties (DASL) which contributed 45 percent, 28 percent and 27 percent respectively to Dabur's sales revenue in 2003-04. FPD looked after products related to Hair Care, Skin Care, Oral Care and Foods. The three leading brands in this division had a turnover of Rs. 1 billion each in 2003-04. HCPD dealt with products related to health supplements, digestives, baby care and natural cares. DASL managed about 250 Ayurvedic medicines. Although Dabur diversified itself into a number of areas, the image of Dabur was still that of an Ayurvedic company. In the public perception, Dabur products were associated with the 35 plus age group. With almost seventy percent of India's population below 35, it appeared that Dabur was missing out this mass market, which also had high disposable income.Apart from the above fact, Dabur in 2001-02 experienced a downturn in sales and profit and there were indications of

slow growth of the company too. Dabur then hired a consulting firm called Accenture and asked them to recommend some changes in the companys marketing system and process. Dabur concluded form that assessment that consumers recognize Dabur as an herbal specialist. They also found that Daburs reputation in this field was considerableacross small towns as well as big cities. Moreover, the size of global herbal FMCG market was estimate at 40 billion. The herbal FMCG market is considered to be the fastest growing product category within FMCGs. And these products were used by youth. Accumulating all the facts, in early 2002, the company then tried to reorient its image from being a manufacturer of Ayurvedic medicines to that of an FMCG company. The company also decided to refocus on its key brands in family and healthcare products and stop focusing on its low contribution brands.

Question 2: What were the action plans Dabur undertook as part of its restructuring? How did they help close the clinks in its marketing armour? Answer: Dabur India Limited started as a medicine manufacturer in 1884. It was ranked at number four in terms of sales among the Fast Moving Consumer Goods (FMCG) companies in India. Earlier Daburs positioning was not clear. As a result, it went in for a restructuring, which included aligning Daburs brand architecture with its brand equity. The company tried to bring to its consumers its Ayurvedic legacy with a contemporary feel. Initially, it started off with a direct mailing system to send medicines to villages in Bengal and later set up a manufacturing plant at different state. During 1919, it set up an R & D lab to conduct research on Ayurvedic medicines and their manufacturing process. Since1940, Dabur started launching various products such as Dabur Amla Hair Oil, Chyawanprash, Dabur LalDantManjan, Hajmola tablet. In 2004, Dabur had three strategic business units: Family Products Division, Health Care Products Division and Dabur Ayurvedic Specialties where family products division contributed most of the sales revenue. Supported by thirteen (13) manufacturing units spread over four countries, Dabur products were marketed in over 50 countries. Though Dabur diversified into number of areas, the image of Dabur was that of an Ayurvedic company. In the public opinion, Dabur products were associated with the 35 plus age group and appeared that it was missing out on the mass market of below 35 who had high disposable income. In early 2000, the company reoriented its image from being a manufacturer of Ayurvedic medicines to that of an FMCG company. Further it had been constantly focusing on the constant improvement in a professional way. This constant improvement by the management was by getting the 4Ps right. Coolers, a juice was 15 percent cheaper than Real because of its lower pulp. Likewise, tomato soup was priced only Rs 16 per 200gm pack where there were highly competing brand like

Hindustan Lever, Nestle and Amul. To increase demand for its product, Dabur engaged in selective price reduction and introduction of smaller packs product such as Vatika shampoo and oil. Dabur has always been known for its innovative promotions. It has used Bollywood Superstar Amitabh Bachhan and cricketer VirendraSehwag as brand ambassadors for oral, hair and healthcare products. In addition, Dabur has always been known for its creative TV advertisement targeting various segments such as women, children, mothers and youngsters. It even customized the product to suit the tastes of customers. Dabur has not only focused on FMCG herbal and Ayurvedic product, it was engaged in manufacturing, selling and export of various cosmetics and toiletries and health care products. The licensing agreement allowed Dabur to make investments in all global ventures. Subsidiaries were established in Nepal, Nigeria, Bangladesh and Pakistan and international business added IRs. 1.28 billion to its turnover in 2003-04. The company planed to focus on Russia and other CIS countries as well as Afghanistan, West Indies and the Asia Pacific region. During early 2000, the company entered the North American markets by appointing distributors and initiating marketing of products to the ethnic Indian segment. Dabur repositioning exercise from a Ayurvedic product to FMCG, from an older market to the younger market seemed to have some success with a noticeable increase in sales and net profit margin of the company in 2004. The mantra for its success was its continuous innovation and renovation. Its innovativeness in packaging, tastes, promotions, product segments made Dabur one of the most promising brand throughout the globe. With the launch of its new products, Dabur expected to compete with established players in the market like Hindustan Lever, Proctor and Gamble etc. This example of Dabur restructuring showed that a small business house could be a leader if treated with continuous innovation, renovation and differentiation. Question 3: Dabur targeted sales of IRs.200 billion by 2006. Hence it needed to grow annually at a rate of 15-20 percent in years 2004, 2005 and 2006. Comment on the growth strategies adopted by Dabur. Answer: Dabur's repositioning exercise seemed to have achieved some success with a perceptible increase in sales and net profit margin of the company in 2004. The company tried to do in a positive and credible way to innovate and renovate. However, the company needs to keep the growth momentum in the categories in which it leads like Chyawanprash, honey and herbal digestives. With Dabur Red Toothpaste, Dabur maintained a strong presence in the toothpowder and toothpaste category. Lal Dant Manjan had a market share of 27 percent in the tooth powder segment. Improvement in packing and promotions made Vatika fastest growing brand of Dabur. Dabur planned to extend Vatika brand to new categories like body care a body-wash

expecting the product will target the premium end of the market. The company has set up an investment of IRs.2o billion, for acquisition of brands in both domestic and overseas markets in order to enter new products and categories. Dabur also planned to create a dedicated production line for healthcare products to feed the overseas market. With launch of its new products, Dabur expect to compete with established players in the market like Hindustan Lever, Proctor and Gamble, Glaxo Smithklin Beecham, Godrej Consumer Products, etc. Daburs earlier growth was restricted to markets where the established FMCG companies had a limited presence. In the pain relief caagory the company had to compete with established brands like Zandu, Amruntanjan and Vicks. The toothpaste segment was dominated by Colgate from Colgate Palmolive (P & G) and Pepsodent from Hindustan Lever (HLL). Dabur knew that for market leadership in categories with wellestablished players would not be a difficult option and started to look for a stable, long term and profitable growth in these categories. For a long time, Dabur was in direct completion with HLL was shampoo. In 2003-04, the companys market share in this category was 3.7% only. Therefore, everyone including industry analysts started watching new product from Dabur with great interest.